Q&A Hero

Q: A clothing store that has opened a credit account with Judy, a college student, gets Judy's older sister Alice to agree to pay the amount owed on the account if Judy fails to do so. Which of the following statements is true for this scenario? A. Judy is the obligor and only she is contractually liable to the clothing store. B. Alice is the guarantor and she is primarily liable to make the payments. C. Judy is the obligor and her promise to the clothing store is conditional. D. Alice is the guarantor and Alice's contract must be in writing to be enforceable.

Q: According to the leading object doctrine, promises of third parties to a contract who are primarily motivated by a desire to secure some personal benefit: A. fall outside the scope of the statute of frauds. B. are covered by the statute of frauds. C. are estopped from recovery. D. have to be in writing to be enforceable.

Q: Miriam makes an oral agreement with John to sell him 200 acres of prime farmland for a mere $500. Their agreement is: A. enforceable in accordance with the statute of frauds. B. covered by the statute of limitations. C. enforceable only if promissory estoppel applies. D. unenforceable as it lacks a writing as required by the statute of frauds.

Q: A famous publisher makes an oral deal with Professor Cullison to write a new Legal Ethics book. The parties agree that Professor Cullison's work will be due in five years. Under this scenario, the contract is: A. enforceable. B. unenforceable. C. void. D. illegal.

Q: When parties to an oral contract have both fully performed their obligations under the contract, the parties are: A. allowed to rescind the contract. B. not allowed to rescind the contract. C. allowed to seek compensatory damages. D. not allowed to recover the value of performance.

Q: If an oral contract has been declared unenforceable by the court, yet one of the parties has rendered some performance under the contract that conferred benefits on the other party, he/she can recover the reasonable value of the performance in: A. collateral enforcement. B. quasi contract. C. the statute of frauds. D. parol evidence.

Q: The equitable doctrine of _____ allows some parties to recover under oral contracts which the statute of frauds would have ordinarily rendered unenforceable. A. estoppel by convention B. equitable estoppel C. proprietary estoppel D. promissory estoppel

Q: Under the U.N. Convention on the International Sale of Goods: A. a writing is required for contracts over $1,000. B. a writing is not required. C. a writing is always required. D. a writing is required for contracts of specially manufactured goods.

Q: Identify the true statement regarding collateral contracts. A. They do not need to be evidenced by writing to be enforceable. B. They are covered by the statute of frauds. C. They are considered to be original contracts. D. The guarantor is primarily liable to perform his contractual duty.

Q: A collateral contract involves: A. three parties and two promises, one of which is conditional. B. two parties and two promises, both are conditional. C. two parties and one promise which is conditional. D. three parties and two promises, both are conditional

Q: What factors do the courts consider in determining whether a contract is unconscionable?

Q: Oral contracts that come under the provisions of the statute of frauds are: A. void. B. illegal. C. unenforceable. D. valid.

Q: Explain the difference between a regulatory and revenue-raising statute.

Q: What are the exceptions to contracts under statute violation?

Q: Name the kinds of contracts courts often hold to be illegal because they violate public policy.

Q: Sam was an expert distance runner who entered into Big City Marathon. In order to participate, he had to sign a "General Release of Claim," which said that he assumed all risk of competition and released all claims against the Marathon and its sponsors. During the first mile, Sam was found unconscious, probably as a result of tripping and falling on his head. He died a few hours later. Sam's estate filed a wrongful death suit against Marathon. Is the suit barred by the exculpatory clause?

Q: Which of the following is a true statement for unconscionable contracts? A. The doctrine of unconscionability can be used to relieve people of their bad bargains. B. Any contract between two parties with unequal bargaining power is unconscionable. C. If the court finds a term of a contract to be unconscionable, it must hold the entire contract to be illegal and unenforceable. D. A court may refuse to enforce an unconscionable contract as contrary to public policy.

Q: Adhesion contracts fall under: A. contracts from unequal bargains. B. contracts injurious to public service. C. contracts to influence fiduciaries. D. contracts in restraint of trade.

Q: If a court finds a contract to be unconscionable, the UCC gives it the power to: A. enforce only the legal parts of the contract. B. relieve one party from liability for the consequences of his/her own negligence. C. prevent liability under willful misconduct or fraud. D. enforce the contract in a way that avoids an unconscionable result.

Q: Identify the true statement regarding unconscionable contracts. A. It protects clauses in fine print or in such technical language that an ordinary person would not understand their meaning. B. They may result when a party with superior bargaining power imposes unfair terms on the other party. C. They work on the basic assumption that public interest is best served by free competition. D. They are provisions in a contract that attempts to relieve one party from liability for the consequences of his/her own negligence.

Q: Harry Hotdog is hired as an accountant by a large Indianapolis-based accounting firm. The firm's attorney drafts an employment contract which contains the following clause: "Employee agrees that he will not engage in the practice of accounting in Indianapolis for one year after termination of his employment with this firm." Hotdog signs the contract, works for six months, and then resigns and opens his own accounting firm in Indianapolis. His former employer sues him for breach of contract, and is likely to: A. lose, because contracts that restrict trade are not considered illegal in Indianapolis. B. lose because the contract represented an unequal bargain. C. win, because Harry's act is a violation of the Blue laws. D. win, because the restriction has reasonable geographic and time restrictions.

Q: The legal concept of unconscionability: A. is a part of the doctrine of freedom of contract. B. establishes that certain classes of contracts are voidable. C. pertains to unequal bargains. D. is only present in contracts between consumers and large companies.

Q: Exculpatory clauses are generally unenforceable: A. if they seek to avoid charges of misrepresentation. B. if they seek to avoid charges of duress. C. if they seek to avoid charges of fraud and willful misconduct. D. if they seek to avoid charges of undue influence.

Q: Trade agreements are legal if: A. their sole purpose is to restrict trade. B. their ancillary purpose is to restrict trade indefinitely. C. their purpose is to recover punitive damages. D. their purpose is to protect interests created by the contract.

Q: A restraint that is merely ancillary to a contract may be legal if it is: A. designed to protect interests created by the contract. B. broader than reasonably necessary to protect the interests created by the contract. C. solely designed to restrain trade. D. meant to recover punitive damages for furthering public interest.

Q: Max is employed by a large law firm in a city of one million. His employment contract with the firm includes a promise on his part not to practice law within the city for ten years once he leaves the firm. His promise: A. is illegal as a contract injurious to public service. B. is only illegal if it violates state or federal antitrust laws. C. is illegal as a contract in restraint of trade. D. is illegal and will invalidate the entire employment contract.

Q: An agreement to restrain trade: A. is illegal under certain cases of the exculpatory clause. B. is never illegal in our democratic society. C. may be legal if it covers a reasonable geographic area and a reasonable time period. D. may be legal if it is contradictory to a contract that protects business interests.

Q: Which of the following statements is true about exculpatory clauses? A. Exculpatory clauses are always illegal. B. When an exculpatory clause is enforced, it can effectively relieve a party of liability for his own negligence. C. Exculpatory clauses are effective only when the party benefited by the clause owes a duty to the public. D. Exculpatory clauses are always valid and enforceable.

Q: The difference between a regulatory and revenue-raising statute depends on: A. legislative intent. B. enforceability. C. the constitutionality of the statute. D. societal interest.

Q: Identify the remedy used in cases involving wagering statues. A. Forfeiture of excess interest. B. Contracts are generally enforceable in such cases. C. There is no remedy in such cases. D. Weekday ratification of contracts.

Q: Identify the true statement regarding the idea of public policy. A. The court's view of public policy is determined by what the court believes is in the best interests of society. B. Public policy is resistant to any social or economic change. C. Courts have limited discretion in determining what constitutes a violation of public policy. D. The limited discretionary powers provide the legal system minimal flexibility which ensures a strict adherence to policies.

Q: Mayor Magnus wants to recruit a Harvard economist, Milton, to be the Chief Developer for the Small Town's economic development division. The legal cap on the job of Chief Developer is $60,000. Mayor Magnus offers Milton $100,000. The contract is: A. unconscionable based on unequal bargaining power. B. injurious to public service. C. exculpatory. D. enforceable.

Q: Which of the following statements is true for contracts to influence fiduciaries? A. This doesn't apply to agreements by fiduciaries that favor the interests of a third person at the expense of their principals' interests. B. Agreements contrary to public welfare are included under this provision. C. They operate as duress on the principal or beneficiary who is entitled to the fiduciary's loyalty. D. Such contracts may be enforced upon full disclosure to, and agreement of, beneficiary.

Q: Regulatory statutes are designed primarily to: A. raise money. B. protect the public. C. define a public employee's personal interests and public duties. D. provide the legal system with a degree of healthy flexibility.

Q: Statutes that require proof of character and skill are considered to be: A. regulatory. B. usury. C. wagering. D. revenue-raising.

Q: Failure to pay for a license which is required for revenue-raising purposes: A. affects the legality of the unlicensed person's agreements and it will be considered void. B. results in generally unenforceable contracts. C. does not affect the legality of the unlicensed person's agreements. D. generally imposes a nominal fine for violation.

Q: Which of the following statements is true for contracts made illegal by statutes? A. Barbers and beauty operators do not require licenses for working. B. Blue laws do not regulate the sale of alcohol. C. Agreements violating wagering statutes are regarded illegal only in certain states. D. Forfeiture of excess or all interest is a common penalty for violation of usury laws.

Q: Blue laws: A. prohibit performing certain acts on Sunday. B. regulate betting. C. regulate interest charged for the use of money. D. regulate licensing activities.

Q: Ali enters into a contract with Billy's Brewpub to be a bartender. Ali does not know that Billy's does not have a liquor license. Under these circumstances: A. Ali can recover only for emotional distress. B. Ali can recover the wages for bartending before she learned of the violation. C. Ali can recover the wages for bartending for the entire term of her employment. D. Ali cannot recover any of her wages as illegality makes the contract void.

Q: When a person, whom a regulatory statute seeks to protect, enters into an agreement in violation of the statute, the protected person: A. is only allowed to enforce the agreement. B. may recover only for economic loss. C. cannot recover for any loss but may enforce the agreement. D. may either enforce the contract or recover any consideration he/she has parted with.

Q: A party which enters into an illegal contract may recover any consideration given when: A. the illegal act has been performed and the party has reported the illegality to law enforcement. B. the party rescinds the contract before any illegal act has been performed. C. the illegal act has been performed and the party demonstrates an unequal bargain thereof. D. the party rescinds the contract immediately after the illegal act has been performed.

Q: If a part of a divisible contract is illegal: A. the whole contract is void. B. the illegal parts will be removed and the legal parts remain in force. C. the whole contract will be unenforceable. D. the whole contract is still enforceable.

Q: ____ is an example of an illegal wager. A. Stock transactions B. Betting on the performance of a stock C. Commodity transactions D. Risk shifting agreements

Q: Which of these laws prohibit charging more than a stated amount of interest for the use of money? A. Rent control law B. Antitrust law C. Usury law D. Blue law

Q: When one or both parties to an illegal bargain are ignorant of the facts that made the bargain illegal, courts will: A. never allow either party to recover damages for breach of the agreement. B. allow recovery for performance rendered before the parties learned of the illegality. C. declare the bargain unconscionable. D. regard the contract a serious threat to public welfare and declare it void.

Q: A contract of adhesion is not in violation of public policy.

Q: The courts have no power over unconscionable contracts.

Q: Which of the following reasons is applicable for voiding a contract based on illegality? A. It requires the commission of a misdemeanor. B. It is in violation of the Code alone; not the common law. C. It is contrary to public policy. D. It protects the interests created by the contract to a reasonable measure.

Q: Statutes that impose a significant license fee and allow anyone who pays the fee to obtain a license are classed as regulatory.

Q: Agreements that create a conflict between a public employee's personal interest and public duties are illegal and contrary to public policy.

Q: Exculpatory clauses are generally enforceable if they do not involve a duty to the public.

Q: Agreements designed solely to restrict trade are legal.

Q: Rent control laws have been implemented to limit the exercise of unequal bargaining power.

Q: Blue laws are uniform across all states in the country.

Q: A party to an illegal contract who is fully aware of the contract's illegality can fully recover damages.

Q: The courts allow recovery if one or both of the parties to an illegal bargain are ignorant of the facts that made the bargain illegal.

Q: One of the primary reasons for not enforcing illegal contracts is to deter people from entering into such agreements in the first place.

Q: A person who rescinds an illegal contract before any illegal act has been performed can usually recover any consideration he has given the other party.

Q: Wagering, risk-shifting, and speculative bargaining agreements are all regarded illegal by statutes.

Q: The violation of usury laws may require the forfeiture of interest and principal.

Q: When might a court grant relief for a unilateral mistake even if it is negligent?

Q: An agreement is illegal if it calls for behavior that violates a statute, but not a general rule of public policy.

Q: Explain the difference between duress and undue influence.

Q: How do cases of mistake differ from fraud and misrepresentation?

Q: Sargent put $5,000 worth of stocks and bonds into an asset management account at Fido Investments. One month later, his account statement indicated that he had a balance in his account of $5 million. Sargent quickly withdrew this amount from his account and put it into a Swiss bank account. Can Fido rescind its payment of $5 million to Sargent on the grounds of mistake? A. No, because Sargent had given value consideration. B. Yes, because even though Fido was at fault, Sargent was well aware of Fido's mistake in crediting the extra amount to his account. C. No, because Fido should have exercised reasonable care while crediting the amount to Sargent's account. D. Yes, because Fido stands to suffer huge material loss without the rescission.

Q: There is no voluntary consent in a mutual mistake if: A. there is a confidential relationship. B. the mistaken party is able to rescind under certain conditions. C. the plaintiff is induced to make an unfavorable agreement. D. there is untrue belief by both parties about a material fact.

Q: Harry owns a Cadillac and a Porsche. Bob has always wanted a Porsche and knows Harry owns one. Harry decides to sell his Cadillac and buy a BMW. A mutual friend of Bob and Harry tells Bob, "Harry's selling his car." Thinking Harry is selling the Porsche (he does not know he also has a Cadillac), Bob calls Harry and says, "I'll give you $9,500 for your car." Harry, thinking Bob is talking about the Cadillac, says, "You've got a deal." On what grounds is the above agreement open for rescission? A. Mutual mistake B. Fraud C. Misrepresentation D. Unilateral mistake

Q: Why do courts require justifiable reliance in misrepresentation and fraud?

Q: Williams bought a house from Smith. He was not told before the sale that a woman and her four children had been murdered there 10 years ago. He learnt about this from a neighbor after the sale. Williams sued Smith and his real estate agent, seeking to rescind the sale. Can he rescind the contract?

Q: An auction house puts a painting up for sale, which it believed to be and represented as Pablo Picasso's "Acrobat and Young Harlequin." An anonymous Japanese buyer, also believing it to be Picasso's original work, bought it for $50 million. Sometime later the buyer had the painting appraised for insurance purposes, and the appraiser discovered that it was a forgery worth only a few thousand dollars. Can the buyer rescind the contract? If so, on what basis? A. The buyer cannot rescind because his mistake was negligent; he should have investigated the authenticity of the work before bidding on it. B. The buyer can rescind on the basis of unilateral mistake. C. The buyer cannot rescind because the auction house did not intentionally mislead him about the authenticity of the painting. D. The buyer can rescind on the basis of mutual mistake.

Q: Bully Corporation contracted to sell Wimp Corporation materials, that Wimp needed to fulfill a contract it had with a third party. Knowing that Wimp was in desperate need of the materials, Bully called Wimp the day before delivery was due and threatened to withhold delivery unless Wimp agreed to pay a higher price. Because Wimp could not get the materials elsewhere and would suffer a huge financial loss without them, it agreed to pay the higher price. Wimp later asserts that its promise to pay the higher price is unenforceable because it was the product of duress. Which of the following is a true statement with regards to this situation? A. If the court agrees that Wimp's promise to pay the higher price was the product of undue influence, the contract will be ruled to be void. B. Under modern contract law, Bully's threat to cause Wimp economic harm could be considered duress and the contract may be considered to be voidable. C. Bully's threat could not be considered duress because Bully had a legal right to seek a higher price for its goods. D. Under modern contract law, Bully's threat to cause Wimp economic harm may be undue influence but not fraud.

Q: In a duress, there is no voluntary consent if: A. either party can rescind. B. there is a confidential relationship between the parties. C. the plaintiff's free will has been overcome. D. the mistaken party is able to rescind under certain conditions.

Q: Most cases charged with undue influence involve: A. force or threat of injury resulting in economic damages. B. misstatements about the content or legal effect of something usually contained in a form or preprinted contract. C. unilateral or mutual mistakes resulting in serious injustice. D. long-time advisers of elderly/sick people, who are alleged to have gotten the victim to make gifts/sales at unfair prices.

Q: The heirs of Mavis, a victim of Alzheimer's, found on her death that she had sold her house to her lawyer for $50,000, a week before her death. The market value of the house at the time of the sale was $500,000. These heirs may attempt to have the sale set aside, arguing that it was the product of: A. undue influence. B. duress. C. fraud. D. misrepresentation.

Q: Mutual mistakes may arise: A. only when parties unintentionally use terms in their contract that are ambiguous. B. only when parties are mistaken about the subject matter of their agreement. C. when parties intentionally use terms in their contracts that are ambiguous which leads to mistaken notions regarding the subject matter of the agreement. D. when there is unintentional usage of ambiguous terms in the agreement and when the matter of the agreement is not properly understood by either party.

Q: The difference between duress and undue influence is: A. their remedy. B. the interference with a party's ability to resist entering into an agreement. C. the relationship between the parties at the time of the contract. D. the type of threat used.

Q: To prove a case of duress, modern courts require evidence of: A. only physical injury. B. only a wrongful threat. C. both threat and injury. D. statements amounting to puffery.

Q: Which of the following statements is true for duress? A. The reason behind the idea of duress is that mistake may prevent the "meeting of the minds" required by contract law. B. The basic idea behind duress is to protect the old, the timid, and the physically or mentally weak from those who gain their confidence and attempt to take advantage of them. C. The term duress is used in contract law to describe the situation in which one or both of the parties to an agreement acted under an untrue belief about the existence or nonexistence of a material fact. D. Generally, the threat of a well-founded civil suit is not duress.

Q: Which of the following is a remedy for fraud? A. Rescission of the contract by the buyer. B. Disaffirming the contract and then suing in tort for damages resulting from the fraud. C. Ratification of the contract by the buyer. D. Restitutionary damages.

Q: The practical difference between the remedies for misrepresentation and fraud is that: A. a victim of misrepresentation can only sue for punitive damages. B. a victim of fraud can sue for punitive damages as well as for damages from the tort of deceit. C. a victim of fraud cannot sue for punitive damages. D. a victim of misrepresentation can only rescind the contract.