Personal Finance Chapter 10 Study Guide
Chapter 10
Contract Performance,
Breach, and Remedies
N.B.: TYPE indicates that a question is new, modified, or unchanged, as follows.
N A question new to this edition of the Test Bank.
+ A question modified from the previous edition of the Test Bank.
= A question included in the previous edition of the Test Bank.
true/false questions
1. A material fact is a fact that a reasonable person would consider important when determining his or her course of action.
answer: T PAGES: Section 1 TYPE: N BUSPROG: Analytic AICPA: BB-Legal
2. Voluntary consent may be lacking because of misrepresentation but not because of a mistake.
answer: f PAGES: Section 1 TYPE: N BUSPROG: Analytic AICPA: BB-Legal
3. Words or terms in contracts …show more content…
Gliding Light, LLC, and Hang Gliders, Inc., are parties to a contract. They subsequently agree that High Riders Inc. should take Gliding Light’s place and assume all of its rights and duties under the contract. This is
a. a mutual agreement to rescind.
b. an accord and satisfaction.
c. a novation.
d. a settlement agreement.
answer: C PAGE: Section 2 TYPE: + BUSPROG: Reflective AICPA: BB-Legal
16. Ambrose enters into a contract to buy 350 acres from Belle Vista Farms to cultivate grapes and open a winery. If Ambrose breaches the contract, Belle Vista’s remedy would most likely be
a. a certain ratio of the amount that Ambrose expected to invest in the project.
b. a percentage of Ambrose’s unrealized profit.
c. the difference between the land’s contract and market prices.
d. specific performance.
ANSWER: D PAGES: Section 3 TYPE: + BUSPROG: Reflective AICPA: BB-Legal
17. Dry Gulch Farms hires Elliot to repair its irrigation system on site on a certain date for $2,500, but Elliot does not show up as agreed. Dry Gulch hires Fernando to do the job for $2,000. Dry Gulch may recover from Elliot
a. nothing.
b. compensatory …show more content…
Rashi contracts to work for Social Data Analysis Corporation during June for $4,500. On May 31, Social Data cancels the contract. Rashi declines a job of a different type and rank with Tech Collection, Inc., which would have paid $3500. Rashi files a suit against Social Data. As compensatory damages, Rashi can recover
a. $4,500.
b. $4,000.
c. $500.
d. $0.
ANSWER: A PAGES: Section 3 TYPE: N BUSPROG: Reflective AICPA: BB-Legal
19. Metro Facilities, Inc., contracts to sell a parking garage to Nouveau Property Company. The contract provides that if Metro does not close the deal by September 15, it must pay Nouveau one-half of the contract price. This provision is not enforceable because it is
a. a liquidated damages clause.
b. a waiver of breach clause.
c. a limitation-of-liability clause.
d. a penalty clause.
ANSWER: D PAGES: Section 3 TYPE: + BUSPROG: Reflective AICPA: BB-Legal
20. Nonny agrees to buy a unique collection of Olympics memorabilia for $7,000 from Piper and sends $1,500 as a down payment. When Nonny sends Piper the rest of the price, she refuses to ship the collection. Nonny should seek
a. damages.
b. quasi-contractual
Contract Performance,
Breach, and Remedies
N.B.: TYPE indicates that a question is new, modified, or unchanged, as follows.
N A question new to this edition of the Test Bank.
+ A question modified from the previous edition of the Test Bank.
= A question included in the previous edition of the Test Bank.
true/false questions
1. A material fact is a fact that a reasonable person would consider important when determining his or her course of action.
answer: T PAGES: Section 1 TYPE: N BUSPROG: Analytic AICPA: BB-Legal
2. Voluntary consent may be lacking because of misrepresentation but not because of a mistake.
answer: f PAGES: Section 1 TYPE: N BUSPROG: Analytic AICPA: BB-Legal
3. Words or terms in contracts …show more content…
Gliding Light, LLC, and Hang Gliders, Inc., are parties to a contract. They subsequently agree that High Riders Inc. should take Gliding Light’s place and assume all of its rights and duties under the contract. This is
a. a mutual agreement to rescind.
b. an accord and satisfaction.
c. a novation.
d. a settlement agreement.
answer: C PAGE: Section 2 TYPE: + BUSPROG: Reflective AICPA: BB-Legal
16. Ambrose enters into a contract to buy 350 acres from Belle Vista Farms to cultivate grapes and open a winery. If Ambrose breaches the contract, Belle Vista’s remedy would most likely be
a. a certain ratio of the amount that Ambrose expected to invest in the project.
b. a percentage of Ambrose’s unrealized profit.
c. the difference between the land’s contract and market prices.
d. specific performance.
ANSWER: D PAGES: Section 3 TYPE: + BUSPROG: Reflective AICPA: BB-Legal
17. Dry Gulch Farms hires Elliot to repair its irrigation system on site on a certain date for $2,500, but Elliot does not show up as agreed. Dry Gulch hires Fernando to do the job for $2,000. Dry Gulch may recover from Elliot
a. nothing.
b. compensatory …show more content…
Rashi contracts to work for Social Data Analysis Corporation during June for $4,500. On May 31, Social Data cancels the contract. Rashi declines a job of a different type and rank with Tech Collection, Inc., which would have paid $3500. Rashi files a suit against Social Data. As compensatory damages, Rashi can recover
a. $4,500.
b. $4,000.
c. $500.
d. $0.
ANSWER: A PAGES: Section 3 TYPE: N BUSPROG: Reflective AICPA: BB-Legal
19. Metro Facilities, Inc., contracts to sell a parking garage to Nouveau Property Company. The contract provides that if Metro does not close the deal by September 15, it must pay Nouveau one-half of the contract price. This provision is not enforceable because it is
a. a liquidated damages clause.
b. a waiver of breach clause.
c. a limitation-of-liability clause.
d. a penalty clause.
ANSWER: D PAGES: Section 3 TYPE: + BUSPROG: Reflective AICPA: BB-Legal
20. Nonny agrees to buy a unique collection of Olympics memorabilia for $7,000 from Piper and sends $1,500 as a down payment. When Nonny sends Piper the rest of the price, she refuses to ship the collection. Nonny should seek
a. damages.
b. quasi-contractual