Chp 14 Quiz - Statute of Frauds

1. Consumer Goods, Inc., and Delta Distribution, Inc., sign a written con­tract for a sale of goods. To be enforceable, this written contract must include

a. a correct title, such as “Purchase Order” or “Sales Invoice.”
b. a declaration of the subject matter.
c. a quantity term.
d. the names of the parties.

answer: C PAGE: 280 TYPE: N
2.National Data Corporation files a suit against Open Source, Inc., to en­force a written contract between the parties. Parol evi­dence will be admit­ted to prove

a. contemporaneous negotiations that vary the written contract..
b. fraud, misrepresentation, or mistake.
c. prior negotiations that vary the written contract.
d. any of the above.

answer: B PAGE: 281 TYPE: N


3. Tex, a resident of Texas, goes to Las Vegas and cashes two checks for $5,000. He loses all of his money, and stops payment on both checks. The casino keeps one of the checks, and sells the other to a collection service in Houston. Casino gambling is illegal in Texas. If both the casino and the collection agency sue Tex, who will he have to pay?
a. the collection agency
b. the casino
c. both A and B
d. none of the above
> b
EXPLANATION: The casino can sue in a Nevada court, where gambling will be deemed legal. Since the agency is from Texas, they will have to sue in a Texas court. The Texas court will not enforce the debt incurred for gambling purposes, as gambling is illegal in their jurisdiction.

4. Paul agrees to sell his clothing store to Michael and, as part of the sale, to execute a covenant not to compete promising not to open a similar store within 1000 miles for the next 20 years. A court reviewing the terms of the covenant would likely find that it is
a. unenforceable because all covenants not to compete are unreasonable restraints of trade.
b. Unreasonable as to geographical scope and duration.
c. Unreasonable with regard to duration.
d. Enforceable.
>b.
EXPLANATION: This type of covenant not to compete is also called a restrictive covenant. As long as the restriction is reasonable and contained within an ancillary clause of a contract they are usually not considered to be a contract in violation of public policy. Reasonable, in this context, means not greater than necessary to protect a legitimate business interest. It also means not so close in proximity or short in time such as to render the agreement trading in on the goodwill of the previous owner of no value whatsoever. 1000 miles and 20 years seem unreasonable. See Chap. 13 Pg. 247 Rt Bottom of page and continued at the very bottom of Pgs. 248 & 249 as well.

5. Business Management, Inc., files a suit against Associated Services, Inc., to enforce a written contract between the parties. Parol evidence will be admitted to prove

a. a subsequent modification of the written contract.
b. contemporaneous negotiations that vary the written contract..
c. prior negotiations that vary the written contract.
d. any of the above.

answer: A PAGE: 281 TYPE: =

6. ABC Realty Company and Fine Investments, Inc., enter into a contract for a sale of land. To be enforceable, the contract must be in writing if the land is valued at

a. $50.
b. $500.
c. $5,000.
d. any of the above.

answer: D PAGE: 273 TYPE: =

7. Andy shines shoes. The state requires him to have a license, primarily so the state can raise money through the annual fee he pays. Andy, however, does not have a license. Bill gets his shoes shined. What is the status of Andy's and Bill's transaction?
a. void
b. voidable
c. valid
d. unenforceable
> c
EXPLANATION: If a license is required to raise revenue, a person operating without a license can still make valid work-related contracts. They will probably have to pay a fine, however.

8. Assume all of the following businesses have customers sign exculpatory clauses that read, "Operator not liable for any loss or injury." Which of these is the MOST likely to be enforced. (That is, which operator is most likely not to be liable for loss or injury?)
a. Southwestern Bell, a phone company
b. City Utilities, an electricity provider
c. AstroWorld, an amusement park
d. Federal Express, a delivery company
> c
EXPLANATION: When a business is important to the public interest, its exculpatory clauses tend to be unenforceable. Entertainment businesses have a better chance of having these clauses enforced, as their customers' use of their facilities is purely voluntary.

9. George and Martha enter into an oral contract for a sale of George’s lum­ber mill. Before Martha takes possession, under the Statute of Frauds this contract is

a. enforceable by George only.
b. enforceable by Martha only.
c. enforceable by either party.
d. not enforceable.

answer: D PAGE: 273 TYPE: =

10. Adam and Becky enter into an oral contract under which Becky agrees to work as Adam’s assistant for two weeks. This contract is

a. enforceable by Adam only.
b. enforceable by Becky only.
c. enforceable by either party.
d. not enforceable.

answer: C PAGE: 274 TYPE: =


11. Mike and National Computer Service (NCS) enter into an oral contract under which Mike agrees to program computers for NCS for two years. This contract is

a. enforceable by Mike only.
b. enforceable by NCS only.
c. enforceable by either party.
d. not enforceable.

answer: D PAGE: 274 TYPE: =

12. Norm hires Linda to clean his apartment once a week. He also tells her, "Oh, yeah. When you come by every week, I want you to bring me a big bag of crack." Which parts of this contract, if any, are enforceable?
a. the cleaning portion
b. the drug delivery portion
c. Both are enforceable.
d. Neither is enforceable.
> a
EXPLANATION: A contract that is divisible into a legal and an illegal part is said to be severable, and a court will likely enforce the legal portion.

13. Which of the following contracts are "within" the UCC Statute of Frauds?
a. the sale of a $600 tennis racquet
b. the sale of a $300 tennis racquet
c. the sale of $600 worth of tennis lessons
d. both b and c
> a.
EXPLANATION: Only sales of goods for over $500 fall within the UCC Statute of Frauds. C is not a sale of goods, it is a sale of an intangible service.
See Chap. 15 Pg. 275 Lft 1

14. Rick and Sue enter into an oral contract under which Rick agrees to as­sume Tina’s debt if Tina does not pay. Before Sue collects any money from Rick, who gets no personal benefit out of the deal, under the Statute of Frauds this contract is

a. enforceable by Rick only.
b. enforceable by Tina only.
c. enforceable by any of the parties.
d. not enforceable.

answer: D PAGE: 275 TYPE: =


15. Jess goes to work for Dell computers. Which of these contracts would require a writing?
a. "I will work for you for 5 years."
b. "I will work for you for life."
c. "I will work for you indefinitely."
d. All of the above
> a
EXPLANATION: This is the only choice that cannot be fulfilled within one year. If you are killed tomorrow, a lifetime contract is fulfilled in under a year as you have literally worked for the company for the rest of your life. If you are killed tomorrow under a contract to work for five years, you have not worked for the five years, so the terms cannot be fulfilled. A subtle but important difference, this is another testing favorite of professors.
See Chap. 15 Pg. 271-272 Case 15.1 McInerney v. Charter Golf

16. Mother and son go bicycle shopping. Son agrees to pay for the bike himself, and mother agrees to pay if son does not. The choices list various uses to which the bicycle might be put. In which cases would a writing NOT be required?
a. Son will be the only rider, and will ride the bike to school.
b. Mother will be the only rider, and will use the bike for exercise
c. Son will be the primary rider, but Mother may borrow it from time to time.
d. No answer is correct; every choice requires a writing.
> b
EXPLANATION: The purchase arrangement gives Mother an ancillary obligation, so normally it would have to be in writing. However, if the person who makes a secondary promise makes the promise, and plans to use the purchase, primarily for their own benefit, a writing is not required.

17. Barney orders a dozen kegs of beer from Moe at a cost of $600. Moe never delivers the beer, and Barney brings a lawsuit. He has a written copy of the agreement between himself and Moe. For this writing to overcome the Statute of Frauds, which parties must have signed it?
a. Barney
b. Moe
c. both Barney and Moe
d. neither Barney nor Moe
> b
EXPLANATION: Only the party against whom enforcement is sought must sign a writing for the writing to overcome a Statute of Frauds defense.

18. International Business, Inc. (IBI), agrees to assume a debt of Southern Export Company to First National Bank. This promise is for the benefit of IBI. To be enforceable, the promise must be in writing if the debt is for

a. $50.
b. $500.
c. $5,000.
d. none of the above.

answer: D PAGE: 275 TYPE: =

19. Jill agrees to build a warehouse for Ken and orders supplies from Larry for the job. Ken promises Larry that Ken guarantees payment for the supplies. Ken’s promise is

a. enforceable only if it is in writing.
b. enforceable only if it is oral.
c. enforceable whether it is oral or in writing.
d. not enforceable.

ANSWER: C PAGE: 275 TYPE: N

20. Donna files a suit against Nationwide Engineering Corporation to enforce a written contract between the parties. Parol evidence will be admitted to prove

a. an orally agreed-on condition.
b. contemporaneous negotiations that contradict the written contract.
c. prior negotiations that contradict the terms of the written contract.
d. any of the above.

answer: A PAGE: 283 TYPE: =

21. Billy Bob Bransky sits down to sign a contract ordering a motorcycle. Which of the following, if written by Billy Bob, would be a valid signature?
a. "B.B. Bransky"
b. "Billy Bob"
c. "B"
d. all of the above
> d
EXPLANATION: Any are a valid signature if written in Billy Bob's own handwriting.

22. Under the UCC, which of the following constitute a writing sufficient to satisfy the Statute of Frauds?
a. a canceled check
b. an invoice
c. a faxed copy of a document
d. all of the above
> d
EXPLANATION: The UCC is not particular about the form the writing takes.

23. Cary files a suit against Delta Contractors, asking the court to enforce a contract between the parties. The only written evidence of the contract is a memo on Delta’s let­terhead in Delta’s files. The court can enforce the con­tract if, besides the letterhead, the memo includes

a. a correct title, such as “Cary-Delta Deal.”
b. all essential terms.
c. a statement of the consideration.
d. the addresses of the parties.

answer: B PAGE: 280 TYPE: N

24. Ben is an attorney who practices without a license. His client Mel owes him $1,000 for the performance of legal services when Mel learns this fact. He refuses to pay. What is the status of their contract?
a. valid
b. void
c. voidable
d. unenforceable
> d
EXPLANATION: If a license is required to protect the public from unauthorized practitioners, a person operating without a license cannot form an enforceable contract. Mel will not have to pay.
See Chap. 13 Pg. 247 Lft 5

25. Representatives of American Manufacturing Company and National Sales Corporation orally agree to several different contracts. The Statute of Frauds will not bar enforcement of an oral contract for

a. a sale of goods for $300.
b. a sale of land.
c. a task that cannot be performed within a year.
d. none of the above.

answer: A PAGE: 278 TYPE: =