exam 3 T/F

Question 1

Agreeing not to open a competing business could be consideration.

Answer 1

True

Question 2

Raul agrees to paint Mike’s house for $1,000. Before finishing, Raul states it is too hot to finish, and Mike offers to pay $1,200 if Raul finishes. Mike’s statement that he will pay $1,200 is unenforceable.

Answer 2

True

Question 3

Generally an agreement not to compete ancillary to a legitimate bargain is not valid.

Answer 3

False

Question 4

When a noncompete agreement is ancillary to the sale of a business, it is enforceable if reasonable in time, geographic area, and scope of activity.

Answer 4

True

Question 5

Consideration can be a promise or an act.

Answer 5

True

Question 6

According to the UCC, one or more open terms will not cause a sales contract to fail for indefiniteness as long as the parties intended to make a contract and there is a reasonably certain basis for the court to grant an appropriate remedy.

Answer 6

True

Question 7

An exculpatory clause is generally enforceable when it attempts to exclude an intentional tort or gross negligence.

Answer 7

False

Question 8

Barbara, a skilled welder, was hired at Mainco Enterprises for a welding position. She was asked to sign noncompete clauses limiting future employment if she left Mainco. A court would be very likely to enforce the noncompete clause unless the time or geographic restriction is unreasonable.

Answer 8

False

Question 9

If a court finds as a matter of law that a clause of a contract was unconscionable at the time the contract was made, the court must refuse to enforce the contract.

Answer 9

False

Question 10

Contract rescission can sometimes be based upon a unilateral mistake.

Answer 10

True

Question 11

Roger parked his car at a garage that has a large sign at the entrance saying, “This garage is not liable for items stolen from a car.” This type of notice is referred to as an exculpatory clause.

Answer 11

True

Question 12

Roger, a minor, buys a stereo from Tuneland, Inc. Roger uses the stereo for a few months, returns it to Tuneland, and demands his money back. In a majority of states, Roger may return the stereo and he does not have to pay for the use of the stereo or the damages.

Answer 12

True

Question 13

Fraudulent, but not innocent, misrepresentation permits the injured party to rescind a contract.

Answer 13

False

Question 14

Vernon suffers from a mental impairment due to a brain injury from a motorcycle accident. He contracts with Glena to purchase her dining room furniture. A month later, he tries to void the contract. If he is unable to return the furniture, a court will not rescind the agreement unless Vernon can show that Glena acted in bad faith.

Answer 14

True

Question 15

Raymond agrees to transfer an easement right to Sandra for $1,000. This contract is within the statute of frauds and therefore needs to be in writing to be enforceable.

Answer 15

True

Question 16

Any contract involving a sale of goods of $100 or more must be in writing.

Answer 16

False

Question 17

Bry, Inc. and Gangl Co. entered into an oral agreement for the sale of 3,000 sweaters. Both parties performed as required under the contract. Bry delivered the sweaters and Gangl accepted and paid for them. Since the contract is fully executed, it makes no difference that it was oral.

Answer 17

True

Question 18

Under the statute of frauds, the writing must: be signed by the defendant; and must state with reasonable certainty the name of each party, the subject matter of the agreement, and all of the essential terms and promises.

Answer 18

True

Question 19

An assignment is effective against the obligor from the moment it is made, regardless of whether the assignor notifies the obligor.

Answer 19

False

Question 20

A party may make either an assignment or a delegation, but cannot make both an assignment and a delegation simultaneously.

Answer 20

False

Question 21

If Casey assigns her rights to receive income from rental property to Errol, then Errol will legally acquire any rights held by Casey to the income.

Answer 21

True

Question 22

If Ray agrees to rake leaves for Michelle in exchange for Michelle’s promise to pay off the debt Ray owes to Dean, then Dean is a donee beneficiary of the agreement between Ray and Michelle.

Answer 22

False

Question 23

Norm and Frank have a legal contract that is silent with regard to an assignment of the contract. In order for Norm to assign all or part of his rights under a contract, Frank must grant permission to Norm to make the assignment legally effective.

Answer 23

False

Question 24

Generally, the assignment of the obligation to perform personal services is invalid.

Answer 24

True

Question 25

If Velma, as a birthday present, assigns to Jim her contractual right to collect $50 from Wood Co., this would be a gratuitous assignment.

Answer 25

True

Question 26

First Bank has agreed to loan Teresa $100,000 for use in her cosmetics business. If Teresa sells the business to Melissa before the loan is consummated, Teresa can assign her right to the loan to Melissa.

Answer 26

False

Question 27

Amanda buys a vacuum cleaner to use in her home from retailer Andy. Amanda promises to pay for it in six monthly installment of $50 each. Andy assigns the contract to Big Finance Co. who paid value and took without notice of any defense. Big Finance Co. sues Amanda for nonpayment. Amanda has stopped making payments because the vacuum stopped working and Andy refuses to honor the express warranty he made to her at the time of the sale. Generally, any defense that Amanda may have against Andy is good against Big Finance Co.

Answer 27

True

Question 28

Assume that Jessie and Whole Foods have formed a contract whereby Jessie agrees to deliver 10,000 dozen “Grade A Large Eggs” to be shipped in recycled paper cartons that conform with Whole Foods’ green policy.. A shortage of paper makes paper cartons much more expensive, so Jessie uses styrofoam cartons and ships the eggs. Whole Foods is entitled to cancel the contract based on this deviation of terms in the contract.

Answer 28

True

Question 29

Most contracts are discharged by mutual agreement.

Answer 29

False

Question 30

Injunctions are commonly used by courts to force employees to complete their contractual obligations with their employers

Answer 30

False

Question 31

A statute of limitations begins to run at the time of injury and will limit the time within which the injured party may file suit.

Answer 31

True

Question 32

Specific performance is available when the subject matter of the contract is unique.

Answer 32

True

Question 33

Expectation interest can best be described as money spent in reliance upon the agreement.

Answer 33

False

Question 34

If you have an established relationship with a buyer, you can sell small tracts of land without a written contract.

Answer 34

False

Question 35

In business law, a lawyer’s primary job is to represent the client in contract litigation.

Answer 35

False

Question 36

Because details can always be added later, it’s better to not overwhelm a contract with specifics in the beginning.

Answer 36

False

Question 37

Ricardo has agreed to sell his family farm to Walter for a price of $450,000. Even though both sides agree on the terms, it is still worth the money for Ricardo to hire a lawyer to write the contract.

Answer 37

True

Question 38

It is unethical to use your lawyer as an excuse for a provision of a contract, such as, “My lawyer insists that I have a liquidated damages clause…”

Answer 38

False

Question 39

You should always hire a lawyer to review any legal papers you have to sign, including such papers as lease agreements or telephone contracts.

Answer 39

False

Question 40

Lucky, a contractor, enters into a contract with Penny, a homeowner, to remodel her kitchen. The contract provides a specific completion date, but does not specify what will happen if Lucky does not have the job finished by the date. So, Penny may deduct $100 per day from the contract price until the job is finished, because this is the industry norm.

Answer 40

False

Question 41

Emily runs a children’s clothing boutique which takes in local homemade items on a consignment basis. Her standard form contract indicates that Emily has the right to put items on sale without prior approval, but does not specify what effect the sale has on the consignor’s payment percentage. Her intent is to keep the same profit she would have had without the sale. She is using ambiguity in her contract to increase her sales and profit.

Answer 41

False

Question 42

Some contracting parties are intentionally vague in contract terms.

Answer 42

True

Question 43

Ambiguities in contracts are always interpreted in favor of the side that wrote the contract, since they are the ones who know what the provision is supposed to mean.

Answer 43

False

Question 44

Typos are almost always detrimental to the validity of a contract because they cause the contract to not reflect the true agreement of the parties.

Answer 44

False

Question 45

“Scrivener’s error” is another (fancier) name for a typo.

Answer 45

True

Question 46

Contracts must begin with the word, “whereas” in order to be legal.

Answer 46

False

Question 47

A contract should have a descriptive title, which is generally in all capital letters, underlined and centered at the top of the page.

Answer 47

True

Question 48

The legal term for a promise in a contract is “provision.”

Answer 48

False

Question 49

Under the Equal Pay Act of 1963 an employee may not be paid at a lesser rate than employees of the opposite sex for tasks requiring equal skill, effort, and responsibility under similar working conditions.

Answer 49

True

Question 50

Heather applied for a promotion, but her manager promoted a co-worker because the manager knew Heather was seven months pregnant. The manager did not want to promote someone who would probably be taking time off of work for childbirth and child care. The manager has acted legally and reasonably to protect her company’s interests.

Answer 50

False

Question 51

Discrimination in the workplace on the basis of age is prohibited under Title VII of the Civil Rights Act of 1964.

Answer 51

False

Question 52

Discrimination protection under Title VII does not extend to job placement ads or postemployment references.

Answer 52

False

Question 53

The plaintiff in a disparate treatment case must prove that an employer or potential employer discriminated against her because of her sex, race, color, religion, or national origin.

Answer 53

False

Question 54

A disparate impact case involves a rule that, on its face, is not discriminatory, but in practice excludes too many people in a protected group.

Answer 54

True

Question 55

An employer cannot have a valid Title VII defense that it was using a legitimate seniority system if such a system perpetuates past discrimination.

Answer 55

False

Question 56

Affirmative action is required by Title VII to remedy past discrimination.

Answer 56

False

Question 57

The Age Discrimination in Employment Act would be violated if a company refuses to interview and hire applicants under twenty years of age.

Answer 57

False

Question 58

An employer may not disqualify a job applicant because of a disability if they can perform the essential functions of the job with reasonable accommodation.

Answer 58

True

Question 59

As with Title VII, a plaintiff under the Americans with Disabilities Act must first file a charge with the EEOC.

Answer 59

True

Question 60

Remedies under title VII include unlimited punitive damages.

Answer 60

False

Question 61

In determining if an accommodation is reasonable, the courts will look at absolute cost.

Answer 61

False

Question 62

It would be permissible to ask a woman about child care arrangements.

Answer 62

False

Question 63

The Equal Pay Act prohibits salary differences based upon gender.

Answer 63

True