30 multiple choice legal questions. Easy $10

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Week 3 Chapter Questions

Student ______________________________

Chapter 8

1. Contracts are: 

___A. 

legally enforceable promises.

___B. 

always required to be written.

___C. 

a form of a circular.

___D. 

enforceable only in the supreme court.

___E. 

informal agreements.

2. A(n) _____ is an agreement containing mutual promises. 

___A. 

unilateral contract

___B. 

quasi-contract

___C. 

express-in-fact contract

___D. 

bilateral contract

___E. 

implied-in-fact contract

3. The courts enforce the concept of _____ to remedy situations of unjust enrichment. 

___A. 

illusory contracts

___B. 

implied-in-law (quasi) contracts

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___C. 

divisible contracts

___D. 

bilateral contracts

___E. 

unilateral contracts

4. The ultimate purpose of a contract is the creation of an agreement that courts will order parties to perform or to pay consequences for the failure of performance. When courts uphold the validity of such promises, the resulting agreement is a(n) "_____ contract." 

___A. 

absolute

___B. 

differentiated

___C. 

void

___D. 

relative

___E. 

enforceable

5. A(n) _____ contract is an agreement when one party has the right to withdraw from the promise made without incurring any legal liability. 

___A. 

executory

___B. 

voidable

___C. 

void

___D. 

implied-in-fact

___E. 

reciprocal

6. According to the mirror image rule, _____. 

___A. 

the acceptance must exactly match the offer

___B. 

to be enforceable, a contract must be accepted in writing by both the parties involved

___C. 

the acceptance of an offer involves changing the terms of offer or adding new terms

___D. 

terms of contract must be definite to be clear and enforceable

___E. 

the contract becomes enforceable by performing a requested act, not by making a promise

7. Valid consideration can include any promise to do something one has no obligation to do, refrain from doing something one has the right to do, or in the case of a unilateral contract, a performance when there is no obligation to do so. This is called as a(n) _____. 

___A. 

accord

___B. 

legal detriment

___C. 

release

___D. 

negotiation

___E. 

promissory estoppel

8. An important exception to the rule requiring consideration to support a promise is the doctrine of _____. This doctrine arises when a promisee justifiably relies on a promisor's promise to his or her economic injury. 

___A. 

firm offer

___B. 

consideration

___C. 

termination

___D. 

promissory estoppel

___E. 

accord and satisfaction

9. Which of the following terms refers to a person's ability to be bound by a contract? 

___A. 

Legality

___B. 

Capacity

___C. 

Usability

___D. 

Negotiability

___E. 

Measurability

10. Which of the following involves an intentional misstatement of a material fact that induces one to rely justifiably to his or her injury? 

___A. 

Duress

___B. 

Misrepresentation

___C. 

Undue influence

___D. 

Mutual mistake

___E. 

Fraud

Chapter 9

11. Which of the following is true in cases where only one party drafts the contracts, which contain terms that appear vague and ambiguous to the other party? 

___A. 

The court will give the terms the meaning as per trade usage.

___B. 

The court will reject the non-drafting party's attempt to reinterpret the terms after the contract has been signed.

___C. 

The court will declare the drafting party's behavior as a tort due to intentional ambiguity of terms.

___D. 

The court will interpret the terms as they mean in the common language.

___E. 

The court will interpret the ambiguous and vague terms against the party that drafts them.

12. Which of the following states that parties to a written contract may not introduce oral evidence to change written terms? 

___A. 

The statute of frauds

___B. 

Concurrent conditions

___C. 

The parol evidence rule

___D. 

Conditions subsequent

___E. 

Conditions precedent

13. Most of our everyday purchases involve: 

___A. 

implied concurrent conditions.

___B. 

express conditions precedent.

___C. 

express conditions subsequent.

___D. 

implied conditions precedent.

___E. 

implied conditions subsequent

14. _____ are court-awarded damages to put the plaintiff in the same position as if the contract had been performed.   

___A. 

Nominal damages

___B. 

Consequential damages

___C. 

Liquidated damages

___D. 

Compensatory damages

___E. 

Specific damages

15. Which of the following is true of liquidated damages? 

___A. 

A small amount is awarded by the court to the plaintiff for a breach of contract which causes no financial injury to the plaintiff.

___B. 

Damages awarded by the court arising from unusual losses, which the parties knew would result from breach of contract.

___C. 

Damages awarded by the court to put the plaintiff in the same position as if the contract had been performed.

___D. 

Damages specified in the contract, where real damages for breach of contract are likely to be uncertain.

___E. 

Courts will enforce these "liquidated" damages to penalize the defendant.

16. The purposeful reduction of damages, usually the responsibility of the nonbreaching party, is known as _____. 

___A. 

mitigation

___B. 

negotiation

___C. 

waiver

___D. 

release

___E. 

novation

17. Principals hire _____ to do tasks and represent them in transactions. 

___A. 

contractors

___B. 

agents

___C. 

third parties

___D. 

organizations

___E. 

suppliers

18. _____ can be inferred from the acts of an agent who holds a position of authority or who had actual authority in the previous situation. 

___A. 

Principal authority

___B. 

Legal authority

___C. 

Situational authority

___D. 

Implied authority

___E. 

Apparent authority

19. _____ occurs when a principal voluntarily decides to honor an agreement, which otherwise would not be binding due to an agent's lack of authority. 

___A. 

Novation

___B. 

Ratification

___C. 

Negotiation

___D. 

Release

___E. Waiver

20. An agent who causes harm to a third party may create legal liability owed by the principal to the third party. This liability is known as: 

___A. 

product liability

___B. 

contractual liability

___C. 

principal liability

___D. 

professional liability

___E. 

vicarious liability

Chapter 14

21. "Creation" means: 

___A. 

the legal steps required to form a particular business organization.

___B. 

the concept of a business.

___C. 

the intent to create a business.

___D. 

a paradigm shift in a business.

___E. 

the relation of the organization's existence to its owners.

22. In a(n) _____, the shareholders are taxed only on income distributed. 

___A. 

limited partnership

___B. 

corporation

___C. 

Limited liability company

___D. 

sole proprietorship

___E. 

S corporation

23. When one person, or a very few persons, own all the shares of stock in a corporation, it is considered a _____ organization. 

___A. 

publicly held

___B. 

narrowly held

___C. 

closely held

___D. 

tightly held

___E. 

minority held

24. When a court finds that the shareholders of a corporation are using the corporate structure to shield themselves from liability when acting for purely personal purposes, the court may disregard the corporate structure and impose personal liability on the shareholders treating them like partners. This is called:   

___A. 

cracking the corporate shell.

___B. 

piercing the corporate veil.

___C. 

breaking the corporate shield.

___D. 

breaching the corporate defense.

___E. 

rupturing the corporate law.

25. If a corporate entity is disregarded by officers or directors so that there is such a unity of ownership and interest that separateness of the corporation has ceased to exist, the corporate veil may be pierced based on the: 

___A. 

alter-ego theory.

___B. 

negligent conduct theory.

___C. 

corporate confusion theory.

___D. 

corporate envelopment theory.

___E. 

corporate doppelganger theory.

26. Which of the following is a taxable entity? 

___A. 

A partnership

___B. 

An S corporation

___C. 

A limited liability company

___D. 

A corporation

___E. 

A sole proprietorship

27. Which of the following is an activity that a limited partner may NOT engage in? 

___A. 

Acting as an agent of the partnership

___B. 

Approving an amendment to the partnerships' certificate

___C. 

Participating in management

___D. 

Inspecting any of the partnership's financial records

___E. 

Advising or consulting with a general partner

28. Which of the following is true about an S corporation? 

___A. 

It has the same legal characteristics as any other corporation except for the issue of taxation.

___B. 

It is the official designation for a corporation with 500 or less employees.

___C. 

It is the same as any other corporation except for management participation by stockholders.

___D. 

It is exactly the same as any other corporation.

___E. 

It need not file an information return with the IRS since it does not pay any taxes.

29. An LLC is created through filing the _____ with a state official, usually the secretary of state. 

___A. 

articles of confederation

___B. 

articles of incorporation

___C. 

articles of organization

___D. 

articles of association

___E. 

articles of integration

30. The owners of LLCs are called: 

___A. 

shareholders.

___B. 

partners.

___C. 

proprietors.

___D. 

members.

___E. 

directors.

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