Exam 2

Question 1

Which of the following can serve as consideration in a contract?

• a promise
• the doing of the act
• property and/or money
• forbearance
• all of these

Answer 1

all of these

Question 2

This means whereby one party conveys/transfers his/her rights in a contract to another who is not a party to the original contract is called:

Answer 2

assignment

Question 3

The party making the assignment is known as the

Answer 3

assignor

Question 4

One to whom no legal obligation exists, but to whom performance is a gift, is known a a/an

Answer 4

donee beneficiary

Question 5

The party to whom the assignment is made is known as the

Answer 5

assignee

Question 6

The person who receives the proceeds from an insurance policy is called the

Answer 6

beneficiary

Question 7

Which form of contract termination deals with a period of time in which you may sue to recover damages?

Answer 7

statute of limitations

Question 8

If a party fails to perform the duties of the contract, they are termed

Answer 8

breaching the contract

Question 9

Which type of damages would be contained in a clause in the original contract?

Answer 9

liquidated

Question 10

Real property is:

1. land
2. buildings
3. fences
4. furniture

Answer 10

land, building, fences

Question 11

Charging a higher interest rate than the maximum set by law is called

Answer 11

usury

Question 12

A token award, as used to symbolize that a wrong was done to the plaintiff, is known as

Answer 12

nominal damages

Question 13

The law which governs the type of contracts which must be in writing in order to be enforceable by the courts is the

Answer 13

statute of frauds

Question 14

A rejection of the original offer and making a new offer back to the offeror is a/an

Answer 14

counteroffer

Question 15

The substitution of a new party for the original contracting party who is to perform, with the mutual consent of both the original parties to the contract is called

Answer 15

novation

Question 16

When one of the parties has failed to fulfill his/her contractual obligations on time, which of these remedies is BEST to use when the contractual goods are of a rare or unique nature?

• sue for liquidated damages
• sue for compensatory damages
• sue for specific performance
• sue for nominal charges

Answer 16

sue for specific performance

Question 17

Monetary awards given by courts in excess of actual damages suffered following a breach of contract are called ________ and monetary awards given by courts for exact amount of damages suffered following a breach of contract are called________.

Answer 17

punitive damages, compensatory damages

Question 18

Which of the following contracts does NOT have to be in written form to be enforceable?

• transfer of ownership of all or part of 5 acres of land
• a promise to transfer ownership of a lake house upon marriage
• sale of a computer for $450
• an agreement to pay off a debt over the next 8 years

Answer 18

sale of a computer for $450

Question 19

A legal order forbidding a specific act is known as a/an

Answer 19

injunction

Question 20

All physical items that are NOT real property are classified as ________ property.

Answer 20

personal

Question 21

The violation of the terms of a contract is called

Answer 21

breach of contract

Question 22

A contract in which ownership of goods passes immediately from a seller to a buyer in consideration of a price is called

Answer 22

sales contract

Question 23

When a seller agrees to transfer title of goods to a buyer in consideration of a price at some time yet to come, this is called a/an

Answer 23

contract to sell

Question 24

A document used as evidence of a sales contract and as proof of the ownership of goods is called a

Answer 24

bill of sale

Question 25

If the most important part of the contract deals with personal services to be rendered, even though there is some purchasing of goods involved also, this would be considered a/an

Answer 25

contract of services

Question 26

Which of the following contracts would NOT have to be in writing before the agreement would be enforceable by the courts? - an agreement to sell real property - an agreement to become responsible for the debts of another - an agreement to buy or sell goods valued at over $500 - an agreement which can be performed within a 12 month period of time

Answer 26

an agreement which can be performed within a 12 month period of time

Question 27

When one party in a contract is completely released and replaced by another party with the formation of a new contract, this is called a/an

Answer 27

novation

Question 28

The law that governs the time period during which one must file suit for breach of contract is called the

Answer 28

statute of limitations

Question 29

A contract that may be set aside by at least one of the parties is called

Answer 29

voidable

Question 30

A means of destroying another's free will by obtaining consent to a contract by means of threat to do them harm is the definition of

Answer 30

duress

Question 31

A mutual mistake as to the existence of the subject matter makes a contract

Answer 31

voidable

Question 32

The election to avoid a contract by a minor is called

Answer 32

disaffirmance

Question 33

A contract made by a legally declared insane person is

Answer 33

void

Question 34

Whatever the promisor demands and receives as the price for his promise is called

Answer 34

consideration

Question 35

One who induces another to enter into a contract as a result of an intentional or reckless false statement of material fact is guilty of

Answer 35

fraud

Question 36

When one promises to refrain from doing something that he/she is legally able to do, his/her behavior is known as:

Answer 36

forbearance

Question 37

If a minor makes a contract during the age of minority and then elects to proceed with the contract after reaching the age of majority, the minor has chosen to _____ the contract.

Answer 37

ratify

Question 38

Which of the following would NOT be considered to be a necessary item for a minor? - food - clothing - housing - laptop

Answer 38

laptop

Question 39

Generally, a mistake made by one of the parties to a contract and that is unknown to the other party has what affect on the contract?

Answer 39

has no effect on the validity of the contract

Question 40

If one person acts in justifiable reliance upon the promise made by another, the promissory cannot later claim lack of consideration because of the principle of

Answer 40

promissory estoppel