Business Law and Ethics Questions

Question 1

Business Law and Ethics Questions. A(n) ______ occurs when the offeree rejects the original offer and proposes a new offer with different terms.

• option contract
• revocation
• rejection
• counteroffer

Question 2

Only the parties or parties for whom the offer is intended has the power of acceptance and may accept.

• True
• False

Question 3

Revocation is consummated through ______ of the offer or by some act ______ with acceptance that would give reasonable notice from the offeror to the offeree that the offer no longer exists.

• implied negotiation; consistent
• constructive negotiation; concordant
• constructive repudiation; consistent
• express repudiation; inconsistent

Question 4

Which of the following is false regarding the mailbox rule?

• It governs common law contracts.
• The time of acceptance depends on whether the offeror has specified a method of acceptance or not.
• It is a rule that determines when a contract is considered to be accepted by the offeree, thus depriving the offeror of the right to revoke the offer.
• It provides that the mailed acceptance of an offer is generally effective when the acceptance is received by the offeror.

Question 5

Suppose that on September 11, Tom sends an email to Joe revoking Tom’s offer. Joe is away from the office, but Joe’s administrative assistant receives the email. Joe never actually sees the email. The next day, from his hotel room in Tokyo, Joe calls Tom to accept Tom’s offer made on September 11. Does a contract exist?

• No, because Joe’s agent received the email
• No, because Joe did not make a counteroffer
• Yes, because Joe was traveling
• Yes, because Joe made a counteroffer

Question 6

A mistake is an erroneous belief about a(n) ______ fact, not an erroneous belief as to what will happen in the future. Erroneous beliefs about the future are covered by the doctrines of ______ and impracticability.

• historical; promissory estoppel
• historical; improbability
• existing; impossibility
• existing; frustration of purpose

Question 7

According to the UCC, a ______ made by a merchant is ______.

• option contract; void
• firm offer; irrevocable
• firm offer; negotiable
• option contract; voidable

Question 8

To find consideration, a court must hold that each party received something of value from the other (called ______), and that each party gave up something of value (called ______) to the other.

• legal detriment; legal benefit
• a moral obligation; an illusory promise
• legal benefit; legal detriment
• an illusory promise; a moral obligation

Question 9

Which of the following is not a happening or an event that will terminate an offer by operation of law?

• Death or incapacity of the offeror or offeree
• Lapse of time
• Destruction of the contract’s subject matter after the contract has been performed
• Supervening illegality

Question 10

Suppose Demetri was in an accident and has the right to sue the other party, but instead agrees to accept a cash settlement rather than file a lawsuit. This is an example of Demetri’s ______ as consideration.

• legal detriment
• moral obligation
• preexisting duty
• nominal detriment

Question 11

Some promises do not support the bargained-for exchange aspect of consideration and are considered ______. Business Law and Ethics Questions

• preexisting duties
• illusory promises
• unforeseeable circumstances
• past consideration. Business Law and Ethics Test 1

Question 12

Generally, as long as the agreement is voluntary, courts will not inquire as to which of the following? (Check all that apply.)

• Whether illusory promises were made by the parties
• Whether there was an offer and an acceptance
• The type of consideration exchanged
• The relative bargaining power of the parties

Question 13

Martha recently announced her retirement from Alpha Corp. Upon her announcement, Martha’s supervisor promised her a gold watch because of her 20 years of service to the company. Martha’s service to Alpha Corp. is ______ and does not meet the bargained-for exchange requirement. Business Law and Ethics Test 1

• a preexisting duty
• promissory estoppel
• an illusory promise
• past consideration

Question 14

Generally, parties do not have a duty to ________ to each other but some courts have held that misrepresentation can be a defense if a party has asserted a(n) ________ that leads to an overall misrepresentation. (Choose two correct answers)

• disclose material information
• disclose all information
• half-truth
• fact

Question 15

In a battle of the forms dilemma, if one of the parties is not a merchant, the contract is

• void ab initio
• considered accepted, but the additional terms are not part of the contract
• void
• considered a counteroffer

Question 16

Both common law contracts and UCC Article 2 sales contracts must be supported by:

• promissory estoppel.
• a written agreement.
• mutual assent.
• bargained-for consideration.

Question 17

Under UCC Article 2, in a battle of the forms dilemma where both parties to the sales contract are merchants, the additional terms automatically become part of the enforceable contract unless the following are true: (Select all that apply)

• The seller raises an objection to the additional terms within a reasonable time according to industry standards.
• The additional term is a material change that diverges significantly from those contained in the offer.
• The buyer has expressly and clearly limited acceptance to the original terms.

Question 18

As a practical matter, businesses frequently use _________ to initiate or respond to an offer to sell a good, which usually have some blanks for the particular negotiated terms unique to the transaction. Normally, the offer takes the form of a(n) _________ from the buyer, and the seller’s firm will typically issue a(n) _________.

• purchase orders; invoices; acknowledgement forms
• preprinted forms; purchase order; acknowledgement form or invoice
• standardized contracts; quote; confirmation

Question 19

In a battle of the forms dilemma under the UCC 2-207, if both parties are merchants and the offer and acceptance documents contain conflicting clauses, the terms of the contract are typically determined by:

• The “first-shot” rule where the terms of the offer prevail.
• The “last-shot” rule where the terms of the acceptance prevail.
• The conflicting clauses are both knocked out and a “gap-filler” provision of the UCC is used to supply the term.
• The contract is considered void for lack of mutual assent.

Question 20

The UCC 2-204 states that a contract for the sale of goods does not fail for indefiniteness even if one or more terms are left open, as long as the parties intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy. This principle of contract law is referred to as:

• Consideration.
• Mutual assent.
• The Statute of Frauds.
• Promissory estoppel.

Question 21

True or False: The biggest distinction between a common law contract and a UCC contract is that common law contracts require new consideration to enforce a modification to an existing contract, while UCC Article 2 does not.

• True
• False

Question 22

True or False: The Common Law “Mirror Image Rule” states that the terms of the acceptance must perfectly match the terms of the offer, or no contract is formed. The UCC 2-207 was created to reject this rule for the sale of goods.

• True
• False

Question 23

By making the parties write down their agreement, the parties will take their agreement more seriously and consider the consequences of breach before entering the agreement. This is the ________ reason why UCC Article 2 requires sales contracts over $500 to be in writing.

• ancillary
• cautionary
• subjective
• evidentiary

Question 24

In a battle of the forms dilemma, if one of the parties is not a merchant, the contract is ________.

• formed as originally offered
• voidable at the election of the merchant
• void
• voidable at the election of the non-merchant. Business Law and Ethics Questions

Question 25

For the statute of frauds provision in UCC Article 2 to be satisfied, a sales contract must contain in writing which of the following? (Check all that apply.)

• Language that would allow a reasonable person to conclude that the parties intended to form a contract
• The signature of the party against whom enforcement is sought
• The delivery terms
• The price
• The quantity

Question 26

Generally, in a battle of the forms dilemma where both parties are merchants, the additional terms ________ become part of the enforceable contract.

• qualifiedly
• do not
• conditionally
• automatically

Question 27

The statute of frauds section of UCC Article 2 ________ sales contracts between two merchants.

• does not address
• provides a relatively strict rule for
• provides a relatively lenient rule for
• does not apply to

Question 28

In some cases involving a battle of the forms between merchants, one merchant proposes a certain term in the offering document (e.g., the ________), but the other merchant’s acceptance (e.g., the ________) states a terms that is different from the offer. In such a case, the majority of states use the ________.

• purchase order; acknowledgement form; parol evidence rule
• purchase order; acknowledgement form; knockout rule
• acknowledgement form; purchase order; commercial impracticability doctrine
• acknowledgement form; purchase order; substantial performance doctrine

Question 29

Which of the following is true regarding the UCC’s stance on electronic records and signatures in sales transactions?

• The UCC requires electronic transactions.
• The UCC does not recognize electronic records and signatures in sales transactions as valid.
• The UCC makes clear that a sales contract cannot be held unenforceable simply because it is in electronic form.
• The UCC always requires hard copies of documents with original signatures.

Question 30

The ________ is a legal requirement that certain contracts be in writing in order to be enforceable.

• parol evidence rule
• frustration of purpose doctrine
• commercial impracticability doctrine
• statute of frauds

Question 31

Without a written contract, one or both of the parties could come into court and lie about the existence or terms of a contract. This is the ________ reason why UCC Article 2 requires contracts over $500 to be in writing.

• cautionary
• ancillary
• evidentiary
• common law

Question 32

Compared to the common law, the UCC is much less flexible concerning what contract terms must be in writing.

• True
• False

Question 33

According to UCC Article 2, a merchant who receives a signed ________ from the other merchant will be bound by the memorandum just as if they had signed it, unless they ________.

• option contract; promptly object
• confirmation memorandum; object within three business days
• confirmation memorandum; promptly object
• option contract; object within three business days

Question 34

The UCC recognizes electronic signatures in sales transactions.

• True
• False

Contract Law Questions

Question 1

Another term for a non-breaching party to a contract is

• Sciënter party
• In pari delicto party
• Innocent party
• Reasonable party

Question 2

Edith sells on Craigslist a life sized statue of a zebra that her mother in law gave to her as a birthday gift. Would this transaction be governed by the UCC?

• No because Edith is not a merchant.
• No because it is a gift and the UCC does not apply to gifts.
• Yes because it involves a sale of goods.
• No because the sale did not take place in a brick and mortar store.

Question 3

Having the ability to allow the court to fill in the gaps to save an incomplete contract best describes

• a mandatory rule.
• a default rule.
• a legal rule.
• an equitable rule.

Question 4

An agreement to transfer title of property or tangible assets for a certain price is called a

• Service contract
• Sales contract
• Commercial contract
• Standardized contract

Question 5

The fundamental purpose of the creation of Uniform Commercial Code was to govern

• Criminal transactions
• Commercial transactions
• Any sales transactions
• All legal transactions

Question 6

Which of the following is accurate as it relates to the value offered by the UCC?

• It provides a more formal way of conducting business.
• It provides standardized and simple procedures for merchants in commercial transactions.
• It provides a way for non-merchants to have more power in commercial transactions.
• It allows the federal government to have more control over commercial transactions.

Question 7

A document generated by the seller that lists the items delivered, along with the price and amount owed by the buyer is called a(n)

• Purchase Order
• Invoice
• Bill of Lading
• Shipping Document

Question 8

When an offer does not state a time limit, the power of acceptance will terminate after

• The end of the business day.
• A reasonable time.
• Thirty days.
• One week.

Question 9

Again Motors offers to sell Shelby a 1977 Shelby Mustang Cobra for $10,000 on July 1, 2018. Shelby decides that she must think about it and one year later, on July 1, 2019, Shelby calls up Again Motors and tells them that she accepts their offer. Again Motors tells Shelby that the car is now $20,000 and they will not honor the $10,000 price. Shelby sues Again Motors for breach of contract. Most likely, according to the UCC, what will be the outcome of the case?

• Again Motors will win because Shelby waited too long to accept. However, the UCC requires a one-year period for an offer to remain open.
• The UCC only requires an offer to remain open for three months unless specifically stated otherwise. Therefore, Again Motors does not have to honor the offer.
• Shelby will win because the price of the car was $10,000 when the offer was made.
• Shelby will win because the UCC requires an offer to remain open for at least two years.

Question 10

The UCC will permit an incomplete or slightly ambiguous contract to be enforced using each of the following criteria except: Business Law and Ethics Questions

• Past commercial conduct
• Industry standards or norms
• Judicial input of any terms necessary to maintain fairness
• Correspondence or verbal exchanges between the parties

Question 11

Brunos’s Incorporated sells a computer to Stovall, with a fair market value of $3,000.00. According to the UCC, must this contract be in writing to be enforceable?

• No because computers are not covered by the UCC.
• No because it is a sale of goods.
• Yes as contracts with goods with a total value of $500.00 or more must be in writing to be enforceable.
• Yes because Brunos is a corporation.