Business Law Final Exam Questions With Accurate Answers
Contract law demonstrates which excuses our society accepts for breaking certain types of promises. -
correct answer -t
Contract law does not distinguish between promises that create only moral obligations and promises
that are legally binding - correct answer -f
In contract law, intent is determined by the personal or subjective intent, or belief, of a party - correct
answer -f
One of the four requirements of a valid contract is an adequate price - correct answer -f
The term consideration refers to the legality of the subject matter of a contract. - correct answer -f
A bilateral contract comes into existence at the moment promises are exchanged. - correct answer -t
A unilateral contract is formed at the moment when the contract is performed. - correct answer -t
Informal contracts include all contracts other than formal contracts. - correct answer -t
A negotiable instrument is a formal contract. - correct answer -t
In an express contract, the terms are fully and explicitly stated in words - correct answer -t
A contract that has been fully performed by the parties is called an executory contract. - correct answer
-f
If a voidable contract is avoided, the promisee, but not the promisor, is released from it. - correct
answer -f
An unenforceable contract is one that cannot be enforced because of cer¬tain legal defenses against it. -
correct answer -t
A void contract imposes certain legal obligations on the parties but is not otherwise enforceable -
correct answer -f
A quasi contract is an actual contract. - correct answer -f
A party who has conferred a benefit on someone else unnecessarily can invoke the principle of quasi
contract to recover the cost. - correct answer -f
The doctrine of quasi con¬tract generally can only be used when there is an actual contract that covers
the matter in controversy. - correct answer -f
When a contract's writing is not clear, a court will enforce it according to its obvious terms. - correct
answer -f
,If a contract term is ambiguous, a court can consider extrinsic evidence. - correct answer -t
A court will normally interpret the language of a contract according to what the parties claim their intent
was when they made it. - correct answer -f
Sal assures Tom that she will deliver a truckload of hay to his cattle ranch. A person's declaration to do a
certain act is part of the defini¬tion of
a. an expectation.
b. a moral obligation.
c. a prediction.
d. a promise. - correct answer -d
Smith & Jones, Accountants, agrees to perform an audit for Brick & Mortar Stores, Inc. Whether or not
this agreement meets all of the requirements of a contract, the parties are likely to follow the rules of
contract law because they
a. want to avoid potential disputes.
b. are conscious of those rules.
c. are not conscious of those rules.
d. have a moral obligation to do so. - correct answer -a
Lark promises to buy Mac's used textbook for $60. Lark is
a. an offeror.
b. an offeree.
c. a promisee.
d. a promisor. - correct answer -d
Gilbert promises to buy Hadley's iPod for $75. Hadley is
a. an offeree.
b. an offeror.
c. a promisee.
d. a promisor. - correct answer -c
Brady accepts what he believes is an offer to work for Canyon River Adventures, Inc., as a tour and
fishing guide. In determining whether a contract has been formed, an element of prime importance is
a. the price to be paid.
b the duration of the work.
c. the intent of the parties.
d. the subject of the contract. - correct answer -c
Cellphones & Calltime, Inc., makes an offer to Delores to enter into a contract to work as a salesperson
for a certain base salary plus commission for ninety days subject to a one-year renewal based on her
performance. Delores accepts the offer. A valid contract requires
,a. a price and a subject.
b. a duration and termination provision.
c. an offer and an acceptance.
d. specific quality standards. - correct answer -c
Jonah tells Levi he will give him an Xbox if Levi does Jonah's chores for a month. Levi promises to do the
chores. Jonah and Levi have formed a
a. a bilateral contract.
b. a formal contract.
c. a unilateral contract.
d. no contract. - correct answer -a
Wilson buys a lottery ticket at his local gas station. Wilson has accepted an offer for a
a. bilateral contract.
b. unilateral contract.
c. void contract.
d. unenforceable contract. - correct answer -b
A letter-of-credit agreement between Rural Feed Corporation and Soybean Farms, Inc., requires Rural
Feed's bank to pay Soybean Farms on receipt of invoices. This letter of credit is
a. a formal contract.
b. no contract.
c. an implied contract.
d. a quasi contract. - correct answer -a
Following negotiations, Office Park, Inc., enters into an informal contract with Quality Janitorial
Company for custodial services for Office Park's buildings. This means that the parties' contract
a. requires no special form.
b. is freely open to either party's interpretation.
c. is subject to change by either party, within reason.
d. is not yet completely formed. - correct answer -a
When Hester's car breaks down, she asks Insta-Tow, Inc., to tow it to Jerry's Repair Shop. There is no
discussion of a price, and Hester and Insta-Tow do not sign any documents. Later, Insta-Tow sends
Hester a bill. With respect to Hester's obligation to pay the bill, this is
a. an express contract.
b. an implied contract.
c. no contract.
d. a quasi contract. - correct answer -b
Bilbo signs a lease agreement for an apartment with Cato, who owns and manages the Deer Creek
Apartments complex. These parties have
, a. an express contract.
b. an implied contract.
c. a quasi contract.
d. no contract. - correct answer -a
Avatar, Inc., agrees to deliver t-shirts emblazoned with video game characters for a certain price to Bling
Bling Corporation. To consti¬tute a contract, the terms of this deal
a. must all be express.
b. must all be implied.
c. may be express, implied, or a mixture of both.
d. may be express or implied, but not both. - correct answer -c
Francie drives into Gage's Auto Service and asks Hong, a Gage's employee, to replace a tire on Francie's
car. After Hong replaces the tire, but before Francie pays for it, any contract between Francie and Gage's
is
a. executed.
b. executory.
c. void.
d. unenforceable. - correct answer -b
Robin claims that her contract with Stroud for tennis lessons is voidable. If their contract is avoided,
a. both parties are released from it.
b. both parties must fully perform their obligations under it.
c. both parties will agree to a wholly different contract.
d. a wholly different contract is imposed "as if" the parties had agreed. - correct answer -a
Sales Marketing Corporation and Tech Support, Inc., negotiate a contract. If the contract has all of the
elements necessary for one of the parties to enforce it in court, it is
a. a valid contract.
b. a voidable contract.
c. a void contract.
d. an unenforceable contract. - correct answer -a
Mallory promises to buy illegal digital copies of movies from Napoleon, who promises to deliver on
October 31. These promises are most likely
a. enforceable.
b. valid.
c. void.
d. voidable. - correct answer -c
Contract law demonstrates which excuses our society accepts for breaking certain types of promises. -
correct answer -t
Contract law does not distinguish between promises that create only moral obligations and promises
that are legally binding - correct answer -f
In contract law, intent is determined by the personal or subjective intent, or belief, of a party - correct
answer -f
One of the four requirements of a valid contract is an adequate price - correct answer -f
The term consideration refers to the legality of the subject matter of a contract. - correct answer -f
A bilateral contract comes into existence at the moment promises are exchanged. - correct answer -t
A unilateral contract is formed at the moment when the contract is performed. - correct answer -t
Informal contracts include all contracts other than formal contracts. - correct answer -t
A negotiable instrument is a formal contract. - correct answer -t
In an express contract, the terms are fully and explicitly stated in words - correct answer -t
A contract that has been fully performed by the parties is called an executory contract. - correct answer
-f
If a voidable contract is avoided, the promisee, but not the promisor, is released from it. - correct
answer -f
An unenforceable contract is one that cannot be enforced because of cer¬tain legal defenses against it. -
correct answer -t
A void contract imposes certain legal obligations on the parties but is not otherwise enforceable -
correct answer -f
A quasi contract is an actual contract. - correct answer -f
A party who has conferred a benefit on someone else unnecessarily can invoke the principle of quasi
contract to recover the cost. - correct answer -f
The doctrine of quasi con¬tract generally can only be used when there is an actual contract that covers
the matter in controversy. - correct answer -f
When a contract's writing is not clear, a court will enforce it according to its obvious terms. - correct
answer -f
,If a contract term is ambiguous, a court can consider extrinsic evidence. - correct answer -t
A court will normally interpret the language of a contract according to what the parties claim their intent
was when they made it. - correct answer -f
Sal assures Tom that she will deliver a truckload of hay to his cattle ranch. A person's declaration to do a
certain act is part of the defini¬tion of
a. an expectation.
b. a moral obligation.
c. a prediction.
d. a promise. - correct answer -d
Smith & Jones, Accountants, agrees to perform an audit for Brick & Mortar Stores, Inc. Whether or not
this agreement meets all of the requirements of a contract, the parties are likely to follow the rules of
contract law because they
a. want to avoid potential disputes.
b. are conscious of those rules.
c. are not conscious of those rules.
d. have a moral obligation to do so. - correct answer -a
Lark promises to buy Mac's used textbook for $60. Lark is
a. an offeror.
b. an offeree.
c. a promisee.
d. a promisor. - correct answer -d
Gilbert promises to buy Hadley's iPod for $75. Hadley is
a. an offeree.
b. an offeror.
c. a promisee.
d. a promisor. - correct answer -c
Brady accepts what he believes is an offer to work for Canyon River Adventures, Inc., as a tour and
fishing guide. In determining whether a contract has been formed, an element of prime importance is
a. the price to be paid.
b the duration of the work.
c. the intent of the parties.
d. the subject of the contract. - correct answer -c
Cellphones & Calltime, Inc., makes an offer to Delores to enter into a contract to work as a salesperson
for a certain base salary plus commission for ninety days subject to a one-year renewal based on her
performance. Delores accepts the offer. A valid contract requires
,a. a price and a subject.
b. a duration and termination provision.
c. an offer and an acceptance.
d. specific quality standards. - correct answer -c
Jonah tells Levi he will give him an Xbox if Levi does Jonah's chores for a month. Levi promises to do the
chores. Jonah and Levi have formed a
a. a bilateral contract.
b. a formal contract.
c. a unilateral contract.
d. no contract. - correct answer -a
Wilson buys a lottery ticket at his local gas station. Wilson has accepted an offer for a
a. bilateral contract.
b. unilateral contract.
c. void contract.
d. unenforceable contract. - correct answer -b
A letter-of-credit agreement between Rural Feed Corporation and Soybean Farms, Inc., requires Rural
Feed's bank to pay Soybean Farms on receipt of invoices. This letter of credit is
a. a formal contract.
b. no contract.
c. an implied contract.
d. a quasi contract. - correct answer -a
Following negotiations, Office Park, Inc., enters into an informal contract with Quality Janitorial
Company for custodial services for Office Park's buildings. This means that the parties' contract
a. requires no special form.
b. is freely open to either party's interpretation.
c. is subject to change by either party, within reason.
d. is not yet completely formed. - correct answer -a
When Hester's car breaks down, she asks Insta-Tow, Inc., to tow it to Jerry's Repair Shop. There is no
discussion of a price, and Hester and Insta-Tow do not sign any documents. Later, Insta-Tow sends
Hester a bill. With respect to Hester's obligation to pay the bill, this is
a. an express contract.
b. an implied contract.
c. no contract.
d. a quasi contract. - correct answer -b
Bilbo signs a lease agreement for an apartment with Cato, who owns and manages the Deer Creek
Apartments complex. These parties have
, a. an express contract.
b. an implied contract.
c. a quasi contract.
d. no contract. - correct answer -a
Avatar, Inc., agrees to deliver t-shirts emblazoned with video game characters for a certain price to Bling
Bling Corporation. To consti¬tute a contract, the terms of this deal
a. must all be express.
b. must all be implied.
c. may be express, implied, or a mixture of both.
d. may be express or implied, but not both. - correct answer -c
Francie drives into Gage's Auto Service and asks Hong, a Gage's employee, to replace a tire on Francie's
car. After Hong replaces the tire, but before Francie pays for it, any contract between Francie and Gage's
is
a. executed.
b. executory.
c. void.
d. unenforceable. - correct answer -b
Robin claims that her contract with Stroud for tennis lessons is voidable. If their contract is avoided,
a. both parties are released from it.
b. both parties must fully perform their obligations under it.
c. both parties will agree to a wholly different contract.
d. a wholly different contract is imposed "as if" the parties had agreed. - correct answer -a
Sales Marketing Corporation and Tech Support, Inc., negotiate a contract. If the contract has all of the
elements necessary for one of the parties to enforce it in court, it is
a. a valid contract.
b. a voidable contract.
c. a void contract.
d. an unenforceable contract. - correct answer -a
Mallory promises to buy illegal digital copies of movies from Napoleon, who promises to deliver on
October 31. These promises are most likely
a. enforceable.
b. valid.
c. void.
d. voidable. - correct answer -c
