Business Its Legal Ethical and Global Environment 10th Edition Jennings Test Bank

1. Contracts for the sale of real property are governed by the Uniform Commercial Code.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: Sources of Contract Law
KEYWORDS: Bloom's: Application
2. The Restatement of Contracts is another name for the UCC.

a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
KEYWORDS: Bloom's: Knowledge
3. Under the UCC, offers need price, subject matter, and quantity to be definite enough.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
TOPICS: Offer
4. An offer is effectively communicated upon mailing or dispatch.

a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
TOPICS: Offer
5. Revocation can be valid any time prior to acceptance.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
TOPICS: Offer
6. A merchant's firm offer requires consideration to be valid.

a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
TOPICS: Offer
7. Options require consideration to be valid.

a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
TOPICS: Offer
8. Under common law, a counteroffer is also a rejection.

a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
TOPICS: Offer
9. The UCC Battle of the Forms provision allows additional terms in an acceptance without invalidating the
acceptance.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
TOPICS: Offer
10. The UCC rules on additional terms in acceptance are the same for merchants and nonmerchants.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
TOPICS: Offer
11. Contracts for services are governed by the UCC.

a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
12. An acceptance of a stipulated means offer by a different means is effective upon receipt.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
TOPICS: Acceptance: The Offeree's Response
13. Common law does not dictate amounts required for consideration.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
14. Contracts for the sale of land must be in writing to be enforceable.

a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
TOPICS: Contract Form: When a Record is Required
15. A contract for the sale of a car for $700, under the old UCC, must be in writing to be enforceable.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
16. A contract to solicit subscribers through pop-up Internet ads is considered a good under the UCC because it is a list
of names.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
17. Implied contracts are unenforceable.

a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
TOPICS: Types of Contracts
18. Quasi contracts are implied-in-law contracts.

a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
19. A UCC offer is valid with the subject matter stated even though no price is given.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
TOPICS: Offer
20. "I'll take it, but you must deliver," is a valid acceptance.
a. True
b. False
ANSWER: False
POINTS: 1
21. An acceptance by a merchant in response to an offer by a merchant cannot contain any additional terms or it will
be treated as a counteroffer under the UCC.
a. True
b. False
ANSWER: False
POINTS: 1
TOPICS: Offer
KEYWORDS: Bloom's: Comprehension
22. Parol evidence is always admissible for challenging contract terms.
a. True
b. False
ANSWER: False
POINTS: 1
23. "I'm thinking of selling my CD player," is an example of offer language.

a. True
b. False
ANSWER: False
POINTS: 1
TOPICS: Offer
24. "I'll take the bike for $75, but first I have to sell my fish tank," is an example of a valid acceptance.
a. True
b. False
ANSWER: False
POINTS: 1
25. "This offer is limited to these terms," means that between merchants only immaterial terms added in the acceptance
will be part of the contract.
a. True
b. False
ANSWER: False
POINTS: 1
TOPICS: Offer
26. The parol evidence rule does not apply in UCC contracts.
a. True
b. False
ANSWER: False
POINTS: 1
27. The CISG follows the mirror image rule in formation.

a. True
b. False
ANSWER: True
POINTS: 1
TOPICS: CISG - UCC for the World
28. "Drive my car to Albuquerque, and I'll pay you $500," is not a valid offer.
a. True
b. False
ANSWER: False
POINTS: 1
TOPICS: Offer
29. Under the CISG, acceptance is effective only upon receipt.

a. True
b. False
ANSWER: True
POINTS: 1
TOPICS: CISG - UCC for the World
30. Under ESIGN, clicking on a tab that reads “I accept” is a valid acceptance to an offer.
a. True
b. False
ANSWER: True
POINTS: 1
TOPICS: Writing and E-Commerce: The Uniform Electronic Transaction Act
31. An executory contract is one that is fully performed.

a. True
b. False
ANSWER: False
POINTS: 1
32. The UCC has no timing rules for acceptance.
a. True
b. False
ANSWER: False
POINTS: 1
33. A contract must be in a formal writing to satisfy the statute of frauds.

a. True
b. False
ANSWER: False
POINTS: 1
34. E-Sign requires that there be faxes or written verification of electronic contracts.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
35. UETA has not yet been adopted in all of the states.
a. True
b. False
ANSWER: True
POINTS: 1
36. UETA does not apply when there is an applicable statute of frauds.
a. True
b. False
ANSWER: False
POINTS: 1
37. A contract for the sale of potatoes is not governed by the UCC.
a. True
b. False
ANSWER: False
POINTS: 1
38. Under the UCC, an acceptance followed by additional terms is a counteroffer and a rejection.
a. True
b. False
ANSWER: True
POINTS: 1
39. A contract for rebinding 500 books at a cost of $1.50/book is governed by the UCC.
a. True
b. False
ANSWER: False
POINTS: 1
40. The above book contract must be in writing to be valid.
a. True
b. False
ANSWER: False
POINTS: 1
41. A record, such as an e-mail or fax, now satisfies the writing requirement under both the UCC and common law.
a. True
b. False
ANSWER: True
POINTS: 1
42. Point-and-click is a valid means of forming a contract if the parties had adequate knowledge of the terms and
conditions of the agreement in advance.
a. True
b. False
ANSWER: True
POINTS: 1
43. E-Sign is a federal law that requires written signatures for electronic contracts to be valid.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
44. Under the UCC, a contract for the sale of a car for $700 need not have a record of the contract to be enforceable.
a. True
b. False
ANSWER: False
POINTS: 1
45. A contract for termite extermination at a home would be governed by the UCC.
a. True
b. False
ANSWER: False
POINTS: 1
46. “Point and click” is not sufficient for acceptance under UETA.
a. True
b. False
ANSWER: False
POINTS: 1
47. A three-year warranty on an oven need be evidenced by a record to be enforceable.
a. True
b. False
ANSWER: False
POINTS: 1
48. A contract for the sale of a $12.2 million Lear jet would be governed by common law because a document of title is
involved.
a. True
b. False
ANSWER: False
POINTS: 1
49. “Would you be interested in selling your Prius for $21,000?”, is not an offer.
a. True
b. False
ANSWER: True
POINTS: 1
TOPICS: Offer
50. Which of the following contract subject matters would not be covered under the UCC?
a. a contract for the sale of a mobile home from the manufacturer
b. a contract for the sale of a mobile home from a previous owner
c. a contract for the sale of a mobile home plus its lot
d. All of the above are under the UCC.
ANSWER: c
POINTS: 1
51. Which of the following is not required for a valid UCC offer?
a. quantity
b. payment terms
c. subject matter
d. both b and c
e. a, b, and c
ANSWER: b
POINTS: 1
TOPICS: Offer
52. Which of the following is effective upon mailing or dispatch?

a. offers
b. rejections
c. counteroffers
d. revocation
e. none of the above
ANSWER: e
POINTS: 1
TOPICS: Offer
53. To be valid, a UCC merchant's firm offer:
a. must be supported by consideration.
b. must be evidenced by a record.
c. must be signed by both parties.
d. all of the above
ANSWER: b
POINTS: 1
TOPICS: Offer
54. Under both UCC and common law, a counteroffer:

a. must be accepted by the original offeror.
b. is effective upon mailing or dispatch.
c. is also a rejection.
d. none of the above
ANSWER: c
POINTS: 1
TOPICS: Offer
55. Under the UCC and between nonmerchants, additional terms in acceptance:
a. constitute a counteroffer.
b. are part of the contract.
c. result in rejection or the original offer.
ANSWER: d
POINTS: 1
56. Under the UCC and between merchants, additional terms in acceptance:
a. are part of the contract unless they are material.
b. are part of the contract unless the offer was limited.
c. result in rejection of the original offer.
ANSWER: a
POINTS: 1
57. The mailbox rule applies to:

a. all acceptances.
b. acceptances communicated through the offer's stipulated means.
c. acceptances under UCC only.
d. revocations and acceptances.
ANSWER: b
POINTS: 1
58. Which is not a requirement for a merchant's confirmation memorandum?

a. evidenced by a record
b. signed by both parties
c. underlying oral agreement
ANSWER: b
POINTS: 1
TOPICS: Formation of Contracts
59. Which of the following contracts would not have to be in writing under the old UCC?
a. a contract for the sale of an easement for $450
b. a contract for consulting services for $10,000 over the next 90 days
c. a three-year advertising contract
d. a contract for the sale of furniture for $700
e. All of the above must be in writing.
ANSWER: b
POINTS: 1
DIFFICULTY: Challenging
NATIONAL STANDARDS: United States - BUSPROG: Reflective Thinking
STATE STANDARDS: United States - OH - AICPA: BB-Critical Thinking
60. The following series of events occurred between Bull's Meat Market and The Butcher:
May 1 - The Butcher faxes Bull's and offers to buy 200 lbs. of T-bone steak at $3.29 per lb.
May 2 - Bull's faxes back: "Price is okay. Payment prior to delivery."
Bull's and The Butcher:
a. have a contract on May 2 with the payment term.
b. have a contract on May 2 without the payment term.
c. do not have a contract.
ANSWER: a
POINTS: 1
61. Jane Linden is negotiating with James Paul to buy his 1987 Toyota MR5. The following excerpts from letters have
occurred so far:
Jane: "I would be interested in purchasing your MR5."
James: "I am thinking of selling my MR5."
Jane: "I am considering selling my diamond tennis bracelet to buy your MR5."
Which of the following statements is true?
a. James and Jane have a contract to sell the MR5.
b. James and Jane do not have a contract to sell the MR5.
ANSWER: b
POINTS: 1
62. John Freeden is negotiating with Bill Murray to buy Bill's mountain bicycle. The following conversation has taken
place:
John: "I will buy your mountain bike for $325.00."
Bill: "I couldn't sell it for less than $375.00."
John: "I'll take it for $375.00."
a. Bill and John have a contract for the sale of the bike at $375.00.
b. Bill and John have a contract for the sale of the bike at $325.00.
c. Bill and John do not have a contract.
ANSWER: c
POINTS: 1
63. Jerry Montray is negotiating with Pamela Barnes for the purchase of her mountain bike. The following conversation
has taken place:
Jerry: "I will buy your mountain bike for $375.00."
Pamela: "I will sell it to you."
Jerry: "Good. The tire pump is included."
a. Jerry and Pamela have a contract for the bike at $375.00.
b. Jerry and Pamela do not have a contract for the bike at $375.00.
c. Jerry and Pamela have a contract for the bike at $375.00 with the tire pump.
ANSWER: a
POINTS: 1
64. Which of the following is not a risk associated with international contracting?
a. Currency exchange rates
b. Transportation costs
c. Fee collection
d. None of the above
ANSWER: d
POINTS: 1
TOPICS: Issues in Formation of International Contracts
65. Ann Frazer has just purchased a new Maserati. Ann will be borrowing the money from her bank. Ann signed the
contract at 8:00 PM at the dealership and her bank will not be open until 10:00 AM the following day. Ann:
a. has a contract regardless of whether her bank approves her loan.
b. has made a conditional acceptance and has no contract.
c. will be excused from her contract if the bank does not approve her loan.
ANSWER: c
POINTS: 1
66. The language "I offer to sell you my 1974 White Ford Torino" is:
a. a valid offer.
b. not a valid offer because it lacks a definite price.
c. not a valid offer because there are no terms for payment.
d. not a valid offer because it is oral.
ANSWER: a
POINTS: 1
TOPICS: Offer
67. Day 1: Mike sends Tina a letter offer to sell his fish tank to her for $125.
Day 2: Tina faxes Mike an acceptance.
Day 2: Mike receives Tina's fax.
Day 3: Mike calls Tina to revoke his offer.
Mike and Tina:
a. do not have a contract since Tina used the wrong means of acceptance.
b. do not have a contract because Mike revoked his offer before Tina accepted properly.
c. have a contract as of the receipt of the fax.
d. have a contract as of when the fax was sent.
ANSWER: d
POINTS: 1
68. Walt's Pool World's fax to Pat's Pumps: "I'll take 10 4 hp pool pumps @ $175 each."
Pat's Pumps' return fax: "Ok. Will deliver tomorrow AM."
Pat and Walt:
a. do not have a contract because the faxes will not satisfy the statute of frauds.
b. do not have a contract because of the mirror image rule.
c. had a contract when Pat's fax was sent.
d. had a contract when Pat's fax was received.
ANSWER: c
POINTS: 1
69. Which of the following contract subject matters must be evidenced by a writing to be enforceable under the statute
of frauds?
a. a contract for the sale of an easement for $75
b. a contract for the sale of a computer monitor for $220
c. a contract for consulting for 6 months @ $10,000 per month plus expenses
d. All of the above must be in writing.
ANSWER: a
POINTS: 1
70. Jane: "I'll pay you $50 if you will clean my windows."
Al: "I'll do it for $75."
Jane: "$65 and it's a deal."
Al: "No way."
Jane: "Too late. We have a contract."
a. Jane is correct, there is a contract.
b. There is no contract.
c. There is a contract to clean the windows for $65.
d. There is a contract to clean the windows for $75.
ANSWER: b
POINTS: 1
71. Which of the following contracts must be in writing to be enforceable?

a. A contract for the sale of an easement for $250.
b. A contract for the sale of a bike for $175.
c. A six-month marketing consulting contract.
d. All of the above must be in writing to be enforceable.
ANSWER: a
POINTS: 1
72. Abe and Gabriel entered into a contract for Abe to furnish landscaping services for Gabriel's office complex. The
contract provides the fee will be $75 per month. At the time Gabriel signs the agreement, the two discuss the fact
that the services required in the winter will be less and the fee will be reduced to $50 per month. Abe adds as
Gabriel is signing, "I just forgot to put that sliding scale in this contract. Don't worry - I'll take care of it because we
understand each other." Gabriel:
a. will be permitted to introduce evidence about the winter fee reduction.
b. will only need to pay $50 during the winter months.
c. will pay $75 per month every month because of parol evidence.
ANSWER: c
POINTS: 1
73. Andy: "This is to confirm our telephone conversation of earlier today. 200 lbs. of T-bone at $2.89 per pound."
Barb: "Yes, but that's 100 pounds at $2.99."
Andy: "Too late, we already reached agreement by phone."
Barb: "Too bad, it wasn't in writing."
a. Barb is incorrect. The phone conversation was a contract.
b. Barb is correct. The agreement must be in writing to be enforceable.
c. Andy can enforce the agreement with the parol evidence rule.
ANSWER: b
POINTS: 1
74. Day 1: A wires an offer to B
Day 2: B receives the offer
Day 3: B phones an acceptance
A states, "Too late. I changed my mind."
a. A and B do not have a contract
b. A and B have a contract under common law only
c. A and B have a contract
ANSWER: d
POINTS: 1
75. Melanie: "I'll buy that armoire for $775."

Judith: "It's not for sale."
Melanie: "How about $875?"
Judith: "I don't know. It's been in my family for 130 years."
Melanie: "How about $1000?"
Judith: "I'll think about it."
a. There is an option contract.
b. There is no contract.
c. There is a reliance case.
d. There is a quasi contract.
ANSWER: b
POINTS: 1
76. Which of the following contracts would not be governed by the UCC?
a. a contract for dentures
b. a contract for the purchase of an Arabian horse
c. a contract for the purchase of an oil painting for $550
d. a contract for the purchase of an ATR jet
e. All of the above are governed by the UCC.
ANSWER: a
POINTS: 1
77. Which of these is an example of a bank’s commitment to pay?

a. Bill of lading
b. Fee arbitration agreement
c. Letter of credit
d. A warrant
ANSWER: c
POINTS: 1
TOPICS: Payment Issues in International Contracts
78. John: "I will sell you my laptop computer for $330."
Mary: "Will you include the carrying case"?
John: "Sold."
a. There is a contract for the sale of the computer with the carrying case.
b. There is a contract for the sale of the computer but the carrying case is not included.
c. There is no contract for the sale of the laptop computer.
d. There is a contract but it is unenforceable because it must be in writing.
ANSWER: c
POINTS: 1
79. Alpha Enterprises sent an offer to Omega Enterprises. The offer read as follows: AVAILABLE FOR
IMMEDIATE SHIPMENT: 600 WIRELESS NOKIA PHONES - MODEL HCG5321 (THE PHONE FROM
"CHARLIE'S ANGELS"). PRICE IS $10 EACH. 30 DAYS, SAME AS CASH. ALL WARRANTIES IN
EFFECT. THIS OFFER EXPIRES ON TUESDAY, MARCH 15, 2004. Omega sent the following letter in
response on March 14, 2002, via overnight delivery: HAPPY TO ACCEPT YOUR OFFER ON THE NOKIA
PHONES. SHIP IMMEDIATELY. There was a major snowstorm that hit the east coast on March 14, 2004, and
Omega's letter did not arrive at Alpha's headquarters until March 18, 2004. Alpha had sold the phones to another
company. Omega demanded the 600 phones for $10 each claiming that it had accepted the offer in time.
a. Omega is correct; it had valid and timely acceptance and had a contract.
b. Omega is incorrect; the acceptance must arrive for it to be effective.
c. Omega is incorrect; the offeree assumes the risk of the delivery means chosen.
d. Omega is correct, but any damages must be recovered from the overnight shipping company.
ANSWER: a
POINTS: 1
80. An ad in a newspaper reads: "AVAILABLE TODAY ONLY. FRIENDLY'S APPLIANCES. CLEARANCE

SALE FOR ALL FLOOR ITEMS. 75% OFF RETAIL PRICES." Joan Ludwig arrived at Friendly's about one
hour after it opened and there were no appliances left. The issues in the situation are governed by:
a. The Uniform Commercial Code
b. UETA
c. common law
d. restatement of contracts
ANSWER: a
POINTS: 1
81. With respect to the facts in number 80, the newspaper ad:
a. is an offer.
b. is not an offer.
c. is a merchant's firm offer.
d. cannot be revoked.
ANSWER: b
POINTS: 1
TOPICS: Offer
82. With respect to the fact pattern in #80:

a. Friendly's has breached a contract and owes damages to Joan.
b. There is no breach of contract.
c. Joan has no rights of recovery because the contract was required to be in writing.
d. There was no contract, but Joan can recover on the basis of quasi contract.
ANSWER: b
POINTS: 1
TOPICS: Offer
83. Which of the following eliminates the effect of the mailbox rule?
a. The UCC eliminates the mailbox rule.
b. Common law eliminates the mailbox rule.
c. An offer that includes, "Acceptance is effective upon receipt only."
d. Any attempt to eliminate the mailbox rule is void.
ANSWER: c
POINTS: 1
84. Day 1 - School teacher sends superintendent letter of resignation.
Day 4 - Superintendent mails letter accepting resignation.
Day 5 - School teacher hand delivers letter withdrawing resignation.
Day 6 - Teacher receives superintendent’s letter.
a. The above negotiations are governed by the UCC.
b. The resignation was accepted and the withdrawal is too late.
c. both a and b
d. The resignation offer was revoked.
ANSWER: b
POINTS: 1
85. Buyer on fax: “Will take house for $587,500 if front lawn is fixed.”
Seller on fax in response: “Price is $589,000 and no front lawn.”
Buyer on fax in response: “$588,000 plus the front lawn.”
Seller on fax in response: $589,000 plus the front lawn.”
a. There is a contract for the sale of the house at $588,000 plus the lawn.
b. There is a contract for the sale of the house at $589,000 plus the lawn.
c. There is no contract.
ANSWER: c
POINTS: 1
86. Which of the following is/are governed by the UCC?

a. a contract for the sale of water
b. a contract for the sale of extracted oil
c. a contract for the sale of barges
d. All of the above are governed by the UCC.
ANSWER: d
POINTS: 1
87. Which of these can be a valid contract agreement under ESIGN?
a. A fax
b. A PDF file
c. An online click or check on an “I accept” button
d. All of the above
ANSWER: d
POINTS: 1
88. "Point and click" refers to:

a. the right of the FBI to search web sites.
b. the formation of contracts via the Internet.
c. the registration of domain names under ICANN.
d. pornographic web sites.
ANSWER: b
POINTS: 1
89. E-Sign:
a. applies only to interstate transactions.
b. must still be adopted by the states to be effective.
c. does not apply to contracts for the sale of goods.
d. applies in all 50 states.
ANSWER: d
POINTS: 1
90. The Uniform Electronic Transaction Act (UETA):
a. has been adopted in all 50 states.
b. has been declared unconstitutional.
c. is the same as E-sign.
ANSWER: d
POINTS: 1
91. The following exchange took place in a series of e-mails between Mitchell Raines and Leslie Carroll:
Mitchell: I am looking at the Trek bike advertised on your website for $650.00. Would you take $600.00?
Leslie: I would take $600 if there were no delivery required.
Mitchell: Well, I have to have it delivered because you are two states away.
Leslie: Well, then if there has to be delivery, I could do it for $630.00.
Mitchell: Is that cash?
Leslie: Yes.
a. Mitchell and Leslie have a contract for the sale and purchase of the bike for $630.00 with delivery.
b. Mitchell and Leslie have a contract for the sale and purchase of the bike for $630.00 without delivery.
c. Mitchell and Leslie have an offer on the table of $600 with no delivery.
d. Mitchell and Leslie do not have a contract.
ANSWER: d
POINTS: 1
92. Julia Pitt runs a boutique that specializes in luggage and travel items. Julia contacts Tumi luggage about carrying its
line of messenger satchels. The Tumi representative tells Julia that Tumi would be happy to sell her 100 Tumi Black
Messenger bags for $318 each. Julia is happy with the price and asks Tumi to send the bags. The Tumi
representative then faxes a confirmation of the shipment of the 100 bags at $318 each. Julia receives the fax.
When the bags arrive, Julia contacts Tumi and says there is a business downturn and that she does not want the
bags and that there was no contract anyway.
a. Julia is correct; the contract requires some type of authentication from Julia to be enforceable.
b. Julia is correct; the contract required more than a fax to have a sufficient record.
c. Julia is incorrect; she and Tumi have a valid and enforceable contract.
d. both a and b
ANSWER: c
POINTS: 1
93. Fred Twain sends the following e-mail to Ralph Barnes: “Will sell you my 2006 Audi A4 for $23,500, will carry or
take cash. This offer to remain open until November 11, 2007.” Ralph responds, “I know how much you love that
car. I’ll think about it.” On November 12, 2007, Ralph e-mails Fred and writes, “Fred, I am ready to buy your car.”
Fred responds, “Ralph, I sold the car this morning because I didn’t hear from you.”
a. Fred has breached a contract because Ralph accepted.
b. Fred was required to notify Ralph before he sold the car to someone else.
c. Ralph no longer had the power of acceptance.
d. both a and b
ANSWER: c
POINTS: 1
94. On Monday, Sam's Computer Company wires Bob's Computer Mart, "I have two IBM XT's for sale for $1700
each. You pay cost of shipping." Bob received the offer on Monday afternoon and wired back, "You have a deal.
30 days same as cash." On Tuesday morning Sam called to revoke the offer. On Tuesday afternoon Sam received
the wire. Sam says there is no contract and Bob says there is. Who is correct?
ANSWER: Mailbox rule applies. There was a contract on Monday afternoon when the wire was
sent. Between the two merchants, the "30 days" additional terms will become part of
the contract.
POINTS: 1
95. List the types of contracts required to be in writing.
ANSWER: UCC - goods $500 or more; real estate; promises to pay the debt of another; contracts
that cannot be performed in one year.
POINTS: 1
96. H2O Plumbing has been working on a residential subdivision project for Paradise Builders. H2O agreed to do all
plumbing work on each of the houses for a fee of $5200 per house. H2O has reviewed the market and decided that
most plumbers are getting between $5500 and $6000 for houses of comparable size. H2O has done the initial work
on all of the houses and has told Paradise it will stop work unless the price is increased to $5500 per house.
Paradise is on a tight schedule with its construction lender and with home buyers and succumbs to the demand.
Later, when the houses are constructed, Paradise refuses to pay any more than $5200 per house. Explain H2O's
rights to them.
ANSWER: H2O cannot get more money for what it was already obligated to do - it could only get
$5500 if it agreed to do more on each house. Further, H2O used duress to get
Paradise to agree to the transaction. There are at least two contract defenses - lack of
consideration and duress - that could be used by Paradise.
POINTS: 1
TOPICS: Consideration
97. Trevor Jones accepted a summer internship with Hailey & Thomas, a management consulting firm. The
negotiations and offer were all oral. Hailey & Thomas' managing partner did send a letter with the following
language:
Welcome to Hailey & Thomas. We are looking forward to working with you. When you arrive in New York,
please call me so that we may help you locate lodging for the summer.
Discuss whether Trevor has a contract and if he has sufficient proof of its existence. Also discuss whether the
agreement needed to be in writing.
ANSWER: The agreement did not need to be in writing since it was a contract for less than one
year. Even if the contract did need to be in writing, Trevor probably has sufficient
evidence with the letter from the managing partner.
POINTS: 1
98. Barnes & Noble faxes to Woodchip Publishing Company on May 1, 2002 the following:
Please ship immediately six copies of NOBODY FIXES REAL CARROT STICKS ANYMORE.
Price: $6.00 Shipping: $2/book
Woodchip ships six books with an invoice as follows:
Six NOBODY FIXES REAL CARROT STICKS ANYMORE @ $6.00 = $36.00
Shipping and Handling = $6.00
Is there a contract?
ANSWER: Yes, under the UCC, the shipment was acceptance. Woodchip gave a break on
shipping which it is free to do.
POINTS: 1
99. In #98 above, suppose that the fax from Barnes & Noble read:
Please ship immediately via priority mail - 10 Copies of NOBODY FIXES REAL CARROT STICKS
ANYMORE.
Price: $6.00 per book Shipping: $3.95 total
Woodchip ships the books at the $6 price but ships them via two-day UPS at a price of $5.95. Is there a contract?
ANSWER: You have two merchants and Woodchip accepted by shipping, but used a different
carrier that made a difference in price. It was an acceptance and breach at the same
time because Barnes & Noble specified shipping and Woodchip used a different
means for shipment. At a minimum, Barnes & Noble is permitted to not pay the extra
shipping even if it chooses to accept the books. The acceptance on the different
shipping terms is really not an acceptance, but a counteroffer that Barnes & Noble is
free to accept or reject.
POINTS: 1
100. Name the statutes that affect contract formation in cyberspace.
ANSWER: E-sign - The Electronic Signatures in Global and National Commerce Act
Uniform Electronic Transactions Act (UETA)
Uniform Computer Information Transactions Act
POINTS: 1
101. Discuss whether a contract to solicit names of potential subscribers using pop-up Internet ads for a newspaper is
considered goods or services under the UCC.
ANSWER: According to Wall Street Network, Ltd. v. New York Times Company, such a list of
names is a service under the UCC and not a good. While the end result is a list of
names - potential subscribers - the process of obtaining those names is a service. The
essence of the contract calls for services not the sale of goods.
POINTS: 1
102. The Equal Credit Opportunity Act was passed to ensure equal credit opportunity regardless of past credit history.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
TOPICS: Consumer Credit Contracts
103. A negative credit decision cannot be based on an applicant's plans for having children.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
104. The Truth-in-Lending Act applies to all credit transactions.

a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
105. The solicitation of credit card customers is not regulated by the federal government.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
106. The liability limitation for credit card holders who report a loss or theft is $50.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
TOPICS: Controlling Credit Card Contracts
107. A credit card applicant can be solicited without disclosure of the card's terms.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
108. Under CARD, credit terms must last for at least two years.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
109. Leases of consumer goods are not subject to disclosure requirements.

a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
110. The Equal Credit Opportunity Act applies only to consumer transactions.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
TOPICS: Discrimination in Credit Contracts
111. A spouse cannot apply for credit without the signature of his/her spouse.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
112. Asking a couple's plans for having children is a violation of the ECOA.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
113. Requiring credit references for members of one race but not for another is a violation of the ECOA.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
114. Asking that all sources of income be revealed on a credit application is prohibited by the ECOA.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
115. The TILA provisions do not apply to commercial loans.

a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
TOPICS: Credit Disclosures
116. The subprime lending market uses title loans.

a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
TOPICS: Subprime or Predatory Lending
117. Predatory lending involves high interest rates and title loans.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
118. The Fair Credit and Charge Card Disclosure Act prohibits issuing credit cards without the consumer’s consent.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
119. The subprime lending market is also called the predatory lending market.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
120. Many states have imposed additional steps for making loans in the subprime lending market.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
121. The subprime lending market collapse in 2007 led to other credit crunches and business impacts.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
122. An applicant for credit need not disclose spousal support income if he is not relying on it as an income source.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
123. The spouse of a credit applicant must disclose his or her credit information if the credit application is for the
applicant’s business operations.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
124. A credit application that asks for criminal convictions from the last five years violates the ECOA.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
125. The Equal Credit Opportunity Act prohibits which of the following?
a. Basing the credit decision on the receipt of public assistance income.
b. Basing the credit decision on a bankruptcy of five years ago.
c. Basing the credit decision on the fact that the applicant was in prison for a felony three years ago.
d. Basing the credit decision on unemployment.
ANSWER: a
POINTS: 1
NATIONAL STANDARDS: United States - BUSPROG: Diversity
126. Which of the following questions on a credit application would be a violation of ECOA?
a. asking about felony convictions
b. asking address and length of residence
c. asking whether the applicant is pregnant
d. All of the above are violations.
ANSWER: c
POINTS: 1
127. The maximum liability for a credit card holder whose card is lost or stolen is:
a. $50.
b. $50 if the cardholder notifies the creditor.
c. $0.
ANSWER: b
POINTS: 1
128. Which of the following is not required to be disclosed in the solicitation of a credit card customer?
a. fees for issuing the card
b. what your credit limit will be
c. APR for the card
d. All of the above must be disclosed.
ANSWER: b
POINTS: 1
129. Assume there is a credit contract for the purchase of the following items. Which one is not covered by TILA
disclosures?
a. a microwave for use in a CPA office
b. a computer for a home
c. a car by an employee that the employee will use to travel to sales calls
d. All of the above are covered.
ANSWER: a
POINTS: 1
130. Janet Kennedy has received a letter in the mail from BISA International, a credit card firm. The letter describes the
card as follows:
"This card is yours for only a small annual fee that is billed to your account. There is an annual percentage rate
finance charge of 16.5%. There may be other charges for some transactions. There are no late fees, but there will
be a charge for going over your credit limit."

a. The letter includes all the necessary disclosures for credit card solicitation under Regulation Z.
b. The finance charge is usurious.
c. The letter is missing several items of disclosure required under Regulation Z for credit card solicitation.
ANSWER: c
POINTS: 1
KEYWORDS: Bloom's: Analysis
131. Which of the following questions on a credit application violates the ECOA?
a. "List your place of employment."
b. "Other sources of income - if you wish to have them considered in your credit evaluation."
c. "Length of time in current residence."
d. "Monthly child support income."
ANSWER: d
POINTS: 1
KEYWORDS: Bloom's: Analysis
132. Under CARD, the terms of the credit card must be:
a. sent to the customers.
b. printed on paper.
c. posted on the Internet.
d. all of the above.
ANSWER: d
POINTS: 1
133. Stan James carelessly left his wallet in the restroom of a gas station while on a business trip. He did not realize his
wallet was gone until eight hours later when he went to check into his hotel. Stan called the credit card companies
immediately, only to learn that the thief had charged $2000 on his American Express card, $450 on his MasterCard,
and $75 on his gas credit card. Stan James' maximum liability on the cards is:
a. $0.
b. $50 per card.
c. $50.
ANSWER: b
POINTS: 1
134. Which of the following questions is prohibited under the ECOA?

a. "Will your husband approve of you getting this credit card?"
b. "Are you now pregnant or are you planning to be?"
c. "We don't count public assistance income."
d. All of the above are ECOA violations.
ANSWER: d
POINTS: 1
135. Which of the following is not a violation of the ECOA?
a. requiring a husband's signature when his wife applies for a credit card
b. requiring disclosure of pregnancy
c. requiring disclosure of length of time at current job
d. requiring disclosure of marital status
e. All of the above are violations of the ECOA.
ANSWER: c
POINTS: 1
136. Which of the following question(s) on a credit application would be a violation of the Equal Credit Opportunity Act?
a. “Do you plan on getting pregnant within the next two years?”
b. “Have you ever declared bankruptcy?”
c. “Have you ever been convicted of a crime?”
d. All of the above are violations.
ANSWER: a
POINTS: 1
137. Under CARD, colleges and universities must:

a. disclose financial relationships with the credit card companies.
b. provide debt counseling for students.
c. limit locations for student solicitation for credit cards.
d. do all of these.
ANSWER: d
POINTS: 1
138. List the federal laws regulating credit contracts and give a brief description of each.
ANSWER: ECOA - prohibits race, color, sex, and national origin from being used as the basis for
a decision. TILA - full disclosure provisions of Consumer Credit Protection Act. Fair
Credit Billing Act - regular disclosures; full disclosures of open-end credit. FCRA -
disclosure of reports and right to correct. Consumer Leasing Act - disclosure in
leasing goods. FDCPA - regulates collection tactics.
POINTS: 1
139. Discuss what colleges and universities must do under CARD for their students.
ANSWER: CARD requires the schools to limit the locations of solicitation of credit cards for
students, to disclose all financial relationships with the credit card companies, and to
provide debt counseling for students. These items will help protect and educate the
students about the uses and misuses of credit cards.
POINTS: 1
140. What additional disclosures must be made in credit transactions in which the debtor's home will serve as security
for the loan?
ANSWER: Under the amendments to TILA covering home mortgages, the loan documents must
make clear the fact that default could lead to foreclosure and loss of the home.
POINTS: 1
141. Using what you have learned about consumer credit, develop a credit application that would comply with all federal
statutes and regulations.
ANSWER: Cannot ask for extra sources of income unless the consumer wants to reveal them.
Cannot ask about marriage, pregnancy, welfare income. Cannot discriminate on the
basis of race, gender, national origin.
POINTS: 1
KEYWORDS: Bloom's: Synthesis
142. Which of the following contracts would have to have some form or writing or record to be enforced?
a. A contract for the sale of a painting for $1,000.
b. A contract for employment for nine months.
c. A contract for advertising a house for sale for $50.
d. All of the above contracts would need to be in writing to be enforceable.
ANSWER: a
POINTS: 1
Evaluate the following facts and then answer the next two questions.
Day 1 S sends a letter to B with the following: “I will sell you my Play Station 3 for $150 when I get my new
Play Station.”
Day 2 B receives the letter and responds, “I will take the Play Station for $150.”
143. S has made a valid offer to B.

a. True
b. False
ANSWER: False
POINTS: 1
TOPICS: Offer
144. The communication between S and B must be evidenced by a record if any rights related to the exchange can be
enforced.
a. True
b. False
ANSWER: False
POINTS: 1
TOPICS: Offer
Day 1 S sends a letter to B with the following: “I will sell you my Play Station 3 for $150.”
Day 2 B receives the letter and responds, “I will take the Play Station for $150, but include 3 games.”
145. S has made a valid offer to B.

a. True
b. False
ANSWER: True
POINTS: 1
TOPICS: Offer
146. B has made a valid acceptance.

a. True
b. False
ANSWER: False
POINTS: 1
Day 1 S sends a letter to B with the following: “I will sell you my Play Station 3 for $150.”
Day 2 B receives the letter and responds by sending a letter with the following, “I will take the Play Station for
$150.”
Day 2 After B sends the letter, S sends an e-mail to B that reads, “Forget it. I sold the Play Station to someone
else.”
147. S has made a valid revocation to B.

a. True
b. False
ANSWER: True
POINTS: 1
TOPICS: Offer
148. B has made a valid acceptance.

a. True
b. False
ANSWER: False
POINTS: 1
149. Which of the following is not part of the CARD provisions on transfer of credit card balances?
a. Limits on how quickly credit terms can be changed following the transfer.
b. Additional disclosures on transfer fees.
c. Limits on transfer fees.
d. Prohibitions on additional transfers by the card holder.
ANSWER: d
POINTS: 1
150. Stamps.com offers at-home postage and mailing for a monthly fee. Customers are able to carry a balance on their
accounts that allows them to mail packages and letters as long as there is a balance in their account. Stamps.com
has a button on its program that carries this logo, “To purchase postage, click here.” Following that click, another
window pops up that reads, “You are about to purchase postage. Once you click 'Okay' below, you cannot change
this transaction." Why does Stamps.com have the second pop-up button?
a. The pop-up button is simply a courtesy for its customers.
b. The pop-up button is necessary to show acceptance of the terms.
c. The pop-up button is required under the UCC.
d. The pop-up button is required under common law.
ANSWER: b
POINTS: 1
151. A bilateral contract is one in which one side promises to perform in exchange for the other side's actions.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
152. Void and voidable contracts are one and the same.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy

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Business Its Legal Ethical and Global Environment 10th Edition Jennings Test Bank

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1. Contracts for the sale of real property are governed by the Uniform Commercial Code.

2. The Restatement of Contracts is another name for the UCC.

4. An offer is effectively communicated upon mailing or dispatch.

6. A merchant's firm offer requires consideration to be valid.

7. Options require consideration to be valid.

8. Under common law, a counteroffer is also a rejection.

11. Contracts for services are governed by the UCC.

14. Contracts for the sale of land must be in writing to be enforceable.

17. Implied contracts are unenforceable.

18. Quasi contracts are implied-in-law contracts.

23. "I'm thinking of selling my CD player," is an example of offer language.

27. The CISG follows the mirror image rule in formation.

29. Under the CISG, acceptance is effective only upon receipt.

31. An executory contract is one that is fully performed.

33. A contract must be in a formal writing to satisfy the statute of frauds.

52. Which of the following is effective upon mailing or dispatch?

54. Under both UCC and common law, a counteroffer:

57. The mailbox rule applies to:

58. Which is not a requirement for a merchant's confirmation memorandum?

71. Which of the following contracts must be in writing to be enforceable?

75. Melanie: "I'll buy that armoire for $775."

77. Which of these is an example of a bank’s commitment to pay?

80. An ad in a newspaper reads: "AVAILABLE TODAY ONLY. FRIENDLY'S APPLIANCES. CLEARANCE

82. With respect to the fact pattern in #80:

86. Which of the following is/are governed by the UCC?

88. "Point and click" refers to:

95. List the types of contracts required to be in writing.

Price: $6.00 Shipping: $2/book

Woodchip ships six books with an invoice as follows:

Six NOBODY FIXES REAL CARROT STICKS ANYMORE @ $6.00 = $36.00

Shipping and Handling = $6.00

Price: $6.00 per book Shipping: $3.95 total

100. Name the statutes that affect contract formation in cyberspace.

104. The Truth-in-Lending Act applies to all credit transactions.

109. Leases of consumer goods are not subject to disclosure requirements.

115. The TILA provisions do not apply to commercial loans.

116. The subprime lending market uses title loans.

Which of the following statements is true?

134. Which of the following questions is prohibited under the ECOA?

137. Under CARD, colleges and universities must:

143. S has made a valid offer to B.

145. S has made a valid offer to B.

146. B has made a valid acceptance.

147. S has made a valid revocation to B.

148. B has made a valid acceptance.

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