Exam 2 Practice Questions
Multiple Choice
Identify the letter of the choice that best completes the statement or answers the question.
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1. A collection agency threatened to sue Martha for the unpaid hospital bills from her heart operation. She
signed a promissory note at a high but not illegal rate of interest. What result?
a. It is valid because she signed it.
b. It is valid because the threat to bring a civil suit to collect money owed is permissible.
c. It is invalid because she signed under duress.
d. It is invalid because the agency put her under undue pressure.
2. Tommy's parents died in a plane crash and he went to live with his guardian, Aunt Rose. Rose had a very
small house and did not have a separate bedroom and bath for 12-year-old Tommy. She and Tommy decided
to use some of his inheritance to pay for an addition to the house. He had some shares of stock transferred into
Rose's name so that she could sell them when the money was due to be paid. The stock transfers are:
a. presumed voidable unless Rose can show no unfair advantage was taken.
b. presumed valid unless it can be proven that Tommy was taken advantage of.
c. null and void because of undue influence.
d. presumed void because of duress.
3. Eliza was an antique expert. She went to a tea party at Grandma Jones' house and saw a magnificent Queen
Anne table out on the back porch. She asked Grandma about it and was told it was in the way so they were
going to store it in the barn. Eliza offered to buy it from her for $200. The next week, Grandma saw it in
Eliza's store on sale for $3,000. Which of the following is true?
a. She can get it back because of fraudulent concealment of the value.
b. She can get the true value, because it would not be fair otherwise.
c. She cannot rescind the contract because Eliza did not have a duty to tell her the value of
the table.
d. She cannot rescind the contract because she did not rely on Eliza to give her a fair price.
4. James threatens to hit Kenneth on the head with a baseball bat unless Kenneth signs a contract agreeing to pay
James $300 for his latest painting. Because of the threat, Kenneth signs the contract.
a. This contract is voidable at Kenneth's option.
b. James has committed physical duress against Kenneth.
c. This is an example of economic duress.
d. All of the above.
5. During a visit to Joe's Jewelry, Patrick looked at a watch that appeared in every way to be a Rolex. Having no
reason to believe that this watch was not a Rolex, Patrick paid $2,000 for the watch. Later, Patrick discovered
that the watch was a fake Rolex. Patrick can:
a. not rescind the transaction since he did not ask the clerk if the watch was a fake.
b. not rescind the transaction, but can get at least part of his money back based on the watch's
value.
c. give back the watch and get back the $2,000.
d. rescind the transaction and keep the watch.
6. Larry and Fred had been negotiating for a landscaping contract for Fred's business. Larry began by offering to
do the work for $6,000 and they had been talking about doing a little less work for around $5,000 in their
most recent discussions. Finally, Fred called Larry and said that he was going to be off in the foreign office
for the next month and that he wanted the work to be done while he was gone; he'd send over a contract the
next day on his way to the airport. The contract arrived, stipulating payment of $15,000 for the work that had
been discussed. Larry decides to go ahead and do the work. When Fred gets the bill for $15,000 a month later,
he
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a. must pay the $15,000.
b. must pay the reasonable value of the services.
c. need not pay anything to Larry.
d. can rescind the contract.
A contract was made for 125 bales of cotton to arrive on a ship named "Peerless" from Bombay.
Unbeknownst to either party to the contract, there were two ships named "Peerless," both of which were
sailing from Bombay. One sailed in October and the other in December. The buyer had in mind the ship
sailing in October, but the seller had in mind the ship sailing in December. Each party held his belief in good
faith. When the goods failed to arrive on time, the buyer sued for breach of contract.
a. The seller is in breach and must pay damages.
b. The seller is guilty of fraud in the inducement for failing to disclose to the buyer which
ship would contain the goods.
c. No contract exists due to mutual mistake of fact as to the existence or identity of the
subject matter of the contract.
d. Two of the above, (a) and (b).
Sam wants to sell his Golden Retriever dog to Jordan. Sam tells Jordan that the dog is three years old and that
he will point, back, and retrieve. Although the dog is three years old and will point at birds, he will not back
(honor another dog's point). Al relies on these statements and purchases the bird dog. The buyer has most
probably been a victim of:
a. duress.
b. undue influence.
c. fraud in the inducement.
d. fraud in the execution.
Tom tries to sell his Aston-Martin to Victoria for $12,000. Tom tells Victoria, "I paid $12,000 for the car in
1978 and it's worth twice that today." Tom really paid $8,000 for the car in 1978. If Victoria buys the car,
basing her decision on Tom's statement, which of the following correctly states the situation?
a. Tom's statements amount to puffing only.
b. Tom's statements provide grounds to set the contract aside.
c. Tom's statements are actionable only if intentional.
d. Tom's statements amount to fraud in the execution.
Kyle wants to buy a six-passenger car. The salesperson tells him that the two-seat sports car Kyle sees on the
car lot would be just perfect for six people. Kyle test drives the car and then buys it.
a. Kyle has a valid cause of action for fraud.
b. Kyle was not justified in relying upon the salesperson's representation that the car would
seat six people.
c. The element of scienter is missing in this fact situation.
d. The saleperson is a fiduciary.
David offers to sell Elmer a house located in another state. Elmer accepts the offer and agrees to buy the
house. Unknown to either party, the house has been destroyed by a tornado.
a. This is an example of mutual mistake by law.
b. This is an example of unilateral mistake of fact.
c. This is an example of mutual mistake as to the existence or identity of the subject matter.
d. The contract is enforceable, because each party was negligent in not checking out the
house before entering into the contract.
Jason agrees to sell to Barbara a vacant lot adjoining a house which he owns. The vacant lot is "Lot 2, block
1," and the house is located on "Lot 1, block 1." When the typist types the contract, she mistakenly types "Lot
1, block 1" on the contract. Neither Jason nor Barbara notices the error when they read the contract.
a. This is a mutual mistake in failing to carefully read the document, which will not allow the
parties to reform the contract.
b. The property description in the written contract is a clerical error that will have no effect
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on the intent of the parties.
c. Arthur has committed fraud in the execution.
d. The typing error is a palpable unilateral mistake on the part of the typist. Jason and
Barbara will both be forced to comply with the agreement.
Stewart entered into a contract with Will to have Will build a 10-unit apartment complex on Elm Street in
Randolph County. Unknown to both parties, this land had recently been rezoned and only single-unit
dwellings can be constructed.
a. This is a mistake of law.
b. This is a mutual mistake of fact.
c. Stewart is obligated to buy land elsewhere and have the complex constructed on property
zoned for apartments.
d. Will is liable to Stewart since Will is a contractor.
Steven has a typed copy of a contract, which he would like to have Thomas sign. Thomas, who needs glasses
to read typing, doesn't want to sign until he has read the document, but Steven convinces Thomas to sign it
anyway, because it is a "standard" contract for this type of situation. Is the contract which Thomas signed
binding upon him?
a. No, because he did not read it.
b. No, because he entered into it based upon fraud in the execution.
c. Yes, because he has made a unilateral mistake of law.
d. Yes, because he was negligent in not ascertaining its contents.
Albert found a stone in his yard and took it to Bob, a jeweler, for evaluation. Although Bob knew what the
stone was, he told Albert that he wasn't sure as to the nature of the stone, but that he thought it was a topaz.
Bob then offered to buy the stone for $25 and Albert agreed. Later Albert found out the stone was an uncut
diamond worth about $700.
a. The sale was a valid contract that should be enforced by the law.
b. This contract can be voided based upon fraud in the execution.
c. This contract can be voided based upon fraud in the inducement.
d. This contract can be voided based upon mistake as to the identity of the subject matter.
Fred is a concert violinist who is scheduled to perform at Carnegie Hall for the first time. He buys what he is
told is a Stradivarius violin from a well-known, reputable dealer in quality violins, and he pays the going rate
for a Stradivarius. He later learns the violin is an imitation, although it is such a good imitation that even the
dealer thought it was authentic.
a. Fred has made a unilateral mistake and cannot avoid the contract.
b. The dealer has committed fraud in the inducement.
c. The sale is voidable by the purchaser for mutual mistake.
d. The sale is voidable, because the dealer has made a fraudulent misrepresentation.
Jill contracts to purchase Kevin's automobile under the belief that she can sell it at a profit to Linda, but after
Jill has bought the car, she finds out that Linda isn't interested in buying it.
a. Jill cannot void the contract.
b. Jill can rescind the agreement.
c. Jill could rescind the agreement if she was mistaken in her estimate of the value of the
auto.
d. Jill can sue Linda for detrimental reliance.
Alex wants to submit a bid on a city sewer project. He computes the cost, but mistakenly omits the cost of one
item. Accordingly, he submits a bid of $430,000 to the city. The next highest bid is $675,000, and the rest of
the bids are even higher. The city is happy to have such a low bid, so it accepts Alex's bid and awards him the
contract for the job, even though the city engineer is of the opinion the job cannot be done for less than
$650,000.
a. Alex must perform for the agreed upon price because he has made a unilateral mistake.
b. The city was aware of or should have been aware of Alex's mistake. When it accepted the
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bid with knowledge of Alex's mistake, the city sought to take an unconscionable
advantage of Alex's error.
c. This case is an example of a palpable unilateral mistake.
d. Both (b) and (c).
Ralph sold a motel to Steve by stating that he had paid $250,000 for it and that his net average annual profit
from the business has been $40,000. In reality he paid $100,000 for the motel and has earned a net average
annual profit of only $30,000. Steve made no attempt to verify the statements until after the transaction was
completed.
a. Ralph has committed fraudulent misrepresentation.
b. Steve is bound by the contract, because he failed to verify the statements which were made
to him.
c. The contract is voidable at Steve's option.
d. Both (a) and (c).
The State of Florida enters into a contract with Treasure Salvors governing the salvage of a Spanish galleon
that sunk in the 1600's. Under the terms of the contract, the salvagers agree to relinquish 25% of the items
recovered to the State of Florida in return for the right to salvage on state lands. At the time the parties enter
into the contract, they both believe that the seabed where the ship lies is state land. Subsequently, the United
States Supreme Court holds that the continental shelf on which the ship rests has never been owned by
Florida. The salvagers sue to rescind the contract.
a. The contract cannot be rescinded.
b. The parties made a mutual mistake for which the contract should be avoided.
c. There is a mutual mistake, but because it is not material, the court should enforce the
contract.
d. The United States government will automatically step into the shoes of the State of Florida
to make the contract enforceable.
Aunt Ellie promises her 21-year-old nephew, Robbie, that she will pay him $100 if he quits smoking for a
month. If Robbie does, is there a binding contract?
a. No, because Robbie gave no benefit to Aunt Ellie.
b. No, because Robbie did not suffer any detriment.
c. Yes, because stopping smoking will benefit Robbie's health.
d. Yes, because Robbie gave up a legal right.
Janet promises Eli $4,000 for one of his original paintings on the condition that she receive $5 million from
her mother's will.
a. Jan has made an illusory promise.
b. Jan's promise is legally sufficient.
c. Jan has made a conditional promise which is not sufficient to form consideration.
d. Jan's promise is legally inadequate and the courts will therefore not enforce it.
Stan purchased 400 pairs of gloves from Isaac at a contract price of $800. Fifty of the gloves were defective,
and a dispute arose as to the amount due and owing under the contract. Stan refuses to pay the $800, and Isaac
is threatening to sue. Which of the following is correct with regard to this transaction?
a. If Isaac agrees to accept $600 to settle the dispute and Stan agrees to pay that amount, the
substitute agreement is enforceable.
b. If Isaac agrees to accept $600 to settle the dispute and Stan pays that amount, Isaac can
still sue for the balance of $200 and will win the lawsuit.
c. Stan is under a pre-existing legal obligation to pay the $800.
d. Both (b) and (c).
Marilyn contracted with Bravo Builders to build an addition to her house for $15,000. After digging the
foundation, Bravo decides that it will take more work and more concrete than it had originally thought and
that it will need to charge an additional $5,000 for the job. Assuming Marilyn agrees, which of the following
is correct?
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a. Marilyn will have to pay $20,000.
b. This is a contract under seal which is enforceable.
c. This is a modification of a preexisting contract, which under common law must be
supported by additional consideration on the part of Bravo Builders.
d. This is the settlement of a disputed debt that requires no additional consideration on the
part of Bravo Builders.
Carlos ordered an aluminum storm door from Sears for $249.99. Before it was delivered, Sears ran an ad in
the paper for the same storm door at $179.99. Carlos calls Sears and demands the advertised price. They say
okay.
a. Carlos must pay $179.99.
b. Carlos must pay $249.99.
c. There is no contract.
d. There is a contract for the reasonable value of the door.
Mary agrees to sew Georgia's prom dress for $50 plus costs. Georgia decides that she wants ruffles around the
neck and calls Mary who says it will now cost $60. When Mary finishes the dress (with ruffles), Georgia must
pay:
a. $50, since that is the original agreement.
b. $50, since a modification must be in writing.
c. $60, since the modified agreement is supported by additional consideration.
d. $60, since any subsequent agreement is enforceable.
Sue owes $5,000 to the First National Bank for a student loan which will come due on January 1 next year.
She has been offered a two-year graduate fellowship, but she will not be able to pay the loan back if she
accepts the fellowship. The bank manager tells Sue that if she pays $3,000 now, they will forgive the loan.
Should Sue accept the offer?
a. No, because the bank can still sue for the remaining $2,000.
b. No, because the manager's promise is not binding on the bank.
c. Yes, because the early payment of the loan is consideration that makes the bank's promise
binding.
d. Yes, because the bank must do whatever the manager says.
Jack moved from New Hampshire to Florida and decided to have an air conditioner installed in his car. After
it was installed, Jack received a bill for $1,200. Jack called the dealer and told him he'd never heard of this
service costing more than $500. They argued, but the dealer finally agreed to take $900. Is the agreement
enforceable?
a. Yes, there is no way for the dealer to get the extra money anyway.
b. Yes, there is consideration for the modified amount.
c. No, there is no consideration and the dealer can sue for the extra $300.
d. No, there is an implied contract to pay the dealer whatever he billed Jack.
Wayne helped Hank study all night for an important exam. After Hank got an A on the exam, he told Wayne,
"I will give you $10 for helping me get a good grade." Wayne said, "Thanks, I'll take it."
a. There is no contract because there is no mutual assent.
b. There is no contract because there is no valid consideration.
c. There is no contract because $10 is reasonably inadequate consideration.
d. There is a contract with sufficient consideration.
Mark paid off his brother Steve's debt to the loan shark on condition that Steve wouldn't be contacted by the
loan shark for payment. The loan shark says that he doesn't have to honor that promise because Steve didn't
pay. Mark would help his cause by accurately pointing out which of the following to the loan shark?
a. Mark's payment to the loan shark was a gift to Steve.
b. Mark's payment to the loan shark was a gift to the shark.
c. Mark's payment to the loan shark was payment of a moral obligation.
d. Mark's payment to the shark was a legal detriment to Mark.
____ 31. Alice says to Brian, "If I decide to buy a word processor next year, I will buy it from you." This is an example
of:
a. an illusory promise.
b. past consideration.
c. the pre-existing duty rule.
d. good consideration.
____ 32. Nancy, who lives in Birdville, wants to open a McHenry Roast Chicken franchise. Mark, a representative of
McHenry, told Nancy, "If you will buy a lot and build a building in River City, we will give you a franchise."
Nancy bought the lot and built the building as instructed, only to discover that McHenry had awarded the
franchise to a large corporation. McHenry claims no liability to Nancy since there was no consideration.
Which statement is most accurate?
a. McHenry is not liable to Nancy since there is no consideration.
b. McHenry is not liable to Nancy since there is past consideration.
c. McHenry is liable to Nancy since adequate consideration is given by both parties.
d. McHenry is liable to Nancy based on the concept of promissory estoppel.
____ 33. Darla offers to pay Edward $6,000 for Edward's car, provided that Darla receives that much from her uncle's
estate, which is currently being probated. She expects to know for sure how much she will receive within a
week or so.
a. This is an illusory contract, because Darla doesn't know whether she will receive the
money for sure.
b. The consideration moving from Darla to Edward is the promise of $6,000 subject to a
condition.
c. Darla's conditional promise is sufficient consideration unless Darla knows she cannot
receive at least$6,000 from her uncle's estate.
d. Both (b) and (c).
____ 34. Jason's mother would like him to go to college, so in June he enrolls at State University. He also quits his job
and tells his mother his plans to continue taking classes. His mother says, "I'm so happy that you are going to
college that I want to pay for your books." Jason then sends her a bill for $485. Which of the following is true
regarding his mother's promise?
a. It is enforceable, because Jason returned to college.
b. It is enforceable, because Jason is giving up the right to do something else.
c. It is unenforceable, because it is a unilateral contract.
d. It is unenforceable, because Jason had already enrolled in school and there is no
consideration.
____ 35. A bank robbery has occurred, and the banker's association has offered a $1,000 reward for information
leading to the arrest and conviction of the robber. Several people are claiming to be entitled to the money.
Which of them is eligible?
a. The employees of the bank.
b. An on-duty sheriff's deputy in the county where the arrest occurred.
c. An off-duty deputy sheriff from a county other than the one where the arrest occurred.
d. None of the above are eligible.
____ 36. Andrew agrees to paint Betty's house for $500. Two days after he starts the job, he decides that $500 isn't
enough money. He refuses to finish the job unless Betty agrees to pay him $100 more. What law applies to
this fact situation?
a. The acceptance of additional money to settle a disputed claim is supported by
consideration.
b. A past obligation is sufficient consideration for a new promise.
c. Andrew was already obligated to paint the house. He gives no additional consideration in
return for Betty's promise to pay more money.
d. Betty has made a promise in exchange for a forbearance.
____ 37. William agrees to drill a well up to 200 feet deep for John's rural cabin. The contract price is $3,000. After
drilling 100 feet, William strikes solid granite rock. He talks to John and explains that this is highly unusual
for the area and could not have been anticipated at the time of entering into the contract. He offers to get a
special drill, but says it will cost him more money, so that he will be unable to complete the project for the
agreed price. Because John is anxious to have the well, he agrees to pay William an additional $1,000 to
complete the job. However, once the well is finished, he changes his mind and now says he will pay only the
originally agreed-upon amount.
a. The parties have agreed to a substitute contract which discharges the original contract.
John is obligated to pay the additional $1,000.
b. Under the UCC, the substitute contract is binding, because there is the payment of
additional money.
c. William is in breach of contract. John need not pay any additional money.
d. William is under a pre-existing moral duty to perform at the originally agreed-upon price.
____ 38. Barbara, a wealthy widow, promises the pastor of her church that she will donate $10,000 to the church to
help pay off its mortgage if the stewardship committee can obtain enough pledges for the balance of the
$30,000 mortgage. Other pledges are obtained to pay off the mortgage, but now Barbara has changed her
mind and plans to take an around-the-world cruise instead.
a. The doctrine of promissory estoppel can be applied to this case.
b. The promise to pay $10,000 is a promise to give a gift and is therefore not enforceable.
c. Under the Restatement, Barbara's promise is enforceable.
d. Both (a) and (c).
____ 39. Doug obtains an exclusive franchise to sell widgets for the Acme Widget Company. The exclusive franchise
covers the entire State of Wisconsin for a period of three years.
a. Acme is obligated to use its best efforts to supply the goods even if no such clause appears
in the written franchise agreement.
b. According to the UCC, unless otherwise agreed, Doug must use his best efforts to promote
the sale of the widgets in his territory.
c. Under the UCC, such an agreement lacks consideration.
d. Both (a) and (b).
____ 40. Tyler contracts to build a garage for Wilbur for a price of $6,000. Because of an increase in the cost of labor
and materials, Tyler refuses to perform. Wilbur wants the garage, so he agrees to pay an additional $500.
a. Wilbur must pay the additional $500.
b. Tyler has given no additional consideration, and under the common law must perform at
the agreed upon original price.
c. The substitute agreement is an illusory contract.
d. The debt is a disputed one, and therefore Wilbur is obligated to pay the additional money.
____ 41. Nell gives Al $50 in return for Al's promise to defame Sara. Nell hopes to ruin Sara's chances at a promotion.
Nell finds out that Al did not hold up his end of the agreement. Which of the following statements are true?
a. Nell can get the money back from Al through litigation.
b. Nell can get the money back and force Al to do as he promised.
c. Legally, Nell can neither get the money back nor force Al to do as he promised.
d. Nell can force Al to act through an appeal to the courts, but Al gets to keep the $50.
____ 42. Claudia sells her highly successful hair salon to Carl. In the sales contract, Claudia agrees never to open a hair
salon in the state. Which of the following best describes this contract clause?
a. Void as an illegal primary restraint.
b. Valid as a reasonable restraint on trade.
c. An unenforceable restraint against public policy.
d. Binding as fair protection.
____ 43. Don has an employment contract with Dunkirk Ice Cream. He sells ice cream and novelty ice cream products.
He has nine children and doesn't make enough money, so he decides to see if Sealtest will hire him, too.
"After all," he reasons, "most stores carry four or five different brands." His employment contract prohibits
him from competing. If Don sells for Sealtest too, will he be in trouble under his contract?
a. No, it is unenforceable as against public policy.
b. Yes, it is likely to be enforceable during employment.
c. No, it is enforceable only after he quits Dunkirk.
d. Yes, it is a mutually agreed upon exchange and therefore enforceable.
____ 44. William recently sold his successful business to Janice. The contract for the sale contained an unreasonable
restriction that did not allow William to open a similar business for fifteen years. The courts would, in this
instance,
a. delete the unreasonable portions of the contract.
b. require the parties to draft a new contract.
c. enforce the contract as it is written.
d. make the entire contract voidable by William.
____ 45. Divided Parcel Service includes the following on its mailing receipts: "We are not responsible for any
damages to packages whether or not through the fault or negligence of our employees. Send packages at your
own risk." Mary reads this clause but sends her watch back to Bulova Co. to be repaired anyway. The watch
is destroyed when the DPS driver uses the package for a ball and tosses it to his buddy. Mary is:
a. out of luck because the clause was communicated to her.
b. out of luck because she should have insured the package.
c. likely to collect from DPS since exculpatory clauses always violate public policy.
d. likely to collect from DPS because it is a common carrier.
____ 46. Glen, acting as real estate agent for James, sold one thousand acres of land to a buyer in New Orleans. Two
hundred acres of the land are in Texas and eight hundred acres are in Louisiana. Glen's commission on the
transaction is $15,000. If Glen is licensed as a real estate agent in Texas, but not Louisiana, he is:
a. not entitled to any commission because a large portion of the land is in Louisiana.
b. not entitled to any commission because the buyer is a citizen of Louisiana.
c. entitled to the $15,000 commission since a portion of the land is in Texas.
d. entitled to a portion of the commission based on the land sold in Texas.
____ 47. John operates a small repair business and is in desperate need of a certain type of building material. He
obtains the material from a large corporation, but is charged a grossly unreasonable price and is forced to buy
other material he does not need. In view of the buyer's unequal bargaining power and unreasonable terms of
the contract, this may be a case of:
a. in para delicto.
b. partial illegality.
c. substantive unconscionability.
d. procedural unconscionability.
____ 48. Andrew owns a store in Polk County. His trade extends throughout River City, but not beyond the county
limits. He sells his store to Betty and, as part of the transaction, agrees not to engage in the same business
anywhere within the state for a period of three years.
a. The agreement is reasonable.
b. The agreement is unreasonable.
c. The agreement unduly interferes with the interests of the public.
d. Both (b) and (c).
____ 49. Andrew owns a store in Polk County. His trade extends throughout River City, but not beyond the county
limits. He sells his store to Betty and, as part of the transaction, agrees not to engage in the same business
anywhere in River City for a period of five years.
a. The geographic restraint is reasonable.
b. This agreement is unreasonable.
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c. The agreement unduly interferes with the interest of the public.
d. Both (b) and (c).
Sarah is working hard on the mayoral campaign of Timothy. She thinks that just a few more votes could win
the election, so she promises to pay her friend Violet $50 to register and vote. Violet does so, but Timothy
loses the election, and Sarah now refuses to pay.
a. This agreement is enforceable.
b. This agreement is unenforceable and opposed to public policy.
c. This is an agreement to obstruct the administration of justice.
d. This is an unconscionable contract covered by the UCC.
Patrick agrees to sell two different goods to his friend Ron, a retailer. One item is legal, and one item is
illegal. The contract price is $2,000.
a. Patrick may not recover payment for either of the goods if delivered.
b. Patrick may recover for the legal item, but he may not recover for the illegal item.
c. This is an unconscionable contract under the UCC.
d. The court may view the contract as in (a) or (b).
A major distributor of popular sportswear offers a franchise agreement to retail stores. The contract is
prepared on a standard form and offers terms on a take-it-or-leave-it basis. Such a contract is called:
a. exculpatory.
b. a usurious contract.
c. an illegal restraint of trade.
d. an adhesion contract.
Elmer promises to pay Fred $100 if Fred will register and vote in the next election as a Republican.
a. This is a valid contract.
b. This is an illegal agreement.
c. This is an adhesion contract.
d. This is a usurious agreement.
ABC, Inc. entered into a contract with Scott, an agent, under the terms of which Scott would receive $20,000
if he stole trade secrets from the leading competitor of ABC. Scott performed his end of the agreement by
delivering the trade secrets. ABC now refuses to pay Scott for his services.
a. Scott may recover based upon the express contract of the parties.
b. Scott may recover based upon a quasi-contractual theory in order to prevent the unjust
enrichment of ABC.
c. Scott will be unable to recover, because this is an illegal contract.
d. Scott will be able to recover based upon promissory estoppel, because he has detrimentally
relied upon the promises made by ABC.
Bill bets his friend $100 that the Vikings will win the next Super Bowl.
a. This is an unconscionable contract and therefore illegal.
b. This is an illegal wagering agreement.
c. This is an agreement to obstruct justice and therefore illegal.
d. This is an illegal restraint of trade.
Carl and Rob are both engaged in road construction work. They know that several jobs are going to be up for
public bids, and agree between themselves that Carl will bid on one job and Rob will bid on the other, so that
they both have work for the summer. When the bids are opened, Carl realizes that Rob has bid on both jobs.
Rob is awarded both contracts. Carl now wants to sue Rob for breach of contract.
a. Carl has detrimentally relied upon Rob's representation that he would not bid.
b. Since Carl is less at fault than Rob, the court will likely award Carl damages.
c. This is an agreement in violation of public policy that will not be enforced by the courts.
d. This is an agreement obstructing the administration of justice that will not be enforced by
the courts.
____ 57. Al has a tax service and accounting business in Redwood City. He decides to move to Center City, which is
150 miles away and sells his accounting practice to Able and Baker, a CPA firm. In the sales contract, he
agrees that he will refrain from practicing accounting anywhere within a 20-mile radius of Redwood City for
a period of five years. However, on weekends he returns to his house in Redwood City, and when clients call
him, he meets with them in his home.
a. Al is in violation of the sales agreement.
b. The agreement is invalid, because it is an illegal restraint on trade.
c. The agreement is illegal, because it is a violation of public policy.
d. The five-year provision is likely to be held invalid, because it is too long a period of time.
____ 58. Theresa is a travel agent at the Fly Away Travel Agency. She has signed an agreement with her employer
which prohibits her from working in any similar business in any town within a 100-mile radius of where she
works. If she wants to quit her job and go to work for another travel agency, it is likely that:
a. a court would uphold these restrictions.
b. if no trade secrets are involved, and she has no dominion over customers, a court would
rule the restrictions to be invalid.
c. if the period of time of the agreement is reasonable, it will be upheld by the court.
d. Both (a) and (c).
____ 59. Anna is 88 years old and under the legal guardianship of her daughter. One day Anna receives a telephone
call from a health insurance salesman and purchases a $400 a month Medigap insurance policy.
a. This contract is valid.
b. This contract is voidable.
c. This contract is void.
d. This contract is unenforceable.
____ 60. Fay, age 17, ordered a pair of skis on the installment plan. She paid $20 every month until she turned 18, the
age of majority. The next day, she sold them to Sharon and disaffirmed the contract. What result?
a. Fay is still liable since she had to disaffirm before her 18th birthday.
b. Fay is still liable because selling the skis amounts to a ratification.
c. Fay is still liable because she used the skis.
d. Fay is not liable because skis are not necessaries.
____ 61. Ann, a minor, disaffirmed her agreement to buy $127 worth of cosmetics from Facial Glo Company. She had
used up all the eye shadows, lipsticks, and powders. The general rule is that:
a. She may disaffirm, but she must pay the asking price of the cosmetics used.
b. She may disaffirm, but she has to return the makeup that is not used up.
c. She may not disaffirm without paying the value of used makeup.
d. She may not disaffirm because she has used the goods.
____ 62. Mary, age 17, sold Mark, age 22, the briefcase she got for graduation. Mark's father liked it and bought it
from him. If Mary decides to disaffirm the contract, will Mark's father have to return the briefcase to her?
a. Yes, the briefcase is not a necessary.
b. Yes, if Mark's father still has it.
c. No, her contract was with Mark and he cannot return goods he does not have.
d. No, if Mark's father bought it without knowing that Mary was a minor.
____ 63. Chris, a 17-year-old college freshman, signed the agreement that he would be responsible for damages to the
athletic equipment caused by his negligence. If he slams a tennis racket into the ground and breaks it, will
Chris be liable for his negligence?
a. No, because it would mean enforcement of the contract.
b. No, because minors are not liable for their torts.
c. Yes, because minors are liable for their torts.
d. Yes, because he voluntarily agreed to be liable.
____ 64. Tim, who is a minor, enters into a contract with Violet, who is an adult. Which of the following is correct?
____ 65.
____ 66.
____ 67.
____ 68.
____ 69.
____ 70.
a. Violet may not disaffirm the contract.
b. Violet may disaffirm the contract at any time.
c. Violet may disaffirm the contract when Tim becomes an adult.
d. Tim may ratify the contract at any time during his minority.
Don, a minor, contracts to sell a car to Jerry, who is also a minor. Don reaches the age of 21, as does Jerry.
Don takes no action to avoid the contract, but continues to use the car. Which of the following most
accurately describes the status?
a. Don has ratified the contract.
b. Don has not ratified the contract.
c. The contract remains executory.
d. There is no contract, so there is no legal obligation owed by either party.
Steve purchases a four-wheel drive truck from Belk Ford. Steve is only 17 years of age. He wrecks the vehicle
and attempts to disaffirm the contract and have Belk Ford repay him all that he has paid. In the majority of
jurisdictions, what would happen?
a. Steve would be out of luck.
b. Steve must have the truck repaired.
c. Steve will receive his money less the depreciation in value of the vehicle.
d. Steve may simply return the vehicle and get his money.
Randy, a minor, buys a new four-wheel drive truck from Jones Ford. Randy sells this truck to his cousin,
Steve, who is an adult. Steve conveys this vehicle to Arthur Smith. Arthur does not personally know Steve or
Randy. Which of the following expresses the status of this situation?
a. Randy may recover the vehicle from Mr. Smith.
b. Randy may not recover the vehicle from Mr. Smith.
c. Randy may hold Steve liable in tort.
d. Randy may recover the reasonable value of the vehicle from Mr. Smith but not the vehicle
itself.
Robert Briscoe is 17 years old. He lies to Belk Ford in order to induce it to sell him a new pickup. Belk falls
for this lie and sells him the pickup. In most jurisdictions, which of the following is correct?
a. Robert may disaffirm and get his money back.
b. Robert may not disaffirm since he lied.
c. Robert may only receive a portion of his money.
d. Robert will receive his money less depreciation.
Percy, age 17, purchased a used mobile home from a mobile home dealer for $20,000. This price, however,
was twice the reasonable value of the mobile home. One month later, Percy wishes to disaffirm the contract.
If the mobile home is considered a necessity, then:
a. Percy can disaffirm the contract based on the wrongful act of the dealer.
b. Percy can disaffirm the contract because the minor can live in an apartment rather than a
mobile home.
c. Percy must keep the mobile home but is only liable for the reasonable value of the mobile
home.
d. Percy must keep the mobile home and abide by the original terms of the contract.
Cheryl, age 16, ordered a new dress to wear to the school prom. She has contracted to pay $500 when the
dress arrives. Before the dress arrives, Cheryl decides that the dress is too expensive and now wishes to cancel
the order.
a. Cheryl must pay $500 for the dress because the dress was specially ordered for Cheryl.
b. Cheryl must pay $500 for the dress because clothing is classified as a necessity.
c. Cheryl may disaffirm this executory contract.
d. Cheryl must accept the dress and pay the reasonable value of the dress.
____ 71. Wanda at age 17 purchased an expensive stereo system from Stereo Sales. If Wanda wishes to ratify this
contract, Wanda:
a. must reach the age of majority and ratify the contract as a whole.
b. may do so by express notification at any time before reaching the age of majority.
c. may at any time keep the stereo but avoid any remaining debt owed on the stereo.
d. may do so at any time by express or implied action before or after reaching the age of
majority.
____ 72. Donald, a minor, makes a contract with Albert, an adult, to buy a computer. One week later, Donald has his
eighteenth birthday and shortly thereafter tells Albert he will pick up the computer next week.
a. Donald has expressly ratified the contract.
b. The contract must be renegotiated, because Donald was a minor when it was made.
c. Donald can change his mind and avoid the contract, because it was made when he was a
minor.
d. The contract is void ab initio, because Donald was a minor at the time it was made.
____ 73. When a minor falsely advises the other party that he is of the age of majority and based upon that
misrepresentation, the other party in good faith enters into a contract with the minor:
a. the minor has lost his right to disaffirm the contract because of the misrepresentation.
b. the adult party can recover damages from the minor in tort.
c. the minor is required to restore the other party to the position occupied before the making
of the contract.
d. There is no uniform rule. States differ, and depending upon the state, all of the above
could be correct.