MGMT 311 Exam III: Questions With Complete Solutio
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ns
Chapter 12: Formation of Traditional and E-Contracts
m m m m m m mmmmmmm Right Ans - m m
mChapter 12: Formation of Traditional and E-Contracts
m m m m m m
Function of Contract Law Right Ans -
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mContracts create expectations as to how parties to agreements will conduct
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themselves in the future m m m
If a party to a valid contract does not carry out a promise, a court will enfor
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ce the contract and provide some form of relief or remedy to the non-
m m m m m m m m m m m m m
breaching party m
Contract law provides stability and predictability and is the foundation upon
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mwhich more specialized areas of the law are built
m m m m m m m m
Contract Right Ans - mmmmmmm m m
magreement enforced between 2+ parties who promise to perform or refrain
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from performing now or in the future
m m m m m m
Breach Right Ans - mmmmmmm m m
ma violation of contract that leads to liability, because both parties have dutie
m m m m m m m m m m m m
s to each other
m m m
Objective Theory of contracts Right Ans -
m m m mmmmmmm m m
mThe apparent intention of a party to enter into a contract is determined by
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the objective, outward manifestation of his or her assent as it would be inte
m m m m m m m m m m m m m
rpreted by a reasonable person m m m m
Objective factors Right Ans - 1. Words -
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mWhat the party said or wrote when entering into the contract
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2. Actions - How the party acted or appeared
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3. Circumstances - circumstances surrounding the transaction
m m m m m m
Weston v. Cornell University m Right Ans -
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mCornell University in New York offered Leslie Weston an associate professo
m m m m m m m m m m
rship for an initial term of five years. The offer letter described the position
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as being "with tenure," but it stated that the offer of tenure would have to b
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e confirmed by the university's review process after she was hired. For a va
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,riety of reasons, Weston delayed her tenure submission for five years and,
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when she finally submitted it, she was not awarded tenure.
m m m m m m m m m
Cornell gave Weston a two- m m m m
year extension, this time as an "associate professor without tenure," to allow
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mher an opportunity to improve and resubmit her tenure package. Although
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she resubmitted her tenure request, it was again denied, resulting in her eve
m m m m m m m m m m m m
ntual termination. Weston sued Cornell for breach of contract, and lost. The
m m m m m m m m m m m m
court held that Cornell's two-
m m m m
year extension of Weston's position had clearly modified the original contra
m m m m m m m m m m
ct by stating that she was working as an associate professor "without tenure
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." Weston's subjective beliefs and unsupport
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Requirements of a Valid Contract m m m m mmmmmmm Right Ans - 1. Agreement
m m m m
2. Consideration
m
3. Contractual Capacity
m m
4. Legality
m
Agreement Right Ans - mmmmmmm m m
mAn agreement to form a contract includes an offer and an acceptance.
m m m m m m m m m m m
Consideration Right Ans - Legally sufficient and bargained-
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for consideration must be exchanged for contractual promises
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Both parties are committing to do something they don't HAVE to do for the
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other party. m
T/F: The court doesn't often consider the amount of consideration
m m m m m m m m m mmmmmmm Right
mAns - T m m
Contractual Capacity Right Ans - m mmmmmmm m m
meach party to a contract must be recognized as being legally competent to e
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nter into contracts
m m
Legality Right Ans - mmmmmmm m m
mthe purpose and subject matter of the contract must not be contrary to law
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or public policy
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Defenses to the Enforceability of a Contract
m m m m m m mmmmmmm Right Ans - m m
m1. Voluntary consent
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2. Form
m
,Voluntary Consent Right Ans - m mmmmmmm m m
mThe knowing and voluntary agreement to the terms of a contract. Cannot b
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e based on mistake,
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Offeror mmmmmmm Right Ans - the party making an offer to enter into a contract
m m m m m m m m m m m m
Offeree Right Ans - mmmmmmm m m
mThe party who, if interested in the offer, may accept the contract
m m m m m m m m m m m
Bilateral contract Right Ans - m mmmmmmm m m
mreciprocal promises are exchanged by the parties so that the promise of on
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e party is exchanged for the promise of the other
m m m m m m m m m
"Promise for a promise" Contract comes into existence the moment the pro
m m m m m m m m m m m
mises are exchanged m m
Unilateral contract Right Ans - m mmmmmmm m m
mA contract that results when an offer can be accepted only by the offeree's
m m m m m m m m m m m m m m
performance. Comes into existence the moment the contact is performed. Ex
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: Reese says to Celia, "If you drive my car from New York to Los Angeles, I'll
m m m m m m m m m m m m m m m m
mgive you $1,000." Only on Celia's completion of the act—
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bringing the car to Los Angeles— m m m m m
does she fully accept Reese's offer to pay $1,000. If she chooses not to accep
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t the offer to drive the car to Los Angeles, there are no legal consequences.
m m m m m m m m m m m m m m
Express Contract Right Ans - m mmmmmmm m m
mthe terms of the agreement are fully and explicitly stated in oral or written
m m m m m m m m m m m m m m
words
Implied Contract Right Ans -
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mthe terms of the agreement are inferred from the conduct of the parties
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3 steps to establish an implied contract
m m m Right Ans - m m m mmmmmmm m m
m 1. The plaintiff furnished some service or property.
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2. The plaintiff expected to be paid for that service or property, and the defe
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ndant knew or should have known that payment was expected.
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3. The defendant had a chance to reject the services or property and did not
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.
, Executed Contracts m mmmmmmm Right Ans - a fully performed contract
m m m m m m
Executory Contracts Right Ans - m mmmmmmm m m
mthose contracts in which the terms have not been completely executed or fu
m m m m m m m m m m m m
lfilled
Informal Contracts Right Ans - m mmmmmmm m m
mA contract that does not require a specified form or formality in order to be
m m m m m m m m m m m m m m
mvalid.
Valid Contract Right Ans -
m mmmmmmm m m
mA contract that results when the elements necessary for contract formation
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(agreement, consideration, contractual capacity, and legality) are present.
m m m m m m m
T/F: Valid contracts are always enforceable
m m Right Ans - m m m mmmmmmm m m
mF; certain legal defenses can prevent enforceability
m m m m m m
Unenforceable contract Right Ans - m mmmmmmm m m
mA valid contract rendered unenforceable by some statute or law.
m m m m m m m m m
Ex: If a contract needs to be in writing, and is not, it will be unenforceable u
m m m m m m m m m m m m m m m m
nless exceptional circumstances exist
m m m
Voidable Contract Right Ans - m mmmmmmm m m
mA valid contract exists but one or more of the parties has the optiom of avo
m m m m m m m m m m m m m m m
iding his or her contractual obligation. The party with the option can electio
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n to void the contract or ratify it.
m m m m m m m
Void Contract m Right Ans - mmmmmmm m m
magreement has no legal effect and is not really a contract; no legal obligatio
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n exists on the part of either party
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Is there a contract?
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Everett McCleskey, a local businessperson, is a good friend of Al Miller, the o
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wner of a local candy store. Every day on his lunch hour, McCleskey goes int
m m m m m m m m m m m m m m
o Miller's candy store and stays about five minutes. After looking at the can
m m m m m m m m m m m m m
dy and talking with Miller, McCleskey usually buys one or two candy bars. O
m m m m m m m m m m m m m
ne afternoon, McCleskey goes into Miller's candy shop, looks at the candy, a
m m m m m m m m m m m m
nd picks up a $1 candy bar. Seeing that Miller is very busy, he waves the ca
m m m m m m m m m m m m m m m m
m m m m m m m
ns
Chapter 12: Formation of Traditional and E-Contracts
m m m m m m mmmmmmm Right Ans - m m
mChapter 12: Formation of Traditional and E-Contracts
m m m m m m
Function of Contract Law Right Ans -
m m m mmmmmmm m m
mContracts create expectations as to how parties to agreements will conduct
m m m m m m m m m m m
themselves in the future m m m
If a party to a valid contract does not carry out a promise, a court will enfor
m m m m m m m m m m m m m m m m
ce the contract and provide some form of relief or remedy to the non-
m m m m m m m m m m m m m
breaching party m
Contract law provides stability and predictability and is the foundation upon
m m m m m m m m m m
mwhich more specialized areas of the law are built
m m m m m m m m
Contract Right Ans - mmmmmmm m m
magreement enforced between 2+ parties who promise to perform or refrain
m m m m m m m m m m m
from performing now or in the future
m m m m m m
Breach Right Ans - mmmmmmm m m
ma violation of contract that leads to liability, because both parties have dutie
m m m m m m m m m m m m
s to each other
m m m
Objective Theory of contracts Right Ans -
m m m mmmmmmm m m
mThe apparent intention of a party to enter into a contract is determined by
m m m m m m m m m m m m m m
the objective, outward manifestation of his or her assent as it would be inte
m m m m m m m m m m m m m
rpreted by a reasonable person m m m m
Objective factors Right Ans - 1. Words -
m mmmmmmm m m m m m
mWhat the party said or wrote when entering into the contract
m m m m m m m m m m
2. Actions - How the party acted or appeared
m m m m m m m m
3. Circumstances - circumstances surrounding the transaction
m m m m m m
Weston v. Cornell University m Right Ans -
m m mmmmmmm m m
mCornell University in New York offered Leslie Weston an associate professo
m m m m m m m m m m
rship for an initial term of five years. The offer letter described the position
m m m m m m m m m m m m m m
as being "with tenure," but it stated that the offer of tenure would have to b
m m m m m m m m m m m m m m m
e confirmed by the university's review process after she was hired. For a va
m m m m m m m m m m m m m
,riety of reasons, Weston delayed her tenure submission for five years and,
m m m m m m m m m m m m
when she finally submitted it, she was not awarded tenure.
m m m m m m m m m
Cornell gave Weston a two- m m m m
year extension, this time as an "associate professor without tenure," to allow
m m m m m m m m m m m
mher an opportunity to improve and resubmit her tenure package. Although
m m m m m m m m m m m
she resubmitted her tenure request, it was again denied, resulting in her eve
m m m m m m m m m m m m
ntual termination. Weston sued Cornell for breach of contract, and lost. The
m m m m m m m m m m m m
court held that Cornell's two-
m m m m
year extension of Weston's position had clearly modified the original contra
m m m m m m m m m m
ct by stating that she was working as an associate professor "without tenure
m m m m m m m m m m m m
." Weston's subjective beliefs and unsupport
m m m m m
Requirements of a Valid Contract m m m m mmmmmmm Right Ans - 1. Agreement
m m m m
2. Consideration
m
3. Contractual Capacity
m m
4. Legality
m
Agreement Right Ans - mmmmmmm m m
mAn agreement to form a contract includes an offer and an acceptance.
m m m m m m m m m m m
Consideration Right Ans - Legally sufficient and bargained-
mmmmmmm m m m m m m
for consideration must be exchanged for contractual promises
m m m m m m m
Both parties are committing to do something they don't HAVE to do for the
m m m m m m m m m m m m m m
other party. m
T/F: The court doesn't often consider the amount of consideration
m m m m m m m m m mmmmmmm Right
mAns - T m m
Contractual Capacity Right Ans - m mmmmmmm m m
meach party to a contract must be recognized as being legally competent to e
m m m m m m m m m m m m m
nter into contracts
m m
Legality Right Ans - mmmmmmm m m
mthe purpose and subject matter of the contract must not be contrary to law
m m m m m m m m m m m m m m
or public policy
m m
Defenses to the Enforceability of a Contract
m m m m m m mmmmmmm Right Ans - m m
m1. Voluntary consent
m m
2. Form
m
,Voluntary Consent Right Ans - m mmmmmmm m m
mThe knowing and voluntary agreement to the terms of a contract. Cannot b
m m m m m m m m m m m m
e based on mistake,
m m m
Offeror mmmmmmm Right Ans - the party making an offer to enter into a contract
m m m m m m m m m m m m
Offeree Right Ans - mmmmmmm m m
mThe party who, if interested in the offer, may accept the contract
m m m m m m m m m m m
Bilateral contract Right Ans - m mmmmmmm m m
mreciprocal promises are exchanged by the parties so that the promise of on
m m m m m m m m m m m m
e party is exchanged for the promise of the other
m m m m m m m m m
"Promise for a promise" Contract comes into existence the moment the pro
m m m m m m m m m m m
mises are exchanged m m
Unilateral contract Right Ans - m mmmmmmm m m
mA contract that results when an offer can be accepted only by the offeree's
m m m m m m m m m m m m m m
performance. Comes into existence the moment the contact is performed. Ex
m m m m m m m m m m
: Reese says to Celia, "If you drive my car from New York to Los Angeles, I'll
m m m m m m m m m m m m m m m m
mgive you $1,000." Only on Celia's completion of the act—
m m m m m m m m m
bringing the car to Los Angeles— m m m m m
does she fully accept Reese's offer to pay $1,000. If she chooses not to accep
m m m m m m m m m m m m m m
t the offer to drive the car to Los Angeles, there are no legal consequences.
m m m m m m m m m m m m m m
Express Contract Right Ans - m mmmmmmm m m
mthe terms of the agreement are fully and explicitly stated in oral or written
m m m m m m m m m m m m m m
words
Implied Contract Right Ans -
m mmmmmmm m m
mthe terms of the agreement are inferred from the conduct of the parties
m m m m m m m m m m m m
3 steps to establish an implied contract
m m m Right Ans - m m m mmmmmmm m m
m 1. The plaintiff furnished some service or property.
m m m m m m m
2. The plaintiff expected to be paid for that service or property, and the defe
m m m m m m m m m m m m m m
ndant knew or should have known that payment was expected.
m m m m m m m m m
3. The defendant had a chance to reject the services or property and did not
m m m m m m m m m m m m m m
.
, Executed Contracts m mmmmmmm Right Ans - a fully performed contract
m m m m m m
Executory Contracts Right Ans - m mmmmmmm m m
mthose contracts in which the terms have not been completely executed or fu
m m m m m m m m m m m m
lfilled
Informal Contracts Right Ans - m mmmmmmm m m
mA contract that does not require a specified form or formality in order to be
m m m m m m m m m m m m m m
mvalid.
Valid Contract Right Ans -
m mmmmmmm m m
mA contract that results when the elements necessary for contract formation
m m m m m m m m m m m
(agreement, consideration, contractual capacity, and legality) are present.
m m m m m m m
T/F: Valid contracts are always enforceable
m m Right Ans - m m m mmmmmmm m m
mF; certain legal defenses can prevent enforceability
m m m m m m
Unenforceable contract Right Ans - m mmmmmmm m m
mA valid contract rendered unenforceable by some statute or law.
m m m m m m m m m
Ex: If a contract needs to be in writing, and is not, it will be unenforceable u
m m m m m m m m m m m m m m m m
nless exceptional circumstances exist
m m m
Voidable Contract Right Ans - m mmmmmmm m m
mA valid contract exists but one or more of the parties has the optiom of avo
m m m m m m m m m m m m m m m
iding his or her contractual obligation. The party with the option can electio
m m m m m m m m m m m m
n to void the contract or ratify it.
m m m m m m m
Void Contract m Right Ans - mmmmmmm m m
magreement has no legal effect and is not really a contract; no legal obligatio
m m m m m m m m m m m m m
n exists on the part of either party
m m m m m m m
Is there a contract?
m m m
Everett McCleskey, a local businessperson, is a good friend of Al Miller, the o
m m m m m m m m m m m m m
wner of a local candy store. Every day on his lunch hour, McCleskey goes int
m m m m m m m m m m m m m m
o Miller's candy store and stays about five minutes. After looking at the can
m m m m m m m m m m m m m
dy and talking with Miller, McCleskey usually buys one or two candy bars. O
m m m m m m m m m m m m m
ne afternoon, McCleskey goes into Miller's candy shop, looks at the candy, a
m m m m m m m m m m m m
nd picks up a $1 candy bar. Seeing that Miller is very busy, he waves the ca
m m m m m m m m m m m m m m m m
