Graded Homework

Business
Law 1

Chapters
12-14

The
first 35 questions are worth 3 points each. The last question is worth up to 10
points. It is possible to score 115 points on this test. The questions that are
not multiple choice are true and false questions.

1. Dana gives care to Marnie’s dog when Dana finds the dog injured
   on the side of the road. After Marnie founds out and claims her dog, she
   promises to reimburse Dana for the cost of feeding and caring for her dog.
   This promise is binding.

1. In the case of Denney v. Reppertthe court allowed the
   employees of a bank to collect a reward because they supplied the
   information that led to the arrest and conviction of a bank robber.

1. Under common law, in order to be enforceable, a modification of
   an existing contract must be supported by new, mutual consideration.

1. D owes C a past due undisputed debt of $500. D sees C in a bar
   and pays him $400. C then says to D, “Forget about the other $100 you owe
   me. I’m glad to get the $400.” C’s promise to discharge the remainder of
   the debt is binding and he cannot recover the other $100.

1. Contracts binding without new consideration include promises to
   pay debts barred by the statute of limitations and debts discharged in
   bankruptcy.

1. Nora promises to give Owen $500 because he is poor and she
   feels sorry for him. Nora’s promise is
1. enforceable because society wishes to encourage people to keep
   their promises
2. enforceable because the redistribution of wealth is a valid
   social objective
3. not enforceable because Owen has not given any consideration
   in return
4. not enforceable because Nora could have given more money

1. Tom promises to design a website for United Telecommunications,
   Inc. To support a contract, the consideration exchanged by the parties
   must be
1. equally valuable
2. fairly reasonable
3. legally sufficient
4. reasonably fair.

1. Jane promises to pay her secretary $1,000 in consideration of
   the services the secretary has provided over the previous ten years. Jane
   later changes her mind and doesn’t pay the $1,000. Jane is
1. liable for payment of the $1,000
2. liable only if the promise was written
3. not liable because the secretary’s consideration is in the
   past
4. not liable because the consideration was accidental

1. Nancy promises to pay Tilly $100 a day to come work for her.
   Tilly agrees and quits her current job. If Nancy fails to provide a job
   for Tilly, then Tilly will have a cause of action based on
1. promissory estoppel
2. the statute of limitations
3. a covenant not to sue
4. uncertain performance

1. Aunt Ellie promises her 21 year old nephew Robbie $500 if he
   quits smoking for two months. If Robbie does, is there a binding contract?
1. no, because Robbie gave no benefit to Aunt Ellie
2. no, because Robbie did not suffer any detriment
3. yes, because stopping smoking will benefit Robbie
4. yes, because Robbie gave up a legal right

1. Bargains are illegal if
   they violate a crime or tort but not if they are merely against public
   policy.

1. The purpose of an exculpatory clause in a contract is to excuse
   one from liability for his/her own tortious conduct.

1. A loan made at a usurious rate will make it impossible for the
   lender to collect either the principal or the interest.

1. American courts generally enforce gambling agreements because
   friendly bets on the Super Bowl and the World Series promote good will
   among people.

1. An adhesion contract is offered on a “take it or leave it”
   basis.

1. Quinn agreed to pay Thorpe $500 if she would not testify
   against him in a court trial. Thorpe agreed and did not testify against
   Quinn. If Quinn does not pay and
   Thorpe sues, a court will award Thorpe the $500 payment.

1. Nell gives Al $100 in return for Al’s promise to defame Sara.
   Nell hopes to ruin Sarah’s chances at a promotion. Nell finds out that Al
   did not hold up his end of the agreement. Which of the following
   statements is true?
1. Nell can get the money back from Al through litigation
2. Nell can get the money back and force Al to do as he promised
3. Nell can neither get the money back nor force Al to do as he
   promised
4. Nell can force Al to act through an appeal to the courts, but
   Al get to keep the $50

1. A(n)___________ is designed to protect the public from
   unqualified practitioners.
1. exculpatory clause
2. revenue license
3. regulatory license
4. usury measure

1. An adult may disaffirm a contract entered into with a minor if
   the minor has lied about his age.

1. Food, clothing and shelter are among things that courts have
   been willing to define as “necessaries” with respect to contracts made
   with minors.

1. Nora signs a contract to buy a car just before reaching the age
   of majority. After reaching the age of majority, Nora does not take
   possession or make payments. Nora has
1. disaffirmed the contract
2. ratified the contract
3. rescinded the contract
4. none of the above

1. Max purchases a motorcycle while still a minor and continues to
   maintain it and operate it after reaching the age of majority. Max has
1. disaffirmed the contract
2. ratified the contract
3. rescinded the contract
4. none of the above

1. Sally goes away to college at 17, lives on her own and pays her
   own rent and utility bills. Nevertheless, if she makes a contract to buy a
   television set, she may assert her minority to set aside the contract.

1. Mel, age 17, but who looks 18 or older, makes a contract to buy
   a car from Maisie, who is of the age of majority. Maisie finds out Mel’s
   age. In general, Maisie cannot get out of the contract.

1. A mental illness or mental defect of one of the parties to a
   contract automatically, in each and every instance, makes a
   contract void.

1. Jay is developmentally disabled but has not been adjudicated an
   incompetent person by the court. Any contract Jay enters into is voidable
1. only if he does not know he is entering into the contract
2. only if he lacks the mental capacity to comprehend the
   consequences
3. both are correct
4. neither is correct

1. John agrees to sell his sports equipment store to Kay and, as
   part of the sale, promises not to open a similar store anywhere in the
   entire United States for 20 years. John’s promise is
1. an unreasonable restraint of trade like all covenants not to
   compete
2. unreasonable in terms of geographic area and time
3. unreasonable in terms of Kay’s goodwill and reputation
4. valid and enforceable

1. Sal telephoned the pet store and told the owner to deliver to
   his girlfriend a puppy he had looked at the day before. Sal asked that the
   cost of the dog be charged to his account. This agreement was
1. binding on Sal because it is a promise to pay another’s debt
2. binding on Sal because it is a promise to pay his own debt
3. not binding on Sal because an oral promise to pay another’s
   debt is not binding
4. not binding on Sal because there was no consideration for the
   oral promise

1. Michael is 17 years old and earns extra money by repairing
   cars. Nathan, who is 21, brings his car to Michael for repairs; Michael
   ruins the brake system because of his inexperience. If Nathan sues Michael
   for negligence in performing the auto repair contract, in most states
   Michael will have no liability, because the tort of negligence and the
   auto repair contract are connected.

1. A minor’s disaffirmance of a contract must come either during
   minority or within a reasonable time after the minor reaches majority.

1. Ratification of a contract, once effected, is final and cannot
   be withdrawn.

1. Anna is 88 years old and, after a hearing, was deemed
   incompetent and placed under the legal guardianship of her daughter. One
   day Anna receives a phone call from a health insurance salesman and
   purchases a $400 per month Medigap insurance policy.
1. the contract is valid
2. the contract is voidable by Ann or her daughter
3. the contract is void
4. the contract is valid but unenforceable

1. Steve purchases a truck from Belk Sales. Steve is 17. He wrecks
   the vehicle and attempts to disaffirm the contract and have Belk repay him
   all that he has paid. In the majority of jurisdictions, including New
   York, what would happen?
1. Steve would be out of luck
2. Steve must have the truck repaired
3. Steve will receive his money less the depreciation in value of
   the vehicle
4. Steve may simply return the vehicle and get his money back

1. Ratification of a contract can occur in which of the following
   ways?
1. through express language
2. as implied by conduct
3. through failure to make a timely disaffirmance
4. all of the above
5. none of the above

1. Percy, age 17, purchased a used mobile home from a dealer for
   $20,000. The price is twice the reasonable value of that mobile home. One
   month later Percy wishes to disaffirm the contract. If the mobile home is
   considered a necessity, then
1. Percy can disaffirm the contract based on the wrongful act of
   the dealer
2. Percy can disaffirm the contract because a minor can live in a
   rental apartment and does not need a mobile home
3. Percy can return the mobile home but may be liable for the
   reasonable value of the use of the mobile home
4. Percy must keep the mobile home and abide by the terms of the
   contract

The following is worth up to 10 points.

1. Sam Student, an avid outdoorsman, promises to act as a guide on
   a fishing trip for a group of visiting alums. The alums agree to pay him
   $250 for his services. Sam guides them to a great fishing spot, but they
   then discover that Sam does not have a fishing license. They refuse to pay
   him saying that because he was unlicensed, the contract is unenforceable
   because it is an illegal bargain. Will Sam be able to collect his money
   from them? Why or why not? Discuss this in the context of licensing
   statutes, their purpose and their effect on a contract, if any.