1. Some promises are not legally binding contracts.

A) True

B) False

2.   The intention to enter into a con¬tract is judged by objective facts as interpreted by a reasonable person.

A) True

B) False

3.   Parties can form a contract without putting the terms in writing.

A) True

B) False

4. Expert Pavers, Inc., contracts with Fabricated Building Corporation to repave Fabricated’s parking lot for which Fabricated agrees to pay. The requirements of this, and any other, contract do not include

A) consideration.

B) capacity.

C) legality.

D) practicality.

5.   When Jeff’s car breaks down, he asks Insta-Tow, Inc., to tow it to Huey’s Repair Shop. There is no discussion of a price, and Jeff and Insta-Tow do not sign any documents. Later, Insta-Tow sends Jeff a bill. With respect to Jeff’s obligation to pay the bill, this is

A) an express contract.

B) an implied-in-fact contract.

C) an implied-in-law contract.

D) no contract.

6. Greco promises to buy illegal copies of CDs and DVDs from Fava, who promises to deliver on April 15. These promises are most likely

A) enforceable.

B) valid.

C) void.

D) voidable.

7. One necessary element for an effective offer is a reasonable price related to market value.

A) True

B) False

8. An offer must be communicated to the offeree to be effective.

A) True

B) False

9. Jon says to Kristy, “I would like to sell you my sports memorabilia collection.” This is not an offer because it

A) does not describe the subject matter sufficiently.

B) does not include a price term.

C) only expresses an opinion.

D) only invites Kristy to negotiate.

10. Elin decides to try to sell her collection of celebrity memorabilia in an auction “with reserve.” If Elin changes her mind, she can withdraw her collection

A) only before the auctioneer announces that the items are sold.

B) only before the auctioneer delivers the items to the buyers.

C) under no circumstances.

D) within thirty days after the auction.

11.   Laredo advertises a reward for the return of his lost dog. Mikayla, who does not know of the reward, finds and returns the dog. Mikayla cannot recover the reward, because she

A) did not confer a benefit on Laredo by returning the dog.

B) did not know of the reward when she found and returned the dog.

C) does not need the money.

D) returned the dog.

12.   Barney offers to sell his Call Marketing Center to Domino for $100,000. Domino replies, “The price is too high. I will offer to buy it for $90,000.” Domino has

A) accepted the offer.

B) made a counteroffer without rejecting the offer.

C) rejected the offer and made a counteroffer.

D) rejected the offer without making a counteroffer.

13. Shelby offers to make digital copies of Relay Company’s business conference videotapes, CDs, DVDs, and other media for $500. Under the mailbox rule, Relay’s acceptance by e-mail will be considered effective when

A) received.

B) sent.

C) followed up by a confirmation letter sent by regular mail.

D) composed on a Relay computer.

14. Consideration is the value given in return for a promise.

A) True

B) False

15. Parties are generally free to bargain as they wish.

A) True

B) False

16. For consideration to have “legally sufficient value,” it must con¬sist of goods or money.

A) True

B) False

17. Rescission is the substitution of one party to a contract for a third party, who agrees to assume the contractual duties.

A) True

B) False

18. NanoCorp hires Mick to work for one month at a weekly salary of $500. A NanoCorp representative orally agrees two weeks later to double Mick’s salary. This agreement is

A) enforceable because of unforeseen difficulties.

B) enforceable because the parties agreed to a new contract.

C) unenforceable because the first contract was not fully performed.

D) unenforceable under the preexisting duty rule.

19. Brickstone Properties, Inc., and Competence Construction, Inc., sign a contract that specifies the amount to be paid. Additional compensation may be justified by

A) changes in the market value of the project during the contract.

B) extraordinary difficulties unforeseen at the time of the contract.

C) no circumstances.

D) ordinary business risks that occur after the time of the contract.

20. Silverman Financial Institution’s promise to pay its employees a year-end bonus “if it seems like a good idea at the time” is an example of

A) an enforceable contract.

B) an illusory contract.

C) an unconscionable contract.

D) a unilateral contract.