Chapter 13 - CHAPTER 13CONTRACTS AND SALES: PERFORMANCE AND...

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CHAPTER 13—CONTRACTS AND SALES: PERFORMANCE AND REMED- IES TRUE/FALSE 1. A contract with a minor is voidable at the minor's option. ANS: T NAT: AACSB: Analytic TOP: capacity 2. A contract with a party who has been declared incompetent is voidable. ANS: F NAT: AACSB: Analytic TOP: capacity 3. The contracts of a person who has been declared legally incompetent are void. ANS: T NAT: AACSB: Analytic TOP: capacity 4. Minors are liable for the reasonable value of necessaries. ANS: T NAT: AACSB: Analytic TOP: capacity 5. Material information is something that would affect the decision to buy or sell. ANS: T NAT: AACSB: Analytic TOP: misrepresentation 6. Misrepresentation must be fraudulent before rescission can be permitted. ANS: F NAT: AACSB: Analytic TOP: misrepresentation 7. Puffing is sufficient grounds for setting aside a contract on the basis of misrepresentation. ANS: F NAT: AACSB: Analytic TOP: misrepresentation 8. "This shirt is 100% cotton" is a statement that is puffing. ANS: F NAT: AACSB: Analytic TOP: puffing 9. Fraud is misrepresentation with intent to mislead or deceive. ANS: T NAT: AACSB: Analytic TOP: fraud 10. Duress requires proof of physical force. ANS: F NAT: AACSB: Analytic TOP: duress 11. Scienter is required for misrepresentation. ANS: F NAT: AACSB: Analytic TOP: misrepresentation 12. Undue influence requires proof of a confidential relationship. ANS: T NAT: AACSB: Analytic TOP: undue influence
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13. Competency licensing statutes do not prevent enforcement of contracts by unlicensed parties. ANS: F NAT: AACSB: Analytic TOP: illegality 14. Contracts with illegal subject matter are voidable. ANS: F NAT: AACSB: Analytic TOP: illegality 15. Usury is regulation of licensing. ANS: F NAT: AACSB: Analytic TOP: usury 16. Unconscionability is an illegality defense. ANS: T NAT: AACSB: Analytic TOP: unconscionability 17. Covenants not to compete are valid only in sales of a business. ANS: F NAT: AACSB: Analytic TOP: public policy 18. Conditions precedent are events that must happen before contract performance is required. ANS: T NAT: AACSB: Analytic TOP: conditions 19. Substantial performance is available for all types of contracts. ANS: F NAT: AACSB: Analytic TOP: substantial performance 20. A force majeure clause is one that provides excuses for nonperformance. ANS: T NAT: AACSB: Analytic TOP: force majeure 21. Liquidated damages are void as penalties. ANS: F NAT: AACSB: Analytic TOP: liquidated damage 22. Incidental damages are the costs of being compensated and are nonrecoverable. ANS: F NAT: AACSB: Analytic TOP: incidental damage 23. A bilateral contract is one in which one side promises to perform in exchange for the other side's ac- tions. ANS: F NAT: AACSB: Analytic TOP: bilateral 24. Void and voidable contracts are one and the same. ANS: F
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Chapter 13 - CHAPTER 13CONTRACTS AND SALES: PERFORMANCE AND...

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