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LAW Multiple Choice Questions with Correct Answers

A contract is:A) a binding agreementB) an agreement creating an obligationC) an agreement that creates enforceable duties and obligations.D) all of the above.2.Mary owes $3,800 on her credit card. She sends the credit card company a check for $800 with the notation “payment in full” on the check. If the credit card issuer cashes the check:A) Mary’s balance will automatically be paid in full if the $3,800 amount was a liquidated debt.B) Mary’s balance will automatically be paid in full regardless of whether the amount of $3,800 was liquidated or unliquidated.C) the check may be subject to a UCC exception to the general rules for accord and satisfaction cases involving checks.D) Mary’s balance will automatically be paid in full if the $3,800 amount was an unliquidated debt.3.The plaintiff in a quasi-contractual action can recover:A) lost profits.B) damages for mental distress.C) the reasonable value of the benefit conferred upon the defendant.D) for all the damages sustained.4.On January 8, Quastrar, Inc. sent Hylavian Company a letter offering to sell $10,000 in restaurant supplies. On January 18, Hylavian mailed a letter to Quastrar accepting the offer. Quastrar received the acceptance letter on January 20. On January 17, Quastrar sent a letter revoking the offer. Hylavian received this letter on January 21. A contract between Quastrar and Hylavian:A) was not formed because the revocation was effective before the acceptance was sent.B) was not formed because the revocation was effective before the acceptance was received.C) was formed on January 18.D) was formed on January 20.5.An offer of a reward for the arrest and conviction of a criminal is an example of a:A) unilateral contract.B) bilateral contract.C) quasi contract.D) formal contract.6.Tuan is president and sole shareholder of Entertainment, Inc. Entertainment, Inc. wishes to borrow money, but to do so, the bank requires Tuan to orally agree to personally pay the debt of the corporation if Entertainment, Inc. cannot. Tuan’s guarantee to repay is:A) enforceable under the parol evidence rule.B) unenforceable because there is no insurable interest.C) enforceable because of the leading object rule.D) unenforceable because it is a collateral promise.7.A customer went into a store and saw a beautiful leather jacket bearing a price tag of $29. The customer handed the cashier a $50 bill and said, “I accept. We have a deal.” The cashier then noticed the price tag and told the customer an error had been made and that the price was $229. In this case:A) the customer validly accepted the store’s offer..B) the price tag was a firm offer.C) no contract was formed because the customer’s offer was refused.D) the customer is the offeree.8.What statute requires banks and other financial institutions to disclose to consumers any non-public information they wish to reveal to third parties?A) Banking and Financial Institution Privacy Act.B) Gramm-Leach-Bliley Privacy Act.C) Electronic Communications Privacy Act.D) Communications Privacy and Decency Act.9.If an offer requires that acceptance be communicated by a specific date and the acceptance is properly dispatched by the offeree on the final date,A) no contract is formed, since the offeror will undoubtedly receive the dispatched acceptance after the deadline for acceptanceB) a contract is formed, but the contract is voidable at the election of the offeror.C) the acceptance is timely and a contract is formed, even though the offeror actually receives the acceptance well after the specified date has passed.D) the acceptance is timely and a contract is formed, but only if the offeror actually receives the acceptance by the deadline specified for acceptance.10.A said to B, “I’ll give you $100 for that bracelet.” B replied, “$135.” A said, “No thanks.” B then said that B accepted the $100, but A was no longer interested and said there was no contract. B insists there is a contract. Result?A) A’s offer of $100 was open and accepted by B, thereby forming a contract.B) B’s counteroffer of $135 terminated A’s offer of $100.C) B’s statement, “$135” was a negotiating statement that did not terminate A’s original offer of $100.D) A’s offer of $100 was irrevocable.11.Derek and Abyan were discussing business over lunch when they agreed on the sale of a five-acre parcel of land. Since neither of them had any paper with them, Derek wrote the following on a napkin: “Abyan agrees to purchase from Derek a 5-acre parcel located at the local address of 123 105th Street, St. Joseph, Minnesota, U.S.A. for the price of $4,500 per acre. Transfer of title, payment, and possession to take place on May 1, 2011.” Abyan signed the napkin. On May 1, 2011, Derek was ready to close the deal and transfer title but Abyan refused to pay the purchase price. If Derek sues Abyan for the price of the land, the most likely result will be:A) Abyan will win because the writing is not sufficient under the statute of frauds.B) Derek will win because the writing is sufficient under the statute of frauds.C) Abyan will win because Derek did not sign the writing.D) Derek will win because the statute of frauds does not apply to this situation.12.Statutes of limitations:A) define how much money the injured party can sue for under a breach of contract claim.B) define whether there has been substantial performance of a contract or a material breach.C) limit the time in which an injured party may sue.D) only apply to the sale of goods. There is no statute of limitations on a service contract.13.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.14.Hill Computers is a retailer, which buys its inventory from Acme Co. on credit, giving Acme a security interest in the inventory. Hubert buys a computer from Hill in the normal course of business. Hubert’s title in the computer is:A) a good title.B) a voidable title.C) Hubert has no title in the computer. Title does not pass to Hill and therefore to Hubert until Hill pays its debt in full to Acme.D) Hubert has good title that is subject to Acme’s security interest.15.Dodger bought an insurance contract from Liberty Farm Co. The policy contained a clause stating that all claims for losses had to be reported within 45 days after the date of the loss or the claim would be barred. Time is stated to be of the essence. Dodger sustained a covered farm loss, but did not report it to Liberty Farm until 50 days later. Liberty Farm denied coverage for the claim. If Dodger sues, who wins?A) Dodger wins; the contract was substantially performed.B) Liberty Farm wins; there was failure of a condition subsequent.C) Dodger wins; courts will not enforce a time-of-the-essence clause.D) Liberty Farm wins; the impossibility doctrine applies.16.Usually, a promise to perform an existing legal obligation isA) not consideration.B) binding if the promisor promises to perform with extra care.C) binding if the promisor promises to perform to suit the personal satisfaction of the promisee.D) binding if the promisee would experience substantial loss due to breach of the promise.17.One of the factors leading courts away from a laissez-faire approach to contract law was:A) the movement away from requiring a writing and a seal on contracts.B) a change in relative bargaining power between parties to contracts.C) the assumption that promises are not legally significant.D) the assumption that parties had freedom to contract and would have to live with the consequences.18.Assume that Sherrie’s Cherries contracts with Dessert World to sell and ship 600 pounds of cherries in three equal installments of 200 pounds each. If the first installment arrives with 5 pounds of spoilage, then Dessert World may:A) reject the installment shipment because of the perfect tender rule.B) not reject the installment if those in the food industry expect a small percentage of spoilage with fresh fruits or vegetables.C) reject the entire contract.D) declare a breach and “cover.”19.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.20.Ralph is a professional football player. He signs a valid contract with the Jets. Later, he claims that he was also promised free use of the Jets’ private jet, but this was not in the contract. What type of clause in his contract would prevent him from flying away with this claim?A) A complete agreement clause.B) A “no additional terms” clause.C) An integration clause.D) A severability clause.21.A promise to pay a debt must be in writing if:A) the debt is for more than $500.B) the debt is now due and payable.C) the promise is to pay the debt of another.D) the debt owed is the promisor’s.22.A contract between a company in the U.S. and one in China, contained a clause that stated: “If an event happens which is extraordinary and out of the control of the parties such as a strike, act of God, fire, accident, or transportation difficulties, then the affected party shall be relieved of its obligations under the contract.” This type of clause is:A) an objective impossibility clause.B) a force majeure clause.C) a concurrent condition clause.D) a condition precedent clause.23.The parol evidence rule:A) applies to complete written contracts.B) prevents all proof of fraud.C) applies to incomplete contracts.D) is not designed to preserve the integrity of written contracts.E) all the above.24.Zena enters into a contract with Steeley Company to purchase a washer and dryer. She doesn’t understand the financing terms, but signs the agreement anyway because she needs the appliances. The financing terms are very unfavorable to Zena, and she is unable to make all of her payments when they are due. Steeley sues. The court would:A) be exercising judicial restraint if it requires Zena to pay as she promised, even if the agreement was unfair and unwise.B) have to rewrite the contract to be fair to both parties.C) have to declare the contract void since it contained terms unfavorable to the weaker party to the transaction.D) use the theory of promissory estoppel to remedy any unfavorable terms in the contract.25.Write a page paper – Describe the rights of employers to monitor the e-mail of employees who are using their employers’ email system.A) Employers may monitor employees’ e-mails, but only if the employees have consented.B) Employers may monitor employees’ e-mails, regardless of whether employees have consented.C) Employers may monitor employees’ e-mails, but only if notice is given.D) Employers may not monitor employees’ e-mails.26.Assume that Bubba orders 15 cases of BBQ chips from Mays Potato Chips for his restaurant, Bubba’s BBQ. Mays ships 15 cases of regular chips by mistake. If Bubba decides to keep the regular chips, in spite of the nonconformity with the contract, then the destruction of the chips when a water pipe breaks in the food storage room will result in:A) Mays’ having to bear the loss, because it shipped nonconforming goods to Bubba.B) Mays’ having to bear the loss, because it failed to insure the chips.C) Bubba’s having to bear the loss, because he accepted delivery of the nonconforming chips.D) Bubba’s having to bear the loss, because it was a sale on approval contract.27.Cyber crime conduct is defined in:A) existing criminal statues only.B) computer-specific statutes only..C) both existing criminal and computer-specific statutes.D) state law only.E) All of the above.28.Acme Co. offers to buy 1000 widgets from Widget World Co. The written offer provides for 1000 at $10 per widget, to be delivered May 1. The offer has no other provisions. Widget World sends a written acceptance. However, the acceptance also states that if any claim arises under this contract, Widget World must be notified within 10 days. Acme does not object to this provision. Both parties are merchants. Which of the following best describes this situation?A) No contract exists. The purported acceptance contains additional terms, so it is a counteroffer, which has not been accepted.B) No contract exists if the additional terms are construed to be material terms.C) A contract exists. If the additional terms are construed to be material, they are not part of the contract. If the additional terms are not material, they are part of the contract.D) A contract exists, but the additional terms are not part of the contract no matter what.29.The Grand Performance Hall is in the process of remodeling and is scheduled to open for business after being closed for 50 years. As part of the remodeling, it is installing a new sound system. The sound system is to be installed by Sound Systems, Inc. on or before April 10. Opening night of the hall is May 1. The contract states that “time is of the essence” because of the opening-night deadline. Sound Systems has some financial difficulties and doesn’t deliver the system until April 20. Grand Hall refuses to accept it, and Sound Systems sues. What result?A) Grand Hall wins; the contract date was strictly enforceable.B) Sound Systems wins; the contract was substantially performed.C) Grand Hall wins; there was commercial frustration.D) Sound Systems wins; there was a true impossibility.30.Sam accesses the Internet and secures information (including credit history) on another person. If that information is used to purchase products in the other person’s name, Sam’s actions constitute:A) contract interception.B) identity theft.C) character assassination.D) none of the above.31.The phrase “time is of the essence” means that:A) the court is in a hurry to dispose of the case.B) performance under the contract at the times specified in the contract is vital or essential.C) the contract expressly states that time is of the essence..D) the price stated in the contract is subject to change without notice.32.Which of the following statements is not true regarding the buyer’s right to cover?A) The buyer must cover.B) The measure of damages in a cover is the difference between the cover price and the contract price.C) Cover must be done by reasonably obtaining substitute goods.D) Consequential damages can be recovered in addition to the cover damages.33.Travel Lines offered to sell 10 round-trip tickets to Elaine. Travel Lines stated that the acceptance must be in writing by USPS next-day service. Which of the following acceptances will create a contract between Travel Lines and Elaine?A) Elaine calls Travel Lines and states that she will buy the tickets.B) Elaine sends a fax to Travel Lines stating she will buy the tickets.C) Elaine sends a letter by USPS next-day service to Travel Lines stating that she will buy the tickets.D) All of the above responses will create a contract between Travel Lines and Elaine since they constitute reasonable means of communication.34.Which of the following events excuses a promisor from performing his or her contractual obligations?A) a riot in a different stateB) a shortage of materials necessary for production of goods and/or provision of services called for under the contract.C) an unanticipated increase in the cost of performance.D) destruction of the subject matter through no fault of either party.35.Tom receives an e-mail from someone alleging to be a Nigerian government official who has stolen money from the government. He needs some place safe to keep the money for a short time. The official promises that, if Tom lets his bank account be used for this purpose, Tom will be allowed to keep a percentage of the stolen money. Tom gives in to the temptation and provides his account information. Instead of receiving money, Tom loses everything he had in the account to the scammer. In this situation:A) prosecution can be under state law.B) prosecution can be under the Computer Fraud and Abuse Act.C) a civil action can be brought under Section 5 of the FTC Act.D) All of the above.36.The Children’s Online Privacy Protection Act prohibits Internet operators from collecting information from children under what age without parental permission?A) 18.B) 16.C) 13.D) 10.37.V3 was a successful singing group that contracted to perform at the “Metalsubstance” rock concert. V3 was aware that the promoter would sustain a substantial loss if the group failed to perform. The members of the group were stricken with a virus that confined them to their beds. The promoter sued for breach of contract. What is the probable result?.A) V3 is liable for damages for breach of contract..B) The contract was discharged by impossibility of performance.C) In order to avoid liability for breach of contract, V3 must arrange for another group of comparable quality and reputation to perform on the scheduled date.D) V3 will be deemed to have substantially performed the contract.38.Meister Bros. shipped 250 radiator belts to fill Braybon’s order. Quality control measures had been in place in Meister’s factory when the belts were manufactured. When Braybon received the order one day before it was due, it notified Meister that it rejected the belts because of a variation from the contract specifications. Meister, although it believed the original belts met the contract specifications, notified Braybon that it would supply conforming goods within one week. When the conforming goods arrive in one week:A) Braybon must accept them, but does not have to pay the full price because the contract deadline has passed.B) Braybon does not have to accept them because Meister Bros. only has one chance to fill the order correctly.C) Braybon should accept them because Meister Bros. has a right to cure even after the contract deadline under these circumstances.D) Braybon does not have to accept them because Meister Bros. failed to meet its UCC requirement to deal in good faith.39.The Uniform Commercial Code applies to:A) new goods only.B) used goods only.C) both new and used goods.D) none of the above.40.Ron operates a garbage pickup business. He contracts to pick up garbage from an apartment complex for the next 52 weeks at a price of $150 per week. Unexpectedly, the landfill center where Ron takes the garbage to dispose of it, files for bankruptcy. As a result, Ron must travel an additional 100 miles to the nearest landfill center, turning Ron’s expected profit into a loss of $40 per week. Ron’s best argument in support of his petition to be discharged from the contract is:A) the mail box rule.B) commercial impracticability.C) frustration of purpose.D) true impossibility.41.Mid-American Oil had a contract with NSB Company to supply 1,000 gallons of oil by September 1. The contract contained a provision which required all modifications to be written and signed by the company presidents. In early August, an executive of Mid-American talked with the purchasing agent of NSB who orally agreed to two shipments of oil; one in September and the second one in December. By September 30, when only 500 gallons had been delivered, NSB sued. The likely outcome of this lawsuit is:A) NSB wins because the modification was not supported by new consideration.B) NSB wins because the modification has to be in writing.C) Mid-American Oil wins because the UCC governs this case and no new consideration is required.D) Mid-American Oil wins because new consideration was present.42.A merchant cannot revoke a firm offer to buy or sell goods if the merchant has:A) promised to keep the offer open.B) declared in the presence of two or more reputable witnesses that the offer will be kept open.C) received consideration to keep the offer open.D) stated in a signed letter that the offer would not be revoked for a specified period of time.43.On impulse, you purchase a travel trailer and ask your acquaintance, Max, if you can leave the trailer at the edge of his restaurant’s parking lot until you can have a concrete pad built to store the trailer on your property. Max agrees. When you return for the trailer the next week, it is gone and you find out that Max sold it. You can:A) recover the trailer because Max did not have any ownership interest to pass.B) recover, but only if Max bought insurance to cover the trailer while it was on his property.C) not recover because you “entrusted” the trailer to Max, who then had a right to sell it.D) not recover because Max had only a voidable title to transfer.44.Seth told the salesperson at Outdoor Times that he wanted the sleeping bag that was advertised in the Sunday paper; one that would keep him comfortable if the temperature drops to 10 degrees Fahrenheit. The salesperson told Seth they were sold out of that bag, but there were two other styles that would meet his needs and were the same price. Seth insisted he wanted the advertised bag and threatened to sue for breach of contract. Which is true?A) Outdoor Times is guilty of “bait and swap.”B) Seth will prevail in his case, as Outdoor Times is responsible for having sufficient stock of advertised items.C) Seth will not prevail, as the advertisement was simply an invitation to negotiate.D) Outdoor Times must provide Seth with a raincheck, ensuring he can buy the same bag at the sales price at a later date.45.Office Plus, an office supply store, ordered 600 blank CDs from Curtis Co., a manufacturer of computer products. Office Plus placed the order using a preprinted purchase order form; Curtis acknowledged the order by sending a preprinted acceptance form back to Office Plus. Unlike Office Plus’ form which says nothing about packaging, Curtis’s form specifies that the CDs will be packaged in cases of 10 CDs per box, 10 boxes per case. Which statement is correct?A) The UCC does not cover computer CDs.B) Curtis’s packaging term is a different term which materially changes the offer. There is no contract.C) Curtis’s packaging term is an additional term and therefore a part of the contract unless Office Plus promptly objects to the term.D) The UCC does not cover the contract because both parties are merchants.46.Walter worked nights as a clerk in a fast-food store. On his last work shift, Walter’s boss told him, “I’m really grateful for the year that you have worked here. I am going to give you a bonus of $1,000 in your last paycheck.” When Walter got his last paycheck, there was no bonus. If Walter sues, the likely result will be:A) Walter will win, as the promise is enforceable.B) Walter will lose, as he gave no consideration.C) Walter will lose unless the promise was in writing.D) Walter will win, as no consideration is required to modify an employment contract.47.Jennifer substantially performs her service contract with Gretchen. Due to Jennifer’s failure to render complete performance, Gretchen:A) is discharged from any further contractual obligations.B) is required to pay the full contract price, minus the value of Jennifer’s defective performance.C) is required to pay the full contract price.D) may declare a material breach and pay only for the value received.48.If you allow another person to use your credit card but the person uses the card for a purpose other than the one you specified:A) an unauthorized usage has occurred.B) an authorized usage has occurred.C) you will not be responsible for more than $50 of the amount charged.D) both a and c.49.On January 16, Deb offers to sell her waterbed to Colleen for $600. Colleen accepts and agrees to pay Deb $600 on January 27. Which of the following is correct?A) On January 16, the contract was executory.B) On January 16, the contract was executed.C) This contract is a unilateral contract.D) There is no contract until January 27.50.Consumer protection statutes and regulations do not protect againstA) deceptive advertising.B) the consumer’s own negligence.C) unsolicited credit cards sent to creditworthy consumers.D) unreasonable methods of debt collection by debt collection agencies.

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