National American University

BUSINESS L 3100

Chapter 12-NATURE AND CLASSES OF CONTRACTS: CONTRACTING ON THE INTERNET

TRUE/FALSE

1)A contract is essentially an agreement that creates an obligation.

 

                                          

 

2. Because transfer of value is essential to a valid contract, contracts cannot arise in the performance of personal services.

 

                                          

 

3. A contract can only involve two parties.

 

                                          

 

4. A person who makes a promise is the promisor, while a person to whom the promise is made is the promisee.

 

                                          

 

5. Only the parties who signed the original contract can have rights with respect to that contract.

 

                                          

 

6. An offeror makes an offer to an offeree.

 

                                          

 

7. The law requires parties to be fair and reasonable in the making of a contract.

 

                                          

 

8. Negotiable instruments are examples of formal contracts.

 

                                          

 

9. A contract for an amount greater than $1 million must be made under seal or it is not binding.

 

                                          

 

10. A recognizance is an agreement by which one party admits or recognizes that a specified sum of money is owed to another party.

 

                                          

 

11. An express contract is one in which the agreement is shown by the acts and conduct of the parties.

 

                                          

12. An implied contract is one in which the agreement is shown not by words, written or spoken, but by the acts and conduct of the parties.

 

                                          

 

13. The effect of an implied contract is not the same as the effect of an express contract.

 

                                          

 

14. A void contract is one that is otherwise valid but may be rejected or set aside by one of the parties.

 

                                          

 

15. An agreement that contemplates the performance of an act prohibited by law is usually void.

 

                                          

 

16. An executory contract is an agreement by which something remains to be done by one or both parties.

 

                                          

 

17. An executed contract is an agreement that has been completely performed.

 

                                          

 

18. When a contract is fully performed by one party, it is called a unilateral contract.

 

                                          

 

19. A bilateral contract is essentially an exchange of promises.

 

                                          

 

20. With regard to a unilateral contract, the offeree does not accept the offer by express agreement, but rather by performance.

 

                                          

 

21. A contract never can be both executory and unilateral.

 

                                          

 

22. An option contract gives one of the parties an absolute right to enter into a second contract at a later date.

 

                                          

 

23. Quasi contracts are contracts.

 

                                          

24. The principle behind the quasi contract is to prevent unjust enrichment.

 

                                          

 

25. A quasi contract may arise in a situation in which no contract exists.

 

                                          

 

26. Whenever a person receives a benefit for which payment has not been made, there is an unjust enrich- ment and the value of such benefit must be paid to the person conferring the benefit.

 

                                          

 

27. Quasi-contractual liability will generally be imposed when the cost of performing a contract is greater than had been expected.

 

                                          

 

28. When a contract sets a price for services rendered, a plaintiff cannot sue for reasonable value.

 

                                          

 

29. The greatest risk to purchasing online is providing your credit card information to the seller.

 

                                          

 

30. When purchasing from a website, the website terms generally become the contract of the parties and are legally enforceable.

 

                                          

 

MULTIPLE CHOICE

 

1. A contract is:
   1. a binding agreement.
   2. an agreement creating an obligation.
   3. an agreement that creates enforceable duties and obligations.
   4. all of the above.

                                          

 

2. The elements of a contract include all of the following except:
   1. an agreement.
   2. two or more competent parties.
   3. consideration.
   4. an illegal purpose.

                                          

 

3. The subject matter of a contract may relate to:
   1. the performance of personal services.
   2. the construction of a house.
   3. the transfer of ownership of property.

1. 4. all of the above.

                                          

 

4. The promisor in a contract may also be called the:
   1. obligor.
   2. grantor
   3. obligee
   4. grantee

                                          

 

5. A party to a contract may be:
   1. an individual.
   2. a partnership.
   3. a corporation.
   4. all of the above.

                                          

 

6. A contract requires:
   1. an offer.
   2. an acceptance.
   3. both an offer and an acceptance.
   4. an agreement manifested by the written or spoken words of the parties.       
7. An agreement arises when one person, the                    , makes an offer and the other person to whom the offer is made, the                               , accepts.
   1. grantor; grantee
   2. grantee; grantor
   3. offeror; offeree
   4. offeree; offeror

                                          

 

8. A contract of record is also referred to as a:
   1. recognizance.
   2. reconnaissance.
   3. recording contract.
   4. none of the above.

                                          

 

9. Negotiable instruments are:
   1. formal contracts.
   2. informal contracts.
   3. option contracts.
   4. first-refusal agreements.

                                          

 

10. An implied contract is shown by:
    1. a writing.
    2. the acts and conduct of the parties.

1. 3. statements made in open court.
   4. an exchange of oral promises.

                                          

 

11. A legally binding agreement that can be rejected at the option of one of the parties is called a(n):
    1. void agreement.
    2. revoked contract.
    3. voidable contract.
    4. optional agreement.

                                          

 

12. An executory contract is:
    1. void if neither party has performed.
    2. voidable.
    3. entered into but not fully performed.
    4. always unilateral in nature.

                                          

 

13. A contract under which one or both parties have not yet fully performed is termed a(n):
    1. void agreement.
    2. executory contract.
    3. executive contract.
    4. executed contract.

                                          

 

14. A bilateral contract consists of a:
    1. promise for an act.
    2. promise for refraining from acting.
    3. promise for a promise.
    4. promise to contract.

                                          

 

15. An offer of a reward for the arrest and conviction of a criminal is an example of a:
    1. unilateral contract.
    2. bilateral contract.
    3. quasi contract.
    4. formal contract.

                                          

 

16. In a bilateral contract, each party will be a promisor and, therefore, each party will:
    1. be an obligor.
    2. be able to avoid the contract.
    3. not be in privity of contract.
    4. be an agent for the other side.

                                          

 

17. The main thrust of the quasi contract is to:
    1. encourage the making of written contracts.
    2. prevent enrichment.

1. 3. compensate those who voluntarily help others.
   4. prevent unjust enrichment.

                                          

 

18. An obligation to pay for the reasonable value of services rendered when there is no contract would be called:
    1. quasi-contractual.
    2. quasi-enforceable.
    3. semi-lawful.
    4. vali

                                          

 

19. A right of                           refusal is the right of a party to meet the terms of a proposed contract before it is executed, such as a real estate purchase agreement.
    1. concomitant
    2. conditional
    3. formal
    4. first

                                          

 

20. The plaintiff in a quasi-contractual action can recover:
    1. lost profits.
    2. damages for mental distress.
    3. the reasonable value of the benefit conferred upon the defendant.
    4. for all the damages sustaine

                                          

 

CASE

 

1. The Martin family owned a home that was badly in need of repair. Mrs. Martin worked outside the home and Mr. Martin took care of the household responsibilities and cared for the two young Martin children. One day, Mrs. Martin left for work and a home repair crew drove up and began to put alu- minum siding on the Martin house. Mr. Martin telephoned his wife, told her, and inquired about whether she had hired the workers. When the Martins realized that they never had ordered this work done, Mr. Martin sneaked out the back with the children. He later met his wife at work and they re- turned home for dinner. By that time, the entire front of the house had been aluminum-sided. The fore- man asked, "Mr. and Mrs. Wolf, how do you like the job?" The Martins replied that they loved the job, but the Wolfs lived next door. When it became clear that the repair crew had made an error, the fore- man insisted that the Martins had to pay.

 

1. 1. Decide the case, and explain the reason(s) for your decision.
   2. Decide the case, assuming that the Martins were away on vacation when the improve- ments were made, and then returned home to discover the improvements.