Name:
Class:
Date:
True False Section
True False Section (26 Questions)
Indicate whether the statement is True or False. ON YOUR ANSWER SHEET WRITE
EITHER TRUE OR FALSE AS AN ANSWER. 1 POINT EACH. TOTAL 26 POINTS.
1. Consequential damages are foreseeable damages that arise from a party’s breach of a contract.
a. True
b. False
2. When a contract’s writing is not clear, a court will not consider evidence outside the contract to interpret its terms.
a. True
b. False
3. A covenant not to compete is enforceable only if it is reasonable in duration and geographic area.
a. True
b. False
4. Generally, acceptance is terminated when a party to the agreement dies.
a. True
b. False
5. Contracts entered into by persons previously determined by a court to be mentally incompetent can be valid.
a. True
b. False
6. A contractual mistake of fact occurs when there is a material misunderstanding of facts at the time of contracting.
a. True
b. False
7. A person who is intoxicated can avoid liability on any contract due to the intoxication.
a. True
b. False
8. As an element of consideration, a Gift cannot be considered Bargain for Exchange.
a. True
b. False
.
Name:
Class:
Date:
9. A remedy is the relief provided to an innocent contracting party when the other party breaches the contract.
a. True
b. False
10. A contract is an agreement that can be enforced in court.
a. True
b. False
11. A material breach occurs when performance is substantial, partial and not complete.
a. True
b. False
12. Compensatory damages compensate the non-breaching party for the loss of the bargain.
a. True
b. False
13. Promissory estoppel requires that justice will be better served by the enforcement of a promise.
a. True
b. False
14. Evidence of prior agreements that differ from the written terms of a contract can be introduced in court to contradict
the contract.
a. True
b. False
15. A condition that must be fulfilled before a party’s promise becomes absolute is a condition subsequent.
a. True
b. False
16. Under the Statute of Frauds, land includes physical objects permanently attached to it, such as buildings, fences, trees,
and soil.
a. True
b. False
17. Ordinarily, minors can disaffirm contracts even when they have misrepresented their age.
a. True
b. False
18. Any contract to commit a crime is unenforceable.
a. True
.
Class:
Name:
Date:
b. False
19. An essential element for contract formation is capacity.
a. True
b. False
20. A contract can only be for legal purposes.
a. True
b. False
21. Rescission is the unmaking of a contract so as to return the parties to the positions they occupied before the
contract was made.
a. True
b. False
22. Rights to receive funds can usually be assigned.
a. True
b. False
23. A material breach usually allows the non-breaching party to sue for damages.
a. True
b. False
24. An agreement subject to the writing requirement of the Statute of Frauds must be written on paper.
a. True
b. False
25. Usually, a court will not award an equitable remedy unless the remedy at law (damages) is inadequate.
a. True
b. False
26. An oral contract may be enforceable if the person making the promise could forsee that the other party would rely on
the promise.
.
Class:
Name:
Date:
a. True
b. False
Multiple Choice Section (42 Questions)
Select the Best Answer. ON YOUR ANSWER SHEET PLACE THE CORRESPONDING
LETTER THAT BEST ANSWERS THE QUESTION. 1 POINT EACH. 42 POINTS
TOTAL.
27. A valid contract requires
a. offer.
b. acceptance.
c. consideration.
d. all of the above.
28. Rosa, a seventeen-year-old minor , signs a contract to sell her car to Street Fleet Cars. Later, Rosa decides not to sell
the car. Rosa is liable to Street Fleet for
a. the cost of a car of comparable value.
b. the value of her performance under the contract.
c. the amount of the buyer’s profit on the deal.
d. nothing.
29. Renew Turf, Inc., enters into a contract with Sports Park to provide surface material for Sports Park’s baseball fields
by October 1 for a tournament to begin October 5. The contract specifies an amount to be paid if the contract is breached.
This is a liquidated damages clause if the amount is
a. meant to pay for additional liquid sealant in the event of damage.
b. a reasonable estimate of the loss on a breach.
c. designed to penalize the breaching party.
d. intended to quickly provide cash to the nonbreaching party.
.
Name:
Class:
Date:
30. Ben makes an appointment for a $50 haircut, buys a bike for $250, and agrees to work for Coding Associates for 6
months for $5,000 per month, starting at the beginning of next month. To be enforceable, a writing is required for
a. the appointment.
b. the purchase.
c. the employment agreement.
d. none of the above.
31. Building Restoration, Inc. (BRI), enters into a contract to refurbish an old train depot for Casual Dining, Inc., to open
as Eat Up Restaurant. If BRI completes most of the work promised in the contract, its performance will be
a. absolute.
b. complete.
c. material.
d. substantial.
32. Dix agrees to sell Eli, for $1,500, a remote parcel of land. They believe the land to be worthless, but beneath it is shale
rock containing oil. A court would
a. not rescind the contract.
b. rescind the contract on the basis of fraud.
c. rescind the contract on the basis of mistake.
d. rescind the contract on the basis of undue influence.
33. A transfer of contractual rights is an
a. Offer.
b. Assignment.
c. Delegation of duties.
d. None of the above.
34. Reed agrees to sell his Sports Equipment store to Taylor. As part of the sale, Reed promises not to open a similar,
competing store anywhere forever. This promise is most likely
a. invalid because it is part of a sale of an ongoing business.
b. invalid because of the unreasonable terms of area and time.
c. valid because it is part of a sale of an ongoing business.
d. valid if Reed and Taylor are reasonably intelligent.
35. Rita, a minor, misrepresents her age as twenty-one and signs a contract with Sporty Motors to buy a sport utility
vehicle (SUV). In most states, Rita may
a. disaffirm the contract.
b. disaffirm the contract only if she makes full payment.
c. disaffirm the contract if she returns the SUV in good condition.
d. not disaffirm the contract due to the misrepresentation.
.
Name:
Class:
Date:
36. Oxley contracts to buy a pizza oven from Restaurant Supplies Warehouse (RSW) for $2,500, but RSW fails to deliver.
Oxley buys the appliance else-where for $3,500. Oxley’s measure of damages is
a. $1,000.
b. $3,500.
c. lost profits.
d. $0.
37. Mai is a third party beneficiary under a contract between Novia and Opie. Novia and Opie can modify or rescind their
contract without Mai’s consent
a. at any time.
b. at no time.
c. only with Mai’s consent.
d. only if they pay Mai damages.
38. An assignment of rights can be:
a. oral.
b. written.
c. Neither a or
b.
d. Both a and b.
39. The following duties cannot be delegated:
a. Obligations involving personal skill or talent.
b. Obligations that will vary materially.
c. Both a and b.
d. No obligations can be delegated.
40. Rico, a user of SmartPhoneApps.com’s Web site, can download apps for free if he first clicks on “I accept” after
viewing certain terms. This is
a. a contract that does not include the terms.
b. a contract that includes the terms.
.
Name:
Class:
Date:
c. not a contract but the terms are enforceable.
d. Neither a or b.
41. An intended third party beneficiary must be intended to benefit:
a. At the time of contracting.
b. At any time.
c. If specified in the contract.
d. None of the above.
42. Incidental beneficiaries may:.
a. Sue under a contract.
b. Never sue under a contract.
c. Sue if they are a minor.
d. None of the above.
43. Grain Co-op, LLC and Hearty Cereals, Inc., discuss the terms of a contract for periodic deliveries of corn. Grain faxes
Hearty a memo on Grain’s letterhead that summarizes the points on which they agreed, including a two-year term. Grain
begins to perform, and Hearty accepts the deliveries but refuses to pay.
The transaction between Grain and Hearty falls within the provision of the Statute of Frauds involving
a. collateral promises.
b. the one-year rule.
c. contracts involving real estate.
d. secondary contracts.
44. Handicrafts & Hobbies Store agrees to hire Iliana for one year at a salary of $600 per week. When Handicrafts &
Hobbies cancels the contract, Iliana spends $150 to obtain a similar job that pays $450 per week for a year. Iliana is
entitled to recover
a. the amount of the wages that Handicrafts & Hobbies promised only.
b. the difference between the wages at the two jobs only.
c. the difference between the wages at the two jobs plus $150.
d. $150 only.
.
Name:
Class:
Date:
45. Ian owes Jo $5,000. Jo assigns the right to this payment to Kyle. To be effective notice by Jo to Ian of the assignment
a. must be given immediately.
b. must be given within thirty days.
c. must be given within a reasonable time.
d. is not required.
46. D’Sean promises to pay his personal assistant Edie $50,000 in consideration of the services she had provided over the
prior years. D’Sean never makes the payment. D’Sean’s promise is
a. enforceable for the entire $50,000.
b. enforceable to the extent of what Edie’s services were actually worth.
c. not enforceable because the consideration is in the past.
d. not enforceable because the failure to pay is an unforeseen difficulty.
47. Gavin takes out an insurance policy on her car. Gavin can assign his policy to a third party
a. under any circumstances.
b. under no circumstances.
c. as long as he does so in writing.
d. if a court approves the assignment.
48. Moe illegally threatens physical harm to force Norel to contract to pay him for protecting her store against vandalism
and destruction. Norel may
a. rescind the contract or refuse to comply with its terms.
b. do nothing once she has agreed to pay.
c. recover from her insurer for the cost.
d. recover from the local police for their failure to protect her store.
49. Idina admires Jules’s collection of guitars. Jules says, “I plan to sell the collection when I get tired of it.” Jules’s
statement is
a. an offer.
b. not an offer because it has not been communicated to Idina.
c. not an offer because Jules expressed only an intent to enter into a future contract.
d. an acceptance.
50. A condition to a contract can be:
a. Precedent.
b. Subsequent.
c. Concurrent.
d. All of the above.
.
Name:
Class:
Date:
51. Even-Bilt Construction contracts to build a warehouse for Discount E-Sales Company. Even-Bilt substantially
performs. Even-Bilt is entitled to
a. the full contract price less any damages they caused by their failure to comply with the contract.
b. the full contract price.
c. to be excused from performance.
d. suspend performance.
52. Jenny promises to pay Kay $500 because “she does not have as much money as other people.” Jenny’s promise is
a. enforceable because society wants people to keep their promises.
b. enforceable because the redistribution of wealth is a valid social goal.
c. not enforceable because Jenny could have paid Kyle more.
d. not enforceable because Kay has not given consideration in return.
53. Ruth, who is Sal’s guardian, convinces him to buy a certain parcel of land from Tyrone at a greatly inflated price.
Ruth may be liable for
a. duress.
b. fraud.
c. mistake.
d. undue influence.
54. Fabien offers to sell his Graphic Signs, LLC, business to Hanna for $100,000. Hanna replies, “The price is too high. I
will buy it for $75,000.” Hanna has
a. accepted the offer.
b. made a counteroffer without rejecting the offer.
c. rejected the offer and made a counteroffer.
d. rejected the offer without making a counteroffer.
55. Substantial performance under a contract requires which of the following:
a. Good faith.
b. Not vary greatly from the initial promise.
c. Provide substantially the same benefits.
d. All of the above.
.
Name:
Class:
Date:
56. Impossibility of performance applies only if
a. if the event was not forseeable.
b. At any time.
c. Never.
d. None of the above.
57. Jeff is seventeen years old. Legally, Jeff is considered
a. an adult.
b. a minor.
c. ratified.
d. emancipated.
58. Ross promises to pay Sara, his niece, $5,000 if she obtains her degree at Tech University, where she is in her third
year. Sara graduates. Ross is
a. not required to pay because Sara was already at Tech.
b. not required to pay because obtaining a degree benefits Sara.
c. required to pay because a job can be hard to find after college.
d. required to pay because Sara obtained a degree at Tech.
59. Mother & Daughter Jewelers breaches its lease with Longview Mall and vacates the premises six months before the
end of the term Longview would have to
a. avoid reletting the premises to recover damages.
b. use reasonable means to find a new tenant to mitigate damages.
c. relet the premises to recover any damages.
d. sell the premises to recover any damages.
60. Punitive damages:
a. Must be quantifiable.
b. Are never allowed.
c. Are to punish and deter future conduct
d. None of the choices.
61. Rose questions whether there is consideration for her contract to perform with Saxophone Symphony. To constitute
consideration, there must be
a. a payment.
b. a performance.
c. a bargained-for exchange.
d. serious thought underlying each party’s intent to contract.
.
Name:
Class:
Date:
62. A non-breaching party:
a. Must always try to mitigate damages.
b. Has no obligation to mitigate damages.
c. Can try to maximize its damages.
d. None of the above.
63. Betty sells her Clothes Shop to Diane. In the sale agreement, there is a covenant not to compete that prohibits Betty
from opening another clothing store within a certain distance. If a court concludes that this restriction is unreasonable, it
will most likely
a. award Betty damages equal to the speculative profit of a closer store.
b. order Diane to stop doing business.
c. reform the covenant.
d. prohibit both parties from opening clothing stores.
64. Rachel and Stuart enter into a contract for the sale of Rachel’s textbook at the end of the fall semester for which Stuart
agrees to pay $75. Rachel wants to transfer her right to payment for the book to Terry. This transfer is
a. a delegation.
b. an assignment.
c. an alienation.
d. a third-party beneficiary contract.
65. Liquidated damages:
a. Usually are valid.
b. Require at the time of the contract difficulty in estimating damages.
c. Need to be a reasonable estimate and not excessive
d. All of the above.
66. Wally offers to repair and service a forklift for Valu Lumber Outlet, but Wally dies before Valu accepts. Most likely,
Wally’s death
a. does not affect the offer.
b. shortens the time of the offer but does not terminate it.
c. extends the time of the offer.
.
Name:
Class:
Date:
d. terminates the offer.
67. Berry enters into a contract with Clyde for a guided tour of Deep Canyon. Clyde represents that he is an experienced,
knowledgeable guide, when in reality he has never been in the canyon. Berry is most likely a victim of
a. undue influence.
b. fraud.
c. mistake.
d. unconscionability.
68. Valid contracts cannot be formed by the following persons:
a. Mentally incompetent.
b. Minors.
c. Intoxicated.
d. All of the above.
Short Answers Section
4 Questions. 8 Points Each. Total 32 Points.
Write your answers on the Answer Sheet below. You may use more space than allotted if
necessary.
To earn full credit fully explain the reasons for your answer.
1. Quest Resources, Inc., contracts with Ring Communications Corporation (RCC) for RCC to design and build an allweather communications system for Quest’s field operations. RCC builds the system, but it functions effectively only in
good weather. Is this a breach of the contract? If so, what remedies does Quest have?
2. Dean, the president of Billing & Credit Company, promises to pay his employee Ewing, who is dangerously obese, $10
for every pound that he loses within the next eleven months. Ewing agrees, diets and exercises, loses 154 pounds, and
asks Dean for $1,540. Dean refuses to pay, saying that he does not remember the promise, but that even if he did make it,
.
Class:
Name:
Date:
there was no consideration, and Ewing’s improved health is a sufficient benefit for his effort and sacrifice. Ewing files a
suit against Dean. In whose favor is the court likely to rule, and why?
3. Matt offers to pay Lisa $1,000 if she will paint his house, insisting that the acceptance occur only by the act of painting
the house rather than through Lisa’s promise. Lisa thereafter begins to paint the house. Matt then attempts to revoke the
offer after Lisa is approximately half way through painting the house. Assuming there is a valid contract, what can Lisa
recover as damages, and why?
4. Carlos is a student at UCLA and agrees to rent an apartment from Larry in Westwood pursuant to a written and signed
lease agreement with a two-year lease term commencing September 1, 2017 and monthly rent of $1,000. After a year at
UCLA however, Carlos decides he wants to transfer to the business school at CSUSM and he accordingly tells Larry on
June 1, 2018 both verbally and in writing that he intends to vacate the apartment on or before September 14, 2018. Although
apartments are notoriously in short supply in Westwood and Larry could easily re-rent Carlos’ apartment, Larry is angry at
Carlos’ early departure and immediately sues Carlos for breach of the rental agreement. Explain the legal principle that
Larry relying on to sue Carlos before he is in breach of the lease agreement? What defense may Carlos have by Larry’s
failure to try to re-rent the apartment?
ANSWER SHEET TEST #2
True/False
1
16
2
17
3
18
4
19
5
20
.
Class:
Name:
6
21
7
22
8
23
9
24
10
25
11
26
12
13
14
15
Multiple Choice
27
52
28
53
29
54
30
55
31
56
.
Date:
Class:
Name:
32
57
33
58
34
59
35
60
36
61
37
62
38
63
39
64
40
65
41
66
42
67
43
68
44
45
46
47
48
49
50
51
SHORT ANSWER #1
.
Date:
Name:
SHORT ANSWER #2
SHORT ANSWER #3
.
Class:
Date:
Name:
SHORT ANSWER #4
.
Class:
Date:
Name
:
Class:
Date:
True False Section
True False Section (26 Questions)
Indicate whether the statement is True or False. ON YOUR ANSWER SHEET WRITE
EITHER TRUE OR FALSE AS AN ANSWER. 1 POINT EACH. TOTAL 26 POINTS.
1. Consequential damages are foreseeable damages that arise from a party’s breach of a contract.
a. True
b. False
2. When a contract’s writing is not clear, a court will not consider evidence outside the contract to interpret its terms.
a. True
b. False
3. A covenant not to compete is enforceable only if it is reasonable in duration and geographic area.
a. True
b. False
4. Generally, acceptance is terminated when a party to the agreement dies.
a. True
b. False
5. Contracts entered into by persons previously determined by a court to be mentally incompetent can be valid.
a. True
b. False
6. A contractual mistake of fact occurs when there is a material misunderstanding of facts at the time of contracting.
a. True
b. False
.
Name
:
Class:
Date:
7. A person who is intoxicated can avoid liability on any contract due to the intoxication.
a. True
b. False
8. As an element of consideration, a Gift cannot be considered Bargain for Exchange.
a. True
b. False
9. A remedy is the relief provided to an innocent contracting party when the other party breaches the contract.
a. True
b. False
10. A contract is an agreement that can be enforced in court.
a. True
b. False
11. A material breach occurs when performance is substantial, partial and not complete.
a. True
b. False
12. Compensatory damages compensate the non-breaching party for the loss of the bargain.
a. True
b. False
13. Promissory estoppel requires that justice will be better served by the enforcement of a promise.
a. True
b. False
.
Class:
Name
:
Date:
14. Evidence of prior agreements that differ from the written terms of a contract can be introduced in court to contradict
the contract.
a. True
b. False
15. A condition that must be fulfilled before a party’s promise becomes absolute is a condition subsequent.
a. True
b. False
16. Under the Statute of Frauds, land includes physical objects permanently attached to it, such as buildings, fences, trees,
and soil.
a. True
b. False
17. Ordinarily, minors can disaffirm contracts even when they have misrepresented their age.
a. True
b. False
18. Any contract to commit a crime is unenforceable.
a.
True
b.
False
19. An essential element for contract formation is capacity.
a. True
b. False
20. A contract can only be for legal purposes.
a. True
b. False
.
Class:
Name
:
Date:
21. Rescission is the unmaking of a contract so as to return the parties to the positions they occupied before the
contract was made.
a. True
b. False
22. Rights to receive funds can usually be assigned.
a. True
b. False
23. A material breach usually allows the non-breaching party to sue for damages.
a. True
b. False
24. An agreement subject to the writing requirement of the Statute of Frauds must be written on paper.
a. True
b. False
25. Usually, a court will not award an equitable remedy unless the remedy at law (damages) is inadequate.
a. True
b. False
26. An oral contract may be enforceable if the person making the promise could forsee that the other party would rely on
the promise.
a. True
b. False
.
Name
:
Class:
Date:
Multiple Choice Section (42 Questions)
Select the Best Answer. ON YOUR ANSWER SHEET PLACE THE CORRESPONDING
LETTER THAT BEST ANSWERS THE QUESTION. 1 POINT EACH. 42 POINTS
TOTAL.
27. A valid contract requires
a. offer.
b. acceptance.
c. consideration.
d. all of the
above.
28. Rosa, a seventeen-year-old minor , signs a contract to sell her car to Street Fleet Cars. Later, Rosa decides not to sell
the car. Rosa is liable to Street Fleet for
a. the cost of a car of comparable value.
b. the value of her performance under the
contract.
c. the amount of the buyer’s profit on the deal.
d. nothing.
29. Renew Turf, Inc., enters into a contract with Sports Park to provide surface material for Sports Park’s baseball fields
by October 1 for a tournament to begin October 5. The contract specifies an amount to be paid if the contract is breached.
This is a liquidated damages clause if the amount is
a. meant to pay for additional liquid sealant in the event of damage.
b. a reasonable estimate of the loss on a breach.
c. designed to penalize the breaching party.
d. intended to quickly provide cash to the nonbreaching party.
.
Name
:
Class:
Date:
30. Ben makes an appointment for a $50 haircut, buys a bike for $250, and agrees to work for Coding Associates for 6
months for $5,000 per month, starting at the beginning of next month. To be enforceable, a writing is required for
a. the appointment.
b. the purchase.
c. the employment
agreement.
d. none of the above.
31. Building Restoration, Inc. (BRI), enters into a contract to refurbish an old train depot for Casual Dining, Inc., to open
as Eat Up Restaurant. If BRI completes most of the work promised in the contract, its performance will be
a. absolute.
b. complete.
c. material.
d. substantial
.
32. Dix agrees to sell Eli, for $1,500, a remote parcel of land. They believe the land to be worthless, but beneath it is shale
rock containing oil. A court would
a. not rescind the contract.
b. rescind the contract on the basis of fraud.
c. rescind the contract on the basis of mistake.
d. rescind the contract on the basis of undue influence.
33. A transfer of contractual rights is an
a. Offer.
b. Assignment.
c. Delegation of
duties.
d. None of the above.
34. Reed agrees to sell his Sports Equipment store to Taylor. As part of the sale, Reed promises not to open a similar,
competing store anywhere forever. This promise is most likely
.
Name
:
Class:
Date:
a. invalid because it is part of a sale of an ongoing business.
b. invalid because of the unreasonable terms of area and
time.
c. valid because it is part of a sale of an ongoing business.
d. valid if Reed and Taylor are reasonably intelligent.
35. Rita, a minor, misrepresents her age as twenty-one and signs a contract with Sporty Motors to buy a sport utility
vehicle (SUV). In most states, Rita may
a. disaffirm the contract.
b. disaffirm the contract only if she makes full payment.
c. disaffirm the contract if she returns the SUV in good condition.
d. not disaffirm the contract due to the misrepresentation.
36. Oxley contracts to buy a pizza oven from Restaurant Supplies Warehouse (RSW) for $2,500, but RSW fails to deliver.
Oxley buys the appliance else-where for $3,500. Oxley’s measure of damages is
a. $1,000.
b. $3,500.
c. lost profits.
d. $0.
37. Mai is a third party beneficiary under a contract between Novia and Opie. Novia and Opie can modify or rescind their
contract without Mai’s consent
a. at any time.
b. at no time.
c. only with Mai’s consent.
d. only if they pay Mai damages.
38. An assignment of rights can be:
a. o ral.
b. written.
.
Name
:
Class:
Date:
c. N
either a or
b.
d. Both a and b.
39. The following duties cannot be delegated:
a. Obligations involving personal skill or
talent.
b. Obligations that will vary materially.
c. Both a and b.
d. No obligations can be delegated.
40. Rico, a user of SmartPhoneApps.com’s Web site, can download apps for free if he first clicks on “I accept” after
viewing certain terms. This is
a. a contract that does not include the terms.
b. a contract that includes the terms.
c. not a contract but the terms are
enforceable.
d. Neither a or b.
41. An intended third party beneficiary must be intended to benefit:
a. At the time of contracting.
b. At any time.
c. If specified in the
contract.
d. None of the above.
42. Incidental beneficiaries may:.
a. Sue under a contract.
b. Never sue under a contract.
.
Name
:
Class:
Date:
c. Sue if they are a minor.
d. None of the above.
43. Grain Co-op, LLC and Hearty Cereals, Inc., discuss the terms of a contract for periodic deliveries of corn. Grain faxes
Hearty a memo on Grain’s letterhead that summarizes the points on which they agreed, including a two-year term. Grain
begins to perform, and Hearty accepts the deliveries but refuses to pay.
The transaction between Grain and Hearty falls within the provision of the Statute of Frauds involving
a. collateral promises.
b. the one-year rule.
c. contracts involving real
estate.
d. secondary contracts.
44. Handicrafts & Hobbies Store agrees to hire Iliana for one year at a salary of $600 per week. When Handicrafts &
Hobbies cancels the contract, Iliana spends $150 to obtain a similar job that pays $450 per week for a year. Iliana is
entitled to recover
a. the amount of the wages that Handicrafts & Hobbies promised only.
b. the difference between the wages at the two jobs only.
c. the difference between the wages at the two jobs plus $150.
d. $150 only.
45. Ian owes Jo $5,000. Jo assigns the right to this payment to Kyle. To be effective notice by Jo to Ian of the assignment
a. must be given immediately.
b. must be given within thirty days.
c. must be given within a reasonable
time.
d. is not required.
.
Name
:
Class:
Date:
46. D’Sean promises to pay his personal assistant Edie $50,000 in consideration of the services she had provided over the
prior years. D’Sean never makes the payment. D’Sean’s promise is
a. enforceable for the entire $50,000.
b. enforceable to the extent of what Edie’s services were actually worth.
c. not enforceable because the consideration is in the past.
d. not enforceable because the failure to pay is an unforeseen difficulty.
47. Gavin takes out an insurance policy on her car. Gavin can assign his policy to a third party
a. under any circumstances.
b. under no circumstances.
c. as long as he does so in writing.
d. if a court approves the
assignment.
48. Moe illegally threatens physical harm to force Norel to contract to pay him for protecting her store against vandalism
and destruction. Norel may
a. rescind the contract or refuse to comply with its terms.
b. do nothing once she has agreed to pay.
c. recover from her insurer for the cost.
d. recover from the local police for their failure to protect her
store.
49. Idina admires Jules’s collection of guitars. Jules says, “I plan to sell the collection when I get tired of it.” Jules’s
statement is
a. an offer.
b. not an offer because it has not been communicated to Idina.
c. not an offer because Jules expressed only an intent to enter into a future contract.
d. an acceptance.
50. A condition to a contract can be:
.
Name
:
Class:
Date:
a. Precedent.
b. Subsequent.
c. Concurrent.
d. All of the
above.
51. Even-Bilt Construction contracts to build a warehouse for Discount E-Sales Company. Even-Bilt substantially
performs. Even-Bilt is entitled to
a. the full contract price less any damages they caused by their failure to comply with the contract.
b. the full contract price.
c. to be excused from performance.
d. suspend performance.
52. Jenny promises to pay Kay $500 because “she does not have as much money as other people.” Jenny’s promise is
a. enforceable because society wants people to keep their promises.
b. enforceable because the redistribution of wealth is a valid social
goal.
c. not enforceable because Jenny could have paid Kyle more.
d. not enforceable because Kay has not given consideration in return.
53. Ruth, who is Sal’s guardian, convinces him to buy a certain parcel of land from Tyrone at a greatly inflated price. Ruth
may be liable for
a. duress.
b. fraud.
c. mistake.
d. undue
influence.
.
Name
:
Class:
Date:
54. Fabien offers to sell his Graphic Signs, LLC, business to Hanna for $100,000. Hanna replies, “The price is too high. I
will buy it for $75,000.” Hanna has
a. accepted the offer.
b. made a counteroffer without rejecting the offer.
c. rejected the offer and made a counteroffer.
d. rejected the offer without making a counteroffer.
55. Substantial performance under a contract requires which of the following:
a. Good faith.
b. Not vary greatly from the initial
promise.
c. Provide substantially the same benefits.
d. All of the above.
56. Impossibility of performance applies only if
a. if the event was not
forseeable.
b. At any time.
c. Never.
d. None of the above.
57. Jeff is seventeen years old. Legally, Jeff is considered
a. an adult.
b. a minor.
c. ratified.
d. emancipated
.
58. Ross promises to pay Sara, his niece, $5,000 if she obtains her degree at Tech University, where she is in her third
year. Sara graduates. Ross is
a. not required to pay because Sara was already at Tech.
.
Name
:
Class:
Date:
b. not required to pay because obtaining a degree benefits Sara.
c. required to pay because a job can be hard to find after
college.
d. required to pay because Sara obtained a degree at Tech.
59. Mother & Daughter Jewelers breaches its lease with Longview Mall and vacates the premises six months before the
end of the term Longview would have to
a. avoid reletting the premises to recover damages.
b. use reasonable means to find a new tenant to mitigate
damages.
c. relet the premises to recover any damages.
d. sell the premises to recover any damages.
60. Punitive damages:
a. Must be quantifiable.
b. Are never allowed.
c. Are to punish and deter future
conduct
d. None of the choices.
61. Rose questions whether there is consideration for her contract to perform with Saxophone Symphony. To constitute
consideration, there must be
a. a payment.
b. a performance.
c. a bargained-for exchange.
d. serious thought underlying each party’s intent to contract.
62. A non-breaching party:
a. Must always try to mitigate damages.
b. Has no obligation to mitigate
damages.
.
Name
:
Class:
Date:
c. Can try to maximize its damages.
d. None of the above.
63. Betty sells her Clothes Shop to Diane. In the sale agreement, there is a covenant not to compete that prohibits Betty
from opening another clothing store within a certain distance. If a court concludes that this restriction is unreasonable, it
will most likely
a. award Betty damages equal to the speculative profit of a closer store.
b. order Diane to stop doing business.
c. reform the covenant.
d. prohibit both parties from opening clothing stores.
64. Rachel and Stuart enter into a contract for the sale of Rachel’s textbook at the end of the fall semester for which Stuart
agrees to pay $75. Rachel wants to transfer her right to payment for the book to Terry. This transfer is
a. a delegation.
b. an assignment.
c. an alienation.
d. a third-party beneficiary contract.
65. Liquidated damages:
a. Usually are valid.
b. Require at the time of the contract difficulty in estimating damages.
c. Need to be a reasonable estimate and not excessive
d. All of the above.
66. Wally offers to repair and service a forklift for Valu Lumber Outlet, but Wally dies before Valu accepts. Most likely,
Wally’s death
a. does not affect the offer.
.
Name
:
Class:
Date:
b. shortens the time of the offer but does not terminate
it.
c. extends the time of the offer.
d. terminates the offer.
67. Berry enters into a contract with Clyde for a guided tour of Deep Canyon. Clyde represents that he is an experienced,
knowledgeable guide, when in reality he has never been in the canyon. Berry is most likely a victim of
a. undue influence.
b. fraud.
c. mistake.
d. unconscionability.
68. Valid contracts cannot be formed by the following persons:
a. Mentally
incompetent.
b. Minors.
c. Intoxicated.
d. All of the above.
Short Answers Section
4 Questions. 8 Points Each. Total 32 Points.
Write your answers on the Answer Sheet below. You may use more space than allotted if
necessary.
To earn full credit fully explain the reasons for your answer.
.
Name
:
Class:
Date:
1. Quest Resources, Inc., contracts with Ring Communications Corporation (RCC) for RCC to design and build an
all-weather communications system for Quest’s field operations. RCC builds the system, but it functions effectively only
in good weather. Is this a breach of the contract? If so, what remedies does Quest have?
2. Dean, the president of Billing & Credit Company, promises to pay his employee Ewing, who is dangerously obese, $10
for every pound that he loses within the next eleven months. Ewing agrees, diets and exercises, loses 154 pounds, and asks
Dean for $1,540. Dean refuses to pay, saying that he does not remember the promise, but that even if he did make it, there
was no consideration, and Ewing’s improved health is a sufficient benefit for his effort and sacrifice. Ewing files a suit
against Dean. In whose favor is the court likely to rule, and why?
3. Matt offers to pay Lisa $1,000 if she will paint his house, insisting that the acceptance occur only by the act of painting
the house rather than through Lisa’s promise. Lisa thereafter begins to paint the house. Matt then attempts to revoke the
offer after Lisa is approximately half way through painting the house. Assuming there is a valid contract, what can Lisa
recover as damages, and why?
4. Carlos is a student at UCLA and agrees to rent an apartment from Larry in Westwood pursuant to a written and signed
lease agreement with a two-year lease term commencing September 1, 2017 and monthly rent of $1,000. After a year at
UCLA however, Carlos decides he wants to transfer to the business school at CSUSM and he accordingly tells Larry on
June 1, 2018 both verbally and in writing that he intends to vacate the apartment on or before September 14, 2018.
Although apartments are notoriously in short supply in Westwood and Larry could easily re-rent Carlos’ apartment, Larry
is angry at Carlos’ early departure and immediately sues Carlos for breach of the rental agreement. Explain the legal
principle that Larry relying on to sue Carlos before he is in breach of the lease agreement? What defense may Carlos have
by Larry’s failure to try to re-rent the apartment?
.
Class:
Name
:
ANSWER SHEET TEST #2
True/False
1
16
2
17
3
18
4
19
5
20
6
21
7
22
8
23
9
24
10
25
11
26
12
13
14
15
.
Date:
Class:
Name
:
Multiple Choice
27
52
28
53
29
54
30
55
31
56
32
57
33
58
34
59
35
60
36
61
37
62
38
63
39
64
40
65
41
66
42
67
43
68
.
Date:
Name
:
44
45
46
47
48
49
50
51
SHORT ANSWER #1
.
Class:
Date:
Name
:
SHORT ANSWER #2
SHORT ANSWER #3
.
Class:
Date:
Name
:
SHORT ANSWER #4
.
Class:
Date:
Purchase answer to see full
attachment
Class:
Date:
True False Section
True False Section (26 Questions)
Indicate whether the statement is True or False. ON YOUR ANSWER SHEET WRITE
EITHER TRUE OR FALSE AS AN ANSWER. 1 POINT EACH. TOTAL 26 POINTS.
1. Consequential damages are foreseeable damages that arise from a party’s breach of a contract.
a. True
b. False
2. When a contract’s writing is not clear, a court will not consider evidence outside the contract to interpret its terms.
a. True
b. False
3. A covenant not to compete is enforceable only if it is reasonable in duration and geographic area.
a. True
b. False
4. Generally, acceptance is terminated when a party to the agreement dies.
a. True
b. False
5. Contracts entered into by persons previously determined by a court to be mentally incompetent can be valid.
a. True
b. False
6. A contractual mistake of fact occurs when there is a material misunderstanding of facts at the time of contracting.
a. True
b. False
7. A person who is intoxicated can avoid liability on any contract due to the intoxication.
a. True
b. False
8. As an element of consideration, a Gift cannot be considered Bargain for Exchange.
a. True
b. False
.
Name:
Class:
Date:
9. A remedy is the relief provided to an innocent contracting party when the other party breaches the contract.
a. True
b. False
10. A contract is an agreement that can be enforced in court.
a. True
b. False
11. A material breach occurs when performance is substantial, partial and not complete.
a. True
b. False
12. Compensatory damages compensate the non-breaching party for the loss of the bargain.
a. True
b. False
13. Promissory estoppel requires that justice will be better served by the enforcement of a promise.
a. True
b. False
14. Evidence of prior agreements that differ from the written terms of a contract can be introduced in court to contradict
the contract.
a. True
b. False
15. A condition that must be fulfilled before a party’s promise becomes absolute is a condition subsequent.
a. True
b. False
16. Under the Statute of Frauds, land includes physical objects permanently attached to it, such as buildings, fences, trees,
and soil.
a. True
b. False
17. Ordinarily, minors can disaffirm contracts even when they have misrepresented their age.
a. True
b. False
18. Any contract to commit a crime is unenforceable.
a. True
.
Class:
Name:
Date:
b. False
19. An essential element for contract formation is capacity.
a. True
b. False
20. A contract can only be for legal purposes.
a. True
b. False
21. Rescission is the unmaking of a contract so as to return the parties to the positions they occupied before the
contract was made.
a. True
b. False
22. Rights to receive funds can usually be assigned.
a. True
b. False
23. A material breach usually allows the non-breaching party to sue for damages.
a. True
b. False
24. An agreement subject to the writing requirement of the Statute of Frauds must be written on paper.
a. True
b. False
25. Usually, a court will not award an equitable remedy unless the remedy at law (damages) is inadequate.
a. True
b. False
26. An oral contract may be enforceable if the person making the promise could forsee that the other party would rely on
the promise.
.
Class:
Name:
Date:
a. True
b. False
Multiple Choice Section (42 Questions)
Select the Best Answer. ON YOUR ANSWER SHEET PLACE THE CORRESPONDING
LETTER THAT BEST ANSWERS THE QUESTION. 1 POINT EACH. 42 POINTS
TOTAL.
27. A valid contract requires
a. offer.
b. acceptance.
c. consideration.
d. all of the above.
28. Rosa, a seventeen-year-old minor , signs a contract to sell her car to Street Fleet Cars. Later, Rosa decides not to sell
the car. Rosa is liable to Street Fleet for
a. the cost of a car of comparable value.
b. the value of her performance under the contract.
c. the amount of the buyer’s profit on the deal.
d. nothing.
29. Renew Turf, Inc., enters into a contract with Sports Park to provide surface material for Sports Park’s baseball fields
by October 1 for a tournament to begin October 5. The contract specifies an amount to be paid if the contract is breached.
This is a liquidated damages clause if the amount is
a. meant to pay for additional liquid sealant in the event of damage.
b. a reasonable estimate of the loss on a breach.
c. designed to penalize the breaching party.
d. intended to quickly provide cash to the nonbreaching party.
.
Name:
Class:
Date:
30. Ben makes an appointment for a $50 haircut, buys a bike for $250, and agrees to work for Coding Associates for 6
months for $5,000 per month, starting at the beginning of next month. To be enforceable, a writing is required for
a. the appointment.
b. the purchase.
c. the employment agreement.
d. none of the above.
31. Building Restoration, Inc. (BRI), enters into a contract to refurbish an old train depot for Casual Dining, Inc., to open
as Eat Up Restaurant. If BRI completes most of the work promised in the contract, its performance will be
a. absolute.
b. complete.
c. material.
d. substantial.
32. Dix agrees to sell Eli, for $1,500, a remote parcel of land. They believe the land to be worthless, but beneath it is shale
rock containing oil. A court would
a. not rescind the contract.
b. rescind the contract on the basis of fraud.
c. rescind the contract on the basis of mistake.
d. rescind the contract on the basis of undue influence.
33. A transfer of contractual rights is an
a. Offer.
b. Assignment.
c. Delegation of duties.
d. None of the above.
34. Reed agrees to sell his Sports Equipment store to Taylor. As part of the sale, Reed promises not to open a similar,
competing store anywhere forever. This promise is most likely
a. invalid because it is part of a sale of an ongoing business.
b. invalid because of the unreasonable terms of area and time.
c. valid because it is part of a sale of an ongoing business.
d. valid if Reed and Taylor are reasonably intelligent.
35. Rita, a minor, misrepresents her age as twenty-one and signs a contract with Sporty Motors to buy a sport utility
vehicle (SUV). In most states, Rita may
a. disaffirm the contract.
b. disaffirm the contract only if she makes full payment.
c. disaffirm the contract if she returns the SUV in good condition.
d. not disaffirm the contract due to the misrepresentation.
.
Name:
Class:
Date:
36. Oxley contracts to buy a pizza oven from Restaurant Supplies Warehouse (RSW) for $2,500, but RSW fails to deliver.
Oxley buys the appliance else-where for $3,500. Oxley’s measure of damages is
a. $1,000.
b. $3,500.
c. lost profits.
d. $0.
37. Mai is a third party beneficiary under a contract between Novia and Opie. Novia and Opie can modify or rescind their
contract without Mai’s consent
a. at any time.
b. at no time.
c. only with Mai’s consent.
d. only if they pay Mai damages.
38. An assignment of rights can be:
a. oral.
b. written.
c. Neither a or
b.
d. Both a and b.
39. The following duties cannot be delegated:
a. Obligations involving personal skill or talent.
b. Obligations that will vary materially.
c. Both a and b.
d. No obligations can be delegated.
40. Rico, a user of SmartPhoneApps.com’s Web site, can download apps for free if he first clicks on “I accept” after
viewing certain terms. This is
a. a contract that does not include the terms.
b. a contract that includes the terms.
.
Name:
Class:
Date:
c. not a contract but the terms are enforceable.
d. Neither a or b.
41. An intended third party beneficiary must be intended to benefit:
a. At the time of contracting.
b. At any time.
c. If specified in the contract.
d. None of the above.
42. Incidental beneficiaries may:.
a. Sue under a contract.
b. Never sue under a contract.
c. Sue if they are a minor.
d. None of the above.
43. Grain Co-op, LLC and Hearty Cereals, Inc., discuss the terms of a contract for periodic deliveries of corn. Grain faxes
Hearty a memo on Grain’s letterhead that summarizes the points on which they agreed, including a two-year term. Grain
begins to perform, and Hearty accepts the deliveries but refuses to pay.
The transaction between Grain and Hearty falls within the provision of the Statute of Frauds involving
a. collateral promises.
b. the one-year rule.
c. contracts involving real estate.
d. secondary contracts.
44. Handicrafts & Hobbies Store agrees to hire Iliana for one year at a salary of $600 per week. When Handicrafts &
Hobbies cancels the contract, Iliana spends $150 to obtain a similar job that pays $450 per week for a year. Iliana is
entitled to recover
a. the amount of the wages that Handicrafts & Hobbies promised only.
b. the difference between the wages at the two jobs only.
c. the difference between the wages at the two jobs plus $150.
d. $150 only.
.
Name:
Class:
Date:
45. Ian owes Jo $5,000. Jo assigns the right to this payment to Kyle. To be effective notice by Jo to Ian of the assignment
a. must be given immediately.
b. must be given within thirty days.
c. must be given within a reasonable time.
d. is not required.
46. D’Sean promises to pay his personal assistant Edie $50,000 in consideration of the services she had provided over the
prior years. D’Sean never makes the payment. D’Sean’s promise is
a. enforceable for the entire $50,000.
b. enforceable to the extent of what Edie’s services were actually worth.
c. not enforceable because the consideration is in the past.
d. not enforceable because the failure to pay is an unforeseen difficulty.
47. Gavin takes out an insurance policy on her car. Gavin can assign his policy to a third party
a. under any circumstances.
b. under no circumstances.
c. as long as he does so in writing.
d. if a court approves the assignment.
48. Moe illegally threatens physical harm to force Norel to contract to pay him for protecting her store against vandalism
and destruction. Norel may
a. rescind the contract or refuse to comply with its terms.
b. do nothing once she has agreed to pay.
c. recover from her insurer for the cost.
d. recover from the local police for their failure to protect her store.
49. Idina admires Jules’s collection of guitars. Jules says, “I plan to sell the collection when I get tired of it.” Jules’s
statement is
a. an offer.
b. not an offer because it has not been communicated to Idina.
c. not an offer because Jules expressed only an intent to enter into a future contract.
d. an acceptance.
50. A condition to a contract can be:
a. Precedent.
b. Subsequent.
c. Concurrent.
d. All of the above.
.
Name:
Class:
Date:
51. Even-Bilt Construction contracts to build a warehouse for Discount E-Sales Company. Even-Bilt substantially
performs. Even-Bilt is entitled to
a. the full contract price less any damages they caused by their failure to comply with the contract.
b. the full contract price.
c. to be excused from performance.
d. suspend performance.
52. Jenny promises to pay Kay $500 because “she does not have as much money as other people.” Jenny’s promise is
a. enforceable because society wants people to keep their promises.
b. enforceable because the redistribution of wealth is a valid social goal.
c. not enforceable because Jenny could have paid Kyle more.
d. not enforceable because Kay has not given consideration in return.
53. Ruth, who is Sal’s guardian, convinces him to buy a certain parcel of land from Tyrone at a greatly inflated price.
Ruth may be liable for
a. duress.
b. fraud.
c. mistake.
d. undue influence.
54. Fabien offers to sell his Graphic Signs, LLC, business to Hanna for $100,000. Hanna replies, “The price is too high. I
will buy it for $75,000.” Hanna has
a. accepted the offer.
b. made a counteroffer without rejecting the offer.
c. rejected the offer and made a counteroffer.
d. rejected the offer without making a counteroffer.
55. Substantial performance under a contract requires which of the following:
a. Good faith.
b. Not vary greatly from the initial promise.
c. Provide substantially the same benefits.
d. All of the above.
.
Name:
Class:
Date:
56. Impossibility of performance applies only if
a. if the event was not forseeable.
b. At any time.
c. Never.
d. None of the above.
57. Jeff is seventeen years old. Legally, Jeff is considered
a. an adult.
b. a minor.
c. ratified.
d. emancipated.
58. Ross promises to pay Sara, his niece, $5,000 if she obtains her degree at Tech University, where she is in her third
year. Sara graduates. Ross is
a. not required to pay because Sara was already at Tech.
b. not required to pay because obtaining a degree benefits Sara.
c. required to pay because a job can be hard to find after college.
d. required to pay because Sara obtained a degree at Tech.
59. Mother & Daughter Jewelers breaches its lease with Longview Mall and vacates the premises six months before the
end of the term Longview would have to
a. avoid reletting the premises to recover damages.
b. use reasonable means to find a new tenant to mitigate damages.
c. relet the premises to recover any damages.
d. sell the premises to recover any damages.
60. Punitive damages:
a. Must be quantifiable.
b. Are never allowed.
c. Are to punish and deter future conduct
d. None of the choices.
61. Rose questions whether there is consideration for her contract to perform with Saxophone Symphony. To constitute
consideration, there must be
a. a payment.
b. a performance.
c. a bargained-for exchange.
d. serious thought underlying each party’s intent to contract.
.
Name:
Class:
Date:
62. A non-breaching party:
a. Must always try to mitigate damages.
b. Has no obligation to mitigate damages.
c. Can try to maximize its damages.
d. None of the above.
63. Betty sells her Clothes Shop to Diane. In the sale agreement, there is a covenant not to compete that prohibits Betty
from opening another clothing store within a certain distance. If a court concludes that this restriction is unreasonable, it
will most likely
a. award Betty damages equal to the speculative profit of a closer store.
b. order Diane to stop doing business.
c. reform the covenant.
d. prohibit both parties from opening clothing stores.
64. Rachel and Stuart enter into a contract for the sale of Rachel’s textbook at the end of the fall semester for which Stuart
agrees to pay $75. Rachel wants to transfer her right to payment for the book to Terry. This transfer is
a. a delegation.
b. an assignment.
c. an alienation.
d. a third-party beneficiary contract.
65. Liquidated damages:
a. Usually are valid.
b. Require at the time of the contract difficulty in estimating damages.
c. Need to be a reasonable estimate and not excessive
d. All of the above.
66. Wally offers to repair and service a forklift for Valu Lumber Outlet, but Wally dies before Valu accepts. Most likely,
Wally’s death
a. does not affect the offer.
b. shortens the time of the offer but does not terminate it.
c. extends the time of the offer.
.
Name:
Class:
Date:
d. terminates the offer.
67. Berry enters into a contract with Clyde for a guided tour of Deep Canyon. Clyde represents that he is an experienced,
knowledgeable guide, when in reality he has never been in the canyon. Berry is most likely a victim of
a. undue influence.
b. fraud.
c. mistake.
d. unconscionability.
68. Valid contracts cannot be formed by the following persons:
a. Mentally incompetent.
b. Minors.
c. Intoxicated.
d. All of the above.
Short Answers Section
4 Questions. 8 Points Each. Total 32 Points.
Write your answers on the Answer Sheet below. You may use more space than allotted if
necessary.
To earn full credit fully explain the reasons for your answer.
1. Quest Resources, Inc., contracts with Ring Communications Corporation (RCC) for RCC to design and build an allweather communications system for Quest’s field operations. RCC builds the system, but it functions effectively only in
good weather. Is this a breach of the contract? If so, what remedies does Quest have?
2. Dean, the president of Billing & Credit Company, promises to pay his employee Ewing, who is dangerously obese, $10
for every pound that he loses within the next eleven months. Ewing agrees, diets and exercises, loses 154 pounds, and
asks Dean for $1,540. Dean refuses to pay, saying that he does not remember the promise, but that even if he did make it,
.
Class:
Name:
Date:
there was no consideration, and Ewing’s improved health is a sufficient benefit for his effort and sacrifice. Ewing files a
suit against Dean. In whose favor is the court likely to rule, and why?
3. Matt offers to pay Lisa $1,000 if she will paint his house, insisting that the acceptance occur only by the act of painting
the house rather than through Lisa’s promise. Lisa thereafter begins to paint the house. Matt then attempts to revoke the
offer after Lisa is approximately half way through painting the house. Assuming there is a valid contract, what can Lisa
recover as damages, and why?
4. Carlos is a student at UCLA and agrees to rent an apartment from Larry in Westwood pursuant to a written and signed
lease agreement with a two-year lease term commencing September 1, 2017 and monthly rent of $1,000. After a year at
UCLA however, Carlos decides he wants to transfer to the business school at CSUSM and he accordingly tells Larry on
June 1, 2018 both verbally and in writing that he intends to vacate the apartment on or before September 14, 2018. Although
apartments are notoriously in short supply in Westwood and Larry could easily re-rent Carlos’ apartment, Larry is angry at
Carlos’ early departure and immediately sues Carlos for breach of the rental agreement. Explain the legal principle that
Larry relying on to sue Carlos before he is in breach of the lease agreement? What defense may Carlos have by Larry’s
failure to try to re-rent the apartment?
ANSWER SHEET TEST #2
True/False
1
16
2
17
3
18
4
19
5
20
.
Class:
Name:
6
21
7
22
8
23
9
24
10
25
11
26
12
13
14
15
Multiple Choice
27
52
28
53
29
54
30
55
31
56
.
Date:
Class:
Name:
32
57
33
58
34
59
35
60
36
61
37
62
38
63
39
64
40
65
41
66
42
67
43
68
44
45
46
47
48
49
50
51
SHORT ANSWER #1
.
Date:
Name:
SHORT ANSWER #2
SHORT ANSWER #3
.
Class:
Date:
Name:
SHORT ANSWER #4
.
Class:
Date:
Name
:
Class:
Date:
True False Section
True False Section (26 Questions)
Indicate whether the statement is True or False. ON YOUR ANSWER SHEET WRITE
EITHER TRUE OR FALSE AS AN ANSWER. 1 POINT EACH. TOTAL 26 POINTS.
1. Consequential damages are foreseeable damages that arise from a party’s breach of a contract.
a. True
b. False
2. When a contract’s writing is not clear, a court will not consider evidence outside the contract to interpret its terms.
a. True
b. False
3. A covenant not to compete is enforceable only if it is reasonable in duration and geographic area.
a. True
b. False
4. Generally, acceptance is terminated when a party to the agreement dies.
a. True
b. False
5. Contracts entered into by persons previously determined by a court to be mentally incompetent can be valid.
a. True
b. False
6. A contractual mistake of fact occurs when there is a material misunderstanding of facts at the time of contracting.
a. True
b. False
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7. A person who is intoxicated can avoid liability on any contract due to the intoxication.
a. True
b. False
8. As an element of consideration, a Gift cannot be considered Bargain for Exchange.
a. True
b. False
9. A remedy is the relief provided to an innocent contracting party when the other party breaches the contract.
a. True
b. False
10. A contract is an agreement that can be enforced in court.
a. True
b. False
11. A material breach occurs when performance is substantial, partial and not complete.
a. True
b. False
12. Compensatory damages compensate the non-breaching party for the loss of the bargain.
a. True
b. False
13. Promissory estoppel requires that justice will be better served by the enforcement of a promise.
a. True
b. False
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14. Evidence of prior agreements that differ from the written terms of a contract can be introduced in court to contradict
the contract.
a. True
b. False
15. A condition that must be fulfilled before a party’s promise becomes absolute is a condition subsequent.
a. True
b. False
16. Under the Statute of Frauds, land includes physical objects permanently attached to it, such as buildings, fences, trees,
and soil.
a. True
b. False
17. Ordinarily, minors can disaffirm contracts even when they have misrepresented their age.
a. True
b. False
18. Any contract to commit a crime is unenforceable.
a.
True
b.
False
19. An essential element for contract formation is capacity.
a. True
b. False
20. A contract can only be for legal purposes.
a. True
b. False
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21. Rescission is the unmaking of a contract so as to return the parties to the positions they occupied before the
contract was made.
a. True
b. False
22. Rights to receive funds can usually be assigned.
a. True
b. False
23. A material breach usually allows the non-breaching party to sue for damages.
a. True
b. False
24. An agreement subject to the writing requirement of the Statute of Frauds must be written on paper.
a. True
b. False
25. Usually, a court will not award an equitable remedy unless the remedy at law (damages) is inadequate.
a. True
b. False
26. An oral contract may be enforceable if the person making the promise could forsee that the other party would rely on
the promise.
a. True
b. False
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Multiple Choice Section (42 Questions)
Select the Best Answer. ON YOUR ANSWER SHEET PLACE THE CORRESPONDING
LETTER THAT BEST ANSWERS THE QUESTION. 1 POINT EACH. 42 POINTS
TOTAL.
27. A valid contract requires
a. offer.
b. acceptance.
c. consideration.
d. all of the
above.
28. Rosa, a seventeen-year-old minor , signs a contract to sell her car to Street Fleet Cars. Later, Rosa decides not to sell
the car. Rosa is liable to Street Fleet for
a. the cost of a car of comparable value.
b. the value of her performance under the
contract.
c. the amount of the buyer’s profit on the deal.
d. nothing.
29. Renew Turf, Inc., enters into a contract with Sports Park to provide surface material for Sports Park’s baseball fields
by October 1 for a tournament to begin October 5. The contract specifies an amount to be paid if the contract is breached.
This is a liquidated damages clause if the amount is
a. meant to pay for additional liquid sealant in the event of damage.
b. a reasonable estimate of the loss on a breach.
c. designed to penalize the breaching party.
d. intended to quickly provide cash to the nonbreaching party.
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30. Ben makes an appointment for a $50 haircut, buys a bike for $250, and agrees to work for Coding Associates for 6
months for $5,000 per month, starting at the beginning of next month. To be enforceable, a writing is required for
a. the appointment.
b. the purchase.
c. the employment
agreement.
d. none of the above.
31. Building Restoration, Inc. (BRI), enters into a contract to refurbish an old train depot for Casual Dining, Inc., to open
as Eat Up Restaurant. If BRI completes most of the work promised in the contract, its performance will be
a. absolute.
b. complete.
c. material.
d. substantial
.
32. Dix agrees to sell Eli, for $1,500, a remote parcel of land. They believe the land to be worthless, but beneath it is shale
rock containing oil. A court would
a. not rescind the contract.
b. rescind the contract on the basis of fraud.
c. rescind the contract on the basis of mistake.
d. rescind the contract on the basis of undue influence.
33. A transfer of contractual rights is an
a. Offer.
b. Assignment.
c. Delegation of
duties.
d. None of the above.
34. Reed agrees to sell his Sports Equipment store to Taylor. As part of the sale, Reed promises not to open a similar,
competing store anywhere forever. This promise is most likely
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a. invalid because it is part of a sale of an ongoing business.
b. invalid because of the unreasonable terms of area and
time.
c. valid because it is part of a sale of an ongoing business.
d. valid if Reed and Taylor are reasonably intelligent.
35. Rita, a minor, misrepresents her age as twenty-one and signs a contract with Sporty Motors to buy a sport utility
vehicle (SUV). In most states, Rita may
a. disaffirm the contract.
b. disaffirm the contract only if she makes full payment.
c. disaffirm the contract if she returns the SUV in good condition.
d. not disaffirm the contract due to the misrepresentation.
36. Oxley contracts to buy a pizza oven from Restaurant Supplies Warehouse (RSW) for $2,500, but RSW fails to deliver.
Oxley buys the appliance else-where for $3,500. Oxley’s measure of damages is
a. $1,000.
b. $3,500.
c. lost profits.
d. $0.
37. Mai is a third party beneficiary under a contract between Novia and Opie. Novia and Opie can modify or rescind their
contract without Mai’s consent
a. at any time.
b. at no time.
c. only with Mai’s consent.
d. only if they pay Mai damages.
38. An assignment of rights can be:
a. o ral.
b. written.
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c. N
either a or
b.
d. Both a and b.
39. The following duties cannot be delegated:
a. Obligations involving personal skill or
talent.
b. Obligations that will vary materially.
c. Both a and b.
d. No obligations can be delegated.
40. Rico, a user of SmartPhoneApps.com’s Web site, can download apps for free if he first clicks on “I accept” after
viewing certain terms. This is
a. a contract that does not include the terms.
b. a contract that includes the terms.
c. not a contract but the terms are
enforceable.
d. Neither a or b.
41. An intended third party beneficiary must be intended to benefit:
a. At the time of contracting.
b. At any time.
c. If specified in the
contract.
d. None of the above.
42. Incidental beneficiaries may:.
a. Sue under a contract.
b. Never sue under a contract.
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c. Sue if they are a minor.
d. None of the above.
43. Grain Co-op, LLC and Hearty Cereals, Inc., discuss the terms of a contract for periodic deliveries of corn. Grain faxes
Hearty a memo on Grain’s letterhead that summarizes the points on which they agreed, including a two-year term. Grain
begins to perform, and Hearty accepts the deliveries but refuses to pay.
The transaction between Grain and Hearty falls within the provision of the Statute of Frauds involving
a. collateral promises.
b. the one-year rule.
c. contracts involving real
estate.
d. secondary contracts.
44. Handicrafts & Hobbies Store agrees to hire Iliana for one year at a salary of $600 per week. When Handicrafts &
Hobbies cancels the contract, Iliana spends $150 to obtain a similar job that pays $450 per week for a year. Iliana is
entitled to recover
a. the amount of the wages that Handicrafts & Hobbies promised only.
b. the difference between the wages at the two jobs only.
c. the difference between the wages at the two jobs plus $150.
d. $150 only.
45. Ian owes Jo $5,000. Jo assigns the right to this payment to Kyle. To be effective notice by Jo to Ian of the assignment
a. must be given immediately.
b. must be given within thirty days.
c. must be given within a reasonable
time.
d. is not required.
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46. D’Sean promises to pay his personal assistant Edie $50,000 in consideration of the services she had provided over the
prior years. D’Sean never makes the payment. D’Sean’s promise is
a. enforceable for the entire $50,000.
b. enforceable to the extent of what Edie’s services were actually worth.
c. not enforceable because the consideration is in the past.
d. not enforceable because the failure to pay is an unforeseen difficulty.
47. Gavin takes out an insurance policy on her car. Gavin can assign his policy to a third party
a. under any circumstances.
b. under no circumstances.
c. as long as he does so in writing.
d. if a court approves the
assignment.
48. Moe illegally threatens physical harm to force Norel to contract to pay him for protecting her store against vandalism
and destruction. Norel may
a. rescind the contract or refuse to comply with its terms.
b. do nothing once she has agreed to pay.
c. recover from her insurer for the cost.
d. recover from the local police for their failure to protect her
store.
49. Idina admires Jules’s collection of guitars. Jules says, “I plan to sell the collection when I get tired of it.” Jules’s
statement is
a. an offer.
b. not an offer because it has not been communicated to Idina.
c. not an offer because Jules expressed only an intent to enter into a future contract.
d. an acceptance.
50. A condition to a contract can be:
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a. Precedent.
b. Subsequent.
c. Concurrent.
d. All of the
above.
51. Even-Bilt Construction contracts to build a warehouse for Discount E-Sales Company. Even-Bilt substantially
performs. Even-Bilt is entitled to
a. the full contract price less any damages they caused by their failure to comply with the contract.
b. the full contract price.
c. to be excused from performance.
d. suspend performance.
52. Jenny promises to pay Kay $500 because “she does not have as much money as other people.” Jenny’s promise is
a. enforceable because society wants people to keep their promises.
b. enforceable because the redistribution of wealth is a valid social
goal.
c. not enforceable because Jenny could have paid Kyle more.
d. not enforceable because Kay has not given consideration in return.
53. Ruth, who is Sal’s guardian, convinces him to buy a certain parcel of land from Tyrone at a greatly inflated price. Ruth
may be liable for
a. duress.
b. fraud.
c. mistake.
d. undue
influence.
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54. Fabien offers to sell his Graphic Signs, LLC, business to Hanna for $100,000. Hanna replies, “The price is too high. I
will buy it for $75,000.” Hanna has
a. accepted the offer.
b. made a counteroffer without rejecting the offer.
c. rejected the offer and made a counteroffer.
d. rejected the offer without making a counteroffer.
55. Substantial performance under a contract requires which of the following:
a. Good faith.
b. Not vary greatly from the initial
promise.
c. Provide substantially the same benefits.
d. All of the above.
56. Impossibility of performance applies only if
a. if the event was not
forseeable.
b. At any time.
c. Never.
d. None of the above.
57. Jeff is seventeen years old. Legally, Jeff is considered
a. an adult.
b. a minor.
c. ratified.
d. emancipated
.
58. Ross promises to pay Sara, his niece, $5,000 if she obtains her degree at Tech University, where she is in her third
year. Sara graduates. Ross is
a. not required to pay because Sara was already at Tech.
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b. not required to pay because obtaining a degree benefits Sara.
c. required to pay because a job can be hard to find after
college.
d. required to pay because Sara obtained a degree at Tech.
59. Mother & Daughter Jewelers breaches its lease with Longview Mall and vacates the premises six months before the
end of the term Longview would have to
a. avoid reletting the premises to recover damages.
b. use reasonable means to find a new tenant to mitigate
damages.
c. relet the premises to recover any damages.
d. sell the premises to recover any damages.
60. Punitive damages:
a. Must be quantifiable.
b. Are never allowed.
c. Are to punish and deter future
conduct
d. None of the choices.
61. Rose questions whether there is consideration for her contract to perform with Saxophone Symphony. To constitute
consideration, there must be
a. a payment.
b. a performance.
c. a bargained-for exchange.
d. serious thought underlying each party’s intent to contract.
62. A non-breaching party:
a. Must always try to mitigate damages.
b. Has no obligation to mitigate
damages.
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c. Can try to maximize its damages.
d. None of the above.
63. Betty sells her Clothes Shop to Diane. In the sale agreement, there is a covenant not to compete that prohibits Betty
from opening another clothing store within a certain distance. If a court concludes that this restriction is unreasonable, it
will most likely
a. award Betty damages equal to the speculative profit of a closer store.
b. order Diane to stop doing business.
c. reform the covenant.
d. prohibit both parties from opening clothing stores.
64. Rachel and Stuart enter into a contract for the sale of Rachel’s textbook at the end of the fall semester for which Stuart
agrees to pay $75. Rachel wants to transfer her right to payment for the book to Terry. This transfer is
a. a delegation.
b. an assignment.
c. an alienation.
d. a third-party beneficiary contract.
65. Liquidated damages:
a. Usually are valid.
b. Require at the time of the contract difficulty in estimating damages.
c. Need to be a reasonable estimate and not excessive
d. All of the above.
66. Wally offers to repair and service a forklift for Valu Lumber Outlet, but Wally dies before Valu accepts. Most likely,
Wally’s death
a. does not affect the offer.
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b. shortens the time of the offer but does not terminate
it.
c. extends the time of the offer.
d. terminates the offer.
67. Berry enters into a contract with Clyde for a guided tour of Deep Canyon. Clyde represents that he is an experienced,
knowledgeable guide, when in reality he has never been in the canyon. Berry is most likely a victim of
a. undue influence.
b. fraud.
c. mistake.
d. unconscionability.
68. Valid contracts cannot be formed by the following persons:
a. Mentally
incompetent.
b. Minors.
c. Intoxicated.
d. All of the above.
Short Answers Section
4 Questions. 8 Points Each. Total 32 Points.
Write your answers on the Answer Sheet below. You may use more space than allotted if
necessary.
To earn full credit fully explain the reasons for your answer.
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1. Quest Resources, Inc., contracts with Ring Communications Corporation (RCC) for RCC to design and build an
all-weather communications system for Quest’s field operations. RCC builds the system, but it functions effectively only
in good weather. Is this a breach of the contract? If so, what remedies does Quest have?
2. Dean, the president of Billing & Credit Company, promises to pay his employee Ewing, who is dangerously obese, $10
for every pound that he loses within the next eleven months. Ewing agrees, diets and exercises, loses 154 pounds, and asks
Dean for $1,540. Dean refuses to pay, saying that he does not remember the promise, but that even if he did make it, there
was no consideration, and Ewing’s improved health is a sufficient benefit for his effort and sacrifice. Ewing files a suit
against Dean. In whose favor is the court likely to rule, and why?
3. Matt offers to pay Lisa $1,000 if she will paint his house, insisting that the acceptance occur only by the act of painting
the house rather than through Lisa’s promise. Lisa thereafter begins to paint the house. Matt then attempts to revoke the
offer after Lisa is approximately half way through painting the house. Assuming there is a valid contract, what can Lisa
recover as damages, and why?
4. Carlos is a student at UCLA and agrees to rent an apartment from Larry in Westwood pursuant to a written and signed
lease agreement with a two-year lease term commencing September 1, 2017 and monthly rent of $1,000. After a year at
UCLA however, Carlos decides he wants to transfer to the business school at CSUSM and he accordingly tells Larry on
June 1, 2018 both verbally and in writing that he intends to vacate the apartment on or before September 14, 2018.
Although apartments are notoriously in short supply in Westwood and Larry could easily re-rent Carlos’ apartment, Larry
is angry at Carlos’ early departure and immediately sues Carlos for breach of the rental agreement. Explain the legal
principle that Larry relying on to sue Carlos before he is in breach of the lease agreement? What defense may Carlos have
by Larry’s failure to try to re-rent the apartment?
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ANSWER SHEET TEST #2
True/False
1
16
2
17
3
18
4
19
5
20
6
21
7
22
8
23
9
24
10
25
11
26
12
13
14
15
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Date:
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Multiple Choice
27
52
28
53
29
54
30
55
31
56
32
57
33
58
34
59
35
60
36
61
37
62
38
63
39
64
40
65
41
66
42
67
43
68
.
Date:
Name
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44
45
46
47
48
49
50
51
SHORT ANSWER #1
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Name
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SHORT ANSWER #2
SHORT ANSWER #3
.
Class:
Date:
Name
:
SHORT ANSWER #4
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Class:
Date:
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