Business law 13e text and cases

1.The elements of a contract include all of the following except:
a. an agreement
b. two or more competent parties.
c. consideration
d. illegal purpose
2.
A counter offer is a(n)
a. acceptance of the original offer
b. rejection of the original offer
c. acceptance of the original offer and an invitation to negotiate further.
d. a revocation of the original offer.
3.
At an auction sale each bid is:
a. a counter offer to the auctioneer’s offer of the merchandise.
b. an acceptance of the auctioneer’s offer.
c. an invitation to negotiate.
d. an offer.
4.
Contractual capacity is the ability to:
a. read and write.
b. sign a written contract
c. understand that a contract is being made and to understand its general nature.
d. understand the legal meaning of the contract being made.
5.
An agreement is not binding when:
a. one party makes a mistake regarding a material fact.
b. both parties make a mistake regarding a material fact.
c. one party makes a mistake of law.
d. both parties make a mistake of law.
6.
When a mutual or bilateral mistake is one of law, then:
a. either party may void the agreement.
b. the contract is generally binding.
c. the contract is void automatically.
d. it always has the same effect as a mutual mistake of fact.
7.
I believe that I won a very valuable vase. I tell you this to you and state that I will sell it to
you for $800.00. I sell the vase to you, and later find out that the vase is worth only
$200.00.
a. fraud:
a. has occurred.
b. ordinarily has not occurred.
c. always can be based upon a statement of value or opinion.
d. none of the above.
8.
A contract in which one party agrees to purchase goods from another contingent upon the
purchaser’s ability to locate suitable financing is said to:
a. be illegal.
b. result from undue influence
c. contain a waiver
d. contain a conditional promise.
9.
Ordinarily, a promise to perform an existing legal obligation:
a. is not consideration.
b. binding if the promisor promises to perform with extra care.
c. binding if the promisor promises to perform to suit the personal satisfaction of the
promisee
d. binding if substantial loss would be caused to the promisee by a breach of the
promise.
10. Forebearance to assert a claim is binding consideration:
a. only if the claim has merit.
b. whether or not the claim has merit.
c. only if the claim has merit and has been asserted in good faith.
d. when the claim, whether or not it has merit, has been asserted in good faith.
11. Inadequacy of consideration may be evidence of:
a. the exercise of undue influence
b. taking advantage of the condition of the other party.
c. unconscionabilty
d. all of the above.
12. Which of the following is not a necessary element of promissory estoppel?
a. a bargained for exchange.
b. likelihood of substantial loss on the party of the promisee.
c. the promisor has reason to foresee the promisee’s detrimental reliance.d. a promise
13. When money is loaned at a greater rate of interest than is allowed by
law,_______________is committed. a. usury
b. sharking
c. petty theft.
d. credit malfeasance.
14. In a unilateral contract consideration is:
a. a promise for a promise
b. doing of the act called for
c. forebearance
d. statement of intention
15. One element involved in the determination of unconscionabilty is:
a. the comparative bargaining power of the parties.
b. the opportunity to make a contract for better terms.
c. the course of the economy after the contract is made.
d. whether a loss will be sustained by performance of the contract.
16. In a unilateral contract, the consideration for the promise is:
a. the surrender of a claim against the promisor.
b. the returning of the promisor’s property
c. a promise to do the act called for by the promisor.
d. the doing of the act called for by the promisor.
ESSAY QUESTIONS
I.
Gerwin’s daughter, Mary, was seeking a position as an associate attorney with Baker,
Charles and Dixon, a large metropolitan law firm. The firm, after several meetings with Mary
over a two month period, made Mary an offer of employment on January 15. Mary accepted the
offer that day and immediately left for South Padre Island to celebrate without telling Gerwin or
anyone else about her new job. Two days later, Gerwin sent Baker a letter in which she offered
to give Baker all of her legal business (approximately $40,000.00 a year) if Baker would hire
Mary. After Gerwin learned that Mary had been hired, Gerwin refused to transfer her business to
Baker. Baker has brought suit against Gerwin on the grounds that a valid contract exists between
them. How will the case be decided?
II.
Sam Willows purchased a used car from his Uncle Buck. Uncle Buck told Sam that the
car was in excellent shape. Sam bought the car and drove it off the lot. Two days later, the
transmission fell our on to the street rendering the car worthless. Is this fraud? What are the
elements of fraud.
III.
Louise owned a house next to Robert’s house. Robert made a contract with Mid City
Painters to paint his house. The painters arrived to paint Robert’s house, but by mistake painted
Louise’s house. She saw the painters at work and made no comment. Later, Mid City Painters
sent Louise a bill for painting her house. She claimed that she was not liable because she had not
made any contract with them. Is this a valid defense?
IV.
Mary Jane, who is 93 years of age, went to the bank to obtain a loan. During the
interview with the banker, Mary Jane fell asleep several times and had difficulty answering the
bankers questions. Unbeknownst to her, she signed a mortgage on her house to secure payment
of the loan. She never made any payments on the note and the bank threatened to foreclose and
repossess her house. What defense does Mary Jane possess?. Is it valid? How can she keep her
house?