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

a. True

b. False

2. An acceptance must be absolute and unconditional.

a. True

b. False

3. An offer is effective only if it is communicated by the offeror in person.

a. True

b. False

4. The "necessaries" of minors are precisely defined by law.

a. True

b. False

5. Generally, contracts are discharged by the performance of the terms of the contract.

a. True

b. False

6. A promise to pay an attorney a fee owed by a third person can be enforced without a writing.

a. True

b. False

7. The fact that the consideration supplied by one party is slight when compared with the burden undertaken by the other party is immaterial.

a. True

b. False

8. Bruce is a donee beneficiary to a life insurance contract if he is listed as the beneficiary.

a. True

b. False

9. In a contract for the sale of goods, any modification made by the parties to the contract must be supported by consideration to be binding.

a. True

b. False

10. A noncompetition covenant may be held invalid because of vagueness concerning the duration and geographic area of the restriction.

a. True

b. False

11. A contract can only involve two parties: the promisor and the obligor.

a. True

b. False

12. Fraud requires intent that the listener rely on the false statement of fact.

a. True

b. False

13. The parties may agree that the adequacy of performance under a contract is to be determined by a third party.

a. True

b. False

14. Ordinarily, every party to a contract is presumed to have contractual capacity until the contrary is shown.

a. True

b. False

15. Contractual capacity can exist even though a party does not understand every provision of the contract.

a. True

b. False

16. Payment by check is a conditional payment.

a. True

b. False

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

a. True

b. False

18. If the offeree purports to accept an offer but in so doing makes any change to the terms of the offer, such action is a counteroffer that rejects the original offer.

a. True

b. False

19. Under the statute of frauds, an oral contract must be completed within one year after performance begins.

a. True

b. False

20. Generally, a promise is legally enforceable even if nothing is given or received for the promise.

a. True

b. False

21. If no time is stated for the duration of an offer, it continues indefinitely if the offer relates to durable goods or land.

a. True

b. False

22. To be enforceable under the statute of frauds, the note or memorandum must be signed by the party sought to be bound by the contract.

a. True

b. False

23. If a municipality contracts with a contractor to pave a street, the homeowners on that street are third-party beneficiaries of the contract.

a. True

b. False

24. The past performance of the parties under a continuing contract is irrelevant in determining what the contract means.

a. True

b. False

25. A requirements contract is too vague to be a legally-enforceable agreement.

a. True

b. False

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

a. True

b. False

27. An assignee of a contract can bring suit on the contract only in the name of the assignor.

a. True

b. False

28. A father's handshake and oral promise to his daughter and her fiance made in consideration of their contemplated marriage is binding.

a. True

b. False

29. Factual incapacity is imposed because of the class or group to which a person belongs.

a. True

b. False

30. If one party's promise contains no real obligation, then the promise is merely an illusory promise and the contract will fail for lack of mutuality.

a. True

b. False

31. If an offer does not state how long it shall remain open, it remains open for ten days.

a. True

b. False

32. A condition subsequent can alter but not terminate a contract.

a. True

b. False

33. In order for fraud liability to arise, the listener must actually rely on the false statement of fact.

a. True

b. False

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

a. True

b. False

35. A third person automatically has the status of an intended third-party beneficiary regardless of the parties' intentions at the time of contracting.

a. True

b. False

36. To make an offer, the offeror must appear to intend to create binding obligation.

a. True

b. False

37. Because contracts are legally binding agreements, they must be in writing to be enforceable.

a. True

b. False

38. A court may sever an unconscionable clause from a contract and enforce the remainder of the contract.

a. True

b. False

39. When it is claimed that a contract is too indefinite to be enforced, a court will do its best to find the intent of the parties and thereby reach the conclusion that the contract is not too indefinite.

a. True

b. False

40. Unless a contract so provides, time is ordinarily not of the essence, and performance within a reasonable time is sufficient.

a. True

b. False

41. The doctrine of promissory estoppel is also known as the doctrine of beneficial reliance.

a. True

b. False

42. It is necessary that a third-party beneficiary be identified by name.

a. True

b. False

43. The parol evidence rule is based on the theory that any oral agreement was abandoned when the contact was written.

a. True

b. False

44. A bilateral contract is essentially an exchange of enforceable promises.

a. True

b. False

45. Offers, acceptances of offers, and revocations of offers are all effective when mailed in a properly-addressed envelope bearing the proper amount of postage.

a. True

b. False

46. In the absence of an agreement to the contrary, weather conditions constitute a risk that is assumed by a contracting party.

a. True

b. False

47. Certain persons cannot make contracts that will bind them.

a. True

b. False

48. A factual incapacity may exist when, because of a mental condition caused by medication, drugs, alcohol, illness, or age, a person does not understand that a contract is being made or understand its general nature.

a. True

b. False

49. If either the offeror or offeree dies or becomes mentally incompetent before the offer is accepted, the offer is automatically terminated.

a. True

b. False

50. Agreements not to compete are always void.

a. True

b. False

51. In general, an acceptance occurs when:

a. a particular form of words is stated to the offeror.

b. a particular mode of expression is made to the offeror.

c. the offeree reserves the right to reject the offer.

d. a clear expression of the offeree's agreement to be bound by the terms of the offer occurs.

52. The phrase "time is of the essence" means that:

a. the court is in a hurry to dispose of the case.

b. performance under the contract at the times specified in the contract is vital or essential.

c. the contract expressly states that time is of the essence.

d. the price stated in the contract is subject to change without notice.

53. Private lotteries, which generally are held to be illegal, involve three elements:

a. prize, chance, and consideration.

b. return, skill, and wager.

c. prize, skill, and consideration.

d. attractive return, minimal involvement, and skill.

54. A contract requires:

a. an offer.

b. an acceptance.

c. both an offer and an acceptance.

d. an agreement manifested by the written or spoken words of the parties.

55. A discharge by agreement can occur in any of the following situations except:

a. death of the obligor.

b. accord and satisfaction.

c. release.

d. mutual rescision.

56. Even if a contract appears legal on its face, it may be unenforceable if:

a. the illegal contract has not been performed.

b. the contract has been partially performed.

c. the contract has been fully performed.

d. the contract has an illegal purpose.

57. Examples of illusory promises include:

a. cancellation provisions.

b. apparent promises.

c. conditional obligations.

d. real obligations.

58. When a contract proves to be a bad bargain:

a. the injured party is never bound by the terms of the contract.

b. courts will always imply terms that are necessary to avoid hardship.

c. parties are generally still bound by the terms of the contract.

d. the contract must be rewritten.

59. When a buyer assigns the right to goods under a contract, the buyer's liability to make payment to the seller is:

a. transferred to the third party.

b. terminated.

c. still in effect.

d. shared equally with the third party.

60. Liz agrees to cook 20 dinners for Brian, and in exchange, Brian will repair all of the plumbing in Liz's house. Liz and Brian's 'deal' has:

a. insufficient consideration, because cooking twenty dinners is not worth as much as repairing all of the plumbing in Liz's house.

b. insufficient consideration, because this kind of bargain is against public policy.

c. insufficient consideration, because there is a clear lack of any bargain.

d. sufficient consideration, because Liz has promised something of value.

61. Which of the following is not consideration for a present promise?

a. a good faith adjustment

b. compromise and release of claims

c. the promise to pay one's child support obligation, consistent with a pre-existing court order.

d. the performance of a requested act

62. In most bilateral contracts, the performances of the parties are __________.

a. conditions precedent

b. conditions subsequent

c. recurrent conditions

d. concurrent conditions

63. A(n) _______ contract is a take-it-or-leave-it contract that is unenforceable because it is deemed to be too harsh or oppressive to one of the contracting parties.

a. unilateral influence

b. bilateral influence

c. adhesion

d. non-compete

64. A contract can be discharged by impossibility in all the following scenarios except:

a. destruction of subject matter in a sales contract.

b. performance under the contract becomes 25% more expensive due to currency fluctuations in construction contract.

c. when the law changes.

d. death of obligee in a personal services contract.

65. A contract under which one or both parties have not yet fully performed is termed a(n):

a. void agreement.

b. executory contract.

c. executive contract.

d. executed contract.

66. Which of the following is not an element of an accord and satisfaction?

a. a bona fide dispute

b. a proposal to settle the dispute

c. performance of the agreement to settle the dispute

d. reservation of rights under the federal Consumer Credit Protection Act

67. An agreement is not binding when:

a. one party makes a mistake regarding a material fact but the mistake is unknown to the other contracting party.

b. both parties make a mistake regarding a material fact.

c. one party makes a mistake of law.

d. both parties make a mistake in judgment.

68. The main thrust of the quasi contract is to:

a. encourage the making of written contracts.

b. prevent enrichment.

c. compensate those who voluntarily help others.

d. prevent unjust enrichment.

69. A third-party beneficiary:

a. may be obligated to pay for services rendered.

b. may bring suit on and enforce the contract.

c. must consent to the contract.

d. must be identified by name.

70. Contractual capacity is the ability to:

a. read and write.

b. sign a written contract.

c. understand that a contract is being made and to understand its general nature.

d. understand the legal meaning of the contract being made.

71. Promissory estoppel does NOT require

a. a signed writing explaining the promise.

b. a clear and definite promise

c. that justice be better served by enforcement of a promise

d. that a promisee has justifiably relied on the promise

72. The plaintiff in a quasi-contractual action can recover:

a. lost profits.

b. damages for mental distress.

c. the reasonable value of the benefit conferred upon the defendant.

d. for all the damages sustained.

73. Bankruptcy results in a discharge of contractual obligations by __________.

a. default

b. equity

c. operation of law

d. oath or affirmation

74. 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.

a. concomitant

b. conditional

c. formal

d. first

75. Jones has a life insurance policy on his own life that provides that in the event of his death, his mother will receive the proceeds. Jones' mother is a(n):

a. incidental beneficiary.

b. donee beneficiary.

c. creditor beneficiary.

d. assignee.

76. An assignment of royalties to a song:

a. is a contract.

b. requires consideration.

c. is a transfer of rights.

d. is not enforceable.

77. When a person has performed services under an oral contract that cannot be enforced because of the statute of frauds, such person:

a. can recover the agreed payment for the services because a refusal to make payment would be a breach of the contract.

b. can recover the reasonable value of the services because there is a quasi-contractual duty to pay for the benefit received from such services.

c. cannot recover the value of the services because they were rendered under a unilateral mistake of law.

d. can have the party receiving the services arrested for obtaining property by false pretenses.

78. A contract is created by which the terms are stated to be for consideration in the amount of $3,000. If typewritten in the contract is the term "four thousand dollars," while the amount of $3,000 is printed within the form:

a. the contract will be interpreted to be for $3,000.

b. the contract will be interpreted to be for $4,000.

c. there is a contract but the courts will not specify the dollar amount, as a conflict exists.

d. a compromise settlement amount of $3,500 will be used.

79. An agreement to slander a third person would not be enforceable because slander is a(n):

a. crime.

b. civil wrong.

c. infringement of privacy.

d. restraint against trade.

80. If an offeree dies before the offer has been accepted, the offer:

a. may be rejected by the surviving spouse of the offeree.

b. may be accepted by the surviving spouse of the offeree.

c. is automatically revoked by the death of the offeree.

d. may be accepted by the guardian appointed for any minor children of the offeree.

81. A person lacks contractual capacity if:

a. the person is a chronic alcoholic.

b. the person is a drug addict.

c. because of mental impairment, the person does not comprehend that a contract is being made or understand its consequences.

d. the person is a minor.

82. Negotiable instruments are:

a. formal contracts.

b. informal contracts.

c. option contracts.

d. first-refusal agreements.

83. The obligation of a cosigner is discharged by:

a. the minority status of one of the parties.

b. the majority status of one of the parties.

c. the court's declaration of the contract's provision of necessaries.

d. the payment of the debt.

84. A counteroffer is a(n):

a. acceptance of the original offer.

b. rejection of the original offer.

c. acceptance of the original offer and an invitation to further negotiate.

d. a revocation of the original offer.

85. A promise to pay a debt must be in writing if:

a. the debt is for more than $500.

b. the debt is now due and payable.

c. the promise is to pay the debt of another.

d. the debt owed is the promisor's.

86. A young stockbroker was rather overwhelmed by a flood of new clients. Assunta, one of his clients, had purchased XYZ Corp. stock through the broker at a price of $35 per share. The stock price began to decline, and Assunta decided to sell, and she called the broker and told her that she wanted to sell the stock if it went below $30 and inquired as to the price. The price had gone down to $29 by the time Assunta telephoned the broker. The broker did not check the price, but thinking it could not have fallen below the $30 threshold, simply reassured Assunta that it was still "in the low 30s." Marta, Assunta's cousin, also had purchased XYZ stock at $35 per share and made a similar call to the broker and received the same response. Marta, however, coincidentally saw the price on a stock ticker tape when she hung up and realized the broker had made an error. Both Assunta and Marta decided to hold the stock and did not sell. Later that same day, the stock price fell an additional $7 per share. Facing sizable losses, both Assunta and Martha decided to sue for fraud when Marta told Assunta of the broker's misstatement. Discuss the probable outcome of the lawsuits.