Chapter 18 Business Law

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Which of the following is true of statute of frauds?
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It prevents parties from entering into contracts with which they do not agree.
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Which of the following contracts fall within the statute of frauds?
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Promises made in consideration of marriage
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Which of the following is true of contracts to be in writing whose terms prevent possible performance within one year?
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The test for compliance with the one-year rule, considers the possibility of completing the contract in one year as defined by the terms of the contract.
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A(n) ____ is an agreement two parties enter into before marriage that clearly states the ownership rights each party enjoys in the other party’s property.
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prenuptial agreement
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A(n) _____ occurs when a party outside a primary agreement promises to fulfill one of the original party’s obligations if the original party fails to fulfill it.
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collateral promise
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Contracts that are required to be in writing by the statute of frauds include:
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contracts for mortgage or lease of land and buildings.
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Agreements for a sale in which the total price is $500 or more are required by the UCC, to be recorded in a written contract. This writing need only state the:
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quantity to be sold.
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Which of the following is true of the sufficiency of writing required by the statute of frauds?
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One or several documents can together make up the written agreement.
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A(n) _____ is a statement made in court, under oath, or at some stage during a legal proceeding in which a party against whom charges have been brought admits that an oral contract existed, even though the contract was required to be in writing.
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admission
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_____ is the legal enforcement of an otherwise unenforceable contract due to a party’s detrimental reliance on an oral contract that within the statute of frauds is required to be in writing.
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Promissory estoppel
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The common law rule, which makes oral evidence of an agreement inadmissible if it is made before or at the same time as a writing that the parties intend to be the complete and final version of their agreement is the:
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parol evidence rule.
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‘Parol’ in parol evidence rule means:
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speech or words.
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The purpose of the parol evidence rule is to:
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prevent evidence that substantially contradicts the agreement in its written form.
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Which of the following statements is true of merger clauses?
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The merger clauses seek to blend other agreements either into the final agreement or into something explicitly identified as being outside the final agreement.
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When an entire contract is conditioned on something else’s occurring first, that first event is known as a(n) _____.
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condition precedent
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There is federal U.S. legislation titled “Statute of Frauds.”
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false
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Contracts related to an interest in land fall within the statute of frauds.
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True
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Under the pure dignity rule, contracts that would normally fall under the statute of frauds and need a writing if negotiated by the principal, must be in writing even if negotiated by an agent.
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false
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In some states, a promise to pay a debt that has already been discharged in bankruptcy must be in writing in order to be enforceable.
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true
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Partial performance is an exception to the statute of frauds.
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true
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In order for the statute of frauds to be satisfied, all parties to a contract must sign the writing.
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false
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If a contract’s terms require that modification be in writing, oral modifications are inadmissible and unenforceable.
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true
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TF The purpose of the parol evidence rule is to prevent attempts to use only oral evidence to prove agreements.
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false
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Whenever a written agreement under the statute of frauds contains a serious, and obvious, typographical error, parol evidence is admissible to demonstrate that the error was indeed an error, as well as to set forth the proper term.
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true
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When a court deems a contract integrated, parol evidence is admissible.
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false
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Which of the following is false regarding written contracts?
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All contracts must be in writing in order to be enforced.
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Which of the following is false regarding the statute of frauds?
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It relates to fraudulent contracts.
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As discussed in the text, a main purpose of the statute of frauds is to prevent unreliable _____ evidence from interfering with a contractual relationship.
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Oral
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Which of the following is a type of contract that falls within the scope of the statute of frauds?
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Contracts whose terms prevent possible performance within one year
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Which of the following is a type of contract that falls within the scope of the statute of frauds?
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Contracts related to an interest in land and promises made in consideration of marriage, but not contracts related to any lease
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Under the Uniform Commercial Code, contracts for the sale of goods totaling more than ______ must be in writing.
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$500
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Which of the following is true regarding the statute of frauds requirement involving contracts that cannot be performed within one year?
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The one-year period begins to run the day after the contract is created, not when the contract is scheduled to begin. Even if it is highly unlikely that a contract will be completed within one year, a contract does not come within the statute of frauds if it could be completed within one year. If a party contracts for lifetime employment, the contract does not have to be in writing in order to be enforceable. Contracts whose performance, based on the terms of the contract, could not possibly occur within one year fall within the statute of frauds.
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A[n] ______ agreement is an agreement two parties enter into before marriage that clearly states the ownership rights each party enjoys in the other party’s property.
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Prenuptial
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Which of the following is false regarding the statute of frauds and promises made in consideration of marriage?
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Mutual promises to marry fall within the statute of frauds.
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Which of the following is a term for contracts within the statute of frauds involving promises to pay a debt of another if the initial party fails to pay?
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Secondary obligations
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Which of the following are debts incurred in an initial contract?
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Primary obligations
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Which of the following is an exception as to when a secondary obligation needs to be in writing?
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The main-purpose rule
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Within the statute of frauds, “land” encompasses not only the land and soil itself but anything ______ to the land.
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Attached
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Which of the following is false regarding the statute of frauds provision relating to an interest in land?
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No leases are within the statute of frauds.
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Which of the following are not considered an interest in land within the statute of frauds?
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Promises to sell crops annually. Agreements between parties for profit sharing from the sale of real property. Boundary disputes that have been settled through the use of land.
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Which of the following was the result in the case in the text Shelby’s, Inc. v. Sierra Bravo, Inc., involving the issue of whether an agreement to deposit debris and soil on land and an alleged agreement to build a landing pad and waterway came within the statute of frauds?
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The court ruled that the agreement did not involve an interest in land and did not come within the statute of frauds.
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Which of the following sections of the Uniform Commercial Code addresses the requirement of a writing when a certain amount of goods are sold?
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2-201
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Which of the following is needed in order to satisfy the UCC’s requirement for a written document?
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The contract or memorandum needs only to state the quantity to be sold.
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Under the ______ in effect in some states, contracts that would normally fall under the statute of frauds and need a writing if negotiated by the principal must be in writing even if negotiated by an agent.
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Equal dignity rule
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Which of the following are exceptions to when the statute of frauds would apply although under normal circumstances it would apply?
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Partial performance Admissions Promissory estoppel
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A[n] ______ is a statement made in court, under oath, or at some stage during a legal proceeding in which a party against whom charges have been brought admits that an oral contract existed, even though the contract was required to be in writing.
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Admission
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All states except ______ adhere to the admission exception to the statute of frauds.
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Louisiana and California
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Under ______, if the buyer in an alleged contract for the sale of land has paid any portion of the sale price, has begun to permanently improve the land, or has taken possession of the land, the courts will consider the contract partially performed, and this partial performance will amount to proof of the contract.
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Partial performance
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Which of the following involves the legal enforcement of an otherwise unenforceable contract due to a party’s detrimental reliance on the contract?
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Promissory estoppel
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Even if they would normally have to be in writing, if applicable criteria are met, oral contracts for _____ goods are enforceable.
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Customized
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Which of the following are required elements for a writing to be considered sufficient under the statute of frauds?
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Identification of the parties to the contract and the subject of the agreement, but not penalties for nonperformance.
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Which of the following is true regarding a signature on a document falling within the statute of frauds?
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So long as it is meant as a signature, a party required to sign may sign at any place on the document.
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Which of the following parties must sign a document coming within the statute of frauds?
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The party against whom action is sought
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Sam orally agreed to work as a computer programmer for ABC Co. Brandy, the president of ABC Co. entered into an agreement with Sam regarding his pay, and he signed an employee handbook including a provision that his employment was at will, meaning that at anytime he could quit or the company could discharge him. A month later, Sam received a three-year contract for employment with ABC Co. in the mail incorporating the amount of his salary and other issues he had discussed with Brandy. Sam signed it and mailed it back, but also changed the vacation provision to three weeks instead of one week. Bobby, the human resources manager for ABC Co. called Sam up after Bobby received the agreement and told Sam that the contract was only a draft for discussion purposes and that he was actually firing Sam because he seemed too focused on vacation. Assuming the court follows the reasoning of the court in the dispute discussed in the text involving Michael Gallagher and Medical Research Consultants, which of the following would be the most likely result in the dispute between Sam and ABC Co. if Sam claims he had a three-year contract of employment?
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ABC Co. will win because even if a three-year oral agreement for employment was made, it would not have been enforceable because the statute of frauds requires that agreements that cannot be completed within one year be in writing. Further, the draft Sam returned was not signed by ABC Co.
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The ______ rule is a common law rule that addresses the admissibility of oral evidence as it relates to written contracts.
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Parol evidence
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What does the term “parol” in the “parol evidence rule” mean?
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Speech or words, specifically words outside the original writing
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What is a purpose of the parol evidence rule?
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To restrict evidence from being admitted that substantially contradicts an agreement in its written form.
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When may a court rule that parol evidence may be admissible to further the court’s understanding of an agreement?
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When a court determines that a written agreement does not represent a complete and final version of the agreement.
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Which of the following is false regarding the parol evidence rule?
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It is a rule of evidence.
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The parol evidence rule is also not a rule of evidence; rather, it relates to the substantive legal issue of what constitutes a legally binding agreement.
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-The parol evidence rule applies to writings created at the same time as the written agreement. -Writings created at the same time as a written agreement are more readily admitted as part of the written agreement than is oral evidence regarding conditions or terms in the final agreement. -As long as contemporaneous written documents do not substantially contradict what is in the final writing, judges can deem these other writings to be part of the final written agreement.
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A[n] ______ agreement is a clause parties include in a written agreement within the statute of frauds that states that the written agreement accurately reflects the final, complete version of the agreement.
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Merger
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Which of the following are exceptions to the parol evidence rule?
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-Contracts that have been subsequently modified -Contracts conditioned on orally agreed-on terms -Contracts that are not final as they are part written and part oral -Contracts with ambiguous terms
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Which of the following are written contracts intended to be the complete and final representation of the parties’ agreement?
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Integrated contracts
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One way parties can indicate their desire to create an integrated contract is through the use of a[n] ______ clause.
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Merger

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