REG: Diag Assessment: 5/4/2018 Flashcards
Janice Gwinn is having an in-floor vacuum system put in her new home. The cost of the components for the system and installation is $22,000. She has signed a contract with Jill’s Permanent Vacuum Systems for that amount with installation to be completed as the phases of construction of the home proceed and allow. Which of the following statements is correct about this contract?
1) Because the contract is one for the purchase of a vacuum, it is the sale of a good and is governed by the UCC.
2) Because the contract involves real estate, it is governed by common law.
3) Because the contract is a sale by a merchant, it is governed by the UCC.
4) Because the contract is one predominantly for installation, it is governed by common law.
Because the contract is one predominantly for installation, it is governed by common law.
Where there are mixed contracts (sale of both goods and services), we look to the price and the intent of the parties. The parts for such a system are small in comparison to the labor required for its installation throughout the construction process. Also, Janice does not just want vacuum parts. She wants the system installed.
Mary offers to buy Hal’s desktop computer for $400. Hal sends Mary an e-mail of acceptance. The $400 is to be paid upon Hal’s delivery of the computer. Which of the following properly classifies this contract?
1) This is a bilateral, valid, executory contract.
2) This is a bilateral, valid, executed contract.
3) This is a unilateral, express, executory contract.
4) This is a unilateral, implied-in-fact, executed contract.
This is a bilateral, valid, executory contract.
A bilateral contract is a promise in exchange for a promise creating a contract. Mary made the offer (promise) to buy Hal’s desktop computer, and Hal accepted her offer by the promise to sell. The contract meets the four requirements for a valid contract; offer and acceptance, consideration (computer for $400), nothing to indicate either party lacks legal capacity, and selling and buying of a computer is a legal purpose. An executory contract is one not fully performed. Neither party has performed their part of the contract. Thus, this contract is classified as bilateral, valid, and executory.
Opal offered, in writing, to sell Larkin a parcel of land for $300,000. If Opal dies, the offer will
1) Terminate prior to Larkin’s acceptance only if Larkin received notice of Opal’s death.
2) Remain open for a reasonable period of time after Opal’s death.
3) Automatically terminate despite Larkin’s prior acceptance.
4) Automatically terminate prior to Larkin’s acceptance.
Automatically terminate prior to Larkin’s acceptance
An offer, unless irrevocable, IS terminated immediately upon the death of the offeror, and thus no contract could be formed.
Which of the following statements is correct regarding the parol evidence rule?
1) It applies only in cases involving an oral contract.
2) It applies only to subsequent written modifications to a written contract.
3) It applies to subsequent oral agreements that contradict the terms of a final written agreement.
4) It applies to prior or contemporaneous oral agreements that contradict the terms of final written agreements.
It applies to prior or contemporaneous oral agreements that contradict the terms of final written agreements.
The parol evidence rule does not permit evidence of terms not in a complete, final, and unambiguous contract. If you want terms in your contract, put them in your contract. Oral understandings not part of the contract terms are inadmissible in court.
Tate signs an all-inclusive written agreement whereby he undertakes to “fully refurbish Bond’s 1981 Porsche 911”. Tate later asserts that the contract did not include rechroming any of the chrome parts. Bond wishes to introduce evidence that rechroming is part of the agreement. Which of the following will not be permitted as evidence under the parol evidence rule?
1) All of these forms of evidence would be admissible.
2) A piece of paper in which Tate, just prior to signing the contract, illustrated which Porsche parts needed chrome plating.
3) A telephone call from Tate to Bond, after work had begun, requesting more money “since chrome plating has gone way up in price”.
4) Testimony of an industry expert that the term “fully refurbish” generally includes chrome plating as needed.
All of these forms of evidence would be admissible.
This is one of the more difficult questions from the exam. Under the parol evidence rule, one cannot introduce into evidence prior or contemporaneous oral or written statements that add to or modify a final, fully integrated, unambiguous contract. The term “fully refurbish” is ambiguous. We don’t know whether chroming is included and how much would have to be rechromed.
Chapter 7 of the Federal Bankruptcy Code will deny a debtor a discharge when the debtor
1) Makes a preferential transfer to a creditor.
2) Accidentally destroys information relevant to the bankruptcy proceeding.
3) Obtains a Chapter 7 discharge ten years previously.
4) Is a corporation or a partnership.
Is a corporation or a partnership.
Corporations and partnerships may go through a Chapter 7 liquidation, but do not qualify for a general discharge from all remaining debts as natural persons do.
Rice contracted with Locke to build an oil refinery for Locke. The contract provided that Rice was to use United pipe fittings. Rice did not do so. United learned of the contract and, anticipating the order, manufactured additional fittings. United sued Locke and Rice. United is
1) Entitled to recover from Rice only because Rice breached the contract.
2) Entitled to recover from either Locke or Rice because it detrimentally relied on the contract.
3) Not entitled to recover because it is a donee beneficiary.
4) Not entitled to recover because it is an incidental beneficiary.
Not entitled to recover because it is an incidental beneficiary.
United is an incidental beneficiary because the contract was not made for its primary benefit. It will benefit from the contract if it is performed, but the parties did not have United’s benefit in mind when making the contract. Incidental beneficiaries may not sue to enforce contracts.
