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ACCT 215 100 question review

ACCT 215 100 question review - Final Exam Sec tion B 100...

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Unformatted text preview: Final Exam Sec tion B - 100 points ‘ L. Curtis TRUE/FALSE: True 1. 2. 3. 7. 8. 9. 10. 11. 12. 13. 14. a; False = b As a general rule, the finder of lost property automatically becomes the rightful owner, whereas the owner of the premises where the property is discovered automati- cally becomes the owner of mislaid property. A retention by the donor of even partial control over the item claimed to have been given usually prevents the gift from being effective. The viewpoint of the third party with whom the agent deals is more important than the viewpoint of the agent in determining whether apparent authority existed. Contracts that are made by an agent that is a minor are voidable. The principal—agent relationship is a fiduciary one, which requires that each be entirely open with the other and not keep any information from the other that has any bearing on their arrangement. R and S contracted for the sale of a cow by R to S. Both thought the cow was with calf. It turned out later that the cow was not pregnant. Either R or S can disaf- firm the contract on the ground of mistake. F wrote a check to G as a gift. F asks his bank not to pay the check, contending that there is no contract because G gave no consideration for the check. F is right. An executory contract is a contract that has been completely performed. Under the UCC, an oral sales contract (calling for the sale of goods having a value of $500 or more) is valid--despite the fact it is not in writing——if, after the contract is made, the seller delivers the goods and the buyer accepts them. In May of 1978 H and J enter into an oral contract of employment, under the terms of which J is to perform certain tasks during the months of July and August of 1979. Because J's actual performance is only going to take two months, this con— tract does not have to be in writing. The act of ratification does not bind the principal as though the act had been pre— viously authorized. If an assignment materially alters the duties of the obligor, the obligor still must complete the contract. If-a contract is required by the Statute of Frauds to be in writing, as a general rule it is valid and enforceable (when in writing) even if it possesses a defect (such as lack of consideration or reality of consent) that would otherwise cause it to be invalid. In general, risk-shifting and risk—creating contracts are both illegal. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. X orally agrees to work for Y "as long as I shall live" for a specified monthly salary. TWo years later.X quits his job without legal excuse, and Y seeks damages for breach of contract. If X's defense is "the Statute of Frauds," the defense is not good for the reason that X could have died within a year after making the con- EEabc i.e., X is liable to Y). The "parol evidence rule" applies only to those written contracts which fall within the Statute of Frauds (that is, it would not be applicable to a written contract that clearly did not have to be in writing in the first place). Whiles easements are technically "interests in land", the general rule is that con- tracts that create or convey easements do not have to be in writing. Adverse possession occurs when one private person takes possession of an item of property currently owned by another person, and then claims to be the owner of that property, for the required statutory period of time. There can be no quasi-contract remedy unless there is a contract originally. The right to assign one's rights under a contract is absolute and may not be pro- hibited by the contract itself. When acting for his principal, an agent is normally expected to exercise the degree of care and skill that is normal under the circumstances, but he may sometimes be required to exercise more than an ordinary degree of care and skill. If the principal knows that the agent is continuing to make efforts to perform his assigned task, and if the principal does nothing, the agency relationship may con- tinue to exist for a period of time longer than would otherwise be deemed reasonable. X, a manufacturer, contracts to sell 1,000 widgets to Y for $2,000. Before the time of delivery arrives, X's material costs increase 20%. He, therefore, refuses to perform, and Y sues him for damages for breach of contract. If the doctrine of commercial impracticability were applied to this case, the result is that X would clearly be freed of liability to Y (i.e., X's nonperformance would be excused). Violation of the Statute of Frauds is punishable by fines and a possible jail sen~ tence if violation was intentional. Pledges to charitable organizations such as churches are found to be enforceable by the courts in cases where the organization has made commitments based on and rely- ing on such pledges. Characterization of a bailment as being one of mutual benefit or as being for the sole benefit of the bailor or bailee is irrelevant to the question of the degree of care that must be exercised by the bailee in handling the bailed property. Intangible property may be real or personal property. A argues with B that a contract is not intangible property. A is correct. A bailment is the transfer of possession of real property from one person to another. An ordinary contract, unlike an agency contract, does not terminate upon the death of the parties. 31. A minor who lacks contractual capacity cannot act as an agent. 32. X and Y make a contract, and X, after just beginning his performance, is forced to quit the job because of illness. In such a case, the doctrine of substantial per- formance is not applicable (though X will probably be allowed to recover the rea- sonable value—3f the benefit which Y received as a result of the partial performance). 33. L and V make a contract; later, they and a third part, (X), agree that X will per— form V's obligations, with L expressly releasing V from the original contract. In ' such a case, it may be said that V's obligations are discharged by "accord and satisfaction" (as distinguished from "novation"). 34. As a general rule, all types of beneficiaries (creditor, donee, and incidental) are entitled to enforce contracts made by others. 35. As a general rule, assignments must be evidenced by a writing in order to be enforceable. ' 36. It is not necessary to have a contract in order to have an agency relationship. 37. When a contract is said to be discharged, it means that the duties of the contract— ing parties have been discharged. 38. Conditions precedent may be either express or implied, but conditions subsequent are implied only. ’ 39. The doctrine of substantial performance requires that a builder render complete (100%) performance before he is entitled to payment. 40. The terms "unenforceable contract" and "void contract" both refer to agreements that, in the eyes of the law, never possessed a legal existence. \_ THIS HYPO IS FOR QUESTIONS 41-45 Evans was over 60 years of age. He wanted to dispose of his department store in Large Town. He called up James and offered to sell him (James) the entire inventory in his store for $150,000. James said that he wanted the inventory and that it was "a deal." Evans contacted Hughes about buying the department store building. Hughes agreed to buy at the price Evans would sell at. ,This/was incorporated into writing and as Evans and Hughes were about to sign, Hughes told Evans he (Hughes) would not sign unless Evans agreed not to go into the department store business in Large Town for 2 years after Hughes' purchase since Hughes intended to use the building for a department store. Evans said that was agreeable to him, but nothing to this effect was put into the written document both signed. 41. The statements made by Evans and Hughes regarding Evans' agreement not to compete with Hughes in Large Town in the department store business will be provable as part of their contract. 42. Hughes would have had a much greater opportunity to prove the existence of the covenant not to compete against Evans if the contract for the sale of the building had not been written. 43. If there were a question of whether James intended to contract with Evans due to James' use of the words "It's a deal," the test to determine whether James had ac- cepted and a contract had been formed would be determined solely by what James had in fact intended those words to mean. - 32: 44. 45. 46. Evans will probably be held to the agreement not to compete on the-grounds of moral obligation. If both the Evans/James and Evans/Hughes agreements were deemed valid in all respects, but Evans breached both and both Hughes and James sued Evans, Hughes would be more likely to receive specific performance than James. The substantive law of torts is concerned with defining what duties we owe to each Other as individuals and what rights we have in individual relationships. MULTIPLE CHOICE: Choose the best answer. 47. 48. 49. 50. 51. 52. 53. 54. 55. Which of the following would not be considered substantive law? a. Contract law . c. Antitrust law b. Evidence law d. All of the above would be considered ‘ substantive law.« A field of law in which the common law has largely yielded to statutory law is: a. criminal law. c. contracts. ~b. torts. d. none of the above. The role of the courts in the American legal system is to: a. determine the facts in a particular dispute whenever the parties cannot agree as to what actually occurred. b. create law in the areas of common law. c. interpret constitutions, statutes, and agency regulations. d. all of the above. An example of a federal executive power is: a. the power to determine the ultimate meaning of the Constitution. b. the power to declare war. c. the power to confirm federal court justices. d. none of the above are executive powers. An example of a federal legislative power is: a. the power to establish budgets. c. the power to declare war. b. the power to confirm court justices. d. all of the above are legislative / powers. An administrative agency may not: a. directly enforce laws. c. conduct investigations. b. make law by promulgating rules. d. establish its own budget. An offer is terminated by operation of law if before acceptance: a. either party dies. b. either party is deprived of contractual capacity. c. the subject matter of the proposed contract becomes illegal or is destroyed. d. any of the above will terminate the offer. ‘ International law governs the acts of: a. states. c. both a and b b. individuals. d. Neither a nor b. International law is a set of non binding principles. Which of the following items of property cannot be the subject of a bailment? a. Shares of corporate stock c. Airplane b. Residential house and lot d.. Boat 56. 57. 58. 59. 60. 61. Ratification of a contract is a statement or other conduct on the part of a minor: a. before he reaches the age of majority, indicating that he is reserving his right to disaffirm the contract at a later time if he wishes. b. after reaching the age of majority, indicating he will be bound by the contract. c. either before or very shortly after reaching the age of majority (i.e., within a reasonable time), indicating he will be bound by the contract. d. none of the above. An exculpatory clause is a contract clause which: a. places total responsibility for injury or damages to property on one party regardless of fault. b. -absolves a party of responsibility for his or her negligence. c. is unconscionable. d. all of the above. e. only a and b above. The essence of undue influence is the obtaining of control over one person's will by another (the dominant party)£i a. usually as a result of the farmer's increasing reliance on the latter person's (dominant party's) judgment and apparent trustworthiness over a period of time. b. usually as a result of fear on the farmer's part, which results from their prior dealings over a period of time. c. usually as a result of the existence of what the courts call constructive fraud, which is brought about by the dominant party' 3 misconduct. d. usually as a result of the dominant party's proven ability over a period of time to make money for the former (the dominated) party. e. none of the above.' A mutual mistake is not grounds for rescinding a contract if the mistake merely involves: a. the existence of the subjectematter. b. the identity of the subject-matter. c. reasonableness of the contract price. d. the character of the subject-matter. e. none of the above (i.e., a mutual mistake as to any of the above is grounds for rescission). In regard to the subject of administrative agencies, which of the following obser- vations is/are correct? ‘ a. A primary reason for the growth of administrative agencies in the last 40 years is political in nature--i.e., the desire of elected officials to have a large source of jobs for political supporters., b. The courts have been increasingly hostile to agencies' rulings and actions. c. Agencies' rulings that are strictly discretionary in nature may not be set aside by the courts even if they are found to be totally without reason. d. b and c e. None of the above. X makes an offer to Y by mail, requiring Y's acceptance to be made by telegram. In such a case: , ‘ a. an acceptance by mail would take effect the moment that it was placed in the mail, despite X's condition that the acceptance be made by telegram. b. an acceptance by telegram would take effect the moment it was placed in the hands of the telegraph company, even if that company thereafter never delivered it to X. c. both of the above. d. none of the above. 62. Sometimes an administrative agency's ruling is challenged in court-on the ground that the statute creating the agency is an "unconstitutional delegation of legisla- tive power." A party making such a challenge is contending that: a. the statute lacks reasonable standards by which the agency is to be guided and limited in performing its duties. ' b. the legislative body that passed the statute did not itself possess that par— ticular‘power which it was attempting to delegate to the agency. c. the statute was in clear conflict with a state or federal constitutional ' provision. d. none of the above.‘ 63. Principal hires an agent to sell a piece of property for no less than $50,000, with agent to receive a 6% commission. Without principal's knowledge, which of the fol— lowing is permitted. a. The agent sells the property to his wife for $50,000 and is now entitled to the 6% commission. b. The agent discovers land values in the area are decreasing rapidly and, not having an opportunity to consult with the principal, sells the property for $49,000. The agent is entitled to the 6% commission. c. The agent tells his principal that he is unable to find a purchaser for more than $50,000. Principal gives agent permission to sell for that price not knowing that agent is also representing the buyer. Agent can still collect 6% commission. ‘ d. While trying to sell principal's property, agent rents the house on the proper- ty to someone. Agent is entitled to keep the rent plus his 6% commission upon selling the property for $60,000, more than principal thought the property would sell for. 64. Nominal damages are those which: a. are "named" in the contract-~i.e., a specific sum of money that one party agrees to pay to the other in the event that he breaches the contract. b. are "in name only"--i.e., a small sum awarded to a plaintiff, whose rights have been infringed upon as a result of the defendants breach of contract or other misconduct, but who has suffered no real or actual loss as a result of the de- fendant's wrong. c. are awarded by a court where a "liquidated damages" clause in a contract is felt by the court to be excessive; that is, nominal damages are those that are given in lieu of liquidated damages. d. none of the above. 65. A bilateral contract comes into existence upon the exchange of: a. performance for a forbearance. c. a promised forbearance for an act. b. a promise for an act. d. an act for a promise. 66. When goods are placed on sale at an ordinary auction, a contract is formed at the moment that: a. The highest (last) bid is made. b. the auctioneer "knocks down the goods"--that is, accepts a particular bid. c.' the bidder whose bid has been accepted pays for (or makes suitable arrangements to pay for) the purchased item. d. none of the above. 67. What is the meaning of the phrase "in pari delicto"? a. It is a delicate matter. b. Both parties are equally guilty of violating the law. c. An unlawful contract may be rescinded by either party. d. Enforcing an illegal contract is unjust. 68. 69' 70. 71. 72. 73. 74. An intentional giving-up of a known right or privilege is called a. mistake. c. merger. b. waiver. _ d. none of these answers is correct. When a court is asked to determine damages in a breach of contract case, the court will first subject the claimed damages to the test of: a. mitigation. c. causation and certainty. b. forseeability. d. all of the above. Marie was a famous model. Tempo Magazine mailed her an offer to do a five page photo layout for a new line of swimsuits for $35,000. Marie received the offer January 2. On January 3, Marie mailed Tempo the following note: "I accept. But must have twelve pages devoted to me and accordingly, $50,000." Tempo received this note on January 5. On January 6, Marie called them and told them she would do the modeling under the original terms. a. There is no contract. The offer terminated when Marie mailed her counteroffer. b. There is no contract. The offer terminated when Tempo received Marie's counteroffer. c. There is a contract. Marie's note did not constitute a counteroffer, hence her acceptance was effective January 6. d. There is a contract. Marie's note did not constitute a counteroffer, hence her acceptance was effective January 3. An implied contract can best be defined as one: a. which lacks one or more elements of a true contract, but which may nevertheless be enforced by the courts if they feel it is in the best interests of the parties to do so. b. in which the intentions of the contracting parties must be inferred by the courts in large part from their conduct and the circumstances surrounding their conduct. c. which exists in the eyes of the law, even though the parties have not in any way manifested an intent to contract. d. none of the above is an acceptable definition. A prenuptial agreement that expressly states the interests in each parties property is invalid: ' a. because it is contrary to the intent of the marriage vow and against public policy. b. if oral. c. if prepared in one state and taken to a neighboring state for application. d. all of the above. An illusory contract is one in which: a. consideration appears to exist, but upon closer examination is found to be absent. . b. the consideration of one party is so inadequate in value as to suggest fraud is present. ' c. consideration appears not to exist, but upon closer examination is found to be present. d. a and c. e. none of the above. Indicate which of the following third parties usually can not enforce contracts. a. Incidental beneficiaries -——' b. Donee beneficiaries (with the exception of insurance contracts) c. Creditor beneficiaries d. Assignees, if assignment is not in writing e. a and b 75. 76. 77. 78. 79. 80. 81. 82. A gift made in contemplation of death is called a gift: a. inter vivos. c. causa mortis. b. rigor mortis. d. None of these answers is correct. Snippy sells his barber business to Flattop for $9,000. The contract provides that "Snippy promises not to engage in the barbering business for a period of one year within a one mile radius of the shop being sold." In regard to this situation: a. the clause quoted above is "in restraint of trade,&qu...
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