Business Law MCQ Exam: Quiz!

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  • 1/40 Questions

    If a contract requires the occurrence of an event before a party is obligated to perform a contractual duty, this is a condition.

    • Precedent
    • Subsequent
    • Conclusive
    • None of the foregoing
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About This Quiz

The 'Business Law MCQ Exam: Quiz!' assesses understanding of key legal concepts in business transactions. It covers conditions precedent, the Statute of Frauds, contract enforceability, and implications of unilateral mistakes, providing practical insights for learners in business law.

Business Law MCQ Exam: Quiz! - Quiz

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  • 2. 

    Jack and Jill were discussing business over lunch when they agreed on the sale of some goods. Because neither of them had any paper handy, Jack wrote the following on a napkin: "Jill agrees to purchase from Jack, 1,000 widgets to be delivered on July 1, 2011, at a cost of $10,000, payable on delivery." Jill and Jack both signed the napkin. Jack delivered the widgets per the contact, but Jill refuses to pay for them. IF Jack sues Jill for the price of the goods, the most likely result is which of the following?

    • Jill will win because this writing is not sufficient under the Statute of Frauds.

    • Jack will win because the writing is sufficient under the Statute of Frauds.

    • Jill will win because this is a formal contract.

    • Jack will win because the Statute of Frauds does not apply to this situation.

    Correct Answer
    A. Jack will win because the writing is sufficient under the Statute of Frauds.
    Explanation
    Anything that is put in writing and contains the signatures of the parties is considered sufficient and enforceable in court.

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  • 3. 

    An oral contract for the sale of land is...

    • Void

    • Enforceable

    • Voidable

    • Unenforceable

    • Implied

    Correct Answer
    A. Unenforceable
    Explanation
    Land is among the things that must be written to be enforceable.

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  • 4. 

    When a client accepts the services of an accountant without an agreement concerning payment, the result is...

    • An implied-in-fact contract

    • An implied-in-law contract

    • An express contract

    • No contract

    Correct Answer
    A. An implied-in-fact contract
    Explanation
    There is an assumption of payment between the client and the accountant, the payment would be considered a "fact" and is implied in this case.

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  • 5. 

    CitiBank makes a mistake at an auction which costs the CitiBank $350,000. After the final bis is accepted and the hammer has fallen, CitiBank realizes its mistake. CitiBank tries to overturn the final bid in a lawsuit.

    • CitiBank wins because the mistake is so serious that enforcing the bid would be unconscionable.

    • CitiBank wins because it would be unjust to allow the winning bit to benefit the high bidder by $350,000.

    • CitiBank loses because of the legal theory of Bilateral Mistake.

    • CitiBank loses because it made a Unilateral Mistake.

    Correct Answer
    A. CitiBank loses because it made a Unilateral Mistake.
    Explanation
    CitiBank was the only party at fault in this incident. the other party should not be punished for CitiBank's mistake.

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  • 6. 

    Which of the following statements concerning the effectiveness of an offeree's rejections and an offeror's revocation of an offer are ordinarily true?

    • An Offeree's Rejection is Effective When: Received by the offeror An Offeror's Renovation is Effective When: Sent by the offeror

    • An Offeree's Rejection is Effective When: Sent by the offeree An Offeror's Renovation is Effective When: Received by the offeree

    • An Offeree's Rejection is Effective When: Sent by the offeree An Offeror's Renovation is Effective When: Sent by the offeror

    • An Offeree's Rejection is Effective When: Received by the offeror An Offeror's Renovation is Effective When: Received by the offeree

    Correct Answer
    A. An Offeree's Rejection is Effective When: Sent by the offeree An Offeror's Renovation is Effective When: Received by the offeree
    Explanation
    The correct answer is that an offeree's rejection is effective when it is sent by the offeree. This means that once the offeree communicates their rejection of the offer, it becomes effective and the offer is terminated. On the other hand, an offeror's revocation is effective when it is received by the offeree. This means that the offeror can revoke their offer at any time before the offeree accepts it, but the revocation must be received by the offeree in order to be effective.

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  • 7. 

    Jenna saw a vase in a store. A tag on the vase said, "Genuine Crystal, $125." Jenna said to Owen, the owner of the store, "I'll buy this vase for $125." Owen refused to sell the vase to Jenna. In a lawsuit brought by Jenna against Owen,

    • Jenna wins because a contract was formed when she said she would buy the vase.

    • Jenna wins because the vase was unique.

    • Owen wins because he rejected Jenna's offer.

    • Owen wins because the contract was not written.

    Correct Answer
    A. Owen wins because he rejected Jenna's offer.
    Explanation
    This was only an "invitation to an offer," meaning that Owen reserved the right to accept the offer of $125 or not.

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  • 8. 

    Generally, Consideration must be:

    • Of "Legally Sufficient Value"

    • A "Bargained-for-Exchange"

    • Of "Cash Money" only

    • All of the above

    • A and B only

    Correct Answer
    A. A and B only
    Explanation
    Each party must perform in some way. Likewise, the performance of each party must be legally sufficient for all parties so that there is equal value performed and received.

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  • 9. 

    Alpha Nu Theta verbally orders $3,500 of screen printed t-shrits for their famous ANT Race contest from "Printin' On Tees." Once the t-shirts are ready, Alpha Nu Theta refused to complete the purchase saying that since they didn't sign a purchase order, they aren't required to complete their end of the bargain. If they are sued for Breach of Contract, Alpha Nu Theta...

    • Wins, since the Statute of Frauds requires all commercial contracts to be in writing

    • Wins, since the Statute of Frauds requires that all contracts for the sale of goods over $500 be in writing

    • Loses since there is no fraud involved in this transaction

    • Loses since they ordered specially manufactured goods which were of no real value to anyone else

    • Loses since "Printin' On Tees" should have realized the Humane Society wouldn't allow ANT racing by drunk college student

    Correct Answer
    A. Loses since they ordered specially manufactured goods which were of no real value to anyone else
    Explanation
    Specially manufactured goods are only valuable to those who order them, therefore no one else would see value in something made for someone else.

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  • 10. 

    An award of ______ performance orders the breaching party to perform the acts promised in a contract.

    • Specific

    • Substantial

    • Sequestered

    • Salient

    Correct Answer
    A. Specific
    Explanation
    Specific performance is asking for the rights and obligations to be performed and fulfilled by a specific party. In specific performance, no other party would be adequate enough to fulfill the responsibilities of the contract because it was designed for someone or something specific.

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  • 11. 

    Sara and Jesse are getting married. They discuss and orally agree on the disposition of all property in the event that the marriage is not successful. During divorce proceedings, Jesse states that the couple had an agreement as to the disposition of property. Is the agreement enforceable?

    • Yes; it was an agreement made in contemplation of marriage.

    • No, the agreement was not in writing.

    • Yes, so long as the terms were reasonably specific or ascertainable

    • No; the agreement is contrary to public policy.

    Correct Answer
    A. No, the agreement was not in writing.
    Explanation
    Land is one of the things that must be in writing to be enforceable in a contract dispute.

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  • 12. 

    The City announces a plan to build a multimillion dollar tennis center on Richland Road. Adjacent land values skyrocket. A local developer pays a premium price for an adjacent parcel of land. The City decides not to build the tennis center. The adjacent land values plummet, costing the local developer a million dollars. He sues the City for costing him a million dollars. The developer...

    • Wins his lawsuit against the City because the City's actions were negligent

    • Wins his lawsuit against the City because he relied on the City's publicly announced plan to build the Tennis Center

    • Loses the lawsuit against he City because he was an incidental beneficiary of the City's plan to build the Tennis Center

    • Loses the lawsuit against the City because "detrimental reliance" doesn't apply to public contracts

    Correct Answer
    A. Loses the lawsuit against he City because he was an incidental beneficiary of the City's plan to build the Tennis Center
    Explanation
    The City had no intent to have the developer benefit from a proposed plan. The developer chose to invest in a plan that was not guaranteed. The incidental beneficiary is not intended to receive any gain as an outside party.

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  • 13. 

    You contract to rent a room at the inn for two months while you are in summer school. You drop out after the first day when you find out Mr. Cochran is going to be the professor. you get another person to take your place on the contract and fulfill your obligations under the contact with the full agreement of all parties. This is...

    • Promissory estoppel

    • Part performance

    • A novation

    • A jurat of acknowledgement

    • Como esta usted

    Correct Answer
    A. A jurat of acknowledgement
    Explanation
    This is very similar to a transfer or assignment of duty as long as all rights and no obligations are fully performed by the new party.

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  • 14. 

    You contract with the Outhouse Mice to perform three sets at your spring formal for $10,000. Other than the fact that they were drunk and sick and your formal, their sets were only 15 minutes long each. They want full payment; you don't want to pay them anything. you both eventually agree that they will be paid $1,000, mostly because they were the funniest drunk and sick people anyone had ever seen. This compromise would...

    • Not be enforceable because the contract was ambiguous

    • Not be enforceable because the rock stars are supposed to only look drunk, not be drunk

    • Be enforceable because this was a unilateral mistake

    • Be enforceable because this was an Accord

    Correct Answer
    A. Be enforceable because this was an Accord
    Explanation
    There is a legitimate dispute causing the desire for the parties to renegotiate.

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  • 15. 

    A _________ is a person who agrees to pay a debt if the primary debtor does not.

    • Creditor

    • Mortgagor

    • Borrower

    • Guarantor

    Correct Answer
    A. Guarantor
    Explanation
    A guarantor is a person who agrees to pay a debt if the primary debtor does not. This means that if the borrower fails to repay the debt, the guarantor steps in and takes on the responsibility of repaying the debt instead. The guarantor acts as a form of insurance for the creditor, providing them with an additional layer of security in case the borrower defaults on their payment obligations.

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  • 16. 

    According to Mr. Cochran, courts do not enforce "gift" contracts because...

    • For almost a thousand years courts have not enforced such contracts

    • "Gift" contracts tend to have a dramatic economic effect on the economy

    • A person's word is their bond

    • "Gift" contracts don't help the economy; they are merely a transfer of wealth

    Correct Answer
    A. "Gift" contracts don't help the economy; they are merely a transfer of wealth
    Explanation
    Mr. Cochran believes that courts do not enforce "gift" contracts because they do not contribute to the economy. He argues that such contracts are simply a transfer of wealth from one person to another and do not have any positive economic impact. Therefore, the reason courts do not enforce "gift" contracts is because they are seen as not beneficial to the economy.

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  • 17. 

    Squeegie, 17 years old, buys a car for $20,000 cash from Fast Eddie's Used Cars. A week later Squeegie is stopped at a red light when he is rear-ended by Wingnut. Squeegie has the wrecked the car, now worth $200, towed back to Fast Eddie's. Squeedie will...

    • Be able to disaffirm the contract and get his $20,000 back since he was a minor and returned the wrecked car

    • Be able to disaffirm the contract but only get $200 back

    • Won't be able to disaffirm his contract since his conduct was wanton

    • Will win a lawsuit against Fast Eddie for dealing with a minor

    Correct Answer
    A. Be able to disaffirm the contract and get his $20,000 back since he was a minor and returned the wrecked car
    Explanation
    As a minor, he is entitled to the disaffirmation of a contract as long as he is not at fault in the accident. Even though it damages Fast Eddie's business by receiving a near-worthless car and having to refund the transaction, he is punished enough for that for dealing with a minor.

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  • 18. 

    Big High Drug Store contract to hire Anna Sue as a pharmacist upon graduation in May, but she muse receive her Pharmacist's license by the next December. This contract contains a(n)...

    • Covenant

    • Condition subsequent

    • Condition precedent

    • Implied condition

    Correct Answer
    A. Condition subsequent
    Explanation
    The correct answer is condition subsequent. This means that Anna Sue's employment with Big High Drug Store is contingent upon her receiving her Pharmacist's license by the next December. If she fails to obtain the license within the specified time frame, the contract will be terminated.

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  • 19. 

    Inferior performance is...

    • The same as no performance at all

    • Simply less than average performance

    • Performance which is almost complete

    • None of the above

    Correct Answer
    A. The same as no performance at all
    Explanation
    Inferior performance refers to a level of performance that is below the expected or desired standard. It implies that the performance is inadequate or subpar, and can be considered as no performance at all because it does not meet the required criteria or expectations.

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  • 20. 

    An email contract is...

    • Void

    • Voidable

    • A violation of the Statute of Frauds

    • Valid and enforceable, assuming all the elements of a contract are present

    Correct Answer
    A. Valid and enforceable, assuming all the elements of a contract are present
    Explanation
    An email contract is considered valid and enforceable if all the essential elements of a contract are present. This means that there must be an offer, acceptance, consideration, intention to create legal relations, and certainty of terms. As long as these requirements are met, an email can be legally binding, just like any other form of contract. However, it is important to note that certain types of contracts, such as those involving the sale of land or goods over a certain value, may require additional formalities to be enforceable.

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  • 21. 

    The Parol Evidence Rule generally prevents Leroy from introducing evidence in court of oral agreements which conflict with the terms on the valid written contract he has with Tater.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    Written terms of a contract take precedence over oral agreements because there is more evidence supporting terms that can be easily viewed. However, both written and oral agreements are considered during disputes

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  • 22. 

    An "Assignment of All Rights" under a contract means an assignment of the rights and a delegation of the duties under a contract.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    All rights under a contract include the rights, delegations, and duties that are otherwise stated in the original contract. Failure to fulfill the terms of the contract by the original party or the transferred party would deb a Breach of Contract

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  • 23. 

    Courts generally consider the adequacy of consideration in a contract

    • True

    • False

    Correct Answer
    A. False
    Explanation
    The adequacy of consideration is never considered by the courts because it is not their responsibility to determine the worth of the contract to each party

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  • 24. 

    Fraud on the part of one party allows the other party to rescind a contract

    • True

    • False

    Correct Answer
    A. True
    Explanation
    Each party is responsible for any agreements made in a contract. It would be unfair to punish a party that fulfilled their responsibilities of the contract while rewarded another party that failed to fulfill theirs

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  • 25. 

    A gift promise is unenforceable by the courts because there isn't adequate consideration.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    The consideration of this gift is not for the courts to decide but it does nothing to benefit economic growth

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  • 26. 

    Shimmy Shammy, Inc. offers you a job for $100,000 a year as a cotton broker in Atlanta upon your graduation. You accept. When you graduate they tell you the job in Atlanta has been eliminated, but he exact same job and pay are available in Buffalo, NY. You have a duty of care to mitigate Shimmy Shammy, Inc.'s damages to you.

    • True

    • False

    Correct Answer
    A. False
    Explanation
    You do not have a duty of care to mitigate damages because the jobs must be similar enough that no "extreme" differences occur. The difference between Atlanta and Buffalo, NY are much more drastic than the difference between Atlanta and Birmingham, AL. If you still have confusion, consider the cost of living or the terms of the job

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  • 27. 

    A breach of a contract usually calls for a monetary remedy since a contract is an economic transaction.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    Whenever a Breach occurs, it is usually taken to court where the plaintiff asks for damages from the defendant for the losses they have incurred

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  • 28. 

    You may not delegate duties to someone who is not as experienced, qualified, or as capable as you are to perform your obligations under the contract.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    Any assignment or delegations of duties under a contract nut be performed by someone of equal or greater skill

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  • 29. 

    You buy Pop Raines' Beverage Shack on the Tuskegee turnpike. As part of the sales agreement, you have a Covenant Not to Compete which prevents Pop Raines from opening another Beverage Shack in Auburn for one year. The courts will enforce this Covenant Not to Compete.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    This kind of covenant is strictly enforced by any court

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  • 30. 

    An Acceptance of an offer is valid when placed in a mailbox, even if the offeror never receives it.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    This is known as the Mailbox Rule

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  • 31. 

    There is a federal law that allows you to register domain names. You find out that Booty Thyme (stage name of Wilma Williams) has neither registered her stage name as a trademark nor copyrighted it. Therefore you may legally register her domain name and charge her a service fee if she decides to register it.

    • True

    • False

    Correct Answer
    A. False
    Explanation
    Only Wilma Williams has sufficient value to that domain name. It would be illegal to wrongfully use a domain name in which you have no personal value invested in

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  • 32. 

    JimBob bought what he thought was the prettiest brass ring out of a box of brass rings at IdaMae's yard sale for 50 cents. JimBob thought this would look nice on the left finger of his 13-year-old cousin Lulu. It turns out the ring was worn by Catherine the Great, was made of solid 24K gold, and is worth $300,000. Ida Mae can claim this was a mutual mistake of value and get the ring back from JimBob.

    • True

    • False

    Correct Answer
    A. False
    Explanation
    Mutual Mistakes of Value or of Fact are insufficient cause to nullify any agreements

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  • 33. 

    Kesha cannot assign her contracts to perform a concert at Auburn University to Lady GaGa.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    This is in accordance with the Specific Performance of a duty. Even though both performers may have "similar" performing abilities, they are not the exact same performer and therefore may not assign a contract to another

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  • 34. 

    Handwritten terms on a contract usually take precedent over conflicting typed terms.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    Handwritten terms are more recent additions and amendments to the terms of a contract and therefor are regarded before any typed terms

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  • 35. 

    The only copy of a contract is on a flash drive. This contract is unenforceable if it is one of the six types of contracts that must be in writing under the Statute of Frauds to be enforceable.

    • True

    • False

    Correct Answer
    A. False
    Explanation
    Flash drives are now considered as a valid form of contract as long as the parties acknowledge the contract and it is approved by the appropriate court

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  • 36. 

    If one party makes a mistake in a contract, that party may generally get out of the contract.

    • True

    • False

    Correct Answer
    A. False
    Explanation
    Each party is responsible for any agreements made in a contract. It would be unfair to punish a party that fulfilled their responsibilities of the contract while rewarded another party that failed to fulfill theirs.

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  • 37. 

    The assent of parties to a contract must be voluntary.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    No contract may be enforced if a party does not voluntarily agree to its terms

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  • 38. 

    Raffles agreed to purchase a shipload of cotton on the ship "Peerless" from Wichelhaus. Raffles thought the agreement was for the ship "Peerless" arriving in December, Wichelhaus thought the agreement was for the ship "Peerless" arriving in March. Neither party may get out of this agreement.

    • True

    • False

    Correct Answer
    A. False
    Explanation
    Either party is able to get out of this agreement

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  • 39. 

    BamBam may not assign the rights and obligations under her life insurance policy to her father, Fred if the assignment would materially alter the risk and duties of the insurance company.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    When a transfer of assignment in a contract or in this case of an insurance policy, the rights and obligations must not benefit one party to incur loss to another

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  • 40. 

    Richie's Roofers, Inc. doesn't want to perform their contract with you because they can get two times the money from someone else to work for them. You agree with Richie's Roofers, Inc. to meet the other party's price because you are desperate to get Richie's Roofers, Inc. work completed for your project. The new contract is unenforceable as an Accord and Satisfaction.

    • True

    • False

    Correct Answer
    A. False
    Explanation
    There must be a dispute

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  • Current Version
  • Mar 21, 2023
    Quiz Edited by
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  • Apr 28, 2014
    Quiz Created by
    Margmini

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