Question

QUESTION 11 In May, Miguel, a 17-year-old college student, was introduced to Bluestone, the operator of a restaurant. Miguel and Bluestone entered into a written agreement whereby Bluestone hired Miguel as a waiter for the summer of 2020. Miguel failed chemistry and decided that instead of working, he would go to summer school. Miguel immediately disaffirmed his obligation with Bluestone. Bluestone sues Miguel. What rights, if any, does Bluestone have against Miguel?

a. Bluestone has the right to seek damages from Miguel, but Miguel can plead Statute of Frauds as a defense.

b. Bluestone has no rights against Miguel.

c. Bluestone has the right to seek damages from Miguel.

d. Bluestone may ask a court to enforce the agreement with Miguel.

QUESTION 12 The Uniform Commercial Code would be applied in which of the following situations?

a. A contract for sale of patent rights

b. A contract to buy living room furniture

c. A contract for the purchase of farmland

d. A contract for landscape services

QUESTION 13 Stan purchased 400 pairs of gloves from Isaac at a contract price of $800. Fifty of the gloves were defective, and a dispute arose as to the amount due under the contract. Stan refuses to pay the $800, and Isaac is threatening to sue. Which of the following is correct with regard to this transaction?

a. If Isaac agrees to accept $600 to settle the dispute and Stan agrees to pay that amount, the substitute agreement is enforceable.

b. If Isaac agrees to accept $600 to settle the dispute and Stan pays that amount, Isaac can still sue for the balance of $200 and will win the lawsuit.

c. Stan is under a pre-existing legal obligation to pay the $800.

d. Both (b) and (c).

QUESTION 14 Mona asserts that a contract she entered into with Nate is unenforceable. Defenses to the enforcement of a contract include:

a. the lack of a party’s assent.

b. adverse economic consequences.

c. results that do not match expectations.

d. a desire not to perform.

QUESTION 15 Maxine offered to sell her video camera to Tom for $200 and also stated to Tom, "I will give you two weeks to accept my offer." One week later Tom learned that Maxine had sold the video camera to Cindy.

a. Maxine has revoked her offer to Tom.

b. Maxine's offer is a firm offer and she must sell Tom a video camera for $200.

c. Maxine must get the camera back from Cindy if Tom accepts withing two weeks.

d. Both (b) and (c) are appropriate alternatives in this case.

QUESTION 16 Belle enters into a contract to subdivide and sell housing lots in Cole’s hillside field if Dell City annexes the property within the next year. Belle’s duty to perform is:

a. irresolute b. illusional c. absolute d. conditional

QUESTION 17 Central Construction Company (CCC) begins building a restaurant for Diners’ Cafe Corporation, but after two months demands an extra $100,000. Diners’ agrees to pay. If CCC offers, as a reason for the extra $100,000, that unforeseen soil conditions will add considerable cost to the project, the agreement is:

a. enforceable because of unforeseen difficulties

b. unenforceable due to the preexisting duty rule.

c. unenforceable as an illusory promise.

d. enforceable as an accord and satisfaction.

QUESTION 18 In May, Miguel, a 17-year-old college student, was introduced to Bluestone, the operator of a restaurant. Miguel and Bluestone entered into a written agreement whereby Bluestone hired Miguel as a waiter for the summer of 2020. Miguel at the same time took out a $5,000 student loan from Apple Bank in Brooklyn to pay his upcoming college expenses at Baruch. Miguel failed chemistry and decided that instead of working, he would go to summer school. Miguel immediately disaffirmed his obligations with Apple Bank and Bluestone. Apple Bank sues Miguel. What rights, if any, does Apple Bank have against Miguel?

a. Apple Bank may ask a court to enforce the agreement with Miguel.

b. Apple Bank has no rights against Miguel.

c. Apple Bank may ask Miguel to ratify the agreement.

d. Both (b) and (c).

QUESTION 19 Keanna wants to buy an 8-passenger car suitable for a family. The salesperson tells her that the two-seat sports car Keanna sees on the car lot would be just perfect for 8 people. Keanna test drives the car and then buys it.

a. The salesperson is a fiduciary.

b. Keanna has a valid cause of action for fraud.

c. The element of scienter is missing in this fact situation.

d. Keanna was not justified in relying upon the salesperson's representation that the car would seat 8 people.

QUESTION 20 Nell gives Al $50 in return for Al's promise to steal Sara’s cell phone. Nell finds out that Al did not hold up his end of the agreement. Which of the following statements is true?

a. Nell can get the money back and force Al to do as he promised.

b. Nell can force Al to act through an appeal to the courts, but Al gets to keep the $50.

c. Nell can get the money back from Al through litigation.

d. Legally, Nell can neither get the money back nor force Al to do as he promised.

QUESTION 21 Anna offers to sell four acres of land to Jessica for $8,000 and further offers to keep the offer open for one month if Jessica will pay her $150 for the privilege. Jessica pays Anna $150. Which statement describes the payment of $150?

a. A unilateral contract has been formed.

b. An implied in fact contract has been formed.

c. This is a formal contract.

d. This is an option.

QUESTION 22 Gary mails an offer to Brian on June 15. Brian receives the offer on June 16. Gary mails a revocation of the offer on June 17. Brian mails a letter of acceptance on June 18 and Gary receives the acceptance on June 20. Brian receives the revocation on June 19. Was a contract formed?

a. Yes, on June 18

b. Yes, on June 16

c. No, the offer was revoked before acceptance

d. Yes, on June 20

QUESTION 23 Albert found a stone in his yard and took it to Bob, a jeweler, for evaluation. Although Bob knew what the stone was, he told Albert that he wasn't sure as to the nature of the stone, but that he thought it was a topaz. Bob then offered to buy the stone for $25 and Albert agreed. Later Albert found out the stone was an uncut diamond worth about $700.

a. The sale was a valid contract that should be enforced by the law.

b. This contract can be rescinded based upon mistake as to the identity of the subject matter.

c. This contract can be rescinded based upon fraud.

d. This contract cannot be rescinded based upon fraud.

QUESTION 24 Which of the following would NOT require writing under the statute of frauds?

a. Where a landscaper agrees to landscape the lot surrounding an office building

b. Where the buyer of a five-acre lot pays the $40,000 purchase price, thus fully performing his obligation

c. Where a painter enters into an agreement to paint the George Washington Bridge within one year

d. Where a renter agrees to rent a building for a 5-year period

QUESTION 25 Paul and Ringo live in Queens, NY. Paul lends Ringo $1000, to be paid in 1 year. Ringo is to pay monthly installments of $100 per month to repay the loan. The loan agreement is:

a. Enforceable because the amount to be repaid is exactly the minimum interest rate.

b. Unenforceable because the amount to be repaid is above the maximum interest rate.

c. Unenforceable because the amount to be repaid is exactly the maximum interest rate.

d. Enforceable because the amount to be repaid is below the minimum interest rate.

QUESTION 26 Vincent entered into a contract to buy Davina’s collection of rare coins. Vincent mailed payment of $10,000 for the coins to Davina, but now Davina tells Vincent, "I'll never part with these coins." Are the following remedies available to Vincent?

a. Restitution: No; Specific Performance: No

b. Restitution: Yes; Specific Performance: No

c. Restitution: No; Specific Performance: Yes

d. Restitution: Yes; Specific Performance: Yes

QUESTION 27 Al has a tax service and accounting business in Redwood City. He decides to move to Center City, which is 150 miles away and sells his accounting practice to Able and Baker, a CPA firm. In the sales contract, he agrees that he will refrain from practicing accounting anywhere within a 20-mile radius of Redwood City for a period of two years. However, on weekends he returns to his house in Redwood City, and when clients call him, he meets with them in his home.

a. Al is in violation of the sales agreement.

b. The two-year provision is likely to be held invalid, because it is too long a period of time.

c. The agreement is invalid, because it is an illegal restraint of trade.

d. The agreement is illegal, because it is a violation of public policy.

QUESTION 28 On April 27, 2020, Sam sends a letter to Jane offering to clean and paint the exterior of Jane’s house for $3,000. The letter which is signed by Sam, states that his offer will remain open for one month. Under New York Law:

a. Sam can revoke the offer at any time.

b. Sam can only revoke the offer before May 27, 2020.

c. Sam cannot revoke the offer before May 27, 2020.

d. None of the above.

QUESTION 29 Moore Properties, Inc., offers in writing to sell to New Development Corporation (NDC) a certain half-acre of land for “$112,000.” After New Development signs the offer in acceptance and returns it, Moore discovers that the price should have been stated as “$121,000.” Moore’s misstatement of the price is:

a. unconscionable. b. a fraudulent misrepresentation. c. a bilateral mistake. d. a unilateral mistake.

QUESTION 30 Aunt Eliza promises her 21-year-old nephew, Aaron, that she will pay him $200 if he quits drinking for one month. If Aaron quits drinking for one month, is there a binding contract?

a. No, because Aaron gave no benefit to Aunt Eliza

b. Yes, because Aaron gave up a legal right

c. No, because Aaron did not suffer any detriment

d. Yes, because stopping smoking will benefit Aaron’s health

Answer 1

11. b.

Reason: Miguel is a minor and a minor can disaffirm a contract as a minor is not legally bound to carry out the terms of the contract.

12. b.

Reason: UCC applies only to movable goods and hence does not apply to sale of patents. Also, UCC does not apply to real estate transactions and services.

13. a.

Reason: A substituted agreement replaces the original contract between the parties.

14. a.

Reason: A contract is unenforceable if a party's consent is due to threat / coercion / improper persuasion.

15. d.

Reason: Since Maxine has not communicated her revocation of the offer, she is bound to sell the video camera to Tom, if he accepts the offer within the time limit of 2 weeks.

16. d.

Reason: Conditional Contract is a contract which is enforceable only if another agreement is performed or conditions are satisfied. It is also called Hypothetical Contract.

17. a.

Reason: A contract is enforceable if unforeseen difficulties arise during the course of performance of the contract which leads to modifications in the terms of the contract.

18. b.

Reason: Miguel is a minor and the contract is not enforceable.

19. b.

Reason: Fraudulent misrepresentation made by the sales person. He has made a statement knowing it to be false.

20. d.

Reason: Illegal Contract is void.

21. b.

Reason: A contract is implied on performance of an obligation as mentioned in the offer.

22. c.

Reason: An offer is said to be revoked if it is communicated before acceptance.

23. b.

Reason: Where the parties to a contract have different subject matters in their minds, the contract is void.

24. b.

Reason: A contract is implied on performance of an obligation as mentioned in the offer. It is a legal contract.

25. d.

Reason: Interest rates of 25% of more is of criminal usury.

26. d.

Reason: Breach of contract and hence liability for both restitution and specific performance.

27. a.

Reason: Restraint of trade contract is legal if it is for a similar business within a specified geographical area and for a specified period.

28. c.

Reason: Offer can be revoked any time before acceptance.

29. d.

Reason: Mistake on the part of one party.

30. b.

Reason: Binding contract since the offer was accepted.