Download Contract Law: Deceptive Advertising, Mistakes, and Fraud and more Exams Business Fundamentals in PDF only on Docsity!
MGMT 311 EXAM 3 2025 | COMPLETE QUESTIONS
AND CORRECT ANSWERS | GRADED A+ | VERIFIED
ANSWERS | LATEST VERSION
What is deceptive advertising? ---------CORRECT ANSWER----------------- Any advertising or marketing practice that is likely to mislead consumers through false, misleading, or unsubstantiated claims. Deceptive Advertising Includes: ---------CORRECT ANSWER------------------ Misleading Statements
- Omissions
- Bait-and-Switch
- Unsubstantiated Claims
- Impression on Consumers What are misleading statements? ---------CORRECT ANSWER----------------- If an advertisement contains false or misleading statements about a product or service, it is considered deceptive. What are Omissions? ---------CORRECT ANSWER-----------------When information is omitted in advertising What is Bait-and-Switch? ---------CORRECT ANSWER----------------- Advertising a product at an attractive price and then telling the consumer that the advertised product is not available or is of poor quality and encouraging him to purchase a more expensive item.
Under FTC guidelines, bait and switch advertising occurs if the seller does any of the following: ---------CORRECT ANSWER-----------------1. Refuses to show the advertised item
- Fails to have a reasonable quantity of the advertised item in stock
- Fails to promise to deliver the advertised item within a reasonable time
- Discourages employees from selling the advertised item What are unsubstantiated claims? ---------CORRECT ANSWER----------------
- Advertisers must have evidence to support any claims they make about their products or services. If they claim things such as "scientifically proven" without actual scientific evidence, this can be considered deceptive. What is Impression on Consumers? ---------CORRECT ANSWER-------------- ---The overall impression an advertisement gives can also be deceptive, even if individual statements are technically true What is Puffery? ---------CORRECT ANSWER-----------------Exaggerated statements made in advertising that are not meant to be taken literally. A mistake of fact occurs when: ---------CORRECT ANSWER----------------- The parties entered into a contract with different understandings of one or more material facts relating to the contracts performance. What is a Unilateral Mistake of Fact? ---------CORRECT ANSWER------------ -----A mistake made by only one of the parties does not generally give the mistaken party any right to relief from the contract.
Intent to deceive exists if a party: ---------CORRECT ANSWER-----------------
- knows that a fact is not as stated
- makes a statement that he believes is not true
- makes a statement recklessly without regard to whether it is true or false
- says (or implies) that a statement is made on some basis, such as personal knowledge, when it is not In fraudulent misrepresentation, if the innocent party wants to recover damages: ---------CORRECT ANSWER-----------------Proof of injury is required In fraudulent misrepresentation, if the innocent party wants to simply rescind the contract: ---------CORRECT ANSWER-----------------No proof of injury is required A contract is voidable if entered into due to __________ since such contract lacks voluntary consent. ---------CORRECT ANSWER----------------- Undue Influence Undue Influence is the: ---------CORRECT ANSWER-----------------1. Inappropriate pressure
- Applied by a trusted, more powerful party
- on a trusting, less powerful party
- to enter into a legally binding agreement against their will, which falls slightly short of duress What is duress? ---------CORRECT ANSWER-----------------The force of threats to force a party into a contract.
Undue influence arises in relationships where: ---------CORRECT ANSWER-----------------One party has significant influence over the other (eg caregiver and dependent) Duress can occur between: ---------CORRECT ANSWER-----------------any parties, not necessarily with a pre-existing relationship of trust. Undue influence may be: ---------CORRECT ANSWER-----------------Subtle or manipulative and exploits a trust or relationship The most common way to discharge ones contractual duties is by: --------- CORRECT ANSWER-----------------Performance of his duties What is a condition? ---------CORRECT ANSWER-----------------A qualification in a contract based on a possible future event The occurance (or non occurence) of the event will: ---------CORRECT ANSWER-----------------Trigger the performance of a legal obligation - or terminate an existing obligation under a contract If the condition is not satisfied: ---------CORRECT ANSWER----------------- The obligations of the parties are discharged
A party who is in good faith performs substantially all the terms of a contract can: ---------CORRECT ANSWER-----------------Enforce the contract against the other party under the doctrine of substantial performance. If performance is substantial, the other party's duty to perform remains: ----- ----CORRECT ANSWER-----------------Absolute, less damages for the deviation For substantial performance to exist: ---------CORRECT ANSWER------------- ----- The party must have performed in good faith
- The performance must not vary greatly from the performance promised in the contract
- Performance must create substantially the same benefits as those promised in the contract Contracts often state that the performance by one party must: --------- CORRECT ANSWER-----------------Personally satisfy the other party What is reasonable personal standard? ---------CORRECT ANSWER--------- --------Most other contracts need to be performed only to the satisfaction of a reasonable person unless they expressly state otherwise The common law governs all contracts EXCEPT: ---------CORRECT ANSWER-----------------When it has been modified or replaced by a statutory law
What is the function of contract law? ---------CORRECT ANSWER------------- ----To assure that the promises parties make in a private agreement will be enforceable What is the definition of a contract? ---------CORRECT ANSWER-------------- ---A promise or set of promises for the breach of which the law gives a remedy, or the performance of which the law is some way recognizes as a duty. What are the two parties involved in a contract? ---------CORRECT ANSWER-----------------The offeror and offeree What is a offeror? ---------CORRECT ANSWER-----------------The party making the offer to form a contract What is the offeree? ---------CORRECT ANSWER-----------------The party to whom the offer is made. If the offeree can accept an offer simply by promising to perform, the contract is a: ---------CORRECT ANSWER-----------------Bilateral Contract If the offer is phrased so that the offeree can accept only be actual performance (not by a promise to perform) the contract is a: --------- CORRECT ANSWER-----------------Unilateral Contract
What are the four categories of enforceability? ---------CORRECT ANSWER-----------------1. Valid
- Voidable
- Unenforceable
- Void What is a Valid Contract? ---------CORRECT ANSWER-----------------A contract with an agreement, consideration, contractual capacity, form, and legality. What is a Voidable Contract? ---------CORRECT ANSWER-----------------A Valid Contract that can be (but does not have to be) legally avoided, canceled, or annulled by one of the parties. What is a Unenforceable Contract? ---------CORRECT ANSWER-------------- ---An otherwise valid contract that may be rendered unenforceable by statute or other law. What is a Void Contract? ---------CORRECT ANSWER-----------------A contract with no legal or binding effect What are the requirements of a Valid Contract? ---------CORRECT ANSWER-----------------1. Agreement
- Consideration
- Contractual Capacity
- Legal
An agreement consists of an: ---------CORRECT ANSWER----------------- Offer and an acceptance An offer is a: ---------CORRECT ANSWER-----------------Promise to do or refrain from doing some specified action in the future. What are the requirements of an offer? ---------CORRECT ANSWER---------- -------- The offeror must have a serious intention to become bound by the offer
- The offer's terms must be reasonably certain or definite
- The offer must be communicated to and received by the offeree What is Intention? ---------CORRECT ANSWER-----------------Judged by what a reasonable person in the offeree's position would conclude about the offer. These statements are generally not considered offers because the necessary intent is usually lacking: ---------CORRECT ANSWER--------------- --- Expressions of opinion
- Statements of future intent
- Preliminary Negotiations
- Advertisements For the offer to be reasonably certain or definite the offer must express the following items: ---------CORRECT ANSWER------------------ Identification of the parties
- Object or subject matter of the contract
- Consideration to be paid
- Time of payment, delivery, or performance
In addition to the specific actions by the parties, an offer can also be terminated by: ---------CORRECT ANSWER-----------------Operation of Law What are the terminations of an Offer by operation of law? --------- CORRECT ANSWER-----------------1. Lapse of Time
- Destruction of the Subject Matter
- Death or Incompetence of a Party What is Acceptance? ---------CORRECT ANSWER-----------------The voluntary statement or act from the offeree that indicates his/her assent to the terms of the offer The acceptance must be ____ and ____ to the offeror. ---------CORRECT ANSWER-----------------Unequivocal and Communicated How can an acceptance be unequivocal? ---------CORRECT ANSWER------ -----------It cannot change the terms of the original offer or impose any new conditions. With a unilateral contract acceptance is "communicated" when: --------- CORRECT ANSWER-----------------Substantial performance is evident, and notification is not necessary.
With a bilateral contract, communication of acceptance is: --------- CORRECT ANSWER-----------------Necessary because it is an exchange of mutual promises. What is the Mailbox Rule? ---------CORRECT ANSWER-----------------If an acceptance is authorize and made by mail, it is effective upon dispatch, and not when it is actually received by the offeror What is the Substitute Method of Acceptance? ---------CORRECT ANSWER-----------------The acceptance may still be effective if the substitute method serves the same purpose as the authorized means. Authorized Means ---------CORRECT ANSWER-----------------When the offer may specify expressly or impliedly how an acceptance must be made What is Consideration? ---------CORRECT ANSWER-----------------The value given in return for a promise (in bilateral contract) or in return for a performance (in a unilateral contract) Generally, consideration must have both: ---------CORRECT ANSWER------- ----------- Legally Sufficient Value
- A Bargained-for-Exchange A valid contract must have legal value and may consist of the following: ---- -----CORRECT ANSWER------------------ A promise
- The performance
- A Forbearance
What is Preexisting Duty? ---------CORRECT ANSWER-----------------A promise to do what one already has a legal duty to do does not constitute legally sufficient consideration. (Therefore no contract) What is Past Consideration? ---------CORRECT ANSWER----------------- Promises made in return for actions that have already taken place are unenforceable What are Illusory Promises? ---------CORRECT ANSWER-----------------The terms of the contract express such uncertainty of actual performance that the promisor has not definitely promised to do anything. What is Contractual Capacity? ---------CORRECT ANSWER----------------- The legal ability to enter into a contractual relationship. What is Dissafirmance? ---------CORRECT ANSWER-----------------The legal avoidance of a contractual obligation by a minor. Who can dissafirm a contract between a minor and an adult? --------- CORRECT ANSWER-----------------ONLY the minor A contract entered into by a intoxicated person may be either: --------- CORRECT ANSWER-----------------Valid or Voidable
In the case of an intoxication, we start with the presumption that the contract is valid and: ---------CORRECT ANSWER-----------------The intoxicated person must overcome this presumption. Courts will look at objective indications of the intoxicated persons condition to determine if: ---------CORRECT ANSWER-----------------He or She lacked the required capacity If the person proves he was too intoxicated to contract, then he may: --------
- CORRECT ANSWER-----------------Disaffirm the contract Contracts made by mentally incompetent persons may be: --------- CORRECT ANSWER-----------------Void, Voidable, or Valid If a court has previously determined a person to be mentally incompetent, any contract made by that person is: ---------CORRECT ANSWER------------- ----Automatically Void A party who has NOT been previously determined to be mentally incompetent by court may disaffirm a contract if at the time of the contracting that person: ---------CORRECT ANSWER-----------------1. Did not know he was entering into a contract
- Lacked the mental capacity to understand its nature, purpose, and consequences For a contract to be valid and enforceable, it must be formed for a: --------- CORRECT ANSWER-----------------Legal Purpose
- Contracts that cannot be performed within one year from the day after the date of formation. Land is _____ and includes all physical objects that are permanently attached to the soil. ---------CORRECT ANSWER-----------------Real Property The lack of voluntary consent can be used as a: ---------CORRECT ANSWER-----------------Defense to the contracts enforceability Consent may be lacking due to: ---------CORRECT ANSWER------------------ Mistake
- Fraudulent Misrepresentation
- Undue Influence
- Duress What is a Breach of Contract? ---------CORRECT ANSWER----------------- The nonperformance of a contractual duty A material breach of contract occurs when: ---------CORRECT ANSWER---- -------------The performance is not substantial If the breach is minor (not material) the non breaching party's duty to perform is: ---------CORRECT ANSWER-----------------Not entirely excused, but it may be suspended until the breach has been remedied
A party who fails to substantially perform (material breach) is: --------- CORRECT ANSWER-----------------Not discharged, and is liable for damages for breach of contract. Substantial Performance = ---------CORRECT ANSWER-----------------Minor Breach No Substantial Performance = ---------CORRECT ANSWER----------------- Material Breach What is Anticipatory Repudiation? ---------CORRECT ANSWER----------------
- Before either party to a contract has a duty to perform, one party may express his refusal to carry out his contractual obligations. Anticipatory Repudiation is treated as: ---------CORRECT ANSWER----------- ------A material breach If no time is stated in the contract: ---------CORRECT ANSWER----------------
- A reasonable time for performance is implied Unless time is expressly states as "of the essence", a performance delay will: ---------CORRECT ANSWER-----------------Not normally destroy the performing party's right to payment
