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MGMT 311 EXAM 3 (LATEST EXAM 2025) | ALL
QUESTIONS AND CORRECT ANSWERS |
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A mistake of fact occurs when: ---------CORRECT ANSWER----------------- The parties entered into a contract with different understandings of one or more material facts relating to the contracts performance. What is a Unilateral Mistake of Fact? ---------CORRECT ANSWER------------ -----A mistake made by only one of the parties does not generally give the mistaken party any right to relief from the contract. What is a Bilateral (mutual) Mistake? ---------CORRECT ANSWER------------ -----A mistake by both contracting parties about one or more material facts. In this case, either party may rescind the contract since both parties are mistaken about the same material fact. What is a mistake of future value? ---------CORRECT ANSWER----------------
- A mistake about the future market value of the object of the contract. Contracts cannot be rescinded due to this mistake. What is Fraudulent Misrepresentation? ---------CORRECT ANSWER---------- -------When an innocent party is fraudulently induced to enter into a contract, the contract can be avoided because the party did not voluntarily consent to its terms.
Fraudulent Misrepresentation consists of the following elements: --------- CORRECT ANSWER------------------ a misrepresentation of a material fact must occur
- there must be an intent to deceive
- the innocent party must have justifiably relied on the misrepresentation
- to collect damages, a party must have been harmed as a result of the misrepresentation What is misrepresentation by conduct? ---------CORRECT ANSWER--------- --------When a party takes specific action to conceal a fact that is material to the contract. An intent to deceive is: ---------CORRECT ANSWER----------------- Knowledge on the part of the misrepresenting party that facts have been falsely represented. Intent to deceive exists if a party: ---------CORRECT ANSWER-----------------
- knows that a fact is not as stated
- makes a statement that he believes is not true
- makes a statement recklessly without regard to whether it is true or false
- says (or implies) that a statement is made on some basis, such as personal knowledge, when it is not In fraudulent misrepresentation, if the innocent party wants to recover damages: ---------CORRECT ANSWER-----------------Proof of injury is required In fraudulent misrepresentation, if the innocent party wants to simply rescind the contract: ---------CORRECT ANSWER-----------------No proof of injury is required
The most common way to discharge ones contractual duties is by: --------- CORRECT ANSWER-----------------Performance of his duties What is a condition? ---------CORRECT ANSWER-----------------A qualification in a contract based on a possible future event The occurance (or non occurence) of the event will: ---------CORRECT ANSWER-----------------Trigger the performance of a legal obligation - or terminate an existing obligation under a contract If the condition is not satisfied: ---------CORRECT ANSWER----------------- The obligations of the parties are discharged Three types of conditions can be present in contracts: ---------CORRECT ANSWER-----------------1. Conditions Precedent
- Conditions Subsequent
- Concurrent Conditions What is a Condition Precedent? ---------CORRECT ANSWER-----------------A precedent that must be fulfilled before a party's performance can be requried If the condition precedent does not occur: ---------CORRECT ANSWER------ -----------Both parties are discharged from their contractual obligations
What is tender of performance? ---------CORRECT ANSWER----------------- An unconditional offer to perform by a party who is ready, willing, and able to do so. There are two basic types of performance in which one is discharged from his/her obligations under the contract: ---------CORRECT ANSWER----------- ------1. Complete (or strict) performance
- Substantial performance What is perfect performance? ---------CORRECT ANSWER----------------- When a party performs exactly as agreed to in the contract Failure to comply with an express condition and render the exact performance may: ---------CORRECT ANSWER-----------------Discharge the party recieving the defective performance A party who is in good faith performs substantially all the terms of a contract can: ---------CORRECT ANSWER-----------------Enforce the contract against the other party under the doctrine of substantial performance. If performance is substantial, the other party's duty to perform remains: ----- ----CORRECT ANSWER-----------------Absolute, less damages for the deviation For substantial performance to exist: ---------CORRECT ANSWER------------- ----- The party must have performed in good faith
- The performance must not vary greatly from the performance promised in the contract
What is a offeror? ---------CORRECT ANSWER-----------------The party making the offer to form a contract What is the offeree? ---------CORRECT ANSWER-----------------The party to whom the offer is made. If the offeree can accept an offer simply by promising to perform, the contract is a: ---------CORRECT ANSWER-----------------Bilateral Contract If the offer is phrased so that the offeree can accept only be actual performance (not by a promise to perform) the contract is a: --------- CORRECT ANSWER-----------------Unilateral Contract What is a Express Contract? ---------CORRECT ANSWER----------------- When the terms of the agreement (whether oral or written) are explicitly stated. What is a Implied Contract? ---------CORRECT ANSWER----------------- When the parties conduct create and define the terms of the contract. Implied contracts are typically formed when: ---------CORRECT ANSWER--- --------------1. The plaintiff furnished some goods or services
- The plaintiff expected to be paid and the defendant knew or should have know that the payment was expected
- Defendant had a chance to reject the goods or services and did not
What are Quasi Contracts? ---------CORRECT ANSWER----------------- Fictional contracts that the courts impose on the parties "as if" the parties had entered into an actual contract Why are Quasi contracts imposed by the courts? ---------CORRECT ANSWER-----------------To avoid the unjust enrichment of one party at the expense of another. What is a Executed Contract? ---------CORRECT ANSWER-----------------A contract that has been fully performed by both or all of the parties What is a Executory Contract? ---------CORRECT ANSWER-----------------A contract that has not been fully performed by one or more parties. What are the four categories of enforceability? ---------CORRECT ANSWER-----------------1. Valid
- Voidable
- Unenforceable
- Void What is a Valid Contract? ---------CORRECT ANSWER-----------------A contract with an agreement, consideration, contractual capacity, form, and legality. What is a Voidable Contract? ---------CORRECT ANSWER-----------------A Valid Contract that can be (but does not have to be) legally avoided, canceled, or annulled by one of the parties.
What is Intention? ---------CORRECT ANSWER-----------------Judged by what a reasonable person in the offeree's position would conclude about the offer. These statements are generally not considered offers because the necessary intent is usually lacking: ---------CORRECT ANSWER--------------- --- Expressions of opinion
- Statements of future intent
- Preliminary Negotiations
- Advertisements For the offer to be reasonably certain or definite the offer must express the following items: ---------CORRECT ANSWER------------------ Identification of the parties
- Object or subject matter of the contract
- Consideration to be paid
- Time of payment, delivery, or performance Why must the offer be communicated and received by the offeree? --------- CORRECT ANSWER-----------------One cannot agree to a bargain without knowing that it exists. The communication of an offer to an offeree gives the offeree the power to: ---------CORRECT ANSWER-----------------Transform the offer into a binding contract by an acceptance. An offer can be terminated by the action of the parties by: --------- CORRECT ANSWER------------------ Revocation
- Rejection
- A Counteroffer
What is Revocation? ---------CORRECT ANSWER-----------------The offerors act of withdrawing an offer What is Traditional View of Revocation? ---------CORRECT ANSWER-------- ---------Revocation is permissible until full performance by the offeree What is the Modern View of Revocation? ---------CORRECT ANSWER------- ----------No revocation once performance has been substantially undertaken. What is a counteroffer? ---------CORRECT ANSWER-----------------A rejection of the original offer by the offeree and the simultaneous making of a new offer by the offeree In addition to the specific actions by the parties, an offer can also be terminated by: ---------CORRECT ANSWER-----------------Operation of Law What are the terminations of an Offer by operation of law? --------- CORRECT ANSWER-----------------1. Lapse of Time
- Destruction of the Subject Matter
- Death or Incompetence of a Party What is Acceptance? ---------CORRECT ANSWER-----------------The voluntary statement or act from the offeree that indicates his/her assent to the terms of the offer
What is Consideration? ---------CORRECT ANSWER-----------------The value given in return for a promise (in bilateral contract) or in return for a performance (in a unilateral contract) Generally, consideration must have both: ---------CORRECT ANSWER------- ----------- Legally Sufficient Value
- A Bargained-for-Exchange A valid contract must have legal value and may consist of the following: ---- -----CORRECT ANSWER------------------ A promise
- The performance
- A Forbearance What is a Forbearance? ---------CORRECT ANSWER-----------------The refraining from an action that one has a legal right to undertake Consideration in a bilateral contract normally consists of: ---------CORRECT ANSWER-----------------A promise in return for a promise Consideration in a unilateral contract involves: ---------CORRECT ANSWER-----------------A promise in return for a performance (an action) Consideration must also provide the basis for: ---------CORRECT ANSWER-----------------The bargain struck between the contracting parties
Adequacy of Consideration ---------CORRECT ANSWER----------------- Involves how much consideration is given; concerns the fairness of the bargain A court normally will not question the adequacy of consideration based solely on: ---------CORRECT ANSWER-----------------The comparative value of the things exchanged. An agreement that lacks consideration is: ---------CORRECT ANSWER------ -----------Not a valid contract What is Preexisting Duty? ---------CORRECT ANSWER-----------------A promise to do what one already has a legal duty to do does not constitute legally sufficient consideration. (Therefore no contract) What is Past Consideration? ---------CORRECT ANSWER----------------- Promises made in return for actions that have already taken place are unenforceable What are Illusory Promises? ---------CORRECT ANSWER-----------------The terms of the contract express such uncertainty of actual performance that the promisor has not definitely promised to do anything. What is Contractual Capacity? ---------CORRECT ANSWER----------------- The legal ability to enter into a contractual relationship.
If a court has previously determined a person to be mentally incompetent, any contract made by that person is: ---------CORRECT ANSWER------------- ----Automatically Void A party who has NOT been previously determined to be mentally incompetent by court may disaffirm a contract if at the time of the contracting that person: ---------CORRECT ANSWER-----------------1. Did not know he was entering into a contract
- Lacked the mental capacity to understand its nature, purpose, and consequences For a contract to be valid and enforceable, it must be formed for a: --------- CORRECT ANSWER-----------------Legal Purpose A contract to do something that is prohibited by the law is: --------- CORRECT ANSWER-----------------Illegal, void from the outset, and unenforceable A contract to commit a tort is: ---------CORRECT ANSWER----------------- Contrary to public policy, illegal, and unenforceable What is Usury? ---------CORRECT ANSWER-----------------When a person loans money to another at an interest rate above the states lawful maximum interest rate. What is Gambling? ---------CORRECT ANSWER-----------------The creation of risk for the purpose of assuming it.
What are Contracts in Restraint of Trade? ---------CORRECT ANSWER------ -----------If two or more parties enter into an agreement not to compete against each other and their only objective is to restrict competition, the agreement is void. What does in pari delicto mean? ---------CORRECT ANSWER----------------- Equally at fault What contracts must be in writing and signed in order to be enforceable? --- ------CORRECT ANSWER------------------ Contracts involving interests in land
- Contracts that cannot be performed within one year from the day after the date of formation. Land is _____ and includes all physical objects that are permanently attached to the soil. ---------CORRECT ANSWER-----------------Real Property The lack of voluntary consent can be used as a: ---------CORRECT ANSWER-----------------Defense to the contracts enforceability Consent may be lacking due to: ---------CORRECT ANSWER------------------ Mistake
- Fraudulent Misrepresentation
- Undue Influence
- Duress
If no time is stated in the contract: ---------CORRECT ANSWER----------------
- A reasonable time for performance is implied Unless time is expressly states as "of the essence", a performance delay will: ---------CORRECT ANSWER-----------------Not normally destroy the performing party's right to payment What is Discharge by Mutual Recission? ---------CORRECT ANSWER------- ----------When parties must make another agreement that also satisfies the legal requirements for a contract. What is a Novation? ---------CORRECT ANSWER-----------------Occurs when the original parties agree to substitute a new third party for one of the original parties. The requirements for a novation are: ---------CORRECT ANSWER------------- -----Previous Valid Obligation
- Agreement by all parties to a new contract
- The extinguishing of all old obligations
- A valid new contract What is a Discharge by Settlement Agreement? ---------CORRECT ANSWER-----------------A compromise that arises out of a genuine dispute over the obligations under an existing contract will be recognized at law
What is the difference between a Novation and a Discharge by Settlement Agreement? ---------CORRECT ANSWER-----------------A discharge by settlement agreement does not require a third party. In _________ the parties agree to accept performance that is different from the performance originally promised. ---------CORRECT ANSWER------------- ----Accord and Satisfaction What is Accord? ---------CORRECT ANSWER-----------------An executory contract to perform some act in order to satisfy an existing contractual obligation. What is Satisfaction? ---------CORRECT ANSWER-----------------The actual performance of the accord agreement What is Statute of Limitations? ---------CORRECT ANSWER-----------------A suit for breach of contract must be filed within the time permitted by applicable law. A discharge in ______ usually prevents creditors from enforcing most of the debtors contracts ---------CORRECT ANSWER-----------------Bankruptcy What is Impossibility of Performance? ---------CORRECT ANSWER----------- ------An event occurring after the formation of the contract making the performance objectively impossible.
