Question 1

An exculpatory clause in an employment contract is not enforceable if it removes the employer's potential liability for injuries to employees.

Accepted Answer

A) True 
 B)False

Question 2

In general,courts consider the fairness of a contract when deciding if the contract is binding.

Accepted Answer

A) True 
 B)False

Question 3

After an accident with a driver for Onyx Security Company,Paul signs a covenant not to sue Onyx for damages in a tort action if it pays for the damage to his car. This covenant

Accepted Answer

A) bars recovery only if Onyx pays. 
B) is an illusory contract. 
C) is barred by the preexisting duty rule. 
D) is unconscionable. 
A) bars recovery only if Onyx pays. 
B) is an illusory contract. 
C) is barred by the preexisting duty rule. 
D) is unconscionable.

Question 4

Statutes often set forth rules specifying the terms of contracts.

Accepted Answer

A) True 
 B)False

Question 5

Carly is a minor.Without her parents' knowledge,she signs a contract to buy an airplane ticket to Hawaii for spring break. Carly's parents are

Accepted Answer

A) liable for the contract. 
B) not liable for the contract. 
C) liable for up to half the value of the goods in the contract. 
D) liable for up to one third of the value of the goods in the contract. 
A) liable for the contract. 
B) not liable for the contract. 
C) liable for up to half the value of the goods in the contract. 
D) liable for up to one third of the value of the goods in the contract.

Question 6

In some states,misrepresentation of age by a minor is enough to prohibit disaffirmance.

Accepted Answer

A) True 
 B)False

Question 7

Lucy,a minor,disaffirms a contract for necessaries without returning the goods.To Manny's Food Mart,the seller,Lucy is required to pay

Accepted Answer

A) nothing. 
B) the reasonable value of the goods. 
C) the sales price of the goods. 
D) the ultimate worth of the goods. 
A) nothing. 
B) the reasonable value of the goods. 
C) the sales price of the goods. 
D) the ultimate worth of the goods.

Question 8

Jake and John make an illegal contract that unjustly enriches Jake at the expense of John.A court will

Accepted Answer

A) not be concerned with the unjust enrichment of Jake. 
B) force Jake to pay damages to John. 
C) reform the contract to prevent undue burdens. 
D) enforce the contract as it was originally written. 
A) not be concerned with the unjust enrichment of Jake. 
B) force Jake to pay damages to John. 
C) reform the contract to prevent undue burdens. 
D) enforce the contract as it was originally written.

Question 9

Frugal Insurance Company sells a policy to Grover Company,in-suring the life of one of Grover's key executives. When the executive dies,Frugal re-fuses to pay,noting that it was not licensed to sell insurance in Grover's state and arguing that thus,its policy cannot be enforced. Grover can recover

Accepted Answer

A) the amount of the policy from Frugal in full. 
B) the amount of the premiums that Grover paid to Frugal. 
C) as much of the amount of the policy from Frugal as will cover Grover's costs. 
D) nothing. 
A) the amount of the policy from Frugal in full. 
B) the amount of the premiums that Grover paid to Frugal. 
C) as much of the amount of the policy from Frugal as will cover Grover's costs. 
D) nothing.

Question 10

Chris promises Dina $40,000 if she graduates from Eagle College.Dina enrolls in Eagle,attends full-time for four years,and graduates.When Dina asks Chris for $40,000,Chris says,"I don't re-member promising you $40,000.But if there was a promise,it's not en-forceable,because we didn't bargain for it.And even if there was a prom-ise that would other-wise be enforceable,I revoke it now." Can Dina en-force Chris's "prom-ise"? Why or why not?

Accepted Answer

Chris's promise is binding and Dina is e

Question 11

Brasilia,a real estate broker licensed only in Connecticut,con-cludes a land sale in Delaware.She can

Accepted Answer

A) collect the commission if it has not been paid. 
B) keep the commission if it has already been paid. 
C) foreclose on the property to obtain any unpaid amount. 
D) not collect the commission,keep it,or foreclose on the property. 
A) collect the commission if it has not been paid. 
B) keep the commission if it has already been paid. 
C) foreclose on the property to obtain any unpaid amount. 
D) not collect the commission,keep it,or foreclose on the property.

Question 12

Jolie signs a contract with Keaton,an unlicensed physician,to perform a medical procedure.This contract is enforceable by

Accepted Answer

A) Jolie. 
B) Jolie's medical insurance company. 
C) Keaton. 
D) no one. 
A) Jolie. 
B) Jolie's medical insurance company. 
C) Keaton. 
D) no one.

Question 13

Doug agrees with Elinor to sell methamphetamine to patrons of Elinor's nightclub Garden of Eden for 25 percent of the take.Doug sells the drugs but keeps all of the money.Elinor can

Accepted Answer

A) recover her share of the money only if she did not aid in the crime. 
B) not enforce the deal. 
C) recover the total amount of the sales. 
D) recover her costs but none of the illegal profit. 
A) recover her share of the money only if she did not aid in the crime. 
B) not enforce the deal. 
C) recover the total amount of the sales. 
D) recover her costs but none of the illegal profit.

Question 14

Duffy and Elbert agree to hijack a truck carrying a load of pecans. If Duffy later refuses to go through with the crime,Elbert can

Accepted Answer

A) enforce the agreement. 
B) obtain damages from Duffy in the amount of Duffy's probable share of the illegal profits. 
C) recover in quasi contract for the loss of his share of the illegal profits. 
D) do nothing. 
A) enforce the agreement. 
B) obtain damages from Duffy in the amount of Duffy's probable share of the illegal profits. 
C) recover in quasi contract for the loss of his share of the illegal profits. 
D) do nothing.

Question 15

A person who enters into a contract when he or she is intoxicated can void the contract if he or she did not comprehend the legal consequences.

Accepted Answer

A) True 
 B)False

Question 16

The state of Illinois enacts a usury statute.The purpose is to

Accepted Answer

A) establish a maximum rate of interest that may be charged for loans. 
B) establish a minimum rate of interest that may be charged for loans. 
C) prevent the misuse of money advanced as loans. 
D) prevent the misuse of money paid back on loans. 
A) establish a maximum rate of interest that may be charged for loans. 
B) establish a minimum rate of interest that may be charged for loans. 
C) prevent the misuse of money advanced as loans. 
D) prevent the misuse of money paid back on loans.

Question 17

A person who enters into a contract when he or she is intoxicated can void the contract under any circumstances.

Accepted Answer

A) True 
 B)False

Question 18

A release does not require consideration to be legally binding.

Accepted Answer

A) True 
 B)False

Question 19

Best Products,Inc.,hires Cole to develop and implement an e-commerce strategy for marketing Best's products. Cole signs a contract that in-cludes a clause prohibiting him from competing with Best during and af-ter the employment. Before the strategy is implemented,Cole resigns from Best's employ and opens a business to compete with Best. In Best's suit against Cole,what is the most important factor the court should consider in determining whether Cole should be allowed to compete with Best?

Accepted Answer

In determining whether Cole may compete

Question 20

Fact Pattern 10-1 
Sally contracts with Tasty Pizza Company to deliver its products.Both parties change their minds,however,and inform each other that they would like to cancel the contract.
-Refer to Fact Pattern 10-1.The next day,Sally changes her mind and again offers to deliver Tasty's products.Tasty is willing to deal,but for a new price.Sally and Tasty

Accepted Answer

A) may agree to a new contract,but it cannot include a new price. 
B) may agree to a new contract that includes the new price. 
C) must perform their original contract. 
D) must perform the part of their original contract that is executory. 
A) may agree to a new contract,but it cannot include a new price. 
B) may agree to a new contract that includes the new price. 
C) must perform their original contract. 
D) must perform the part of their original contract that is executory.

Exam 10: Consideration, capacity, and Legality

An exculpatory clause in an employment contract is not enforceable if it removes the employer's potential liability for injuries to employees.

In general,courts consider the fairness of a contract when deciding if the contract is binding.

After an accident with a driver for Onyx Security Company,Paul signs a covenant not to sue Onyx for damages in a tort action if it pays for the damage to his car. This covenant

Statutes often set forth rules specifying the terms of contracts.

Carly is a minor.Without her parents' knowledge,she signs a contract to buy an airplane ticket to Hawaii for spring break. Carly's parents are

In some states,misrepresentation of age by a minor is enough to prohibit disaffirmance.

Lucy,a minor,disaffirms a contract for necessaries without returning the goods.To Manny's Food Mart,the seller,Lucy is required to pay

Jake and John make an illegal contract that unjustly enriches Jake at the expense of John.A court will

Frugal Insurance Company sells a policy to Grover Company,in-suring the life of one of Grover's key executives. When the executive dies,Frugal re-fuses to pay,noting that it was not licensed to sell insurance in Grover's state and arguing that thus,its policy cannot be enforced. Grover can recover

Brasilia,a real estate broker licensed only in Connecticut,con-cludes a land sale in Delaware.She can

Jolie signs a contract with Keaton,an unlicensed physician,to perform a medical procedure.This contract is enforceable by

Doug agrees with Elinor to sell methamphetamine to patrons of Elinor's nightclub Garden of Eden for 25 percent of the take.Doug sells the drugs but keeps all of the money.Elinor can

Duffy and Elbert agree to hijack a truck carrying a load of pecans. If Duffy later refuses to go through with the crime,Elbert can

A person who enters into a contract when he or she is intoxicated can void the contract if he or she did not comprehend the legal consequences.

The state of Illinois enacts a usury statute.The purpose is to

A person who enters into a contract when he or she is intoxicated can void the contract under any circumstances.

A release does not require consideration to be legally binding.

The Legal and Constitutional Environment of Business

Courts and Alternative Dispute Resolution

Ethics and Business Decision Making

Tort Law

Intellectual Property

Internet Law,social Media,and Privacy

Criminal Law and Cyber Crime

Nature and Classification

Agreement in Traditional and E-Contracts

Defenses to Contract Enforceability

Third Party Rights and Discharge

Breach and Remedies

The Formation of Sales and Lease Contracts

Performance and Breach of Sales and Lease Contracts

Warranties and Product Liability

Negotiability, transferability, and Liability

Checks and Banking in the Digital Age

Secured Transactions

Creditors Rights and Bankruptcy

Agency Relationships

Employment Law

Sole Proprietorships, partnerships, and Limited Liability Companies

Corporate Formation, financing, and Termination

Corporate Directors, officers, and Shareholders

Investor Protection, insider Trading, and Corporate Governance

Personal Property and Bailments

Real Property and Landlord-Tenant Law

Insurance, wills, and Trusts

Liability of Accountants and Other Professionals

International Law in a Global Economy

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