Business Law, 9e (Cheeseman) Chapter 9 Nature of Traditional and E-Contracts

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1 Instant download and all chapters Test Bank Business Law Legal Environment Online Commerce Business Ethics and International Issues 9th Edition Cheeseman Business Law, 9e (Cheeseman) Chapter 9 Nature of Traditional and E-Contracts 1) Which of the following is an acceptable consideration for a contract? A) arrest B) penalty C) money D) sentence LO: 9.1 Define contract. 2) Which of the following statements is true of contracts? A) The offeror is the party to whom an offer to enter into a contract is made. B) An offeree is the authority that supervises the signing of a contract. C) A contract is created when the offer is made and before it is accepted. D) To have an enforceable contract, there must be mutual assent by the parties. Answer: D LO: 9.1 Define contract. 3) Ross makes an offer to Elizabeth to sell his automobile to her for $10,000. In this case, Ross is the offeree and Elizabeth is the offeror. LO: 9.1 Define contract. 4) Provision of services qualifies as a consideration for an enforceable contract. LO: 9.1 Define contract.

2 5) Two brothers Sam and Jim were fighting over the division of their ancestral property. After ten years of legal battle, a frustrated Sam contacted a powerful politician who subjected Jim to extreme duress to make him sign a contract of assent in favor of Sam. When Jim takes this contract to court, the contract will be declared. A) enforceable B) conditionally enforceable C) voidable D) unenforceable Diff: 3 6) Which of the following is true of the UCC (Uniform Commercial Code)? A) The UCC aims to create a uniform system of accounting among the 50 states. B) The common law of contracts normally takes precedence over the provisions of the UCC. C) Article 2 of the UCC prescribes a set of uniform rules for the creation and enforcement of rules of taxation. D) Article 2A of the UCC prescribes a set of uniform rules for the creation and enforcement of contracts for the lease of goods. Answer: D 7) Which of the following is true of the Restatement of the Law of Contracts? A) It serves as a reference for guidance in contract disputes. B) It does not identify negotiable instruments as formal contracts. C) Its goal is to create a uniform system of commercial law among the 50 states. D) It is the absolute federal law for contracts drafted in the U.S.A. Answer: A

3 8) The states that the intent to contract is judged by the reasonable person standard and not by the subjective intent of the parties. A) Restatement of the Law of Contracts B) Restatement (Second) of Contracts C) objective theory of contracts D) common law of contracts 9) According to the objective theory of contracts, the intent to enter into an express or impliedin-fact contract is judged by the. A) reasonable person standard B) legality of the contract C) doctrine of equity D) common law of contracts Answer: A 10) The establishes uniform legal rules for the formation and enforcement of electronic contracts and licenses. A) common law of contracts B) Restatement of the Law of Contracts C) Uniform Computer Information Transactions Act D) Uniform Commercial Code

4 11) Michael Harrison opens an online store where people from all over the world can purchase and download iphone apps. Which of the following should Michael consult to know the rules of trading through his online store? A) the common law of contracts B) the objective law of contracts C) the Uniform Computer Information Transactions Act D) the Uniform Commercial Code 12) Which of the following is true of the Uniform Computer Information Transactions Act? A) It establishes the rules for operation of franchises in the U.S.A. B) It does not become law until a state adopts it as a statute. C) It solely deals with the formation of electronic contracts, not licenses. D) It addresses most of the legal issues that are encountered while starting an entrepreneurial venture. Answer: B 13) Agreement to a contract requires an offer by the offeror and an acceptance of the offer by the offeree. 14) If the law requires that a contract be in writing, failure of such a contract to be in writing does not impact its enforcement.

5 15) Common law of contracts refers to contract law developed primarily by state courts. 16) The goal of the Uniform Commercial Code (UCC) is to regularize foreign trade norms among the 50 states of the U.S.A. 17) Article 2 of the Uniform Commercial Code (UCC) prescribes a set of uniform rules for the creation and enforcement of contracts for the sale of goods. 18) Restatement of the Law of Contracts is the agreed upon federal law in the United States. 19) Objective theory of contracts states that the intent to contract is judged by the reasonable person standard and not by the subjective intent of the parties.

6 20) Under the objective theory of contracts, the subjective intent of a party to enter into a contract is irrelevant. 21) Companies are not permitted to issue licenses by e-commerce. 22) Traditional contract rules do not apply to e-contracts. 23) The UCITA (Uniform Computer Information Transactions Act) is a model act that does not become law until a state legislature adopts it as a statute for the state. 24) The UCITA (Uniform Computer Information Transactions Act) establishes uniform legal rules for the formation and enforcement of electronic contracts and licenses.

7 25) The UCITA (Uniform Computer Information Transactions Act) is a law common to all states and does not require state legislatures to adopt it as a statute for the state. 26) Explain the basic requirements that must be met for a contract to be enforceable. Answer: The requirements for a contract to be enforceable are: 1. Agreement. To have an enforceable contract, there must be an agreement between the parties. This requires an offer by the offeror and an acceptance of the offer by the offeree. There must be mutual assent by the parties. 2. Consideration. A promise must be supported by a bargained-for consideration that is legally sufficient. Money, personal property, real property, provision of services, and such qualify as consideration. 3. Contractual capacity. The parties to a contract must have contractual capacity for the contract to be enforceable against them. Contracts cannot be enforced against parties who lacked contractual capacity when they entered into the contracts. 4. Lawful object. The object of a contract must be lawful. Most contracts have a lawful object. However, contracts that have an illegal object are void and will not be enforced. 27) A contract is a(n) if the offeror's promise is answered with the offeree's promise of acceptance. A) unilateral contract B) bilateral contract C) executed contract D) executory contract Answer: B

8 28) Windsor, the owner of Windsor's Sandwiches, contacts a new supplier, Gary. He tells Gary that he will pay him $375 if Gary delivers 20 pounds of cheese the following morning. Gary promises to make the delivery as requested by Windsor. This creates a(n) contract between them. A) unilateral B) bilateral C) implied-in-law D) executory Answer: B 29) A contract is if the offeror's offer can be accepted only by the performance of an act by the offeree. A) unilateral B) bilateral C) implied-in-law D) executory Answer: A 30) Yvonne finds a carpenter to do some repairs for her house and tells him that if he finishes the job within Saturday, she would pay him $1,000. This offer creates a(n) contract. A) executed B) executory C) unilateral D) bilateral

9 31) Martha contacts a bakery to get a cake for her son's birthday party. She tells the baker that she will pay him $150 for the cake if he delivers the cake on Friday evening. If the baker does not deliver the cake on Friday evening, which of the following will hold true? A) Martha can sue the baker to recover $150 in damages. B) Martha can sue the baker but cannot recover damages. C) The baker has to give $150 plus cost of the replacement cake to Martha as he entered into a verbal contract with her. D) Martha cannot sue the baker. Answer: D 32) Alan tells Sherry that he will pay her $5,000 if she runs the Boston Marathon. Once Sherry starts running the marathon, Alan. A) can revoke the contract as informal verbal agreements are not binding B) cannot revoke the contract C) can reduce the money on offer D) can only increase the money on offer Answer: B 33) Which of the following is an informal contract? A) check B) bank draft C) lease D) recognizance

10 34) What is recognizance? A) a party's acknowledgement in court that he or she will pay a specified sum of money if a certain event occurs B) a sealed document that contains a formal contract whose contents are known to both parties and the referee who supervised its signing C) a sealed document that contains an informal contract whose contents are known only to the parties D) a party's acknowledgement in court that he or she is not liable to pay any money if a certain event occurs Answer: A