Legal and Social Chapter 11(Questions and Answers)

Which of the following is the MOST accurate statement regarding economic duress? A. It is never grounds for rescission. B. It is always grounds for rescission. C. It is a UCC concept only. D. It may be grounds for rescission. D. It may be grounds for rescission. Which of the following oral contracts may be enforceable? A. Nathan owes $1,000 in back rent to his landlord. Miranda tells Nathan not to worry about it, she'll pay his debt for him. B. Kenny orally agrees to purchase 5,000 pencils that the ABC Pencil Company stamps with the words "Kenny is the Greatest!" C. Mrs. Washington calls the corner grocery and places an order for a loaf of bread, a gallon of milk, and a pound of hamburger to be delivered to her. Ten minutes later, before the store has a chance to put together her items, she calls to cancel the order. D. All of these are correct. B. Kenny orally agrees to purchase 5,000 pencils that the ABC Pencil Company stamps with the words "Kenny is the Greatest!" 00:49 01:26 Which of the following statements, if made by a seller who knows the statement to be untruthful, would NOT be misrepresentation of material fact resulting in a cause of action for fraud? A. "This horse is only six years old." B. "There is no better car in the world." C. "The tires have less than 5,000 miles on them." D. "This car gets 28 miles per gallon." B. "There is no better car in the world." Judith is a CPA with an excellent reputation and client base. She sells her tax preparation business to Shawn, and the sales contract includes a non-compete clause restricting Judith from opening a similar business for one year within a 10-mile radius of her former office. If she opens a tax preparation office five miles away after one year, a court would probably A. grant an injunction barring her from operating the new office. B. order confiscation of all of her new client files and turn them over to Shawn. C. refuse to become involved, as the non-compete clause was illegal. D. refuse to enforce the non-compete clause, as it is unreasonable regarding time and geographic area. A. grant an injunction barring her from operating the new office. Peter, a minor, purchased a car from ACME Motors. Using a fake ID, he misrepresented his age to be 18. The contract is fully executed. Which of the following is correct? A. Peter cannot disaffirm the contract because a car is a necessary. B. Peter cannot disaffirm the contract because of his misrepresentation. C. Peter can disaffirm the contract, because a minor must be saved from his own poor judgment, including his lie. D. Either b or c may be applicable depending on the law of the jurisdiction in which the contract was formed. D. Either b or c may be applicable depending on the law of the jurisdiction in which the contract was formed. Derek and Abyan were discussing business over lunch when they agreed on the sale of a five-acre parcel of land. Since neither of them had any paper with them, Derek wrote the following on a napkin: "Abyan agrees to purchase from Derek a 5-acre parcel located at the local address of 123 105th Street, St. Joseph, Minnesota, U.S.A. for the price of $4,500 per acre. Transfer of title, payment, and possession to take place on May 1, 2011." Abyan signed the napkin. On May 1, 2011, Derek was ready to close the deal and transfer title but Abyan refused to pay the purchase price. If Derek sues Abyan for the price of the land, the most likely result will be A. Abyan will win because the writing is not sufficient under the Statute of Frauds. B. Derek will win because the writing is sufficient under the Statute of Frauds. C. Abyan will win because Derek did not sign the writing. D. Derek will win because the Statute of Frauds does not apply to this situation. B. Derek will win because the writing is sufficient under the Statute of Frauds. An exculpatory clause is generally unenforceable when A. it attempts to release a party from liability for ordinarily negligent behavior. B. it involves public transportation. C.it is written clearly and in bold, large print. D. the affected activity is a recreational activity. B. it involves public transportation. When one person agrees to pay the debt of another as a favor to that debtor, it is called A. promissory representation. B. a mutual promise. C. promissory estoppel. D. a collateral promise. D. a collateral promise. A(n) _______ contract is illegal from the beginning and may not be enforced by either party; a(n) _______ contract is legal but permits one party to escape, if he or she so wishes. A. disaffirmed; affirmed B. void; voidable C. affirmed; disaffirmed D. voidable; void B. void; voidable The Uniform Electronic Transmission Act (UETA) A. declares that a contract or signature may not be denied enforceability just because it is in electronic form. B. declares that e-signatures are invalid. C. creates a safe cyberspace environment in which business communications cannot be intercepted or fraudulently altered. D. has only been adopted in a handful of states. A. declares that a contract or signature may not be denied enforceability just because it is in electronic form. For his 17th birthday, Asher bought himself a used car from a car dealer for $10,000. The dealer purchased it for $6,000, repaired it, and then sold it to Asher. Eighteen months later, Asher has almost finished paying off the car when he totals it by accidentally driving it into his neighbor's swimming pool. Asher's mother is a lawyer and tells him to rescind the contract. Will Asher be able to recover any money from the dealer? a. No, because he is no longer a minor. b. No, because he ratified the contract. c. Yes, because he was a minor when he entered into the contract. d. Yes, but the amount he receives back will depend if his state follows the status quo rule. b. No, because he ratified the contract. The McAllisters had several serious problems with their house, including leaks in the ceiling, a buckling wall, and dampness. They repaired the buckling wall by installing I-beams to support it, but never resolved the leaks or the dampness. When they decided to sell the house, they said nothing to prospective buyers about the problems. If asked, they stated that the I-beam had been added for reinforcement. The Silvas bought the house for $60,000 and immediately began to have problems with leaks, mildew, and dampness. Are the Silvas entitled to any money damages? a. Yes, the Silvas are entitled to damages for nondisclosure because the McAllisters did not mention any problems. b. Yes, the Silvas are entitled to damages for both fraud and nondisclosure. c. No, the Silvas are not entitled to any money damages. d. Yes, the Silvas are entitled to damages for fraud because the McAllisters claimed the I-beams were added only for reinforcement. b. Yes, the Silvas are entitled to damages for both fraud and nondisclosure.