Question 1

A contract between Kim and Larry to lease residential property contains an exculpatory clause. This clause is

Accepted Answer

A)   ​enforceable as a matter of public policy.
B)   ​enforceable if either party is in a business important to the public.
C)   ​enforceable if an event occurs to which the clause applies.
D)   ​generally unenforceable.E) C) and D)
F) B) and C)

Question 2

All states require that members of certain professions obtain licenses allowing them to practice.

Accepted Answer

A) True 
 B)False

Question 3

Contracts in restraint of trade are contrary to the public policy that favors competition in the economy.

Accepted Answer

A) True 
 B)False

Question 4

Countrywide Trucking Inc. contracts with Dewey to transport crated goods to a certain destination for $5,000. Countrywide delivers the crates, but Dewey does not pay. Countrywide learns that the crates contained stolen goods. Countrywide can recover from Dewey

Accepted Answer

A)   ​none of the choices.
B)   ​$5,000, but not the goods.
C)   ​the goods but not $5,000.
D)   ​the goods and $5,000.E) C) and D)
F) A) and B)

Question 5

Every state has a statute that sets the maximum rate of interest for different types of transactions.

Accepted Answer

A) True 
 B)False

Question 6

Service Corporation markets its service to less educated consumers. In considering the unconscionability of a Service contract, a court will likely consider all of the following except

Accepted Answer

A)   ​a buyer's level of education.
B)   ​the parties' relative bargaining power.
C)   ​the price of a service.
D)   ​the seller's level of education.E) None of the above
F) A) and D)

Question 7

Games Galore Corporation hires Haley, a minor, to create new customized game software for certain clients. Haley signs a contract that requires her to work for Games Galore for eighteen months. Before beginning work, however, Haley tells Games Galore that she will not create new software for Games Galore and that she is going to work for Ideal Worldcraft, Inc., a Games Galore competitor. Is Games Galore's contract with Haley enforceable? Why or why not?

Accepted Answer

The contract is not enforceable. Haley i...

Question 8

Betty sells her Clothes Shop to Diane. In the sale agreement, there is a covenant not to compete that prohibits Betty from opening another clothing store within a certain distance. If a court concludes that this restriction is unreasonable, it will most likely

Accepted Answer

A)   ​award Betty damages equal to the speculative profit of a closer store.
B)   ​order Diane to stop doing business.
C)   ​reform the covenant.
D)   ​prohibit both parties from opening clothing stores.E) B) and C)
F) C) and D)

Question 9

A covenant not to compete is enforceable only if it is necessary to restrain trade.

Accepted Answer

A) True 
 B)False

Question 10

Research Data Corporation sells access to its database of scientific research to users for a certain price per month. Research Data files a suit against its user Tom when, in violation of their contract, he stops making payments. Tom claims that the deal is unconscionable. The court will most likely consider

Accepted Answer

A)   ​the geographic area of the relevant market.
B)   ​the parties' relative bargaining power.
C)   ​the quality of related services in the general market.
D)   ​the relation of this deal to those of other users.E) None of the above
F) A) and D)

Question 11

Jake and Kline make an illegal contract that unjustly enriches Jake at the expense of Kline. A court will

Accepted Answer

A)   ​not be concerned with the unjust enrichment of Jake.
B)   ​award damages to Kline.
C)   ​reform the contract to prevent undue burdens.
D)   ​enforce the contract as it was originally written.E) A) and B)
F) A) and C)

Question 12

Food is a "necessary."

Accepted Answer

A) True 
 B)False

Question 13

In an employment contract, a covenant not to compete is unenforceable.​

Accepted Answer

A) True 
 B)False

Question 14

Executed contracts are presumed ratified.

Accepted Answer

A) True 
 B)False

Question 15

Statutes often specify what is prohibited in contracts.

Accepted Answer

A) True 
 B)False

Question 16

Intoxicated and not aware of the consequences, Grady agrees to a two-year phone service contract with Horizon, Inc., at more than the average market price. This contract is

Accepted Answer

A)   ​enforceable.
B)   ​not enforceable because contracting parties can change their minds.
C)   ​not enforceable because the contract favors Horizon.
D)   ​not enforceable if Grady was intoxicated enough to lack mental capacity.E) A) and D)
F) A) and C)

Question 17

Shannon signs a contract with Tevin, an unlicensed contractor, to build a deck and gazebo at the rear of her house. This contract is enforceable by

Accepted Answer

A)   ​Shannon.
B)   ​any supplier of tools and materials with whom Tevin deals.
C)   ​Tevin.
D)   ​no one.E) All of the above
F) B) and D)

Question 18

Contractual capacity includes the financial ability to pay for the benefits of a contract.

Accepted Answer

A) True 
 B)False

Question 19

A covenant not to compete is enforceable only if it is reasonable in duration and geographic area.

Accepted Answer

A) True 
 B)False

Question 20

Emma, a minor, buys a water bottle, a set of weights, and a treadmill from Fitness Warehouse. Later, Emma disaffirms the deal. If the goods are still in her possession or control, she can keep

Accepted Answer

A)   ​the water bottle, but not the weights or the treadmill.
B)   ​none of the goods.
C)   ​only the damaged or used goods.
D)   ​all of the goods.E) C) and D)
F) A) and B)

Exam 14: Capacity and Legality

Countrywide Trucking Inc. contracts with Dewey to transport crated goods to a certain destination for $5,000. Countrywide delivers the crates, but Dewey does not pay. Countrywide learns that the crates contained stolen goods. Countrywide can recover from Dewey

Correct Answer
verified

Executed contracts are presumed ratified.

Correct Answer
verified

Statutes often specify what is prohibited in contracts.

Correct Answer
verified

Contractual capacity includes the financial ability to pay for the benefits of a contract.

Correct Answer
verified

Food is a "necessary."

Correct Answer
verified

Correct Answer
verified
The contract is not enforceable. Haley i...
View Answer

Emma, a minor, buys a water bottle, a set of weights, and a treadmill from Fitness Warehouse. Later, Emma disaffirms the deal. If the goods are still in her possession or control, she can keep

Correct Answer
verified

Jake and Kline make an illegal contract that unjustly enriches Jake at the expense of Kline. A court will

Correct Answer
verified

Every state has a statute that sets the maximum rate of interest for different types of transactions.

Correct Answer
verified

Intoxicated and not aware of the consequences, Grady agrees to a two-year phone service contract with Horizon, Inc., at more than the average market price. This contract is

Correct Answer
verified

All states require that members of certain professions obtain licenses allowing them to practice.

Correct Answer
verified

Shannon signs a contract with Tevin, an unlicensed contractor, to build a deck and gazebo at the rear of her house. This contract is enforceable by

Correct Answer
verified

In an employment contract, a covenant not to compete is unenforceable.

Correct Answer
verified

A contract between Kim and Larry to lease residential property contains an exculpatory clause. This clause is

Correct Answer
verified

A covenant not to compete is enforceable only if it is reasonable in duration and geographic area.

Correct Answer
verified

Betty sells her Clothes Shop to Diane. In the sale agreement, there is a covenant not to compete that prohibits Betty from opening another clothing store within a certain distance. If a court concludes that this restriction is unreasonable, it will most likely

Correct Answer
verified

Correct Answer
verified

A covenant not to compete is enforceable only if it is necessary to restrain trade.

Correct Answer
verified

Service Corporation markets its service to less educated consumers. In considering the unconscionability of a Service contract, a court will likely consider all of the following except

Correct Answer
verified

Contracts in restraint of trade are contrary to the public policy that favors competition in the economy.

Correct Answer
verified

Exam 14: Capacity and Legality

Countrywide Trucking Inc. contracts with Dewey to transport crated goods to a certain destination for $5,000. Countrywide delivers the crates, but Dewey does not pay. Countrywide learns that the crates contained stolen goods. Countrywide can recover from Dewey

Correct AnswerverifiedShow Answer

Executed contracts are presumed ratified.

Correct AnswerverifiedShow Answer

Statutes often specify what is prohibited in contracts.

Correct AnswerverifiedShow Answer

Contractual capacity includes the financial ability to pay for the benefits of a contract.

Correct AnswerverifiedShow Answer

Food is a "necessary."

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe contract is not enforceable. Haley i...View AnswerShow Answer

Emma, a minor, buys a water bottle, a set of weights, and a treadmill from Fitness Warehouse. Later, Emma disaffirms the deal. If the goods are still in her possession or control, she can keep

Correct AnswerverifiedShow Answer

Jake and Kline make an illegal contract that unjustly enriches Jake at the expense of Kline. A court will

Correct AnswerverifiedShow Answer

Every state has a statute that sets the maximum rate of interest for different types of transactions.

Correct AnswerverifiedShow Answer

Intoxicated and not aware of the consequences, Grady agrees to a two-year phone service contract with Horizon, Inc., at more than the average market price. This contract is

Correct AnswerverifiedShow Answer

All states require that members of certain professions obtain licenses allowing them to practice.

Correct AnswerverifiedShow Answer

Shannon signs a contract with Tevin, an unlicensed contractor, to build a deck and gazebo at the rear of her house. This contract is enforceable by

Correct AnswerverifiedShow Answer

In an employment contract, a covenant not to compete is unenforceable.​

Correct AnswerverifiedShow Answer

A contract between Kim and Larry to lease residential property contains an exculpatory clause. This clause is

Correct AnswerverifiedShow Answer

A covenant not to compete is enforceable only if it is reasonable in duration and geographic area.

Correct AnswerverifiedShow Answer

Betty sells her Clothes Shop to Diane. In the sale agreement, there is a covenant not to compete that prohibits Betty from opening another clothing store within a certain distance. If a court concludes that this restriction is unreasonable, it will most likely

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A covenant not to compete is enforceable only if it is necessary to restrain trade.

Correct AnswerverifiedShow Answer

Service Corporation markets its service to less educated consumers. In considering the unconscionability of a Service contract, a court will likely consider all of the following except

Correct AnswerverifiedShow Answer

Contracts in restraint of trade are contrary to the public policy that favors competition in the economy.

Correct AnswerverifiedShow Answer

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The contract is not enforceable. Haley i...
View Answer

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Correct Answer
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Correct Answer
verified

In an employment contract, a covenant not to compete is unenforceable.

Correct Answer
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