The courts will generally still allow a wrongdoer to enforce a contract against an innocent party

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1. Social Science
2. Law
3. Legal Management

Terms in this set (237)

The most common type of relief that courts of equity provide is monetary damages.

False

A temporary order that is issued by a court with equity powers forbidding activities that would be detrimental to others is known as:

​ a restraining order.

Kenneth was sentenced to six years in prison for forgery. In this case Kenneth has committed a(n) _____.

Felony

In the legal system of the United States, it is possible for the same law to have different consequences in different states.

True

If a decision of an administrative agency conflicts with a statute enacted by a higher legislative body, the agency decision will prevail.

False

Most federal laws regulating business are based on the Commerce Clause of the U.S. Constitution.

True

Felonies refer to crimes that are usually punishable by just a fine.

False

In a democratic society, laws are designed to reflect the ethical view of the majority.

True

Which of the following statements is most likely to be true of administrative agencies?

Administrative agencies have the power to implement laws.

Which of the following best describes the difference between civil law and criminal law?

Civil law deals with the enforcement or protection of private rights, whereas criminal law deals with offenses against society.

Probate courts handle divorce and child custody cases.

False

Each state has a federal court system and a state court system.​

True

A chief officer is known as a judge in a state court of record as well as in a federal court.

True

​ What is the chief function of the courts?

​ They interpret and apply the law from whatever source to a given situation.

A person licensed to represent others in court is called a(n):

Attorney

A summons is a way for parties to obtain unprivileged information from another party prior to trial.

False

The U.S. Supreme Court is the highest tribunal in the land, and its decisions are binding on all other courts.

True

In a small claims court, there is no jury and a judge tries the case.

True

Which of the following is true of appeals made to higher courts?

​ The decision of the appellate court is binding on lower courts.

_____ laws are those that state how parties are to go forward with filing civil actions and how these actions are to be tried.

Procedural

The use of rogue programs to produce abnormal computer behavior is an example of computer trespass.

True

The offering of money, entertainment, or anything of value constitutes a bribe.

True

For an act to be established as a tort of injurious falsehood, the false statements of fact must be communicated by the defendant to a third person.

True

To establish the offense of criminal copyright infringement, a prosecutor needs to prove that the infringement was done for non-financial gain.

False

An employee who picks up inventory tools from his office with the intent to deprive the owners of the property is an example of larceny.

True

A trademark must be registered before the holder is afforded any rights or protections for the mark.

False

The Racketeer Influenced and Corrupt Organizations Act includes civil sanctions as well as criminal ones.

True

Which of the following is most likely to be a tort based on negligence?​

Automobile accidents

In a situation where an injured party in an accident is partly to blame for the accident, which of the following is most likely to be true under a contributory negligence system?

The injured party cannot recover any damages because it is partially negligent in the case.

The tort of injurious falsehood occurs when:

a person makes false statements of fact that degrade the quality of another's goods or services.

The Office of Foreign Assets Control (OFAC) is responsible for:

​ enforcing economic sanctions against individuals and entities deemed a threat to national security.

A state administrative agency affects businesses throughout the country.​

False

ANZ Inc., a cement manufacturer, releases hazardous chemicals into the atmosphere and also into nearby streams. The pollutants released into the atmosphere exceed acceptable levels and the company is facing a suit from the residents of nearby towns. Under which of the following acts can the company be sued?

Clean Air Act

Activities that are illegal regardless of their effect are known as _____.

​ per se violations

Generally, it is the activity itself, not its effect, which is the most important element in deciding whether the Sherman Act has been violated.

False

Private citizens are entitled to sue on the basis of the Water Pollution and Control Act.

True

Which of the following is true of government regulation of business?​

​ Government regulations are used to eliminate abuse in business.

The Water Pollution and Control Act is responsible for preventing the illegal discharge of pollutants into interstate and navigable waters.

True

An antitrust violation occurs when a business firm seeks to have cooperation within its firm to diminish competition.

False

Government regulates business by means of antitrust laws that seek to promote competition among businesses.

True

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 quasicontract

An enforceable contract is made by an adult with a minor. Which of the following is most likely to hold true in this case?

​ The contract is enforceable against the adult but not against the minor.

A _______ contract must be in a special form or be created in a certain way.

Formal

There is no difference between a void contract and an unenforceable contract.

False

When a contract is required to be sealed, a substitute for an actual seal may be used.

True

Most business people prefer making oral contracts regarding matters of great importance.

False

What is the difference between an agreement and a contract?

​ An agreement results whenever two people's minds meet on a subject, but a contract only exists when the parties intend to be legally obligated by the terms of the agreement.

The legal term for one party benefiting unfairly at the expense of another is unjust enrichment.

True

An agreement between two parties to perform an illegal act is a quasi-contract.

False

Judy promises to pay Ashley $50 to babysit her children. After Ashley babysits the children, Judy pays Ashley the $50; thus each party has completed performance of each part of the contract. This is an example of a(n):

executed contract.

Advertisements and catalogs are examples of general invitations.

True

Which of the following is true of a binding contract?

It is created when an offeree accepts an offer that has been properly communicated.

An offer expresses the willingness of the offeror to enter into a contractual agreement.​

True

Silence constitutes acceptance to an offer if because of previous dealings, it is reasonable for the offeree to notify the offeror of non-acceptance.

True

If, after an offer has been made, the performance of the contract becomes illegal, the offer is terminated.

True

If an offeror receives something of value in return for a promise to hold the offer open, it is said to be a(n) ________, and this type of offer cannot be revoked.

Option

Maya, an elderly lady, wanted to sell her house. She offered the house to Lily, a friend. However, before the house deeds were transferred, Maya passed away. Which of the following scenarios is legally acceptable in such a case?

Lily must consider the offer automatically revoked and void.

When an offeree is not aware of the insanity of the offeror and communicates assent to an offer, it is considered as accepted.

False

Ryan, a college student, intends to sell his car. He contacts his friend Luiz and inquires whether he is interested in buying the car. Luiz finds the quoted price reasonable and buys the car from Ryan. In this scenario, Ryan is the _____.

Offeror

The "mailbox rule" does not apply in situations where the offeror does not receive the acceptance.

False

If a minor contracts for necessaries, the minor's liability is quasi-contractual in nature. This means that:

the minor is not required to pay the contract price.

Ratification to a contract can be made any time before reaching majority.

False

The law is uniform throughout the United States in binding minors on contracts induced by misrepresenting their age.

False

​ Which of the following conditions is a prerequisite for any agreement to be legally enforceable?

​ The parties entering into the agreement must have the mental capacity to contract.

The term disaffirmation refers to:

​ the election to avoid a contract or set it aside.

Contracts made by people who have become so intoxicated that they cannot understand the meaning of their acts are:

Voidable

A minor must ratify none or all parts of a contract.

True

Generally, a part payment of a past-due debt is not consideration to support the creditor's promise to cancel the balance of the debt.

True

Mark owes $2000 each to his business partners, Ryan, Bryan, and Clark. Since Mark is facing financial difficulties, his business partners agree to accept a total amount of $4800 from Mark as a cancellation of the unpaid balance due to them. This type of an agreement is known as a _____.

composition of creditors

A promise to steal a valuable piece of art is valid consideration to support a contract.

False

Consideration is not necessary to support an obligation of record.

True

Blake has subscribed to a local charitable association where he needs to make a monthly payment of $100. However, a few months later, Blake stops paying this amount. Which of the following exceptions to the requirement of consideration will enforce that Blake pays the amount?

Voluntary subscriptions

Only financial items can constitute consideration.

False

If the supposed consideration consists merely of a promise to do what one is already legally obligated to do, consideration is invalid.

True

Consideration distinguishes mere agreements from legally enforceable obligations.​

True

When charitable enterprises are financed by voluntary subscriptions of many people, the promise of each person is generally not held to be enforceable.

False

The Uniform Commercial Code states that when a contract for the sale of goods is modified by agreement of the parties, consideration is necessary to make it enforceable.

False

Which of the following is true of undue influence?

It refers to a person in a special relationship causing another's action contrary to free will.

Fraud in the execution occurs when a defrauded party intends to sign a contract as a result of false statements made by the promisor.

False

​ As a general rule, a unilateral mistake made at the time of contracting has an effect on the validity of a contract.

False

Failure to disclose information when there is duty to do so is known as passive fraud.

True

Mistakes such as duress and undue influence render contracts void.

False

A false statement made in the belief that it is true is known as innocent misrepresentation.

True

Which of the following is true regarding parties who make mutual mistakes of law?

The parties are expected to have knowledge of the law when making the contract.

Which of the following statements is true of fraud in the execution?

It occurs when a party does not intend to sign a contract, as the nature of the writing is not understood.

Ordinarily, for a mistake to invalidate a contract, the mistake must be a mutual one about a material fact.

True

When one party wrongly threatens to injure another person financially in order to get agreement to a contract, economic duress occurs.

True

In which of the following situations is a state most likely to enforce a usury law?

X charges a very high rate of interest on money borrowed by Y.

If a contract is divisible so that the legal parts can be performed separately from the illegal parts, then the legal parts of the contract are:

Enforceable

Contracts which are designed to limit competition are acceptable by law.

False

Which of the following is true of Sunday contracts?

​ Their laws are a result of statutes.

​ A contract must be for a lawful purpose, which must be achieved in a lawful manner, otherwise the contract is:

Void

The penalty for usury is uniform in all states.

False

A person who sells alcoholic beverages to a minor when such a sale is prohibited can recover on the contract.

False

Which of the following is an example of a contract contrary to public policy?

A agrees to appoint B as sheriff, provided he helps him win the local elections.

The courts may sometimes allow a wrongdoer to enforce a contract against an innocent party.

False

A contract is indivisible if it can be performed in ways other than as an entity.

False

​ Which of the following is true of the parol evidence rule?

​ It allows a written contract to be modified by oral testimony if there is evidence of fraud.

According to the Statute of Frauds, an agreement to sell goods for $500 or more must be in writing.​

True

All contracts must be in writing to be enforceable.​

False

The Statute of Frauds' requirement of writing applies if the main purpose of the promise is to gain some advantage for the promisor.​

False

Every state has an identical list of types of contracts required by law to be in writing in order to be enforceable.​

False

Which of the following types of agreements according to the Statute of Frauds need to be in writing?. ​

​ An agreement containing a promise in consideration of marriage

​ Courts will always permit spoken words to add to or modify the terms of a written contract that appears to be complete.

False

Which of the following constitutes an exception to the Statute of Frauds requirement that a contract be in writing?​

​ An original promise from the promisor rather than a promise to pay the debt or another

​ Default refers to:

​ a breach of any contractual obligation.

Which of the following is an advantage of a written contract over an oral one?​

​ The existence of a contract cannot be denied if it is in writing.

Only when performance is standardized, may one delegate its performance to another.​

True

A novation does not need to be in writing and can be implied from the parties' actions.​

True

A person not party to contract but whom parties intended to benefit is known as a(n) _____.​

Third-party beneficiary

Blake agreed to renovate Jane's house, and they drafted a written contract. However, Blake was unable to complete the renovation due to an accident. Blake's friend, Tom, agreed to complete the job, and Jane agreed to release Blake from the contract. The terms of the old contract remained the same. This process of substitution of a contract is known as a(n) _____. ​

Novation

The term delegation describes a transfer of rights.​

False

Which of the following warranties does an assignor make when he assigns rights under a contract to an assignee for value?​

That there are no defenses available to the debtor that have not been disclosed
to the assignee

An assignee can receive greater rights or interest than the assignor held in a contract. ​

False

An donee beneficiary is best described as a person:​

​ who is a third-party beneficiary and for whom performance is a gift.

At common law, individuals other than the parties to a contract can sue upon or seek to enforce the contract.​

False

A contract can never be described as being both joint and several.​

False

​ In a written contract, Sheldon agreed to tutor the children of Mrs. Smith for a certain period of time. However, Sheldon, prior to starting classes, announced that he would not be able to tutor the children due to other commitments of his. In this case, there has been a(n):

​ anticipatory breach.

Which of the following is an example of a contract discharged by impossibility of performance? ​

​ A new law makes the contract illegal.

When a contract contains the words "time is of the essence," which of the following is true? ​

​ Performance on the exact date is deemed vital.

If a contract calls for personal services, the death or physical incapacity of the person to perform such services discharges the contract.​

True

An offer to pay money in satisfaction of a debt or claim when one has the ability to pay is a ____. ​

Tender of payment

If an act is legal at the time of entering a contract but is subsequently made illegal, the contract is discharged.​

True

Which of the following statements is true of statutes of limitations?​

​ In the case of running accounts, such as purchases from department stores, the statute starts from the date of the last purchase.

Which of the following statements best describes specific performance?​

​ It refers to the carrying out of the specific terms of a contract.

A debt that has been outlawed by a statute of limitations cannot be revived.​

False

​ When a court orders for specific performance, it is exercising its equity powers.

True

Which of the following is an example of a bailment for the sole benefit of the bailor?

Ken borrowing a suit from his friend for his graduation ceremony

Which of the following is most likely to happen when one party intentionally mixes another's property with his own, resulting in confusion?

​ Title to the total mass passes to the innocent party, unless the mixing party can clearly prove how much of his property was confused with that of the innocent party.

When a bailment is for the sole benefit of a bailor, a bailee may receive benefits of ownership during the bailment.

False

A constructive bailment is a bailment for the sole benefit of the bailor.

True

A copyright must be registered in order for the owner to sue for its infringement.

True

A finder of lost property gas a right of possession against all but the true owner.

True

A transfer of fungible goods does not constitute a bailment.

False

The unauthorized exercise of ownership rights over another's property is known as a(n) _____.

Conversion

The theft of trade secrets is a federal crime.

True

Which of the following is true of bailments for the sole benefit of the bailee?

Any loss or damage to bailed property due to no fault of the bailee falls on the owner.

The laws of a hotelkeeper also apply to a boardinghouse keeper.

False

Which of the following is true of the liability of a common carrier of people?

​ The liability of a common carrier for a passenger's safety begins when the passenger enters the waiting platform.

A bill of lading may not place additional limitations on a carrier's liability.

False

Which of the following is true of the transportation of goods through a common carrier?

The carrier is not liable for damage due to the inherent nature of the goods, such as decay of vegetables.

A common carrier is held liable if it is found transporting goods that pose a menace to health.

False

The laws regarding hotelkeepers does not apply to boardinghouse keepers.

True

A hotelkeeper is not liable if a guest's behavior increases the risk of a criminal attack.

True

To whom must goods shipped under an order bill of lading be delivered:

to the person who presents the order bill of lading to the carrier at delivery.

Which of the following parties would qualify as a guest at a hotel?

A person who lives within a short distance from a hotel but rents a room at the hotel and remains there overnight.

A bill of lading refers to:

​ a receipt and contract between the shipper of a particular good and a carrier.

Which of the following acts govern the sales of movable personal property?​

​ The Uniform Commercial Code

Land is generally considered as intangible personal property.

False

As per the UCC's definition of sale, in which of the following transactions has a sale taken place?

​ A buys a spare USB charger for his phone.

Which of the following statements is true of illegal sales?

An indivisible sale with an illegal part makes the entire sale illegal.

The difference between a sale and a contract to sell is that:

a sale involves an immediate transfer of title from one party to another while a contract to sell does not.

In order to be the subject of a sale, goods must be existing.

True

The United Nations Convention on Contracts for the International Sale of Goods (CISG) does not apply to personal consumer transactions.

True

Which of the following statements is true of the United Nations Convention on Contracts for the International Sale of Goods (CISG)?

The convention extensively covers personal consumer transactions in addition to business-to-business situations.

In order for a sale to have taken place, the purchased goods need to be delivered to the buyer immediately.

False

Sara visited Ben's, a famous designer jewelry store, to buy herself a necklace. She browsed through the store's product catalogue and chose a particular model of diamond necklace. After she chose it, the manager at Ben's sent an order to the manufacturer to make the necklace. Which of the following statements is true at this point in the scenario?

Only a contract to sell has been made between Sara and Ben's.

To satisfy the Statute of Frauds, a writing must be made at the time of sale.

False

In an auction, a bid is an offer, and not a contract, until the auctioneer accepts the bid.

True

A signature can be initials, electronic or stamped, so long as it was made with necessary intent.

True

​ Goods that are specifically made for the buyer and are of such an unusual nature that they are not suitable for trade in the ordinary course of the seller's business are called _____.

​ nonresellable goods

If a bid is made while the hammer is falling in acceptance of a prior bid, the auctioneer has the option to reopen the bid.

True

Which of the following can be a writing sufficient to satisfy the Statute of Frauds?

Emails

Purchase orders, cash register receipts, sales tickets, invoices, and similar papers satisfy the requirements as to a signature.

False

Writing is required when the person against whom enforcement of a sales contract is sought voluntarily admits, in the course of legal proceedings, to having made the sales contract.

False

Which of the following best describes the term "acceptance"?

It is the assent of a buyer to become the owner of specific goods.

No writing is required in the case of nonresellable goods.

True

In a sale or return contract, the cost and risk of return is borne by the seller.

True

Who bears the risk of loss of damage to unidentified goods?

Seller

Which of the following is an example of a consignment?

A sends a shipment of farm produce to B for sale.

A sale on approval and a sale or return are two names for the same transaction.

False

What is the essential element in determining who bears the risk of loss of goods?

​ The party with control over the goods bears the risk of loss.

A buyer has a property interest in goods when the seller indicates that certain goods are the ones to be delivered to the buyer under the contract.

True

Generally, people can sell only such interest or title in goods as they possess.

True

In the event of goods damaged through no fault of either the buyer or the seller, the party with control over the goods bears the risk of loss.

True

An insurable interest may arise when a party has sufficient economic interest in the transaction to entitle it to insure the property involved.

True

In an FOB contract, the seller bears the risk of loss until the goods are delivered to the buyer.

False

A small piece of molded plastic shown to a car buyer to illustrate the materials and methods used in the construction of cars creates a sale by sample.

False

A warranty is an assurance that the article sold will conform to a certain standard or will operate in a certain manner.​

True

A(n) _____ is one that the seller did not make but that is imposed by the law.

Implied warranty

Which of the following is true of sale of food or drink?

The sale carries an implied warranty that the food is fit for consumption.

______ is information that the law presumes everyone knows by virtue of the fact that it is filed or recorded on the public record.

Constructive notice

The statement of the seller in which the article sold is warranted or guaranteed is known as an implied warranty.

False

Jack, a second-hand dealer of cars, provides his clients with the opportunity to examine them. Jenny test-drove a car and got it checked by her mechanic as well. However, the mechanic missed a broken valve and the car broke down after the purchase. Which of the following is likely to happen in this scenario?

Jack is exempt from prosecution as the principle of caveat emptor applies.

The statement of the seller in which the article sold is warranted or guaranteed is known as an _____.​

Express warranty

Under the Fair Credit Reporting Act, certain types of adverse information may not be maintained in a consumer's credit report for more than seven years.

True

Implied warranty arises as to fitness of used property for ordinary use from a sale made by a casual seller.

False

A system of shortening the trip a bill of exchange makes from the payee to the drawee bank and then to the drawer is called _____.

Check truncation

Generally, a transfer initiated by a telephone call between a bank employee and a customer is an example of an electronic fund transfer.

False

_____ are writings drawn in a special form that can be transferred from person to person as a substitute for money or as an instrument of credit.​

Commercial paper

A drawee who takes responsibility for paying a draft is called the acceptor.

True

Under the Electronic Fund Transfer Act, a customer's liability for an unauthorized EFT can be limited to $50.

True

Transferranceis the act of transferring ownership of a negotiable instrument to another party.

False

Negotiable instruments have replaced the instruments of collection which existed under the law merchant.

False

The act of transferring ownership of commercial paper to another party, is called _____.

Negotiation

The maker makes an indorsement by signing on the back of the instrument.

False

If commercial paper is made payable to whoever has possession of it, it is called order paper.

False

Which of the following describes paper payable to order?

Pay to the order of Hill

When a negotiable instrument is payable to order, the payee need not be named.

False

A holder in due course can enforce paper according to filled-in terms even when the terms were not authorized.

True

Who can enforce a negotiable instrument which was only partially filled in and signed before delivery?

An assignee may enforce the paper according to the filled-in terms.

A negotiable instrument must be in writing and signed by the party executing it.​

True

Which of the following is true of a check made out to the order of a person?

​ The drawee can only deposit the check into his own account.

Jim agreed to pay Jose $1,000 by check, provided he is able to sell his farm. However, he did not mention the number of days it would take for him to sell the farm nor did he provide a contingency date. Which of the following is legally permissible in this scenario?

Jim's promise to pay is conditional and Jose should ask for a negotiable instrument.

If the choice of whether an instrument is payable in either cash or goods is left up to the holder, the instrument is not negotiable.

False

The name of the place where an instrument was drawn need not be specified.

True

The sum payable in a negotiable instrument cannot be dependent on future profits.

True

In the case of a time draft, the holder can require payment of the paper before it matures.

False

A _____is a written contract obligation, usually under seal, generally issued by a corporation, a municipality, or a government, that contains a promise to pay a fixed amount of money at a set or determinable future time.

Bond

Which of the following is true of a collateral note?

It is a note secured by personal property.

The drawee's signature alone on the draft is not sufficient to constitute a valid acceptance.

False

​ Coupon bonds carry detachable individual coupons to be presented for payment when due.

True

A voucher's check is a check drawn by one bank on another bank.

False

​ A secured bond or note issued by a government is called a debenture.

False

What duties does a bank owe its depositor/drawer?

Compare the signature on the depositor's check with the signature on file.

​ Generally, the drawer draws a trade acceptance at the time goods are sold.

True

​ A foreign draft is one that shows on its face that it is drawn or payable outside the United States.

True

For what does an indorser of a negotiable instrument become liable?

stated interest payable from the date of the indorsement

Which of the following is true regarding the negotiator of bearer paper?

One who negotiates a bearer instrument by delivery alone does not guarantee payment.

A qualified indorsermakes no warranties regarding the instrument.

False

A(n) _____ is a signature on the back of an instrument along with any directions or limitations regarding use of or liability for the instrument.​

​ indorsement

_____ is a unilateral act of a holder of an instrument, usually without consideration, whereby the holder gives up rights on the instrument.

Renunciation

The warranty liability of a qualified indorser is the same as that of an unqualified indorser.

True

A depository bank receiving a check with a restrictive indorsement, such as "for deposit " must always honor the restriction.

True

The Uniform Commercial Code does not require an allonge to be attached to an instrument.

False

When a negotiable instrument is lost, this automatically discharges the obligation of the holder.

False

Which of the following best describes a restrictive indorsement?

It is an indorsement that attempts to prevent the use of the instrument for anything except the stated use.

Which of the following is an example of a dishonor?

Dan issues a check to Ben but it is returned by the bank due to insufficient funds.

Which of the following is a scenario where a universal defense can be applied?

A delivers a check to B, who is a minor, and B loses it.

A thief can pass good title of an instrument to a holder in due course.

True

An agent who signs an instrument indicating a representative capacity cannot have personal liability on the instrument.

False

In order to attain the specially favored status of being a holder in due course, the holder need not give value for the paper.

False

A holder for value and in good faith with no knowledge of dishonor, defenses, or claims, or that paper is overdue is known as a _____.

holder in due course

Even in cases in which the defendant's negligence made the forgery possible, forgery may be raised successfully against any holder.

False

Which of the following is true of primary liability?​

​ A drawee is liable only by writing "accepted" and signing the draft.

Generally, the rights of the holder of consumer paper are subject to all claims, defenses, and setoffs of the original purchaser arising from the consumer transaction.

True

Those defenses thought to be so important that they are preserved even against a holder in due course are called real.

True

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