BLT&E-7e: Practice Quiz Chapter 8: Introduction to Contracts

1. A contract may be defined as: a. a nonbinding promise to act. b. a promise or agreement that may be enforced in court. c. an agreement that always involves parties who are not family members. d. an agreement that always involves people over the age of twenty-one.

Answers: a. Incorrect. A contract is a binding agreement. b. Correct. What distinguishes a contract from a mere promise is the contracts enforceability in a court of law. c. Incorrect. You may contract with family members. d. Incorrect. You need not be twenty-one or older to enter into a valid contract. 2. In order to determine a partys intent in a contract case, a court will apply: a. the subjective theory of contracts. b. the alternate-party theory of contracts. c. the consideration theory of contracts. d. the objective theory of contracts.

Answers: a. Incorrect. Courts are concerned not with a partys personal, or subjective intent, but rather with the objective facts of the case. b. Incorrect. There is no alternate-party theory of contracts. c. Incorrect. There is no consideration theory of contracts. d. Correct. In contract disputes, a court will determine a contract partys intent by looking at the outward, objective facts, as they would be interpreted by a reasonable person. 3. In contract law, consideration means: a. the genuine consent of both parties. b. the legality of the subject matter of a contract. c. something of value received or promised. d. the ability of a party to enter into a legal contract.

Answers:

a. Incorrect. Consideration does not mean the genuine consent of parties. b. Incorrect. The legality of the subject matter of a contract is not consideration. c. Correct. Consideration is something of value that one party to a contract offers to the other party. d. Incorrect. The ability of the parties to enter into a contract is known as contractual capacity. 4. Which of the following IS NOT a basic element of a valid contract? a. Integrity. b. Agreement. c. Consideration. d. Contractual capacity.

Answers: a. Correct. Integrity is not a basic element of a valid contract. b. Incorrect. Agreement is a basic element of a valid contract. c. Incorrect. There must be a bargained-for item or promise that is exchanged to have a valid contract. This is a basic element of a contract. d. Incorrect. Parties to a contract must have the legal capacity to enter into a contract. This is a basic element of a contract. 5. If you offer Sally $50 for her used business law text and she agrees to sell it to you for that amount, you and Sally have formed: a. a bilateral contract. b. a unilateral contract. c. an executed contract. d. no contract at all.

Answers: a. Correct. You made an offer to Sally, which she accepted. Your exchange of promises to perform has created a bilateral contract. b. Incorrect. In this situation, Sally did not have to hand over her book to you to accept your offer. All she had to do was agree (promise) to do so in the future. In a unilateral contract, in contrast, the offer is phrased so that the offeree can accept the offer only by completing the contract performance. c. Incorrect. Because you and Sally have not yet performed your contractual promises, the contract is not yet executed. d. Incorrect. Assuming that you are legally competent to enter a contract, this is a valid bilateral contract.

6.

Which of the following elements NEED NOT be proved to establish that an implied contract exists? a. The defendant could have rejected the goods or services but did not. b. The defendant was unable to reject the goods or services. c. The plaintiff provided some good or service to the defendant. d. The plaintiff expected payment for some good or service and the defendant should have known this.

Answers: a. Incorrect. No contract will exist if the defendant did not have the opportunity to reject the goods or services. b. Correct. The plaintiff must show that the defendant COULD have rejected the service or property and did not. c. Incorrect. The plaintiff must show he or she provided some good or service to the defendant. d. Incorrect. This is a necessary step in proving that an implied contract exists. 7. If someone would be unjustly enriched unless that person were held liable for the benefits that he or she has received, a court may create and impose on the parties: a. an executory contract. b. a quasi contract. c. an implied contract. d. a void contract.

Answers: a. Incorrect. An executory contract is an actual contract that has not yet been fully performed. b. Correct. To avoid unfairness or injustice, a court may create and impose on the parties a quasi contract. c. Incorrect. An implied contract is an actual contract, implied by the parties actions and the circumstances. In contrast, an implied -in-law (quasi) contract is a fictional contract. d. Incorrect. By definition, a void contract is not a contract at all.

8.

An example of a void contract would be: a. a contract formed for an illegal purpose. b. a contract entered into by a minor without his or her parents consent. c. a contract for the sale of alcohol to a competent adult. d. a contract for the sale of land to a competent adult.

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a. Correct. If the purpose of a contract is illegal, the contract will generally be deemed void. b. Incorrect. Contracts entered into by minors (those under the age of eighteen, usually) are not void contracts, although they may be voidable at the option of the minor. c. Incorrect. A contract for the sale of alcohol to a competent adult is valid. d. Incorrect. A contract for the sale of land to a competent adult is valid.

9.

An agreement to form a contract must include: a. a fair bargain. b. a fair price. c. an offer and an acceptance. d. a physical sample of the good for sale.

Answers: a. Incorrect. The agreement need not be fair. b. Incorrect. There is no fair-price requirement in American contract law. c. Correct. To be valid, an agreement must include an offer and acceptance. d. Incorrect. There is no requirement that an agreement include a physical sample.

10.

Kamil, a college student, offers to sell his 2002 Toyota Camry, which has been driven 24,000 miles and has no mechanical problems that Kamil is aware of, to his friend Jason for $12,00 0. Jason accepts Kamils offer. This is an example of: a. an express contract. b. an implied contract. c. an executed contract. d. a quasi contract.

Answers: a. Correct. An express contract is one in which the terms of the agreement are fully and explicitly stated in words, written or oral. b. Incorrect. Because the terms of this agreement are fully and explicitly stated, the contract is express, not implied. c. Incorrect. From the facts given in this question, all we know is that an express contract has been formed; there is no evidence that it has been executed (performed by both parties).

d. Incorrect. A quasi contract is not an actual contract but a fictional contract imposed by courts to prevent injustice. Kamil and Jason have formed an actual (express) contract.