An offer may be made only to a specific person.
A voidable contract is one that is otherwise valid but may be rejected or set aside by one of the parties.
An agreement that contemplates the performance of an act prohibited by law usually is void.
An executory contract has been entered into but not yet fully performed.
When a contract is fully performed by one party, it is called a unilateral contract.
A unilateral contract may be described as a promise for an act.
A contract never can be both executory and unilateral.
An option contract gives one of the parties an absolute right to enter into a second contract at a later date.
When a contract sets a price for services rendered, a plaintiff cannot sue for reasonable value.
To create an offer, an offeror must intend, or it must appear that the offeror intends, to be bound to a contractual relationship.
Social invitations can be offers.
The bid of each contractor for a job is considered an offer.
A court will do its best to find the intent of parties to an agreement provided that the agreement is not too indefinite
An agreement cannot be enforced if it does not set forth every detail.
Contract terms may not be implied from conduct.
A term of a written contract that is too vague to have a definite meaning sometimes may be ignored.
An agreement is not too indefinite to be binding if a standard or formula is provided by which variable factors can be determined.
A contract to buy all the buyer's requirements from the seller at a stated price is too vague to be a contract.
A person returning lost property without knowing that a reward was offered cannot sue the owner for the reward.
An offer is effective only if it is communicated by the offeror in person.
In most cases, an offeree may ignore any offer.
An acceptance must be absolute and unconditional.
The addition of any new terms in the acceptance, including terms that relate to mere clerical detail, converts the acceptance into a counteroffer.
A properly mailed acceptance takes effect when mailed, even if it never is received by the offeror.
At an auction, the bidders make offers and they cannot be withdrawn.
Ordinarily, every party to a contract is presumed to have contractual capacity until the contrary is shown.
Discriminatory and punitive incapacities have largely disappeared.
Generally, when a person of legal age makes a contract with a minor, the contract is voidable by either party.
If any party to a contract does not have contractual capacity, the contract is either voidable or void.
Once a contract has been affirmed, it no longer can be avoided.
When a minor avoids contracts, the minor always must return the other contracting parties to their original financial positions.
The "necessaries" of minors are concisely defined by law.
The parent of a minor is liable for payment of the purchase price of a contract that the minor has avoided.
The appointment of a guardian for an insane person does not avoid a contract made by the person the day before the guardian was appointed.
A person who has drunk too much alcohol at a party and signs a contract may be able to rescind that contract.
Fraud requires a misstatement of either a fact or opinion.
There is a growing trend to treat fine print as not binding on the injured party without regard to whether fraud was involved.
A claim of undue influence will be unsuccessful unless the contracting parties have a close relationship of trust.
Consideration always must be an act or the promise to perform an act.
A completed gift cannot be rescinded for lack of consideration.
True consideration occurs only when the value of one promise is equal to the value of the promise given by the other party.
Forbearance may constitute consideration.
A binding contract cannot contain a cancellation provision.
Arresting 100 persons guilty of crime can be consideration for the promise made to a police officer to pay a bonus for making such arrests.
If a claimant knows that there is no merit in the claim itself but is using the claim to force an issue, a settlement of the claim based on partial payment lacks consideration.
If a merchant receives and cashes a check for partial payment of a debt and the check bears the notation that the amount is in full payment of a disputed sum, the total debt is released.
In a composition of creditors, the various creditors of a single debtor mutually agree to accept a fractional part of their claims in full satisfaction thereof.
Past benefits already received by a promisor cannot be consideration for a later promise.
A promise to make a contribution to a church is binding even though the promisor does not receive anything for the promise.
Consideration is required to modify a contract for the sale of goods.
The doctrine of promissory estoppel cannot be applied if there is no consideration for the promise which was relied upon.
An agreement that does not specify the time for performance is not binding because it is too indefinite.
The time for performance is typically essential in a contract for the sale of perishable property.
A person who substantially performs a contract is liable for damages to the other party.
When a building contract requires the contractor to perform the contract to the satisfaction of the owner, the owner generally is required to pay only if actually satisfied with the contractor's work.
A novation is a substitution of a new contract involving a third party.
An accord has the effect of discharging the prior contract it is intended to replace.
Performance of a contract sometimes is excused on the ground of economic frustration.
A party injured by the other party's anticipatory repudiation of a contract has the right to bring suit at the time of the repudiation, and before the date on which that performance is due.
An injured party that does not suffer an actual loss from the breach of a contract is entitled to nominal damages.
Punitive damages generally are recoverable in contract actions.
Consequential damages may not be recovered, even if they were within the contemplation of the parties at the time of contracting.
Only direct losses from a breach of contract may be recovered by an injured party.
A party that rescinds a contract without proper grounds for rescission is liable for damages for breach of the contract.
The promisor in a contract agreement also may be called the:
To have a contract you must have:
A) an offer.
B) an acceptance.
C) both an offer and an acceptance.
D) an agreement manifested by the written or spoken words of the parties.
When an envelope contains both a written contract and another paper, such other paper:
A) is always regarded as part of the written contract.
B) is never part of the written contract.
C) has whatever effect the written contract says it has.
D) can only relate to matters not covered by the written contract.
A legally binding agreement that can be rejected at the option of one of the parties is called a(n):
A) void agreement.
B) revoked contract.
C) voidable contract.
D) optional agreement.
If not an offer, the first statement made by one of two persons is most properly termed a(n):
C) invitation to negotiate.
A customer went into a store and saw a beautiful leather jacket bearing a price tag of $29. The customer handed the cashier a $50.00 bill and said, "I accept. We have a deal." The cashier then noticed the price tag and told the customer an error had been made and that the price was $229. In this case:
A) the customer already had accepted the offer.
B) the price tag was a firm offer.
C) no contract was formed because the customer's offer was refused.
D) the customer is the offeree.
A customer requested a price from a carpenter on a teak cabinet to be built according to the buyer's specifications. Because teak wood is difficult to obtain, the customer agreed to pay the cost of the wood plus $175 and the carpenter agreed to build it. Which of the following is correct?
A) Although the price is somewhat unclear, the parties have entered into a contract.
B) This is an agreement to agree and is not binding.
C) This agreement fails for indefiniteness.
D) The carpenter is bound, but not the customer.
If an offeree accepts an offer before it is effectively revoked:
A) a void contract is formed.
B) a voidable contract is formed.
C) an unenforceable contract is formed.
D) a valid contract is formed.
Under the Uniform Commercial Code (UCC), a firm offer applies to:
A) a written, signed offer by a merchant to buy or sell goods.
B) an unwritten but definite offer to buy or sell goods.
C) a written, signed offer, by anyone, to buy or sell goods.
D) an unlimited stipulated period of time.
A said to B, "I'll give you $100 for that bracelet." B replied, "$135." A said, "NO thanks." B then said that B accepted the $100, but A was no longer interested and said there was no contract. B insists there is a contract. Result?
A) A's offer of $100 was open and accepted by B forming a contract.
B) B's counteroffer of $135 terminated A's offer of $100.
C) B's statement, "$135" was a negotiating statement that did not terminate the offer of $100.
D) A's offer of $100 was irrevocable.
A young woman received an unordered diamond ring in the mail along with a bill for $850. She called the store and was told it was a sales promotion and she should pay for the ring or return it. She said, "Thank you for the free ring." The young woman kept the ring, did not pay, and was sued. Result?
A) The woman is liable for the reasonable value of the ring.
B) The woman accepted the offer and is liable for $850.
C) The young woman may keep the ring without liability.
D) The young woman is obligated to return the ring.
An acceptance made in a telegram that never is delivered to the offeror:
A) has no effect.
B) is effective as an acceptance at the time that it is given by the offeree to the telegraph office for sending to the offeror.
C) is effective as an acceptance as of the date it should have been received by the offeror.
D) is not effective as an acceptance of the offer until the moment that the telegraph office begins to transmit the acceptance to the offeror.
The maximum amount of time that a minor has to disaffirm a contract is:
A) one year from the date of the agreement.
B) 30 days from learning of his or her right to disaffirm.
C) the age of majority.
D) a reasonable period of time after reaching the legal age.
When a minor avoids a contract to purchase a car:
A) the parents of the minor are liable for the purchase price.
B) a relative who cosigned the contract is liable for the purchase price.
C) a friend to whom the minor loaned the car is liable for the purchase price.
D) the automobile insurance company is liable for the purchase price.
The obligation of a cosigner is discharged by:
A) the minority status of one of the parties.
B) the majority status of one of the parties.
C) the court's declaration of the contract's provision of necessaries.
D) the payment of the debt.
A person lacks contractual capacity if:
A) the person is a chronic alcoholic.
B) the person is a drug addict.
C) because of mental impairment, the person does not comprehend that a contract is being made or understand its consequences.
D) all of the above.
In which of the following cases is a contract between A and B binding?
A) A makes a mistake of material fact.
B) A and B make the same mistake of material fact.
C) A recklessly but honestly misrepresents a material fact.
D) A innocently misrepresents a material fact.
A person unable to read is bound by signing a paper without obtaining an explanation of it, unless:
A) the other contracting party finds out later about the signer's disability.
B) a person unable to read never will be bound.
C) the other contracting party knows of the signer's disability.
D) the offeror is similarly lacking in education.
When a mutual or bilateral mistake is one of law, then:
A) either party may void the agreement.
B) the contract generally is binding.
C) the contract is void automatically.
D) it always has the same effect as a mutual mistake of fact.
Jack sells Jim a used car that Jack falsely described as having been driven only 12,000 miles. Fraud has occurred if:
A) Jim bought the car solely because of its color.
B) Jim knew that the mileage was more than 12,000 miles.
C) Jim relied upon Jack's statement.
D) Jack's statement occurred after the sale.
I believe that I own a very valuable vase. I tell this to you and state that I will sell it to you for $800. I sell the vase to you, and you later find out that the vase is worth only $200. A fraud:
A) has occurred.
B) ordinarily has not occurred.
C) always can be based upon a statement of opinion or value.
D) none of the above.
Will the law enforce every promise?
B) Yes, with or without consideration.
C) Generally yes, if consideration amongst other elements is present.
D) None of the above.
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.
Inadequacy of consideration may be evidence of:
A) the exercise of undue influence.
B) taking advantage of the condition of the other party.
D) all of the above.
Which of the following will not be consideration for a promise?
A) a return promise
B) a forbearance
C) performance of acts the promisee was bound to perform but had vowed not to do
D) performance of a requested act
The effect of the making of a partial payment to satisfy an admitted debt is an example of the rule that:
A) past benefits cannot be consideration for a later promise.
B) a conditional promise may be consideration.
C) doing what one is bound to do is not consideration.
D) consideration must be adequate to be binding.
Consideration is not required in:
A) contracts for the sale of goods.
B) employment contracts.
C) agreements to modify employment contracts.
D) agreements to modify contracts for the sale of goods.
Which of the following is not a necessary element of promissory estoppel?
A) a bargained-for exchange
B) likelihood of substantial loss on the part of the promisee
C) promisee's foreseeable detrimental reliance
D) a promise
The phrase "time is of the essence" means that:
A) the court is in a hurry to dispose of the case.
B) performance under the contract at the times specified in the contract is vital or essential.
C) the contract expressly states that time is of the essence.
D) the price stated in the contract is subject to change without notice.
A contract to build a house is deemed performed when:
A) there has been substantial performance of the contract.
B) the house is approved by the city housing inspectors.
C) the house is approved by the owner's architect.
D) the house is approved by the owner.
When a second contract is made between two parties, it can be said that:
A) the original contract is canceled.
B) the later contract now displaces the first.
C) the intent of the parties will control regarding the effect of the agreement.
D) the modifying contract must be in writing.
The death or disability of a party to a contract discharges the contract when:
A) the obligation requires personal skill.
B) a payment of money is involved.
C) a house is to be painted.
D) none of the above.
The Bowling Bones were a successful singing group who contracted to perform at a rock concert. The Bones were aware that the promoter would sustain a substantial loss if they failed to perform. The members of the group were stricken with a virus that confined them to their beds. The promoter sued for breach of contract. What is the probable result?
A) They are liable for damages for breach of contract.
B) The contract was discharged by impossibility of performance.
C) The Bones must sing on the next available date.
D) The Bones have substantially performed their contract.
If a plaintiff seeking damages from a breach-of-contract action were to receive $1 in damages, the damages would most likely be classified as:
A) punitive damages.
B) exemplary damages.
C) nominal damages.
D) compensatory damages.
Consequential damages may be recovered if:
A) the damages were not a foreseeable consequence of the breach.
B) the damages reasonably follow the breach.
C) the breach did not cause the damages.
D) the loss exceeds $500.
The rule of mitigation of damages requires that a party injured by a breach of contract must:
A) take any and all steps possible to reduce the damages that will be sustained because of the breach.
B) discharge the contract before filing suit for breach.
C) hire someone else to perform the contract.
D) take reasonable steps to reduce the damages that would otherwise be sustained because of the breach.
Which is not a correct statement concerning the remedy of specific performance?
A) The subject matter of the contract generally must be unique.
B) An award of monetary damages would be an inadequate remedy.
C) The granting of specific performance is discretionary with the court.
D) It generally is available in all breach-of-contract cases.
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