ACCT 215 EXAM 3 IOWA STATE EXAM QUESTIONS AND ANSWERS
*Statute of Frauds - CORRECT ANSWER✅✅Certain contracts have to be in writing to be enforceable in
court.
• must be signed by the opposing party against whom the contract is being enforced.
*Wright vs. Wright - CORRECT ANSWER✅✅• plaintiff gives birth to son
• defendant's son was the father
• defendant agrees to pay plaintiff if she will marry his son and the son leaves her
• son leaves plaintiff and child
• defendant argues he should not have to pay plaintiff because there was no consideration and this type
of contract violates public policy
• court disagrees and holds for plaintiff
*Contracts subject to Statute of Fraud - CORRECT ANSWER✅✅• interests in land or anything
permanently attached to land
• contracts that cannot be performed within one year from date of formation**
• surety contracts (gratuitous guarantors only)
• promises made in consideration of marriage
• contracts for goods priced $500 or more
*Promises to pay for debt of another.. - CORRECT ANSWER✅✅Has to be in writing if you don't get an
economic benefit
*Exceptions to statute of Frauds - CORRECT ANSWER✅✅• Common Law
- partial performance
- promissory estoppel
• UCC
- Admission in court
- acceptance (or partial acceptance) of goods costing $500 or more
- specially manufactured goods
,*Parole Evidence Rule - CORRECT ANSWER✅✅• applies to written contract, court doesn't care about
the negotiation leading up to the contract being made.
• Exceptions:
- subsequent Modification
- Ambiguous terms
Parole Evidence - CORRECT ANSWER✅✅• course of performance
• course of dealings
• usage of trade
Course of performance (P E) - CORRECT ANSWER✅✅court looks how the parties have been interpreting
the contract terms to date as they have performed under the contract
Course of dealings (P E) - CORRECT ANSWER✅✅court looks at how parties in question have transacted
in the past and interpreted similar terms
Usage of trade - CORRECT ANSWER✅✅how do others involved in the trade in question interpret terms
such as those in dispute
Consent - CORRECT ANSWER✅✅parties cannot enter into an agreement if they have not consented to
the terms of the agreement because they were mistaken, tricked or threatened
*Mistakes - CORRECT ANSWER✅✅• mistake of law is not an excuse
• mistake of value
- courts generally don't care about this type of mistake
• mistake of fact
- bilateral mistakes
• both parties mistaken
• cannot have a meeting of the minds
, *Bilateral Mistakes - CORRECT ANSWER✅✅Both parties are mistaken
*Unilateral Mistake - CORRECT ANSWER✅✅• only one party makes a mistake
- must be material
- courts not interested in unilateral mistakes
• 2 Exceptions**
- one party knows/ should have known the other party is mistaken
- mathematical or bookkeeping errors
*Aydin Corp vs. US - CORRECT ANSWER✅✅• NAVALEX solicited orders for radio sets
• Aydin submits a bid for $158,800 per radio
• plaintiff learns of competitor's higher bid
• plaintiff claims unilateral mistake in calculating bid
• court states the plaintiff appears to have made an error in judgement not calculation per se
- no relief for errors of judgement
*Fraudulent Misrepresentation - CORRECT ANSWER✅✅• No mutual assent when fraudulent
misrepresentation has occurred.
- puffing up a product or service not fraud
• Test:
- Misrepresentation of a material fact
• material: makes a difference in the decision making process
- Must be an intent to deceive
• scienter: intent by the defendant to tell deceiving lie
- the innocent party must rely on misrepresentation
Types of Misrepresentations - CORRECT ANSWER✅✅• Misrepresentation of law
- don't generally care as parties should be informed of the law
*Statute of Frauds - CORRECT ANSWER✅✅Certain contracts have to be in writing to be enforceable in
court.
• must be signed by the opposing party against whom the contract is being enforced.
*Wright vs. Wright - CORRECT ANSWER✅✅• plaintiff gives birth to son
• defendant's son was the father
• defendant agrees to pay plaintiff if she will marry his son and the son leaves her
• son leaves plaintiff and child
• defendant argues he should not have to pay plaintiff because there was no consideration and this type
of contract violates public policy
• court disagrees and holds for plaintiff
*Contracts subject to Statute of Fraud - CORRECT ANSWER✅✅• interests in land or anything
permanently attached to land
• contracts that cannot be performed within one year from date of formation**
• surety contracts (gratuitous guarantors only)
• promises made in consideration of marriage
• contracts for goods priced $500 or more
*Promises to pay for debt of another.. - CORRECT ANSWER✅✅Has to be in writing if you don't get an
economic benefit
*Exceptions to statute of Frauds - CORRECT ANSWER✅✅• Common Law
- partial performance
- promissory estoppel
• UCC
- Admission in court
- acceptance (or partial acceptance) of goods costing $500 or more
- specially manufactured goods
,*Parole Evidence Rule - CORRECT ANSWER✅✅• applies to written contract, court doesn't care about
the negotiation leading up to the contract being made.
• Exceptions:
- subsequent Modification
- Ambiguous terms
Parole Evidence - CORRECT ANSWER✅✅• course of performance
• course of dealings
• usage of trade
Course of performance (P E) - CORRECT ANSWER✅✅court looks how the parties have been interpreting
the contract terms to date as they have performed under the contract
Course of dealings (P E) - CORRECT ANSWER✅✅court looks at how parties in question have transacted
in the past and interpreted similar terms
Usage of trade - CORRECT ANSWER✅✅how do others involved in the trade in question interpret terms
such as those in dispute
Consent - CORRECT ANSWER✅✅parties cannot enter into an agreement if they have not consented to
the terms of the agreement because they were mistaken, tricked or threatened
*Mistakes - CORRECT ANSWER✅✅• mistake of law is not an excuse
• mistake of value
- courts generally don't care about this type of mistake
• mistake of fact
- bilateral mistakes
• both parties mistaken
• cannot have a meeting of the minds
, *Bilateral Mistakes - CORRECT ANSWER✅✅Both parties are mistaken
*Unilateral Mistake - CORRECT ANSWER✅✅• only one party makes a mistake
- must be material
- courts not interested in unilateral mistakes
• 2 Exceptions**
- one party knows/ should have known the other party is mistaken
- mathematical or bookkeeping errors
*Aydin Corp vs. US - CORRECT ANSWER✅✅• NAVALEX solicited orders for radio sets
• Aydin submits a bid for $158,800 per radio
• plaintiff learns of competitor's higher bid
• plaintiff claims unilateral mistake in calculating bid
• court states the plaintiff appears to have made an error in judgement not calculation per se
- no relief for errors of judgement
*Fraudulent Misrepresentation - CORRECT ANSWER✅✅• No mutual assent when fraudulent
misrepresentation has occurred.
- puffing up a product or service not fraud
• Test:
- Misrepresentation of a material fact
• material: makes a difference in the decision making process
- Must be an intent to deceive
• scienter: intent by the defendant to tell deceiving lie
- the innocent party must rely on misrepresentation
Types of Misrepresentations - CORRECT ANSWER✅✅• Misrepresentation of law
- don't generally care as parties should be informed of the law
