Chapter 9 Practice Exam

Chapter 9 Practice Exam Matching Questions Match the following terms with their definitions: (5) B. Mirror image rule. (3) C. Consideration (1) D. Liquidated debt. 1. A debt in which the amount is undisputed. 3. Bargaining that leads to an exchange between the parties. 5. A common law principle requiring the acceptance to be on exactly the terms of the offer. True/False Questions Circle true or false: 1. T F To be enforceable, all contracts must be in writing. 3. T F If an offer demands a reply within a stated period, the absence of a reply indicates acceptance. 5. T F As long as one party gives consideration, there is a binding contract. Multiple-Choice Questions 7. Raul has finished the computer installation he promised to perform for Tanya, and she has paid him in full. This is (a) An express contract. (b) An implied contract. (c) An executed contract. (d) A bilateral contract. (e) No contract. 9. On Monday night, Louise is talking on her cell phone with Bill. “I’m desperate for a manager in my store,” says Louise. “I’ll pay you $45,000 per year, if you can start tomorrow morning. What do you say?” “It’s a deal,” says Bill. “I can start tomorrow at 8 a.m. I’ll take $45,000 and I also want 10 percent of any profits you make above last year’s.” Just then Bill loses his cell phone signal. The next morning he shows up at the store, but Louise refuses to hire him. Bill sues. Bill will (a) Win, because there was a valid offer and acceptance. (b) Win, based on promissory estoppel. (c) Lose, because he rejected the offer. (d) Lose, because the agreement was not put in writing. (e) Lose, because Louise revoked the offer.

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Short-Answer Questions 11. Interactive Data Corp. hired Daniel Foley as an assistant product manager at a starting salary of $18,500. Over the next six years Interactive steadily promoted Foley until he became Los Angeles branch manager at a salary of $56,116. Interactive’s officers repeatedly told Foley that he would have his job as long as his performance was adequate. In addition, Interactive distributed an employee handbook that specified “termination guidelines,” including a mandatory seven-step, pretermination procedure. Two years later Foley learned that his recently hired supervisor, Robert Kuhne, was under investigation by the FBI for embezzlement at his previous job. Foley reported this to Interactive officers. Shortly thereafter, Interactive fired Foley. He sued, claiming that Interactive could only fire him for good cause, after the seven-step procedure. What kind of a claim is he making? Should he succeed? Answer: Foley is arguing that he has an implied contract with Interactive based on the informal discussions concerning his future and the employee handbook. His argument convinced the California Supreme Court. Foley v. Interactive Data Corp., 47 Cal. 3d 654, 765 P.2d 373 (1988). Foley had no express contract for any period, and thus he started work as an employee-at-will. However, the company’s repeated assurances, and the handbook, created an implied contract. 13. Arnold owned a Pontiac dealership and wanted to expand by obtaining a Buick outlet. He spoke with Patricia Roberts and other Buick executives on several occasions. He now claims that those discussions resulted in an oral contract that requires Buick to grant him a franchise, but the company disagrees. His strongest evidence of a contract is the fact that Roberts gave him forms on which to order Buicks. Roberts answered that it was her standard practice to give such forms to prospective dealers, so that if the franchise were approved, car orders could be processed quickly. Is there a contract? Answer: The order forms are neither an offer nor an acceptance. Arnold has offered no evidence that the parties agreed on price, date of performance, or any other key terms. There is no contract. 15. ROLE REVERSAL: Write a multiple-choice question focusing on UCC 2-207.