Cengage Advantage Books Law for Business 17th Edition by John D. Ashcroft - Test Bank

Cengage Advantage Books Law for Business 17th Edition by John D. Ashcroft – Test Bank

 

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Sample Questions Are Posted Below

 

CHAPTER 5—NATURE AND CLASSES OF CONTRACTS

 

MULTIPLE CHOICE

 

1. Contracts:

a.	Must be in writing.
b.	Can be between any two parties.
c.	Must be of a substantial nature.
d.	Are binding on all parties.

 

 

ANS:  D                    PTS:   1

 

2. A voidable contract:

a.	Must be in writing.
b.	Must be rejected by both parties.
c.	Gives one party the choice to abide by it or reject it.
d.	Is never effective.

 

 

ANS:  C                    PTS:   1

 

3. Simple contracts:

a.	Can be implied from the conduct of the parties.
b.	Never need to be in writing.
c.	Must be in a particular form.
d.	Must be sued on within one year if they are breached.

 

 

ANS:  A                    PTS:   1

 

4. Contracts are important in business because:

a.	Failing to perform a contract is a crime.
b.	The law provides a remedy to a party if the other fails to perform.
c.	All agreements are enforceable.
d.	They are of a substantial nature.

 

 

ANS:  B                    PTS:   1

 

5. If Adams advertises a $5,000 reward for information about the robbery of his store and Jessup tells him who robbed the store:

a.	A bilateral contract has been made.
b.	There has been a mutual exchange of promises.
c.	Only Adams has made a promise.
d.	Jessup had a duty to disclose the information.

 

 

ANS:  C                    PTS:   1

 

6. Unjust enrichment:

a.	Occurs when both parties to a contract benefit.
b.	Is a violation of statutory law.
c.	Is used when the parties make a specific agreement.
d.	Offends our ethical principles.

 

 

ANS:  D                    PTS:   1

 

TRUE/FALSE

 

7. A contract is an agreement to do something, but cannot be to refrain from doing something.

 

ANS:  F                    PTS:   1

 

8. If the law requires a certain contract to be in a particular form, and it is not in that form, it is automatically void.

 

ANS:  F                    PTS:   1

 

9. Unlike the case of an oral contract, when a contract is written, there cannot be a dispute between the parties as to the terms of the agreement.

 

ANS:  F                    PTS:   1

 

10. When a contract is required to be sealed, no substitute for an actual seal may be used.

 

ANS:  F                    PTS:   1

 

11. Only one party needs to supply consideration to have an enforceable contract.

 

ANS:  F                    PTS:   1

 

12. One may have rights and obligations imposed by law when no real contract exists.

 

ANS:  T                    PTS:   1

 

COMPLETION

 

13. The failure of one of the parties to perform the obligations assumed under the contract is ____________________.

 

ANS:  breach of contract

 

PTS:   1

 

14. A contract in which the terms of the agreement are not specified in words but understood from their acts or conduct is called a(n) ____________________.

 

ANS:  implied contract

 

PTS:   1

 

15. A formal contract to do an act required by law and entered into before a court is a(n) ____________________.

 

ANS:  recognizance

 

PTS:   1

 

16. A contract enforceable against all parties is called a(n) ____________________.

 

ANS:  valid contract

 

PTS:   1

 

17. A contract that has been fully performed by all parties is ____________________.

 

ANS:  executed

 

PTS:   1

 

18. One benefiting unfairly at the expense of another is called ____________________.

 

ANS:  unjust enrichment

 

PTS:   1

 

19. A contract that would be enforceable but, because of the capacity of a party, one or both parties may set aside is called a(n) ____________________.

 

ANS:  voidable contract

 

PTS:   1

 

20. The imposition of rights and obligations by law is called a(n) ____________________ contract.

 

ANS:  quasi

 

PTS:   1

 

ESSAY

 

21. The Davidsons decide to hold a formal dinner party. They invite five couples to the party. All five couples tell the Davidsons they will attend. At the last minute two couples phone the Davidsons to say they cannot come. One couple had unexpected houseguests arrive and the other couple caught the flu. What is the liability of each couple to the Davidsons and why?

 

ANS:

Neither couple is liable to the Davidsons. While the Davidsons had agreements with the two couples to attend the dinner party, there was no contract with the couples. The subject matter of these agreements does not involve a business transaction.

 

PTS:   1