1. Collin purchases a house, using a loan from Big Bank. As a condition of the l

Question

1. 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 intended beneficiary but not a donee beneficiary.

B. a creditor beneficiary but not a donee beneficiary.

C. an incidental beneficiary but not a donee beneficiary.

D. both a creditor beneficiary and a donee beneficiary.

2. 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. have Harry assign his interests under the contract with Paul to Sam's Supply House.

D. require an accord and satisfaction be entered into.

3. Elmer borrows money from Big Bank, who then assigns the promissory note and mortgage to Financial Institution for valuable consideration. Elmer isn't given notice of the assignment and continues to pay Big Bank. Financial Institution files suit, claiming Elmer is in default because Elmer failed to pay monthly payments to Financial Institution. Which of the following statements is true?

A. Elmer is in default to Financial Institution because he didn't pay them.

B. Financial Institution was obligated to give notice to Elmer of the assignment.

C. Financial Institution must pay Big Bank for the payments Elmer made.

D. Big Bank must forgive Elmer's loan because they failed to notify him.

4. Warren agrees to paint Abby's restaurant for $1,000. Warren fails to paint. Abby may be entitled to punitive damages if

A. Abby loses profits as a result of the breach.

B. the contract breached was both written and witnessed.

C. Warren doesn't know how to paint, misrepresented himself as a painter, and never intended to paint.

D. Abby has to pay substantially more than $1,000 for someone else to perform the job.

5. 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 an intended third-party beneficiary.

B. Danielle is a donee beneficiary.

C. Walter is a donee beneficiary.

D. Big Life Insurance is a creditor beneficiary.

6. 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. Elmer, but not Robert, is responsible for the breach.

C. Robert is responsible for the breach of the contract only if there has been a novation.

D. Robert is responsible for the breach of the contract. 7. On June 29, Henry contracts to purchase American flags, which Henry intends to sell at the annual Fourth of July fireworks event, from Liz. The contract doesn't specify a delivery date. Liz delivers the flags on July

7. Henry sues for breach of contract. Which of the following will most likely happen?

A. Liz will win because the contract didn't specify a delivery date.

B. Henry will win because of the equal dignities rule.

C. Henry will win because of the standard construction rule.

D. Liz will win because she delivered within a reasonable time.

8. Horatio agrees to paint Stella's house for $1,000. Horatio fails to paint, and Stella hires Winston to paint the house for $1,000. Stella sues Horatio for breach of contract. Stella likely will receive __________ damages.

A. nominal

B. punitive

C. liquidated

D. consequential

9. Under the _______ rule, courts generally accept into evidence only the original of a writing, not a copy.

A. standard construction

B. best evidence

C. parol evidence

D. equal dignities

10. 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. won't win based on the parol evidence rule.

D. will win based on the seller's representation when they looked at the property.

11. 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. won't win because they shouldn't have entered into an oral contract to buy the house.

B. won't win because they can find another house that will work just as well.

C. 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.

D. will win because the owner breached his agreement to sell them the house.

12. Which of the following acts is designed to cut down on identity theft related to the use of credit cards?

A. E-Sign Act

B. Uniform Electronic Transactions Act

C. Fair and Accurate Credit Transactions Act

D. Uniform Computer Information Transactions Act

13. Will contracts with Grace to sell her 100 lamps for $1,000. Will breaches his contractual duty to deliver the lamps, and Grace buys 100 lamps for $2,000 from another dealer. Grace sues Will for breach of contract. She will most likely receive what type of damages?

A. Compensatory damages in the amount of $2,000

B. Nominal damages of $100

C. Compensatory damages in the amount of $1,000

D. Consequential damages of $3,000

14. Barb and Ned exchange e-mails in which Barb agrees to paint Ned's house for $1,000. Which of the following statements is true?

A. The contract is enforceable.

B. The contract can't be enforced because there's no handwritten signature.

C. The contract is unenforceable due to the statute of frauds.

D. The contract can't be enforced because electronic contracts aren't legally binding.

15. One name for a promise made by one party to pay another person's debts, if that person fails to pay the debt, is

A. collateral contract.

B. condition precedent.

C. prenuptial agreement.

D. signature requirement.

16. Stan contracts to sell his house to Bonnie for $150,000. Stan then finds a buyer who will pay $200,000 and tells Bonnie he won't perform. Bonnie wants to make Stan honor his contract. The remedy she should seek is

A. consequential damages.

B. specific performance.

C. punitive damages.

D. compensatory damages.

17. A substitution, by mutual agreement, of a new party for one of the original parties to a contract is called a

A. condition concurrent.

B. mutual rescission.

C. novation.

D. complete performance.

18. Kevin, a world-renowned violinist, agrees to play at the reception for Jay's wedding. Something comes up at the last minute, and Kevin delegates his duty to perform to Susan, a mediocre but professional violinist. This delegation is

A. permissible if Susan performs well.

B. permissible.

C. impermissible.

D. permissible if Kevin also assigns to Susan the right to be paid for playing.

19. 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 compensatory and consequential damages.

B. both nominal and punitive damages.

C. compensatory damages only.

D. punitive damages only.

20. 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. The contract violates the statute of frauds.

B. Tom couldn't have breached the contract because the contract didn't specify a time for performance, and he did do the painting work.

C. The contract was unenforceable because it didn't specify a time for performance.

D. Tom breached the contract because he didn't perform within a reasonable time.

Explanation / Answer

1. B

2. B

3. B

4. B

5. C

6. C

7. D

8. A

9. B

10. C

11. A

12. C

13. C

14. A

15. A

16. B

17. B

18. C

19. A

20. B

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