Chapter 10 Nature and Terminology. All Answers

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Chapter 10 Nature and Terminology N.B.: TYPE indicates that a question is new, modified, or unchanged, as follows. N A question new to this edition of the Test Bank. + A question mo... dified from the previous edition of the Test Bank. = A question included in the previous edition of the Test Bank. TRUE/FALSE QUESTIONS A1. Some promises are not legally binding. T PAGE: 206 TYPE: + NAT: AACSB Analytic AICPA Critical Thinking A2. Resolving whether a promise should be enforced is a function of contract law. T PAGE: 206 TYPE: N NAT: AACSB Analytic AICPA Legal A3. If a contractual promise is not fulfilled, the person who made it may be required to perform the promised act. T PAGE: 207 TYPE: N NAT: AACSB Analytic AICPA Critical Thinking A4. The intention to enter into a con¬tract is judged by outward, objective facts as interpreted by a reasonable person. T PAGE: 207 TYPE: + NAT: AACSB Analytic AICPA Legal A5. The only requirement of a valid contract is that it be voluntarily entered into. F PAGE: 208 TYPE: N NAT: AACSB Analytic AICPA Legal A6. Every contract involves at least three parties. F PAGE: 208 TYPE: N NAT: AACSB Reflective AICPA Legal A7. “Consideration” refers to the voluntary consent of all of the parties to a contract. F PAGE: 208 TYPE: + NAT: AACSB Analytic AICPA Legal A8. A unilateral contract is formed when the one receiving the offer com¬pletes the re¬quested act or performance. T PAGE: 209 TYPE: = NAT: AACSB Analytic AICPA Legal A9. No offer may be revoked before it is accepted. F PAGE: 210 TYPE: = NAT: AACSB Analytic AICPA Legal A10. A check is a formal contract. T PAGE: 210 TYPE: N NAT: AACSB Analytic AICPA Legal A11. Informal contracts are usually based on their sub¬stance rather than their form. T PAGE: 210 TYPE: = NAT: AACSB Analytic AICPA Critical Thinking A12. An express contract must be in writing. F PAGE: 210 TYPE: = NAT: AACSB Analytic AICPA Legal A13. An implied contract is not an actual contract. F PAGE: 210 TYPE: + NAT: AACSB Reflective AICPA Legal A14. If a voidable contract is ratified, the parties must fully perform their respective legal obligations. T PAGE: 211 TYPE: N NAT: AACSB Analytic AICPA Legal A15. An executed contract is one that has been fully performed. T PAGE: 211 TYPE: = NAT: AACSB Analytic AICPA Legal A16. A quasi contract is a fictional contract. T PAGE: 212 TYPE: = NAT: AACSB Analytic AICPA Critical Thinking A17. A void contract is enforceable if it is in writing. F PAGE: 212 TYPE: = NAT: AACSB Reflective AICPA Legal A18. The doctrine of quasi contract can be used only when there is an actual con-tract that covers the matter in controversy. F PAGE: 214 TYPE: = NAT: AACSB Reflective AICPA Legal A19. Plain language laws regulate some types of contracts to require “legalese.” F PAGE: 215 TYPE: N NAT: AACSB Analytic AICPA Legal A20. A reasonable, lawful, and effective meaning will normally be given to all of a contract’s terms. T PAGE: 217 TYPE: N NAT: AACSB Reflective AICPA Legal MULTIPLE CHOICE QUESTIONS A1. Phil agrees to work for Vacation Resorts, Inc., as a chef. In determining whether a contract has been formed, an element of prime importance is a. the parties’ intent. b. Phil’s rate of pay. c. the duration of the work. d. Vacation Resorts’s facilities. A PAGE: 207 TYPE: N NAT: AACSB Analytic AICPA Legal A2. Crosby believes that he and Dakota agreed he would act as her personal sports trainer for seven workout sessions. In a later dispute, the existence of any contract can be judged by a. the parties’ statements at the time of their alleged contract. b. what the defendant claims was the parties’ intent. c. what the plaintiff claims was the parties’ intent. d. what the parties agree they intended. A PAGE: 207 TYPE: N NAT: AACSB Reflective AICPA Legal A3. Expert Pavers, Inc., contracts with Fabricated Building Corporation to repave Fabricated’s parking lot for which Fabricated agrees to pay. The elements of this, and any other, contract include a. capability. b. consideration. c. formation. d. practicality. B PAGE: 208 TYPE: + NAT: AACSB Analytic AICPA Legal A4. Mona asserts that a deal she entered into with Nate is an unenforce¬able contract. Defenses to the enforcement of a contract include a. a desire not to perform. b. adverse economic consequences. c. results that do not match expectations. d. the lack of a party’s voluntary consent. D PAGE: 208 TYPE: = NAT: AACSB Reflective AICPA Legal A5. Freida and Gail enter into a bilateral contract, which is created when Freida gives a promise in exchange for Gail’s a. payment of money only. b. performance of a par¬ticular act only. c. promise only. d. prudent awareness only. C PAGE: 208 TYPE: = NAT: AACSB Reflective AICPA Legal A6. Clay offers to pay Dorianne $50 for a golf lesson for Estee. They agree to meet the day after tomorrow to exchange the cash for the lesson. These parties have a. a bilateral contract. b. a trilateral contract. c. a unilateral contract. d. no contract. A PAGE: 208 TYPE: = NAT: AACSB Reflective AICPA Legal A7. Opie offers to sell his guitar to Pinky for $100. Pinky agrees. They complete and sign a printed form, and Pinky gives Opie a check for the price. This check is a. a formal contract. b. an informal contract. c. a simple contract. d. no contract. A PAGE: 210 TYPE: + NAT: AACSB Analytic AICPA Critical Thinking A8. On Monday, Neil tells Outdoor Landscaping, Inc., that he will pay Outdoor $500 if a variety of tasks are completed by Friday. On Wednesday, when Outdoor is more than half done with the work, Neil says that he has changed his mind. Under the present-day view, these parties had a. an expired contract when Neil said that he had changed his mind. b. a quasi contract when Neil said that he would pay for certain work. c. a unilateral contract as soon as Outdoor began to perform. d. no contract. C PAGE: 210 TYPE: = NAT: AACSB Analytic AICPA Legal A9. On behalf of the jazz group Synco-Passion, their manager Raul agrees to a performance in the Quay Club on May 1. Portia, acting for Quay Club, sends a written copy of the agreement to Raul to be signed. Typically, businesspersons put their contracts in writing to a. ensure proof of the contracts’ existence. b. create substance from form. c. obtain a check or other negotiable instrument. d. practice their “letters of credit.” A PAGE: 210 TYPE: N NAT: AACSB Reflective AICPA Legal A10. Flo tells Gregor that she will buy his textbook from last semester for $65. Gregor agrees. Flo and Gregor have a. an executed contract. b. an express contract. c. an implied contract. d. a quasi contract. B PAGE: 210 TYPE: = NAT: AACSB Reflective AICPA Legal A11. When Jeff’s car breaks down, he asks Kwik Tow, Inc., to tow it from its location to Loyal Repair Shop. There is no discussion of a price, and Jeff and Kwik do not sign any documents. After the tow, Kwik sends Jeff a bill. With respect to Jeff’s obligation to pay the bill, this is a. an express contract. b. an implied contract. c. a quasi contract. d. no contract. B PAGE: 210 TYPE: = NAT: AACSB Reflective AICPA Legal A12. Following negotiations with Merchants Storage Company, Lonny enters into an informal contract to clean the loading dock. This means that the parties’ contract a. requires no special form. b. must be drafted “in form” to be valid. c. is indefinite and imprecise. d. does not exist. A PAGE: 210 TYPE: N NAT: AACSB Reflective AICPA Legal A13. Sam and Tiffany enter into an implied contract. This is a contract in which the parties’ conduct a. defines the contract’s terms. b. finds the contract’s facts. c. terminates any unintended consequences. d. undercuts any terms based on the facts. A PAGE: 210 TYPE: = NAT: AACSB Reflective AICPA Legal A14. Scot enters into a contract with Tiffany that later proves voidable at Tiffany’s option. If she elects to avoid any duty to perform under the contract a. both parties are released from it. b. neither party is released from it. c. only Scot is released from it. d. only Tiffany is released from it. A PAGE: 211 TYPE: N NAT: AACSB Reflective AICPA Legal A15. Holiday Sales Company and Global Distributors, Inc., enter into a contract for the delivery of imported specialty goods. Until the goods are delivered and paid for, these parties have a. an executory contract. b. no contract. c. a quasi contract. d. an informal contract. A PAGE: 211 TYPE: N NAT: AACSB Reflective AICPA Legal A16. Mia, a physician, renders aid to Noel, who is injured and unconscious. Mia can recover the cost of the aid from Noel a. even if Noel was not aware of the aid. b. only if Noel recovers because of the aid. c. only if Noel was aware of the aid. d. under no circumstances. A PAGE: 212 TYPE: = NAT: AACSB Reflective AICPA Legal A17. Green Grocers, Inc., enters into a contract with Hiway Transport Company for the deliv¬ery of a shipment of fresh produce. In a later dispute between these parties over the delivery, the doctrine of quasi contract cannot be used because a. both of the parties involved are businesses. b. at least one of the parties had greater bargaining power. c. the subject of the contract was a service. d. there is an actual contract covering the subject in dispute. D PAGE: 214 TYPE: N NAT: AACSB Reflective AICPA Legal A18. Phil enters into a contract with Quality Resorts, Inc., to work as a chef. Under the plain meaning rule, the meaning of this contract must be de¬ter-mined by reference to a. any available evidence. b. any relevant extrinsic evidence. c. the face of the instrument. d. the later testimony of the parties. C PAGE: 215 TYPE: = NAT: AACSB Reflective AICPA Legal A19. Diaz and Cuzco enter an express contract for the construction of a warehouse. Express contract terms are given, in relation to the parties’ course of performance, a. less priority. b. the same priority. c. no priority. d. more priority. D PAGE: 217 TYPE: + NAT: AACSB Reflective AICPA Legal A20. National Grocers, Inc., enters into a contract with Overland Shipping Company for the de¬livery of a shipment of fresh produce. If ambiguities appear in the con¬tract, they will be construed against a. the party who drafted the contract. b. the party with the greater bargaining power. c. the promisor. d. the promisee. A PAGE: 217 TYPE: = NAT: AACSB Reflective AICPA Legal A1. Ed, a businessperson, is a friend of Fran, the owner of a candy store. Every day, Ed spends five minutes in Fran’s candy store, looking at the candy and usually buying one or two candy bars. One afternoon, Ed goes into the store, looks at the candy, and picks up a $1 candy bar. Ed waves the candy at Fran without saying a word and walks out. Is there a con¬tract? If so, how would it be classified in terms of formation, perform¬ance, and enforceability? A2. On May 1, Local Cartage Company and Modern Computers, Inc., orally agree that Local Cartage will pick up from National Chip Corporation and deliver to Modern Computers’ manufacturing plant a certain num¬ber of computer chips on each Monday in May. Under the agree¬ment, Modern Computers will pay for the delivery services on June 1. On May 1, is this contract express, implied in fact, or implied in law? On May 31, after all of the deliveries have been made, is the contract exe¬cuted or executory? [Show More]

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