LST 240 STUDY GUIDE EXAM 3 | LST 240 EXAM #3 REVIEW | PRACTICE
QUESTIONS & ANSWERS 2026/2027
What is consideration? - correct answer ✔✔The value given in return for a promise or performance in a
contractual agreement. Or inducement to make a promise
A's son is in the hospital. B is the doctor who operate on him. A tells the doctor she will pay him 200000
if the surgery is successful. Is A legally bound to pay B 200000? - correct answer ✔✔No due to gratuitous
promise. That is is not binding consideration due to that is original job of the surgeon for that to be a
success.
A goes to the dentist for a operation. The dentist bills the patient $10000 due on April 1st. On April the
2nd A sends a check to dentist for $5000 with a note that by cashing the check the dentist agrees to a
full discharge of the debt. Can the dentist cash the check and later sue A? - correct answer ✔✔Yes. The
dentist can and should sue for the rest of the money. This is an undisputed debt. "Under the common
law, the payment of a lesser sum is legally insufficient to support the promise of discharge." Pge 220
A gets a phone call from a collection company saying that that he owes $8000 for a credit card debt that
the collection company has bought from the credit card company. A tells the collection agency that the
debt to the credit card was $4000. The credit card company is unable to provide paper work proving the
amount. A offers to pay $6000 to settle the claim with the collection company. Can the collection
company cash the check and sue for the additional balance owed? - correct answer ✔✔The credit card
company cannot sue due to this being a disputed debt. "Settlement of a disputed debt: payment of a
lesser sum of money to discharge a debt is legally sufficient consideration." Pge 220
What is an illegal agreement? Is it void, voidable, or unenforceable? - correct answer ✔✔"Illegal
contracts are unenforceable. In most cases, neither party to an illegal agreement can sue the other for
breach of contract or recover for any performance rendered." Pge 240
A medical doctor from Romania has failed exams required to practice medicine in U.S. and is therefore
not licensed to practice medicine in Kentucky. A does liposuction on B at a hotel pursuant to a legal
agreement between the two. Mrs. B liked the results of the operation but refuses to pay. Can A sue B to
collect? What kind of licenses are medical licenses? - correct answer ✔✔Dr. A cannot sue Mrs. B for
payment because of licensing statute. "If the statute is a regulatory license the person cannot recover for
professional services unless he has required as long as the public policy behind the regulatory purpose
clearly outweighs the person interest in being paid for his service."
Regulatory license: measure to protect the public interest
Pge 231
A the pharmacist who works for a pharmacy B in a small town. A is laid off from her work. A's former
employer reminds her of the non-compete clause in her employment contract that reads for three years
from the end of her employment at B Pharmacy, A cannot get a job as a pharmacist in a pharmacy within
4 miles of B's pharmacy? Is this provision enforceable? Why? - correct answer ✔✔Both of the
contingency of Covenant in Employment in Contracts MUST be REASONABLE to be enforced. This
provision is only enforceable if B's pharmacy can list that it is necessary to protect the businesses
legitimate interest.
, What does the statute of frauds require? - correct answer ✔✔that certain designated types of contract e
evidenced by writing. Bottom of pge 258
List the 5 types of contracts within the statute of frauds. - correct answer ✔✔1.) Promises to answer for
the duty of another
2.)Promises of an executor or administrator to answer personally for a duty of a decedent whose fund he
is administering
3.) Agreement upon consideration of marriage
4.) Agreements for the transfer of an interest in land
5.) Agreements not to be performed within one year
pge 259
What is the parol evidence rule? - correct answer ✔✔excludes inconsistent prior and contemporaneous
oral and written agreement not incorporated into an integrated contract (Bottom pge 270) A.K.A. The
term parol evidence refers to any evidence whether oral or in writing that is outside the written contract
and not incorporated into it directly or by reference
Due to contracts with minors being voidable, what should a merchant do to protect its interest when
entering a contract with a minor? - correct answer ✔✔"Consequently, business people deal at their peril
with minors and in situations of consequences generally require an adult to co-sign or guarantee the
performance of the contract"
A is under a guardianship by court order. B learns that A wants to sell her house. If A and B enter into a
contract for the sale of the house. What is the legal effect of the contract? - correct answer ✔✔The
contract between A and B is held void and has no legal effect, because a court appoints a guardian,
generally under the terms of a statute to control and preserve the property of a person whose impaired
compacity prevents her from managing his/her own property.
Can the parties have in the contract a provision that in the event of a breech of contract that the
aggrieved party can get attorney's fees? - correct answer ✔✔Nominal Damages can be awarded. Pge
315
What is the primary objective of contract remedies? - correct answer ✔✔The primary objective is to
make the side that was breached upon WHOLE again.
Are punitive damages allowed in contract action? What must there be to receive it? - correct answer
✔✔Punitive damages are NOT allowed in contract law. Only when their is a tort connected to it.
Why is "sales" the most common and important of all commercial transactions? - correct answer
✔✔"Because practically everyone in our economy is a purchaser of durable and consumable goods." 332
What is a good? - correct answer ✔✔It is movable personal property pge 333
What is a sale? - correct answer ✔✔the passing of title from the seller to the buyer for a price pge 333
What is a lease? - correct answer ✔✔a transfer of rights to possession and use of goods in return for
consideration pge333
QUESTIONS & ANSWERS 2026/2027
What is consideration? - correct answer ✔✔The value given in return for a promise or performance in a
contractual agreement. Or inducement to make a promise
A's son is in the hospital. B is the doctor who operate on him. A tells the doctor she will pay him 200000
if the surgery is successful. Is A legally bound to pay B 200000? - correct answer ✔✔No due to gratuitous
promise. That is is not binding consideration due to that is original job of the surgeon for that to be a
success.
A goes to the dentist for a operation. The dentist bills the patient $10000 due on April 1st. On April the
2nd A sends a check to dentist for $5000 with a note that by cashing the check the dentist agrees to a
full discharge of the debt. Can the dentist cash the check and later sue A? - correct answer ✔✔Yes. The
dentist can and should sue for the rest of the money. This is an undisputed debt. "Under the common
law, the payment of a lesser sum is legally insufficient to support the promise of discharge." Pge 220
A gets a phone call from a collection company saying that that he owes $8000 for a credit card debt that
the collection company has bought from the credit card company. A tells the collection agency that the
debt to the credit card was $4000. The credit card company is unable to provide paper work proving the
amount. A offers to pay $6000 to settle the claim with the collection company. Can the collection
company cash the check and sue for the additional balance owed? - correct answer ✔✔The credit card
company cannot sue due to this being a disputed debt. "Settlement of a disputed debt: payment of a
lesser sum of money to discharge a debt is legally sufficient consideration." Pge 220
What is an illegal agreement? Is it void, voidable, or unenforceable? - correct answer ✔✔"Illegal
contracts are unenforceable. In most cases, neither party to an illegal agreement can sue the other for
breach of contract or recover for any performance rendered." Pge 240
A medical doctor from Romania has failed exams required to practice medicine in U.S. and is therefore
not licensed to practice medicine in Kentucky. A does liposuction on B at a hotel pursuant to a legal
agreement between the two. Mrs. B liked the results of the operation but refuses to pay. Can A sue B to
collect? What kind of licenses are medical licenses? - correct answer ✔✔Dr. A cannot sue Mrs. B for
payment because of licensing statute. "If the statute is a regulatory license the person cannot recover for
professional services unless he has required as long as the public policy behind the regulatory purpose
clearly outweighs the person interest in being paid for his service."
Regulatory license: measure to protect the public interest
Pge 231
A the pharmacist who works for a pharmacy B in a small town. A is laid off from her work. A's former
employer reminds her of the non-compete clause in her employment contract that reads for three years
from the end of her employment at B Pharmacy, A cannot get a job as a pharmacist in a pharmacy within
4 miles of B's pharmacy? Is this provision enforceable? Why? - correct answer ✔✔Both of the
contingency of Covenant in Employment in Contracts MUST be REASONABLE to be enforced. This
provision is only enforceable if B's pharmacy can list that it is necessary to protect the businesses
legitimate interest.
, What does the statute of frauds require? - correct answer ✔✔that certain designated types of contract e
evidenced by writing. Bottom of pge 258
List the 5 types of contracts within the statute of frauds. - correct answer ✔✔1.) Promises to answer for
the duty of another
2.)Promises of an executor or administrator to answer personally for a duty of a decedent whose fund he
is administering
3.) Agreement upon consideration of marriage
4.) Agreements for the transfer of an interest in land
5.) Agreements not to be performed within one year
pge 259
What is the parol evidence rule? - correct answer ✔✔excludes inconsistent prior and contemporaneous
oral and written agreement not incorporated into an integrated contract (Bottom pge 270) A.K.A. The
term parol evidence refers to any evidence whether oral or in writing that is outside the written contract
and not incorporated into it directly or by reference
Due to contracts with minors being voidable, what should a merchant do to protect its interest when
entering a contract with a minor? - correct answer ✔✔"Consequently, business people deal at their peril
with minors and in situations of consequences generally require an adult to co-sign or guarantee the
performance of the contract"
A is under a guardianship by court order. B learns that A wants to sell her house. If A and B enter into a
contract for the sale of the house. What is the legal effect of the contract? - correct answer ✔✔The
contract between A and B is held void and has no legal effect, because a court appoints a guardian,
generally under the terms of a statute to control and preserve the property of a person whose impaired
compacity prevents her from managing his/her own property.
Can the parties have in the contract a provision that in the event of a breech of contract that the
aggrieved party can get attorney's fees? - correct answer ✔✔Nominal Damages can be awarded. Pge
315
What is the primary objective of contract remedies? - correct answer ✔✔The primary objective is to
make the side that was breached upon WHOLE again.
Are punitive damages allowed in contract action? What must there be to receive it? - correct answer
✔✔Punitive damages are NOT allowed in contract law. Only when their is a tort connected to it.
Why is "sales" the most common and important of all commercial transactions? - correct answer
✔✔"Because practically everyone in our economy is a purchaser of durable and consumable goods." 332
What is a good? - correct answer ✔✔It is movable personal property pge 333
What is a sale? - correct answer ✔✔the passing of title from the seller to the buyer for a price pge 333
What is a lease? - correct answer ✔✔a transfer of rights to possession and use of goods in return for
consideration pge333
