Business law

.   Candice hires Otto to work as a tax preparer in Candice’s tax return business. The employment contract restricts the ability of Otto to set up a competing business or engage in tax preparation services if Otto leaves Candice’s employ. Otto discovers he likes this kind of work and wants to set up his own tax return business. He asks you whether the restrictions in his contract with Candice will be enforceable. You should tell him that


A. restrictive covenants regarding future employment will be enforceable if the value of the consideration given for the covenant equals the value of the income loss that would be caused by enforcing the agreement.

B. any restriction regarding employment will be enforceable as long as there was adequate consideration.

C. restrictive covenants regarding future employment will be enforceable if they’re reasonable.

D. any restriction regarding employment is unenforceable as against public policy


12.   Under tenant Lester’s lease contract with landlord Mary, Lester must pay an extra $25 if his rent is more than five days late. This is an example of __________ damages.


A. punitive

B. consequential

C. liquidated

D. nominal


13.   Denise orally authorizes Shaun to sell her house. Shaun enters into a written agreement with Eric to sell him the house for $140,000. Both Shaun and Eric sign the contract. Denise learns of the agreement after the fact and decides she doesn’t want to sell. If the contract is ruled unenforceable, the most likely reason is the __________ rule.


A. fairness

B. parol evidence

C. equal dignities

D. best evidence


14.   Jack and Jane formed a contract in which Jack agreed to sell Jane a large amount of apples. Jack knew that Jane planned to resell the apples at the farmers’ market the following weekend. Jack failed to deliver the apples as promised. Jane will most likely be able to recover


A. both nominal and punitive damages.

B. compensatory damages only.

C. punitive damages only.

D. both compensatory and consequential damages


15.   Jordan is charged with a crime, and Jeff is chosen to be on the jury. Jordan offers to pay Jeff $500 if he votes not guilty. Jeff does so, but Jordan refuses to pay. Jeff sues Jordan for breach of contract. Jeff will


A. win because of the statute of frauds.

B. lose because the contract is usurious.

C. lose because the contract is against public policy.

D. win because Jordan materially breached.


16.   Tom and Zeke enter into a contract for Tom to paint Zeke’s house for $1,000. The contract doesn’t specify a time for performance by Tom. Six years later, Tom shows up with a bucket of paint, paints the house, and demands payment. Which of the following is true?


A. Tom couldn’t have breached the contract because the contract didn’t specify a time for performance, and he did do the painting work.

B. The contract violates the statute of frauds.

C. Tom breached the contract because he didn’t perform within a reasonable time.

D. The contract was unenforceable because it didn’t specify a time for performance.



17.   Bella and Connie are struggling to find jobs. They decide they want to open a child daycare center together. They see a house in the perfect neighborhood with a “For Sale by Owner.” They talk to the owner, reach an agreement, and shake hands. Just before the closing on the house, at which they’ll take ownership of the house, the owner decides not to sell to Bella and Connie. They tell the owner they’re going to sue him for breach of contract. Bella and Connie most likely


A. will win because the owner shouldn’t have entered into a contract with them if he wasn’t sure he wanted to sell the house.

B. will win because the owner breached his agreement to sell them the house.

C. won’t win because they can find another house that will work just as well.

D. won’t win because they shouldn’t have entered into an oral contract to buy the house.


18.   Which of the following is an example of discharge by impossibility?


A. Jason agrees to paint Sheila’s house for $1,000. Sheila changes her mind and asks Jason not to paint. Jason agrees.

B. Jason agrees to paint Sheila’s house for $1,000. Sheila later tells Jason that she won’t pay him. As a result, Jason decides not to paint.

C. Jason agrees to paint Sheila’s house for $1,000. Before Jason can paint, Sheila’s house burns down.

D. Jason agrees to paint Sheila’s house for $1,000. Jason paints, but before Sheila pays him, she files bankruptcy. As a result, Jason doesn’t get paid.


19.   Tom and Zeke go out to a restaurant for dinner. Tom orders a steak, and Zeke orders lasagna. After they’ve finished eating, they pay their bill. Assuming all parties performed in the order they were required to under this contract, which of the following is true?


A. Service and payment were conditions concurrent.

B. Payment was a condition precedent to service.

C. Service was a condition precedent to payment.

D. There was no contract.


20.   Tom and Zeke enter into a contract for Tom to paint Zeke’s house for $1,000 by August 5th. Tom paints half of the house on August 6th, then demands pay. Which of the following is false?


A. Tom may not be in breach if the contract doesn’t make time of the essence.

B. Tom’s duties are discharged under the doctrine of substantial performance.

C. The contract doesn’t violate the statute of frauds.

D. Zeke may have to pay if payment is a condition precedent to the duty to paint.


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