Question 1 of 20
Windsor, the owner of Windsor's Sandwiches, contacts a new supplier named Gary. He tells Gary that he will pay him $375 if Gary delivers 20 pounds of cheese the following morning. Gary promises to make the delivery as requested by Windsor. This creates a __________ contract between them.
A. unilateral
B. bilateral
C. implied-in-law
D. executory
Question 2 of 20
Which of the following is considered a distinction of a check?
A. It always draws its money from a financial institution
B. It is created when credit is extended to a buyer by a seller
C. It is a two-party instrument
D. It is an unconditional written promise to pay
Question 3 of 20
A contract that has been fully performed by both sides is called an __________ contract.
A. executory
B. executed
C. option
D. executive
Question 4 of 20
Which of the following statements is TRUE regarding a negotiable instrument?
A. It should be signed by the payee
B. It need not state a fixed amount of money
C. It should not require any undertaking other than the payment of money
D. It can be either written or oral
Question 5 of 20
Contracts that have been fully performed by one side but not by the other are classified as __________ contracts.
A. executory
B. executed
C. void
D. voidable
Question 6 of 20
A(n) _________ is an example of a three-party transaction.
A. promissory note
B. certificate of deposit
C. ordinary lease
D. draft
Question 7 of 20
The __________ is the acceptor of a draft in a draft transaction.
A. drawer
B. drawee
C. payee
D. financee
Question 8 of 20
A(n. __________ is stated orally or in written words.
A. express contract
B. implied-in-law contract
C. implied-in-fact contract
D. quasi-contract
Question 9 of 20
Two brothers, Sam and Jim, were fighting over the division of their ancestral property. After ten years of legal battle, a frustrated Sam contacted a powerful politician who subjected Jim to extreme duress in order to make him sign a contract of assent in favor of Sam. When Jim takes this contract to court, the contract will be declared:
A. enforceable.
B. conditionally enforceable.
C. voidable.
D. unenforceable.
Question 10 of 20
Which of the following is an acceptable consideration for a contract?
A. Arrest
B. Penalty
C. Money
D. Sentence
Question 11 of 20
The similarity between a demand draft and a trade acceptance is that both:
A. are examples of sight drafts.
B. require credit to be extended to the buyer.
C. have the drawer be the payee as well.
D. are considered two-party transactions.
Question 12 of 20
A __________ is a type of draft that is always paid at a future date.
A. sight draft
B. bill of exchange
C. time draft
D. demand draft
Question 13 of 20
Which of the following is an informal contract?
A. Check
B. Bank draft
C. Lease
D. Recognizance
Question 14 of 20
A contract is a(n) __________ contract if the offeror's promise is answered with the offeree's promise of acceptance.
A. unilateral
B. bilateral
C. executed
D. executory
Question 15 of 20
The __________ states that the intent to contract is judged by the reasonable person standard and not by the subjective intent of the parties.
A. Restatement of the Law of Contracts
B. Restatement (Second. of Contracts
C. objective theory of contracts
D. common law of contracts
Question 16 of 20
__________ are a special form of contract that satisfy the requirements established by Revised Article 3 of the UCC.
A. Banknotes
B. Negotiable instruments
C. Letters of credit
D. Stocks
Question 17 of 20
Which of the following statements is TRUE about contracts?
A. Parties to an informal contract can use any words they choose to express their contract
B. A contract under seal is disclosed only to the offeror of the contract
C. A letter of credit is an informal contract
D. A void contract is the same as a voidable contract
Question 18 of 20
Martha contacts a bakery to get a cake for her son's birthday party. She tells the baker that she will pay him $150 for the cake if he delivers the cake on Friday evening. If the baker does not deliver the cake on Friday evening, which of the following will hold true?
A. Martha can sue the baker to recover $150 in damages.
B. Martha can sue the baker but cannot recover damages.
C. The baker has to give $150 plus the cost of the replacement cake to Martha as he entered into a verbal contract with her.
D. Martha cannot sue the baker at all.
Question 19 of 20
Which of the following is TRUE about a trade acceptance?
A. The buyer is the payee
B. The seller is both the drawer and the payee
C. The draft is countersigned by the drawee's bank
D. The draft is only as good as the drawer's creditworthiness
Question 20 of 20
A(n) __________ clause is a clause in an instrument that permits the maker to pay the amount due prior to the date of the instrument.
A. prepayment
B. acceleration
C. extension
D. forestallment
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