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BUSINESSLAW PRACTICEFINALEXAMINATION Indicate whether each statement below is true or false. 1.

In a contract, the value of the consideration given need not be equal to the value of the consideration received. 2. One who has a right to receive money from another may transfer this right to a third person through the process of delegation. 3. According to the statute of limitations, certain debts are outlawed and the right to legal action is lost if a claim is not filed within a specific period of time. 4. A contract to answer for the debts of others must be in writing. 5. If a debtor makes a voluntary partial payment after the due date, the time limit under the statute of limitations starts over from the date of payment. 6. Cilino said to Regal, "I'll sell you my video game system for $175 in cash today." Regal replied, 'I'll take it by paying you $100 today and the other $75 in 30 days." Regal's reply resulted in an accord and satisfaction. 7. Nonpersonal rights that do no involve unique skills, talent or knowledge cannot be transferred without the other party's permission.

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8. When money damages do not compensate adequately for a loss, one remedy is for the injured party to sue for specific performance. 9. Not all contracts must be in writing to be valid. 10. A minor's obligation to pay for necessaries is an express contract. PARTTWO Choose the best answer in response to the following questions.

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11. A contract that is completely enforceable against all parties unless and until a party legally entitled to avoid the contract does so is (a) valid. (b) void. (c) voidable. (d) performed.

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12. On July 8, Varden wrote to Montague offering to sell Montague her used car for $525. The letter stated: "The offer is subject to the actual receipt of your acceptance no later than July 23." Monty mailed a letter of acceptance on July 21, which reached Varden on July 24. A valid contract (a) was made July 21. (b) was made July 23. (c) was made July 24. (d) was never made. 13. An agreement induced by fraud is (a) valid. (b) void. (c) voidable by the injured party. (d) voidable by either party.

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14. Carter offered to sell Milford a used power lawn mower. Milford accepted the offer. This offer and acceptance are called (a) mutual assent. (b) compromise. (c) ratification. (d) payment of an option.

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15. Paulson borrowed $100 from Best and promised in writing to pay the debt on March 1. On the due date, Paulson could not pay the full amount but offered Best $50 in cash and a watch worth $25. Best accepted. Was the debt discharged? (a) Yes. When a claim is disputed, a compromise figure is binding. (b) Yes. A debt is canceled if the creditor accepts as full payment a part payment in money plus property. (c) No. The consideration was inadequate. (d) No. The additional consideration was illegal.

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_____ 16. A contract must be in writing to be enforceable if it involves (a) payment of an excessive interest rate. (b) the sale of goods worth more than $350. (c) the sale of real property. (d) restraint of marriage.

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17. Contracts involving personal services can be assigned or delegated (a) under any conditions. (b) with the consent of all the parties involved. (c) under no circumstances. (d) with the consent of only one of the parties.

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18. If a party proves that a contract has been breached but cannot prove any actual damages, the injured party may be awarded (a) liquidated damages. (b) remote damages. (c) nominal damages. (d) punitive damages.

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19. In a personal services contract, if the person to perform the services dies, the contract is (a) terminated. (b) assigned to a relative. (c) considered breached. (d) ratified. 20. Agreements in unreasonable restraint of trade are (a) voidable. (b) quasi contracts. (c) illegal. (d) valid.

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21. An agreement in which the offeree gives something of value to the offeror to keep an offer open is called a(n) (a) tender of performance. (b) compromise agreement. (c) option contract. (d) promise. 22. A minor can disaffirm a contract for the purchase of a stereo (a) during minority or within a reasonable time after reaching majority. (b) only during minority. (c) within one year of the date of the agreement. (d) only after reaching majority. _____ 23. An agreement that would be illegal and therefore void is a contract (a) in reasonable restraint of trade. (b) to pay a usurious rate of interest. (c) to extend the time of payment of a debt. (d) to hold an offer open for a certain time.

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24. The purpose of awarding an injured party money damages for breach of contract is to (a) permit the injured party to avoid the contract. (b) punish the party that breached the contract. (c) compensate the injured party for the loss suffered. (d) permit the injured party to make a profit. _____ 25. Carlson had a written contract with Sanchez to purchase some cattle. Unknown to either party, the cattle had died. The contract was discharged by (a) breach. (b) full performance. (c) impossibility. (d) mutual agreement. 26. The statute of frauds applies only to (a) executed contracts. (b) executory contracts. (c) quasi contracts. (d) illegal contracts. 27. Which of the following, at common law, generally constitutes impossibility? (a) fire caused by lightning. (b) strikes. (c) shortage of supplies. (d) none of these. PARTTHREE Indicate whether each agreement described below is valid, void, or voidable on the part of the party underlined in bold in each sentence. 28. A minor contracted to purchase a motorcycle for his personal use. ____________ 29. An adult contracted to purchase a VCR from a minor. _________________

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30. An adult sold real estate without a license to do so. _________________ 31. An adult thought by some people to be mentally ill made a reasonable contract to purchase a necessity. ______________ 32. A minor ratified an executory contract when he reached majority. _____________ PARTFOUR Use the following terms to identify the phrases below. On the line next to each phrase, write the letter of the term that is most closely related to it. a. b. c. d. Recission Alteration Breach Impossibility of performance e. Performance f. Legal Tender g. Waiver

33. The voluntary surrender of one's contractual rights. 34. An offer to pay money in satisfaction of a contractual obligation. 35. A termination by mutual consent. 36. A refusal to perform by one of the contracting parties. 37. A material change of the terms of a written contract without the consent of both parties. _____ PARTFIVE

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In the statements below, important words have been omitted. Fill in the blanks to complete each statement. 38. Duress renders a contract by the victim ______________________. 39. The most common method by which contracts are discharged is __________________________. 40. Damages that are agreed on in advance in case of a breach and 6

stated in the contract are known as _____________________________ damages. 41. Coins and currency of the United States are called ___________________. 42. A contract in which nothing remains to be done by either party is said to be _____________________. 43. Once an agreement is executed, the presence of ________________ is unimportant. 44. The rights of the assignor are the rights of the __________________. 45. A promise based on consideration to keep an offer open for a definite period of time is called a(n) ____________________. 46. An agreement containing illegal subject matter is ________________. 47. When one party to a contract fails to do as agreed, a(n) _____________ is said to have occurred.

PARTSIX Read the case problems below. For each problem, answer yes or no, and then explain your answer in the space provided. 48. Singer Nancy Green was admitted to a Chicago hospital last night after being reported missing for two days. She had failed to make her scheduled appearance at a nightclub. Mrs. Helen Mangam, owner of Mangam's Chateau in Chicago where Green was appearing, said the singer apparently suffered a heart attack and would not be able to make any scheduled appearances for at least six months. Is Green's contract with Mangam's Chateau discharged?

49. On February 1, 1995, the Burton Manufacturing Co. contracted to make and ship 1,000 men's suits to the Fisher Clothing Co. by March 1. A prolonged breakdown of factory machinery caused an interruption in production, and the Burton Co. informed Fisher Clothing Co. that it could not fulfill contract commitments until June 1. Does the Fisher Clothing Co. have a case for breach of contract under the common law?

50. Deveraux, a noted columnist, was engaged by a newspaper syndicate to prepare manuscript copy and editorials for its papers. Owing to ill health, Deveraux is obliged to retire and assigns his contract to White, also a prominent journalist. When the newspaper syndicate learns of the assignment, it refuses to give its approval. Is the newspaper syndicate obliged to accept White's services?

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PARTSEVEN Answer each of the following questions in the space provided. 51. Name two situations in which contract law attempts to protect the morality of the general public.

52. Is it possible to rescind a contract because of a unilateral mistake?

53. When is an advertisement an offer?

54. It is said that the assignee "steps into the shoes of the assignor." What does this mean?

55. How can a contract be breached before the date scheduled for performance?

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