Posted: November 9th, 2016
0. X and Y agreed that X would sell Y his small business, including the land on which the business was situated, for $500,000. Both X and Y knew at the time the contract was formed that the business was actually worth $800,000. Is this a valid, enforceable contract? a) Yes, provided the contract was in writing, in accordance with the Statute of Frauds and the parties freely consented. b) Yes, provided the contract was in accordance with state statutory law that permits real estate sales for 40% or more below market value. c) No, because $500,000 is not valid consideration for a business worth $800,000. d) No, because X has no pre-existing legal duty to sell his business. 11. Fine Art Corp. sent a written offer to buy 10,000 pencils for a total of $10,000 from Faber Pencil Co. Both parties are merchants. Faber can accept the offer by: a) Promising to ship the pencils. b) Promptly shipping the pencils. c) Accepting the offer on Faber’s own written standard form contract. d) All of the above could be valid acceptance. 12. Ralph, a 16-year old minor, is manager for the high school football team. Ralph signed a contract to purchase alcoholic beverages from Liquormart, Inc. for the team party. This contract is: a) Void as a matter of law because it is illegal to sell alcohol to minors by state law. b) Void only if Ralph misrepresented his age and told Liquormart he was an adult. c) Valid and enforceable, but Ralph has the right to disaffirm because he is a minor. d) Valid and enforceable, if Liquormart knew that Ralph was a minor. 13. Which of the following activities may involve the use of a contract, and/or constitute a sales contract? a) Purchasing medications from a pharmacy. b) Hiring a contractor to make home repairs. c) Purchasing insurance policies from an insurance agent. d) Selling books to customers in a bookstore. e) All of the above. 14. Fay was admitted to Global Associates, an existing general partnership on January, 2014. In August, 2014, a partnership debt that was incurred in October, 2013 came due. Fay is: a) Not liable for the debt because the debt was incurred prior to her joining the partnership. b) Only liable for the debt up to the amount of her capital contribution to the partnership. c) Personally liable only for 50% of the total debt if 50% of the other partners do not pay. d) Personally liable for the full extent of the debt if the other partners do not pay. 15. Kelly, Lars and Mona agreed to be partners in Neighborhood Deliveries (ND), all splitting the profits equally. Kelly contributed 70% of the capital upon formation of the partnership. Later, the partners agreed to dissolve the partnership as it was not as profitable as they had expected, and its liabilities were greater than its assets. The losses are paid by: a) All the partners in proportion to their capital contributions. b) All the partners in proportion to their share of the profits. c) Kelly alone because she contributed the most capital. d) Lars and Mona because they contributed the least amount of capital. 16. CC’s Day Spa, LLC, is a member-managed limited liability company. So long as it is in accordance with state law, and unless the members previously agreed otherwise, voting rights will be apportioned according to: a) Participation in management. b) Capital contributions. c) The number of members. d) Each individual transaction of the LLC, and will vary with each transaction. 17. Jim and Kiley are architects and general partners of JK Designs. Jim and Kiley supervise Luc, an employee of JK Designs. As partners, Jim and Kiley a) Are personally liable for any/all tort(s) committed by Luc. b) May be liable for malpractice, but not torts, committed by Luc while Luc is working within the scope of his job at JK. c) May be liable for torts committed by Luc while Luc is working within the scope of his job at JK. d) Have no liability for any torts committed by Luc at any time.
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