1. Danielle purchases life insurance on her own life with Big Life Insurance and makes her husband, Walter, the beneficiary. Which of the following statements is true?
A. Danielle is a donee beneficiary.
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B. Danielle is an intended third-party beneficiary.
C. Big Life Insurance is a creditor beneficiary.
D. Walter is a donee beneficiary.
2. Jessica orally agrees that she will sell 400 pairs of flip-flops to a customer for $600. This agreement is
A. unenforceable because of the statute of frauds.
B. unenforceable because all necessary elements aren’t met.
C. enforceable because all necessary elements are met.
D. unenforceable because of the parol evidence rule.
3. James leases an apartment to Kyle for $900 per month rent. The written lease contains no prohibition against assignment, nor does it expressly permit assignment. Kyle assigns his rights to Harley without any consideration. James finds out and objects. The assignment is
A. invalid because James didn’t consent to the assignment.
B. valid because the written lease didn’t prohibit it.
C. invalid because the lease didn’t expressly permit assignment.
D. valid because there’s no consideration for the assignment.
4. Warren agrees to paint Abby’s restaurant for $1,000. Warren fails to paint. Abby may be entitled to punitive damages if
A. Warren doesn’t know how to paint, misrepresented himself as a painter, and never intended to paint.
B. Abby loses profits as a result of the breach.
C. Abby has to pay substantially more than $1,000 for someone else to perform the job.
D. the contract breached was both written and witnessed.
5. Paul enters into a contract with Harry. Paul agrees to put a new roof on Harry’s house, and Harry agrees to pay Paul $5,000. Paul is late on a payment to Sam’s Supply House and tells Sam’s Supply House that he will pay when he receives money from Harry. Sam’s Supply House has heard this from Paul before and didn’t receive money. To ensure Paul pays his payment from the money Harry pays him, Sam’s Supply House can
A. tell Harry that Paul is indebted to Sam’s Supply House, which automatically makes them a creditor beneficiary entitled to the payment.
B. have Paul assign his interests under the contract with Harry to Sam’s Supply House.
C. require an accord and satisfaction be entered into.
D. have Harry assign his interests under the contract with Paul to Sam’s Supply House.
6. Coretta and Mary find a property to purchase. They sign a written agreement that states the agreed-on price, closing date, and items that are to stay in the house. They forget to include the washer and dryer in the agreement, but the seller tells them he will leave them if they want them. Right before closing, they walk through the property and find that the washer and dryer have been removed. They purchase the property and sue the seller for not leaving the washer and dryer. Coretta and Mary most likely
A. won’t win based on the statute of limitations.
B. won’t win based on the statute of frauds.
C. will win based on the seller’s representation when they looked at the property.
D. won’t win based on the parol evidence rule.
7. Collin purchases a house, using a loan from Big Bank. As a condition of the loan, Big Bank requires that Collin purchase life insurance payable to Big Bank, to the extent of the outstanding mortgage, if Collin dies before fully paying the mortgage. Big Bank is
A. an incidental beneficiary but not a donee beneficiary.
B. both a creditor beneficiary and a donee beneficiary.
C. a creditor beneficiary but not a donee beneficiary.
D. an intended beneficiary but not a donee beneficiary.
8. Which of the following is an example of discharge by operation of law?
A. Xavier agrees to paint Rita’s house for $1,000. Before Xavier can paint, Rita’s house burns down.
B. Xavier agrees to paint Rita’s house for $1,000. Rita later tells Xavier that she won’t pay him. As a result, Xavier decides not to paint.
C. Xavier agrees to paint Rita’s house for $1,000. Rita changes her mind and asks Xavier not to paint. Xavier agrees.
D. Xavier agrees to paint Rita’s house for $1,000. Xavier paints, but before Rita pays him, she files bankruptcy. As a result, Xavier doesn’t get paid.
9. Sara purchases life insurance on her own life and makes her husband, Dean, the beneficiary. Sara dies. Dean applies to the insurance company for payment of the proceeds. The insurance company denies payment, pointing out that Dean didn’t sign the contract and therefore doesn’t have privity of contract. Dean is
A. entitled to the proceeds as an incidental beneficiary.
B. entitled to the proceeds because he was married to Sara.
C. not entitled to the proceeds because he doesn’t have privity of contract.
D. entitled to the proceeds as an intended beneficiary.
10. Robert contracts to paint Jake’s house for $500. Robert then asks Elmer to perform the painting work for him. Elmer does a bad job, and Jake wants to sue for breach of contact. Which of the following is true?
A. Robert isn’t responsible if he gave Jake notice of the delegation.
B. Robert is responsible for the breach of the contract only if there has been a novation.
C. Robert is responsible for the breach of the contract.
D. Elmer, but not Robert, is responsible for the breach.
11. Candice hires Otto to work as a tax preparer in Candice’s tax return business. The employment contract restricts the ability of Otto to set up a competing business or engage in tax preparation services if Otto leaves Candice’s employ. Otto discovers he likes this kind of work and wants to set up his own tax return business. He asks you whether the restrictions in his contract with Candice will be enforceable. You should tell him that
A. restrictive covenants regarding future employment will be enforceable if the value of the consideration given for the covenant equals the value of the income loss that would be caused by enforcing the agreement.
B. any restriction regarding employment will be enforceable as long as there was adequate consideration.
C. restrictive covenants regarding future employment will be enforceable if they’re reasonable.
D. any restriction regarding employment is unenforceable as against public policy
12. Under tenant Lester’s lease contract with landlord Mary, Lester must pay an extra $25 if his rent is more than five days late. This is an example of __________ damages.
13. Denise orally authorizes Shaun to sell her house. Shaun enters into a written agreement with Eric to sell him the house for $140,000. Both Shaun and Eric sign the contract. Denise learns of the agreement after the fact and decides she doesn’t want to sell. If the contract is ruled unenforceable, the most likely reason is the __________ rule.
B. parol evidence
C. equal dignities
D. best evidence
14. Jack and Jane formed a contract in which Jack agreed to sell Jane a large amount of apples. Jack knew that Jane planned to resell the apples at the farmers’ market the following weekend. Jack failed to deliver the apples as promised. Jane will most likely be able to recover
A. both nominal and punitive damages.
B. compensatory damages only.
C. punitive damages only.
D. both compensatory and consequential damages
15. Jordan is charged with a crime, and Jeff is chosen to be on the jury. Jordan offers to pay Jeff $500 if he votes not guilty. Jeff does so, but Jordan refuses to pay. Jeff sues Jordan for breach of contract. Jeff will
A. win because of the statute of frauds.
B. lose because the contract is usurious.
C. lose because the contract is against public policy.
D. win because Jordan materially breached.
16. Tom and Zeke enter into a contract for Tom to paint Zeke’s house for $1,000. The contract doesn’t specify a time for performance by Tom. Six years later, Tom shows up with a bucket of paint, paints the house, and demands payment. Which of the following is true?
A. Tom couldn’t have breached the contract because the contract didn’t specify a time for performance, and he did do the painting work.
B. The contract violates the statute of frauds.
C. Tom breached the contract because he didn’t perform within a reasonable time.
D. The contract was unenforceable because it didn’t specify a time for performance.
17. Bella and Connie are struggling to find jobs. They decide they want to open a child daycare center together. They see a house in the perfect neighborhood with a “For Sale by Owner.” They talk to the owner, reach an agreement, and shake hands. Just before the closing on the house, at which they’ll take ownership of the house, the owner decides not to sell to Bella and Connie. They tell the owner they’re going to sue him for breach of contract. Bella and Connie most likely
A. will win because the owner shouldn’t have entered into a contract with them if he wasn’t sure he wanted to sell the house.
B. will win because the owner breached his agreement to sell them the house.
C. won’t win because they can find another house that will work just as well.
D. won’t win because they shouldn’t have entered into an oral contract to buy the house.
18. Which of the following is an example of discharge by impossibility?
A. Jason agrees to paint Sheila’s house for $1,000. Sheila changes her mind and asks Jason not to paint. Jason agrees.
B. Jason agrees to paint Sheila’s house for $1,000. Sheila later tells Jason that she won’t pay him. As a result, Jason decides not to paint.
C. Jason agrees to paint Sheila’s house for $1,000. Before Jason can paint, Sheila’s house burns down.
D. Jason agrees to paint Sheila’s house for $1,000. Jason paints, but before Sheila pays him, she files bankruptcy. As a result, Jason doesn’t get paid.
19. Tom and Zeke go out to a restaurant for dinner. Tom orders a steak, and Zeke orders lasagna. After they’ve finished eating, they pay their bill. Assuming all parties performed in the order they were required to under this contract, which of the following is true?
A. Service and payment were conditions concurrent.
B. Payment was a condition precedent to service.
C. Service was a condition precedent to payment.
D. There was no contract.
20. Tom and Zeke enter into a contract for Tom to paint Zeke’s house for $1,000 by August 5th. Tom paints half of the house on August 6th, then demands pay. Which of the following is false?
A. Tom may not be in breach if the contract doesn’t make time of the essence.
B. Tom’s duties are discharged under the doctrine of substantial performance.
C. The contract doesn’t violate the statute of frauds.
D. Zeke may have to pay if payment is a condition precedent to the duty to paint.