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Question 1
George and Lenny make an oral contract with Curley to buy five acres of farm land from Curley for $150,000. When George and Lenny bring the money to Curley, Curley refuses to convey title to them. George and Lenny sue Curley for breach of contract. George and Lenny will win:
Correct
Incorrect!
Correct George and Lenny will lose this case because sales of real estate are within the statute of frauds and, therefore, must be in writing. George and Lenny only had an oral agreement with Curley. That being the case, George and Lenny will not be able to recover from Curley and FALSE is the correct answer.
Incorrect! George and Lenny will lose this case because sales of real estate are within the statute of frauds and, therefore, must be in writing. George and Lenny only had an oral agreement with Curley. That being the case, George and Lenny will not be able to recover from Curley and FALSE is the correct answer.
Question 2
George and Lenny make an oral contract with Curley to buy five acres of farm land from Curley for $150,000. Before George and Lenny pay Curley and get title to the land, they build a corral for the cows they are going to keep, put up several rabbit hutches and chicken coops, build a grain silo and dig an irrigation ditch. When George and Lenny bring the money to Curley, Curley refuses to convey title to them. George and Lenny sue Curley for breach of contract. George and Lenny will win:
Correct Although oral contracts for the sale of land are unenforceable because they violate the statute of frauds. They will become enforceable if the buyer either makes a valuable improvement on the land or takes possession of the property and pays part of the purchase price. Here, George and Lenny made several valuable improvements to the land. That being the case, the contract will be enforceable and George and Lenny will be able to recover from Curley. Therefore TRUE is the correct answer.
Incorrect! Although oral contracts for the sale of land are unenforceable because they violate the statute of frauds. They will become enforceable if the buyer either makes a valuable improvement on the land or takes possession of the property and pays part of the purchase price. Here, George and Lenny made several valuable improvements to the land. That being the case, the contract will be enforceable and George and Lenny will be able to recover from Curley. Therefore TRUE is the correct answer.
Correct
Incorrect!
Question 3
Ben and Jerry make an oral contract with Moo Juice under which Moo Juice will sell Ben and Jerry 10,000 gallons of milk for $1 per gallon on May 1st. On April 30th, Moo Juice calls Ben and Jerry and tells them that it has sold its milk to Eddie who is buying it for $1.50 per gallon and that there is no more milk left to sell to Ben and Jerry. Ben and Jerry sue Moo Juice for breach of contract. Ben and Jerry will win:
Correct
Incorrect!
Correct According to U.C.C. section 2-201, any contract for the sale of goods for the price of $500 or more must be in writing. Since the contract between Ben and Jerry and Moo Juice was for $10,000, the contract was within the statute and had to be in writing. Because it is oral it is unenforceable and, therefore, FALSE is the correct answer.
Incorrect! According to U.C.C. section 2-201, any contract for the sale of goods for the price of $500 or more must be in writing. Since the contract between Ben and Jerry and Moo Juice was for $10,000, the contract was within the statute and had to be in writing. Because it is oral it is unenforceable and, therefore, FALSE is the correct answer.
Question 4
Ben and Jerry make an oral contract with Moo Juice under which Moo Juice will sell Ben and Jerry 10,000 gallons of milk per month for two years for $1 per gallon. Moo Juice delivers, and Ben and Jerry accept, the first shipment of milk. However, after accepting the shipment, Ben and Jerry try to get out of paying for the milk by arguing that the contract was unenforceable because it violated the statute of frauds. Moo Juice sues Ben and Jerry for breach of contract. Moo Juice will probably:
Correct
Incorrect!
Correct
Incorrect!
Correct According to U.C.C. section 2-201, any contract for the sale of goods for the price of $500 or more must be in writing. One exception to this rule is that an oral contract will be enforceable if the buyer receives and accepts the goods. If the buyer receives and accepts part of the goods, the contract will become enforceable as to the goods that were accepted and received. That being the case, Ben and Jerry are contractually bound to pay Moo Juice for the shipment of milk they accepted. However, they are not contractually bound to accept any future shipments of milk. That being the case, C is the correct answer.
Incorrect! According to U.C.C. section 2-201, any contract for the sale of goods for the price of $500 or more must be in writing. One exception to this rule is that an oral contract will be enforceable if the buyer receives and accepts the goods. If the buyer receives and accepts part of the goods, the contract will become enforceable as to the goods that were accepted and received. That being the case, Ben and Jerry are contractually bound to pay Moo Juice for the shipment of milk they accepted. However, they are not contractually bound to accept any future shipments of milk. That being the case, C is the correct answer.
Correct
Incorrect!
Question 5
Ben and Jerry make an oral contract with Moo Juice under which Moo Juice will sell Ben and Jerry 500 gallons of specially produced chocolate milk that is made of very finely ground Mayan coco beans and contains added milk fat and vitamin D. Ben and Jerry are going to use the milk in a new ice cream recipe that they are experimenting with and they specially order this milk, which they agree to pay $10 per gallon for. Moo Juice orders the coco beans and begins the slow process of adding the extra milk fat and homogenizing the milk when Ben and Jerry call and inform Moo Juice that they will not be buying the milk. No one else has any use for the milk. Moo Juice sues Ben and Jerry for breach of contract. Moo Juice will probably:
Correct
Incorrect!
Correct
Incorrect!
Correct
Incorrect!
Correct According to U.C.C. section 2-201, any contract for the sale of goods for the price of $500 or more must be in writing. One exception to this rule is that, if the contract requires the seller to specially manufacture goods for the buyer that are not suitable for sale to others and the seller makes a substantial beginning in the manufacturing process, the contract will be enforceable. Here, Moo Juice made a substantial beginning in manufacturing goods that were only of use to Ben and Jerry. That being the case, the contract is enforceable, even though it was oral, and Moo Juice can collect the entire contract price. Therefore, D is the correct answer.
Incorrect! According to U.C.C. section 2-201, any contract for the sale of goods for the price of $500 or more must be in writing. One exception to this rule is that, if the contract requires the seller to specially manufacture goods for the buyer that are not suitable for sale to others and the seller makes a substantial beginning in the manufacturing process, the contract will be enforceable. Here, Moo Juice made a substantial beginning in manufacturing goods that were only of use to Ben and Jerry. That being the case, the contract is enforceable, even though it was oral, and Moo Juice can collect the entire contract price. Therefore, D is the correct answer.
Question 6
College Painters, Inc. is a house painting company staffed and run by college students from Boston College. The company has just entered an oral contract with Howard, a private homeowner, to paint his house. The contract states that the company will paint the house white with blue trim, Howard will pay the company $10,000 for the job and, for an extra $500, the company will sell Howard the paint brushes and left-over paint from the job. One day before the work is supposed to begin, the company calls Howard to tell him that they have accepted an offer to paint a house for $15,000 so they will not be painting his house. Howard immediately sues the company. The company will probably:
Correct
Incorrect!
Correct
Incorrect!
Correct If a contract involves the sale of goods and services together, the statute of frauds will govern if the contract is primarily for the sale of goods and will not govern if the contract is primarily for the sale of services. Here, the contract is primarily for services. That being the case, the statute of frauds does not govern and the contract is enforceable even though it is oral. Therefore, Howard will be able to recover from the company and C is the correct answer.
Incorrect! If a contract involves the sale of goods and services together, the statute of frauds will govern if the contract is primarily for the sale of goods and will not govern if the contract is primarily for the sale of services. Here, the contract is primarily for services. That being the case, the statute of frauds does not govern and the contract is enforceable even though it is oral. Therefore, Howard will be able to recover from the company and C is the correct answer.
Correct
Incorrect!
Question 7
Mrs. Taylor's daughter, Elizabeth has just become engaged to Richard. Elizabeth has been engaged several times before but had always gotten cold feet before the wedding so she has never been married. Mrs. Taylor is afraid that Elizabeth will not go through with this wedding either so, to give her daughter some incentive, she promises to give Elizabeth $25,000 and a new car if she actually marries Richard. Much to Mrs. Taylor's surprise, Elizabeth goes through with the wedding. Much to Elizabeth's surprise, her mother refuses to give her the money and the car. If Elizabeth sues her mother, she will probably:
Correct Under the U.C.C., contracts made in consideration of marriage must be in writing. This was a contract made in consideration of Elizabeth marrying Richard. Therefore, it was within the statute and must have been in writing to be enforceable. Therefore, Elizabeth will not be able to recover from her mother and A is the correct answer.
Incorrect! Under the U.C.C., contracts made in consideration of marriage must be in writing. This was a contract made in consideration of Elizabeth marrying Richard. Therefore, it was within the statute and must have been in writing to be enforceable. Therefore, Elizabeth will not be able to recover from her mother and A is the correct answer.
Correct
Incorrect!
Correct
Incorrect!
Correct
Incorrect!
Question 8
Dire Straits is about to go on a world tour to promote its album "Brothers in Arms". The concert is supposed to begin on May 1st, 2012 at Wembly Stadium in London and conclude on July 5th, 2013 in Boston, Massachusetts. The tour has one hundred scheduled tour dates. Unfortunately, the band only has ninety-nine sheets of paper on which to draw up contracts. On February 1st, 2012, the band draws up ninety-nine identical contracts and sends them to the promoters of the first ninety-nine concerts. However, the band contacts the Boston promoter by phone and orally comes to terms with him on the contractual details of the show. Mark, one of the band members, and his wife have their first child on July 5th, 2012. Because Mark wants to be home for his baby's first birthday, the band decides to cancel the last show in Boston. The Boston promoter, who has already leased out a venue and begun advertising for the concert, sues the band for breach of contract. He will win his suit:
Correct
Incorrect!
Correct Under the statute of fraud, contracts that cannot be performed within one year of the contract being made must be in writing. The one year time period is measured from the date that the contract is made. In this case, the contract for the concert in Boston was established on February 1st, 2002 but the concert will not (and cannot) be performed until seventeen months later. That being the case, the contract between the band and the Boston promoter is within the statute and must be in writing in order to be enforceable. Because this contract is oral, the Boston promoter will not be able to recover from the band and FALSE is the correct answer.
Incorrect! Under the statute of fraud, contracts that cannot be performed within one year of the contract being made must be in writing. The one year time period is measured from the date that the contract is made. In this case, the contract for the concert in Boston was established on February 1st, 2002 but the concert will not (and cannot) be performed until seventeen months later. That being the case, the contract between the band and the Boston promoter is within the statute and must be in writing in order to be enforceable. Because this contract is oral, the Boston promoter will not be able to recover from the band and FALSE is the correct answer.
Question 9
Coach J has just led his Bristol University Bears to their third national basketball championship in five years. Two days after the championship game, the University rewards Coach J with a lifetime contract. The coach and the university come to an oral agreement as to the contract terms and Coach J then leaves on a three week recruiting trip. At the beginning of the next season, the Bristol Bears begin by losing seven of their first ten games and the University begins to think that giving Coach J a lifetime contract was not such a good idea. When the team loses the next two games in a row, the University decides that a change of coaches would get the team back on track and they fire Coach J. Coach J sues the University for breach of contract. The University argues that the contract was not enforceable because it was oral. The university will win this case:
Correct
Incorrect!
Correct Under the statute of fraud, contracts that cannot be performed within one year of the contract being made must be in writing. It is important to remember that, if there is any possible chance that a contract can be performed within a year, the contract is outside the statute and does not need to be in writing no matter how remote the chance is that the contract will be performed within a year. Here, Coach J has been given a lifetime contract. Lifetime employment contracts, as a rule, are outside the statute because, if the employee dies within the first year of the contract, the contract has been performed within a year. Because there is always a chance that a lifetime contract can be performed within a year, these contracts can be oral and still be enforceable. Therefore, the university is in breach, Coach J can recover from them and FALSE is the correct answer.
Incorrect! Under the statute of fraud, contracts that cannot be performed within one year of the contract being made must be in writing. It is important to remember that, if there is any possible chance that a contract can be performed within a year, the contract is outside the statute and does not need to be in writing no matter how remote the chance is that the contract will be performed within a year. Here, Coach J has been given a lifetime contract. Lifetime employment contracts, as a rule, are outside the statute because, if the employee dies within the first year of the contract, the contract has been performed within a year. Because there is always a chance that a lifetime contract can be performed within a year, these contracts can be oral and still be enforceable. Therefore, the university is in breach, Coach J can recover from them and FALSE is the correct answer.
Question 10
Dire Straits is about to go on a world tour to promote its album "Brothers in Arms". The concert is supposed to begin on May 1st, 2012 at Wembly Stadium in London and conclude on July 5th, 2013 in Boston, Massachusetts. The tour has one hundred scheduled tour dates. Unfortunately, the band only has ninety-nine sheets of paper on which to draw up contracts. On February 1st, 2012, the band draws up ninety-nine identical contracts and sends them to the promoters of the first ninety-nine concerts. However, the band contacts the Boston promoter by phone and orally comes to terms with him on the contractual details of the show. The last day of the tour comes around and the band delivers the performance of a lifetime to their fans in Boston. However, after the show, the promoter refuses to pay the band, arguing that the contract was oral and, therefore, unenforceable. The band sues the promoter for breach of contract. The band will win this suit:
Correct Under the statute of fraud, contracts that cannot be performed within one year of the contract being made must be in writing. However, if the contract has been fully performed, the contract is enforceable. Here, although the band's performance could not have happened within a year of the contract being signed, the oral contract is enforceable because the band has fully performed on the contract. Therefore, the band will be able to recover from the promoter and TRUE is the correct answer.
Incorrect! Under the statute of fraud, contracts that cannot be performed within one year of the contract being made must be in writing. However, if the contract has been fully performed, the contract is enforceable. Here, although the band's performance could not have happened within a year of the contract being signed, the oral contract is enforceable because the band has fully performed on the contract. Therefore, the band will be able to recover from the promoter and TRUE is the correct answer.
Correct
Incorrect!
Question 11
Ben and Jerry have just purchased two acres of land in Vermont and would like to build an ice cream manufacturing plant. Ben and Jerry apply for a $2 million loan to finance the building of the plant and other start up costs. Since Ben and Jerry have no prior business experience and no assets, they are afraid that they might not get the loan. Eddie is a good friend of Ben and Jerry's and he promises the bank that he will repay the loan if Ben and Jerry default. Eddie is one of the wealthiest men in Vermont and, on the strength of his promise, the bank lends Ben and Jerry the money. Unfortunately, business does not go very well and Ben and Jerry are unable to repay the loan. When the bank contacts Eddie and requests that Eddie repay the loan, Eddie refuses. If the bank sues Eddie, they will win:
Correct
Incorrect!
Correct According to the statute of frauds, a promise made by a third person to a creditor that the third person will be responsible for the debt that the debtor owes the creditor must be in writing. The promise must be made to the creditor in order for it to be within the statute. Here, such a promise was made. Therefore, the promise had to be in writing to be enforceable. Because Eddie's promise to the bank was oral, it is not enforceable. That being the case, the bank cannot recover from Eddie and FALSE is the correct answer.
Incorrect! According to the statute of frauds, a promise made by a third person to a creditor that the third person will be responsible for the debt that the debtor owes the creditor must be in writing. The promise must be made to the creditor in order for it to be within the statute. Here, such a promise was made. Therefore, the promise had to be in writing to be enforceable. Because Eddie's promise to the bank was oral, it is not enforceable. That being the case, the bank cannot recover from Eddie and FALSE is the correct answer.
Question 12
Ben and Jerry have just purchased two acres of land in Vermont and would like to build an ice cream manufacturing plant. Ben and Jerry apply for a $2 million loan to finance the building of the plant and other start up costs. Since Ben and Jerry have no prior business experience and no assets, they are afraid that they might not get the loan. Moo Juice is a dairy farm in the area and Ben and Jerry have signed a contract with Moo Juice, under which, Ben and Jerry will buy all of the milk and cream that they need from Moo Juice. This contract could be worth a lot of money to Moo Juice if Ben and Jerry succeed so they promise the bank that they will repay the loan if Ben and Jerry default. On the strength of this promise, the bank lends Ben and Jerry the money. Unfortunately, Business does not go very well and Ben and Jerry are unable to repay the loan. When the bank contacts Moo Juice and requests that they repay the loan, they refuse. If the bank sues Moo Juice, they will win:
Correct According to the statute of frauds, a promise made by a third person to a creditor that the third person will be responsible for the debt that the debtor owes the creditor must be in writing. However, according to the "Main Purpose" rule an oral promise will be enforceable if the third person's main purpose for making the promise is for his own benefit. Here, Moo Juice's main purpose for making the promise was for their own benefit (protecting a potentially lucrative contract with Ben and Jerry). That being the case, their promise to the bank is enforceable even though it is oral. Therefore, the bank can recover from Moo Juice and TRUE is the correct answer.
Incorrect! According to the statute of frauds, a promise made by a third person to a creditor that the third person will be responsible for the debt that the debtor owes the creditor must be in writing. However, according to the "Main Purpose" rule an oral promise will be enforceable if the third person's main purpose for making the promise is for his own benefit. Here, Moo Juice's main purpose for making the promise was for their own benefit (protecting a potentially lucrative contract with Ben and Jerry). That being the case, their promise to the bank is enforceable even though it is oral. Therefore, the bank can recover from Moo Juice and TRUE is the correct answer.