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Cengage Advantage Books Law For Business 18th Edition Ashcroft Test Bank 1
Cengage Advantage Books Law For Business 18th Edition Ashcroft Test Bank 1
MULTIPLE CHOICE
1. The failure of a party to perform the obligations assumed under a contract is known as a(n):
a. intrinsic fraud.
b. misrepresentation.
c. negative pledge.
d. breach of contract.
ANS: D PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 5-1 NAT: BUSPROG: Ethics STA: AICPA: BB-Legal
TOP: A-head: Nature and Classes of Contracts KEY: Bloom's: Knowledge
3. An enforceable contract is made by an adult with a minor. Which of the following is most likely to
hold true in this case?
a. The contract is enforceable against the adult but not against the minor.
b. The contract is enforceable against the minor but not against the adult.
c. The contract is not enforceable against either of the parties until the minor attains a
majority.
d. The contract is enforceable against the adult only if the minor ratifies the contract.
ANS: A PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 5-2 NAT: BUSPROG: Ethics STA: AICPA: BB-Legal
TOP: A-head: Nature and Classes of Contracts KEY: Bloom's: Knowledge
7. Ashley offers to pay $50 to Judy in return for babysitting Ashley’s children over the weekend. Judy
tells Ashley that she will think about it and convey her decision the next day.Which of the following is
true in this case?
a. A bilateral contract has been made between Ashley and Judy.
b. Judy has been unjustly enriched in this situation.
c. Only Ashley is under an enforceable obligation.
d. Judy has a duty to baby-sit the children.
ANS: C PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 5-2 NAT: BUSPROG: Ethics STA: AICPA: BB-Legal
TOP: A-head: Nature and Classes of Contracts KEY: Bloom's: Comprehension
8. Which of the following is not a true contract and has been imposed by law in order to prevent one
party benefiting unfairly at another’s expense?
a. A voidable contract
b. An informal contract
c. A quasicontract
d. A unilateral contract
ANS: C PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 5-3 NAT: BUSPROG: Ethics STA: AICPA: BB-Legal
TOP: A-head: Nature and Classes of Contracts KEY: Bloom's: Knowledge
TRUE/FALSE
10. Only one party needs to give an agreement in order for a contract to be enforceable.
12. An agreement that does not meet all five of the requirements for a valid contract is known as an
unenforceable contract.
13. When a contract is required to be sealed, a substitute for an actual seal may be used.
14. The Uniform Commercial Code makes no distinction between contracts under seal and other written
contracts for the sale of goods.
16. The law states that a unilateral contract can be formed when performance is started.
17. One may have rights and obligations imposed by law even when no real contract exists.
19. The legal term for one party benefiting unfairly at the expense of another is unjust enrichment.
ESSAY
20. What is a contract? What are the five definite requirements that every contract must fulfill?
ANS:
A contract can be defined as a legally enforceable agreement between two or more competent people.
A contract must fulfill the following definite requirements:
1. It must be based on a mutual agreement by the parties to do or not to do a specific thing.
2. It must be made by parties who are competent to enter into a contract that will be enforceable
against both parties.
3. The promise or obligation of each party must be supported by consideration (such as the payment of
money, the delivery of goods, or the promise to do or refrain from doing some lawful future act) given
by each party to the contract.
4. It must be for a lawful purpose; that is, the purpose of the contract must not be illegal, such as the
unauthorized buying and selling of narcotics.
5. In some cases, the contract must meet certain formal requirements, such as being in writing or under
seal.