BAM 521 ( 100 FINAL)

Authors:

Henry R. Cheeseman, University of Southern California

BAM 521

Business Law

Text:
Contemporary Business and Online Commerce Law

Sixth Edition, 2009
ISBN: 10: 0-13-601500-X
Publisher:

Pearson Prentice Hall
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Multiple Choice Questions (Enter your answers on the enclosed answer sheet)
1) What was the U.S. Supreme Court’s reaction to a case where a business
executive was found guilty of aiding and abetting in the bribery of an Internal
Revenue Service Agent even though the Internal Revenue Service agent had
been found not guilty of the bribery in a separate trial?
a. Because one of the defendants had been found guilty, then both should
have been fou nd gu i Ity.
b. Because of the inconsistent outcomes, a third combined trial was ordered to
reconcile the different outcomes.
c. This simply underscores the fact that there is always the possibility that dif-
ferent juries might reach different results in a given situation.
d. Because one of the defendants had been found not guilty, they both should
have been found not gu i Ity.
e. The decisions in both cases were thrown out, making it possible, though not
mandatory, that one or both defendants would have to face another trial.
2) The followers of this school of jurisprudential thought are known as realists:
a. the Sociological School.
b. the Analytical School.
c. the Command School.
d. the Psychological School.
e. the Critical Legal Studies School.
3) The school of jurisprudence that believes that free market forces should
determine the outcomes to lawsuits is:
a. The Command School.
b. The Sociological School.
c. The Critical Legal Studies School.
d. The Analytical School.
e. The Law and Economics School.
4) Which of the following is an example of an equitable remedy?
a. A remedy that may not be modified from its rigid prescribed form.
b. A remedy fashioned by a chancery court fashioned to fit the particular situa-
tion.
c. Any remedy granted by the merchant court.
d. A remedy required to be approved by the law court.
e. Any remedy issued by a judge.
5) Which of the following is true about the creation of courts in England?
a. The different types of courts were created in order to handle different types of
cases, but the remedies available to the different courts were the same.
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b. The law courts were created to allow remedies that could not be granted by
the law courts.
c. The equity courts were created to allow remedies that could not be granted by
the law courts.
d. The merchant courts were created in order to have more flexibility in fashion-
ing remedies than the chancery courts.
e. The law courts were created in order to have broader jurisdiction than the
merchant courts.
6) Which of the following statements is true about treaties?
a. Treaties are valid only if they do not conflict with a statute passed by Con
gress.
b. The U.S. Constitution provides that the president, with the advice and con-
sent of one-half of the Senate, may enter into treaties with foreign govern-
ments.
c. The U.S. Constitution provides that the president, with the advice and con-
sent of two-thirds of the Senate, may enter into treaties with foreign govern-
ments.
d. The U.S. Constitution provides that the president, with the advice and con-
sent of three-fourths of the Senate, may enter into treaties with foreign gov-
ernments.
e. Treaties are valid only if they do not conflict with a statute passed by Congress
or any of the state legislatures.
7) A local zoning law is an example of which of the following?
a. Statutes.
b. Regulations.
c. Executive Orders.
d. Ordinances.
e. Judicial mandates.
8) The process of critical legal thinking includes which of the following?
a. A judge must specify the issue presented by the case.
b. A judge must identify the applicable law for the case.
c. A judge must identify the key facts in the case.
d. A judge must apply the law to the facts to come to a conclusion that answers
the issue presented.
e. All the above involve the process of critical legal thinking.
9) Betty believes that she has been discriminated against because of her sexual
orientation. Although federal law does not prohibit this discrimination, Mary
believes that the law should be changed in order to make the members of
society more accepting of gay individuals. Mary’s beliefs most closely corre-
spond to which school of jurisprudence?
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a. Critical Legal Studies School.
b. Sociological School.
c. Natural Law School.
d. Historical School.
e. Psychological School.
10) In what year was the U.S. Constitution written?
a.
1812.
b.
1787.
c.
1865.
d.
1776.
e.
1782.
III For which of the following in the U.S. Congress can the number to which a
state is entitled change over time?
a. Neither senators nor representatives.
b. Both Senators and representatives.
c. All members of the U.S. Congress.
d. Representatives.
e. Senators.
12) In relation to freedom of speech:
a. commercial speech receives no protection due to its profit motive.
b. all speech receives the same degree of Constitutional protection.
c. it is not an absolute right.
d. commercial speech receives the same protection as any other speech or any
person.
e. most speech critical of the government can be restricted because such
speech can be destabilizing.
13) Which of the following is true regarding obscene speech?
a. Because the definition of obscene is so subjective, it cannot be restricted or
prevented.
b. Obscene speech and offensive speech receive the same degree of protection.
c. Even though the definition of obscene speech is subjective, if speech is deter-
mined to be obscene, it loses all constitutional protection.
d. It cannot be prevented, but can be subject to time, place or manner restric-
tions.
e. The U.S. Supreme Court has set out a clear definition of what speech is de-
fi ned as obscene and therefore unprotected.
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14) Which of the following types of speech are unprotected meaning that they are
not protected by the First Amendment and may be totally forbidden by the
government?
a. Speech that incites the violent or revolutionary overthrow of the government.
b. Fighting words that are likely to provoke a hostile or violent response form an
average person.
c. Dangerous speech (including such things as yelling “fire” in a crowded the-
ater when there is no fire).
d. All the above are unprotected speech.
e. None of the above are unprotected speech.
15) Which of the following would be a violation of the freedom of religion protec-
tions in the U.S. Constitution?
a. The government preventing the practice of unpopular or fringe religions.
b. The government establishing a time in school for persons to practice the reli-
gion of their choice.
c. The government promoting a religion as better than other religions.
d. a and b only.
e. a, band c.
16) Substantive due process requires that:
a. a law treat all persons the same.
b. a notice and hearing be given before one is deprived of life, liberty or prop-
erty.
c. a defendant not be tried twice for the same crime.
d. a criminal defendant have an attorney present at all times.
e. government statutes, ordinances and regulations be clear and not overly
broad.
17) Assume that the state of Colorado institutes a law requiring that persons
from outside the state of Colorado take a skiing exam and obtain a skiing
I icense before bei ng a Ilowed to ski at a down hill resort on ru ns other than
the beginner runs. The fee for this license is $75. Colorado residents are
not required to get a license because most resident skiers learn to ski prop-
erly at an early age. This statute could be challenged under:
a. the Equal Protection Clause.
b. the Interstate Commerce Clause.
c. the Privileges and Immunities Clause.
d. none of the above because this is an intrastate commerce issue that does not
unduly burden interstate commerce.
e. a, band c.
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18) The general jurisdiction trial court in the federal system is called the:
a. United States Circuit Court.
b. United States Inferior Court.
c. United States District Court.
d. United States Trial Court.
e. United States General Court.
19) Which of the following is true?
a. Very important cases are usually initially tried in the U.S. Supreme Court.
b. In the federal court system, there are usually two levels of appeal by right.
c. The U.S. Supreme Court chooses to review only half of those cases that it is
asked to review.
d. When a case is appealed, the appellate court usually holds a new trial.
e. The U.S. Supreme Court chooses to review only a small fraction of those
cases that it is asked to review.
20) Which of the following is an example of concurrent jurisdiction shared by
federal and state courts?
a. Copyrights and trademarks.
b. Bankruptcy.
c. Federal questions.
d. Patents.
e. None of the above, each is considered exclusive federal jurisdiction.
21) There will never be a dissenting opinion filed when the U.S. Supreme Court
has issued atn).
a. majority opinion.
b. opinion written by the Chief Justice.
c. unanimous opinion.
d. tie opinion.
e. plurality opinion.
22) The concept of in personam jurisdiction is that:
a. the case has been filed at the correct location with the state.
b. special requirements must be met in non-business cases involving individu-
als.
c. a party has a personal stake in the outcome of a particular case.
d. the court has jurisdiction over the property involved.
e. a court has the power to make and enforce a judgment against a particular
person.
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23) When parties to a contract agree upon which state court will have jurisdiction
should litigation become necessary, that contract clause is called a:
a. choice-of-law clause.
b. jurisdiction selection clause.
c. standings clause.
d. venue selection clause.
e. forum-selection clause.
24) Two friends, Mary and Dean, are hiking in the Colorado mountains when a
dog being walked by its owner, Wally, who is from Wyoming, bites Dean, caus-
ing injury. Mary was not disturbed physically or emotionally but wants Dean
to sue Wally. Dean does not want to incur the cost. Which of the following is
true?
a. Whether Mary has standing depends on whether Mary files the suit in state or
federal court.
b. Mary has standing if Wally agrees she can sue instead of Dean.
c. Mary will have standing only if she files the lawsuit in Wyoming.
d. Mary does not have standing to sue Wally, the owner of the dog.
e. Mary has standing if Dean consents to Mary filing the suit.
25) Which of the following are in the proper order from first to last filed?
a. Reply; cross-complaint; answer; complaint.
b. Answer; complaint; reply; cross-complaint.
c. Complaint; answer; cross-complaint; reply.
d. Complaint; cross-complaint; reply; answer.
e. Complaint; reply; cross-complaint; answer.
26) In connection with the pleadings in a lawsuit, what is an answer?
a. The response of the plaintiff to questions posed by the judge.
b. The response of the defendant to questions posed by the judge.
c. The response of the defendant to the plaintiff’s complaint.
d. The response of the judge to the plaintiff’s complaint.
e. Both a and b.
27) Live testimony taken under oath before the trial is a discovery device known
as a/an:
a. intervention.
b. deposition.
c. interrogatory.
d. arbitration.
e. production of evidence.
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28) What is “voir dire?”
a. A discovery method to learn about the other party’s case.
b. The jury deliberation process in a trial.
c. The U.S. Supreme Court’s case selection process.
d. A motion to dismiss a case.
e. The jury selection process in a trial.
29) The decision made by an administrative law judge is called atn).
a.
verdict.
b.
order.
c.
finding.
d.
decree.
e.
judgment.
30) Which of the following is an example of an executive power granted to an
administrative agency?
a. The power to investigate a violation of a statute or administrative rule.
b. The responsibility to determine licensing requirements for pharmacists.
c. The right to issue an interpretive rule.
d. The right to adjudicate a case through an administrative proceeding.
e. The right to issue a substantive rule.
31) Brooke has fallen asleep on the beach. Eight guys, who are all friends of
hers, get into a circle around her and one gets real close and screams,
“snake” into her ear. When she jumps up screaming, they all start laughing
at her. What tort, if any, have they committed?
a. Battery.
b. Negligent infliction of emotional distress.
c. Assault.
d. All of the above.
e. None of the above.
32) The doctrine that is applied when a defendant violates an existing statute
intended to prevent the injury in question to persons of a class that includes
the plaintiff is:
a. negligence per se.
b. concurrent statutory violation.
c. proximate cause statute.
d. res ipsa loquitur.
e. negligence res ipsa.
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33) A dram shop is another name for:
a. a factory that illegally uses child labor.
b. a pharmacy.
c. a house of i II repute.
d. a bar or tavern.
e. a seller of second-hand goods.
34) In Wilhelm v. Flores, involving a death from bee stings, which of the following
sets forth the ruling of the Court of Appeals as to whether a defendant who
hires a person to work with bees can be held liable for the failure to warn of
the dangers involved?
a. A defendant who had knowledge of the dangers of working with bees can be
held liable on a negligence basis for the failure to warn of some dangers, but
the danger of anaphylactic shock is too remote for there to be a danger to
warn about that.
b. There is no liability for negligence when the unpredictability of animals, birds
or bees is involved.
c. Liability would only exist if the defendant was aware that the plaintiff knew
nothing about bees and intentionally kept the dangers a secret.
d. There could be no liability whatsoever since it is assumed that if a person
agrees to work with bees, they are aware of the dangers.
e. A defendant who has knowledge of the dangers of working with bees can be
held liable on a negligence basis for the failure to warn of dangers including
the possibility of dying from anaphylactic shock.
35) Bill and Sam get into a heated argument regarding over whether a political
candidate has been guilty of fraud. Sam makes a fist and acts as if he is
going to hit Bill. Bill is apprehensive of immediate harm, but Sam drops his
arm before he actually hits bill and says he was just kidding. Sam also apolo-
gizes for any inappropriate behavior. For which tort or torts could Sam be
held liable?
a. Assault only.
b. Assault, battery, and negligence.
c. Battery only.
d. Assault and battery.
e. None of the above. Sam could not be held liable for anything because he
said he was just kidding and apologized.
36) The proximate cause requirement for a negligence tort is most likely not met
where:
a. a customer in a building supply store carelessly drops a small can of paint
that breaks open and is ignited from a spark caused when the metal can hits
the concrete floor.
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b. a patient becomes sick from a doctor carelessly prescribing the wrong medi-
cine.
c. the victim of an accident was aware, prior to the actual accident, that the ac-
cident was likely to occur.
d. a customer becomes ill from food that is carelessly packed at a processing
plant.
e. a driver injures a pedestrian when rounding a curve at twice the legal speed
limit.
37) Probable cause is most directly associated with which step of the criminal
process?
a. Arraignment.
b. Plea bargaining.
c. Arrest.
d. Indictment.
e. Jury deliberations.
38) In Atwater v. Lago Vista, Texas, in which a mother sued for alleged violation
of her civil rights after she was handcuffed and arrested for a seat belt viola-
tion, what did the U.S. Supreme Court decide?
a. The mother’s Fifth Amendment rights were violated by the unreasonable sei-
zure of her person.
b. The mother’s Fourth Amendment rights were violated by the unreasonable
seizure of her person.
c. There was no violation of the mother’s Constitutional rights.
d. The mother’s First Amendment rights were violated by the stop.
e. There was no violation of the mother’s Constitutional rights only because she
struck the police officer before he arrested her.
39) To find someone guilty of receiving stolen property, it is sufficient to prove
that the defendant:
a. was in possession of stolen property.
b. took part in the wrongful taking of the property and intended to deprive the
true owner of the property.
c. knowingly received the stolen property and intended to deprive the true owner
of the property.
d. intended to keep the property himself.
e. paid for the property and intends to keep it himself.
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40) Which of the following statements is true?
a. The Fifth Amendment guarantee against self-incrimination does not prohibit
the taking of fingerprints against a suspect’s will.
b. The Fifth Amendment guarantee against self-incrimination does prohibit the
taking of fingerprints against a suspect’s will.
c. Even if immunity from prosecution has been granted, the defendant may still
refuse to testify.
d. The attorney-client privilege is the only privilege that has been recognized
under the Fifth Amendment.
e. The guarantee has been extended to include all business records and docu-
ments.
41) In New York v. Berger, when a warrantless search of Berger’s junkyard uncov-
ered stolen vehicles and parts, Berger challenged the search and the Su-
preme Court said:
a. warrantless searches are never valid unless the officer witnesses the crime
being committed.
b. closely regulated industries enjoy less privacy protection than other types of
busi nesses.
c. warrantless searches are allowed regarding all businesses but never against a
citizen in their home.
d. the expectation of privacy is the same regarding businesses and individuals.
e. a statute can never provide a constitutionally adequate substitution for a war
rant.
42) Miranda rights:
a. are a combination of rights contained in the Fifth, Sixth and Eighth Amend
ments.
b. are all contained in the Sixth Amendment.
c. are a combination of rights contained in the Fifth and Eighth Amendments.
d. are a combination of rights contained in the Fifth and Sixth Amendments.
e. are all contained in the Fifth Amendment.
43) Which of the following is an effect of the Sony Bono Copyright Term Exten-
sion Act of 1998?
a. Copyright protection was extended from 17 to 20 years.
b. The length of val id ity for a corporate copyright was extended to be the same
as for a copyright held by an individual.
c. Copyright protection for music was extended so that it is now longer than that
for other types of copyrighted material.
d. Individuals were granted copyright protection for their life plus 70 years.
e. Copyright protection was extended to computer programs.
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44) What was the result in the case in which James W. Newton, Jr. sued after the
Beastie Boys used six seconds of a Newton composition in a song.
a. The Beastie Boys use of Newton’s composition did not constitute a fair use
because a song was involved, and fair use is not a viable defense when a
claim is made that portions of a song were illegally used.
b. The Beastie Boys use of Newton’s composition did not constitute a fair use
because the Beastie Boys were attempting to profit off of Newton’s composi-
tion.
c. The Beastie Boys use of Newton’s composition was unfair, and Newton did
not have to prove damages in order to recover.
d. The Beastie Boys use of Newton’s composition was brief enough to be consid-
ered fair use.
e. The Beastie Boys use of Newton’s composition did not constitute a fair use
because Newton could prove he suffered money damages because of the ac-
tions of the Beastie Boys.
45) Willful copyright infringement can be punished with a statutory damage
award up to:
a.
$150.000.
b.
$500,000.
c.
$100,000.
d.
$350,000.
e.
$250,000.
46) Each of the followi ng is a word that has lost its trademark due to generic use
except:
a.
yo-yo.
b.
xerox.
c.
nylon.
d.
mimeograph.
e.
cornflakes.
47) Which of the following is true about the Paris Convention of 18837
a. It protects copyrights only.
b. It protects patents and trademarks only.
c. It protects trademarks only.
d. It protects copyrights and trademarks only.
e. It protects patents only.
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48) Kantian ethics is also known as:
a. ethical relativism.
b. social contract theory of mortality.
c. utilitarian ethics.
d. duty ethics.
e. fundamental ism.
49) In Pizza Hut, Inc. v. Papa John’s International, Inc., which Pizza Hut sued
Papa John’s claiming that Papa John’s slogan “Better Ingredients. Better
Pizza” was false advertising, what was the Court’s ruling?
a. Papa John’s had violated the False Advertising Act.
b. The slogan was a statement of opinion, not a statement of fact upon which
consumers would be justified in relying.
c. The slogan was an example of “puffery” that is not actionable under the Act.
d. Papa John’s had violated the Lanham Act.
e. Both band c.
50) The categorical imperative is an integral part of:
a. moral minimum theory.
b. Locke and Rousseau’s theory of social contract.
c. Kant’s duty ethics.
d. maximizing profit theory.
e. Rawl’ theory of social justice.
51) The theory of business social responsibility that holds that a business has a
duty to generally do good for society is:
a. moral maximum.
b. corporate citizenship.
c. moral minimum.
d. stakeholder interest.
e. maximizing profits.
52) Mary finds a wallet in the library that is filled with case. She would like to
keep the money but decides to turn it in to the lost-and-found office because
if it were her wallet, she would like the person who found it to do the same.
Mary reached her decision in accordance with:
a. Rawl’s social justice theory.
b. the categorical imperative.
c. Kantian ethics.
d. utilitarianism.
e. moral maximum.
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53) Which of the following is not needed in all cases in order to have a valid con-
tract?
a. A signed written document.
b. An agreement.
c. A legal object.
d. Consideration.
e. Contractual capacity.
54) How has the government role in contract regulation changed since the found-
ing of the United States?
a. There is less federal, but more state involvement today than in the past.
b. There is less state and federal government involvement today than in the
past.
c. There is greater state and federal government involvement today than in the
past.
d. There is less state, but more federal involvement today than in the past.
e. There is approximately the same degree of state and federal government in-
volvement today as in the past.
55) Which of the following are two terms for the same concept or situation?
a. Implied-in-fact contract and quasi-contract.
b. Implied-in-Iaw contract and quasi-contract.
c. Unilateral contract and informal contract.
d. Formal contract and implied-in-Iaw contract.
e. Implied-in-Iaw contract and implied-in-fact contract.
56) The United Nations Convention on Contracts for the International Sale of
Goods provides rules that govern:
a. the enforcement of contracts.
b. the formation of contracts.
c. the performance of contracts.
d. all of the above.
e. none of the above.
57) Which of the following is not a formal contract?
a. Negotiable instrument.
b. Recognizance.
c. Contract under seal.
d. Letter of credit.
e. New car purchase contract.
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58) A contract can be formed:
a. as a result of preliminary negotiations.
b. by an offer made in jest.
c. resulting from an expression of opinion.
d. by an offer made in anger.
e. in none of the above situations.
59) What is necessary in order for an offer to be effectively communicated?
a. The offeree must learn of the offer, but this knowledge can come from any
source.
b. The offeror must communicate the offer to at least one offeree, at which point
the offer will be considered to be communicated to anyone who later learns of
the offer by any means.
c. The offer must be communicated by either the offeror or the offeror’s agent to
the offeree.
d. The offeror must personally communicate the offer to the offeree.
e. So long as the offer is in writing, any party who learns of the offer’s terms can
accept it.
60) The requirement that the terms of the acceptance be the exact same as those
of the offer is the:
a. promissory estoppel doctrine.
b. mirror image rule.
c. identical terms rule.
d. counteroffer equals rejection rule.
e. doctrine against offer modifications.
61) Which of the following is true regarding acceptance of an offer?
a. Generally, an offeree must accept an offer by an authorized means of commu-
nication.
b. The common law recognizes certain implied means of communication.
c. The offer can stipulate that acceptance must be by a specified means of com-
munication (e.g., registered mail).
d. Most offers do not expressly specify the means of communication required for
acceptance.
e. All the above.
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62) Charlie is a contractor contacted by Hilda to discuss repairing termite dam-
age to Hilda’s home. The damage is so extensive that Charlie doubts the
home can be saved. Hilda begs Charlie to try to repair the home. Charlie
tells Hilda that he will do the best he can but cannot promise that the he will
be successful. He will charge Hilda $60 per hour whether or not he suc-
ceeds. Hilda agrees to these terms. Which of the following is true in this
situation?
a. If Charlie encounters unforeseen difficulties Hilda will not be obligated to pay
him.
b. The doctrine of promissory estoppel will allow Hilda to recover from Charlie if
he fails to repair the damage.
c. This is a requirements contract because it states what each party is required
to do.
d. This is an illusory promise because Charlie is not obligated to repair the dam-
age.
e. This is a best efforts contract properly supported by consideration on both
sides.
63) When after reaching the age of majority a minor legally indicates that the
minor intends to be bound by the terms of a contract entered into as a minor,
the action is known as:
a. ratification.
b. restoration.
c. reinstitution.
d. reaffirmation.
e. restitution.
64) What is the effect on contract obligations of a person who is insane much of
the time but who also has periodic lucid intervals of sanity?
a. In order to avoid a contract, this person must not be in a lucid interval when
making the decision to avoid a contract.
b. All contracts entered into by such a person are void regardless of when they
were entered into.
c. Contracts entered into during a lucid interval cannot be avoided.
d. All contracts entered into by this person will be voidable regardless of when
they were entered into.
e. A person who has lucid intervals can avoid contracts only after being adjudi-
cated insane.
65) In order for someone to avoid a contract on the grounds of intoxication, the
level of intoxication must have been:
a. so great that he didn’t comprehend the nature of the agreement he was enter-
ing into.
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b. only high enough that he was able to notice it.
c. so great that no reasonable person would have comprehended the nature of
the agreement entered into.
d. at or above the legal limit to operate a motor vehicle.
e. at least as high as that of the other party.
66) What is an exculpatory clause in a contract?
a. A clause that prevents one party from competing with the other party for a set
period of time.
b. A clause that releases a party from liability for that party’s negligence.
c. A clause that sets the penalties for a breach of the contract.
d. A clause that negates a minor’s ability to disaffirm a contract.
e. A clause that says that an innocent party is entitled to extra damages to pun-
ish a breaching party.
67) What is an unconscionable contract?
a. A contract where a strong party to a contract misused its power to create
unfair contract terms.
b. Any contract involving a minor or intoxicated person.
c. A contract that was entered into with both parties being fully aware of its il-
legality.
d. Any contract that is contrary to public policy.
e. Any contract where the terms greatly favor one party.
68) In Wells Fargo Credit Corporation v. Martin, what was the result when a para-
legal misread her instructions and bid lower on some foreclosed property than
she was supposed to bid, and someone else bought the property at auction?
a. The paralegal was allowed to bid again for her company.
b. The paralegal was allowed to take title to the land only if she matched the bid
of the highest bidder.
c. The paralegal was allowed to bid again only because she presented proof by a
disinterested witness of her unilateral mistake.
d. The auction was voided and conducted again because of the unilateral mis
take of the paralegal.
e. The person who made the highest bid, not the paralegal, was allowed to keep
the land.
69) What is the significance of requiring that a misrepresentation relate to a “ma-
terial fact” in connection with a fraud in the inducement case?
a. The misstatement must have been a significant factor in the plaintiff’s deci-
sion to enter into the contract, and cannot relate to an opinion or prediction.
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b. The misstatement must not involve an issue of law.
c. The misstatement can relate to any fact before or after the contract was
formed.
d. The misstatement must have been a correct statement at some point in the
past.
e. The misstatement must relate to the substance that the item is made of.
70) Which of the following best describes duress?
a. A situation where one party has lied to the other to lead them to enter into a
contract.
b. A situation where a trust relationship has been violated in forming a contract.
c. A situation where, after the contract was negotiated, circumstances have
changed so that one of the parties is in a desperate circumstance and cannot
reasonably perform.
d. A situation where a party has improperly given the other party no alternative
but to enter into a contract.
e. A situation in which fraud has been committed by a third party to the con-
tract.
71) What does” incorporation by reference” do in the context of contract law?
a. Nothing as far as the Statute of Frauds is concerned because incorporation
cannot be used to satisfy the Statute of Frauds.
b. It has no legal significance.
c. It makes separate writi ngs part of a contract’s terms.
d. It makes the Statute of Frauds inapplicable to the contract.
e. It identifies the parties to a contract.
72) Jack and Jill were discussing business over lunch when they agreed on the
sale of some goods. Because neither of them had any paper with them, Jack
wrote the following on a napkin: “Jill agrees to purchase from Jack, 1,000
widgets to be delivered on July 1, 2001, at a cost of $10,000, payable on
delivery.” Jill signed the napkin, although Jack did not sign it. Jack deliv-
ered the widgets per the contract, but Jill refuses to pay for them. If Jack
sues Jill for the price of the goods, the most likely resu It is:
a. Jack will win because the writing is sufficient under the Statute of Frauds.
b. Jack will win because the Statute of Frauds does not apply to this situation.
c. Jill will win because Jack did not sign the contract.
d. Jill will win because there was no reasonable basis for her to believe there as
an enforceable contract.
e. Jill will win because this writing is not sufficient under the Statute of Frauds.
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73) When the government enters into a contract on behalf of a taxpayer, the
taxpayer is usually what kind of beneficiary?
a.
Incidental.
b.
Creditor.
c.
Donee.
d.
Cond itiona I.
e.
Covenanted.
74) What is the significance of a contract clause stating that “time is of the
essence?”
a. It means that performance by the stated time is an express condition.
b. It means that the contract is ineffective if the time for performance is not
expressly stated.
c. It puts a duty on the parties to a contract to perform as soon as possible.
d. It creates a legal goal for the parties.
e. It means that if performance of the contract is completed within a short time
of the stated time, it will be considered performed at essentially the proper
time.
75) John entered into a contract with Barb to restore Barb’s antique Ford for
$9,000. Because John owes his younger brother a large sum of money, John
assigned, prior to notifying Barb of the assignment, his right to receive pay-
ment to his brother. John began the restoration, but quickly stopped working
on the car. Because of this, Barb retrieved the car from John. Almost no
restoration work had been performed. Which of the following is true in this
situation?
a. John’s assignment of his right to payment without Barb’s consent was improp-
er and discharged John’s duties under the contract.
b. John’s brother does not have a right to collect the $9,000 from Barb.
c. Because of the assignment, John’s brother was responsible for John’s perfor-
mance.
d. As a resu It of the assign ment, Joh n ‘s brother is entitled to payment despite
the fact that John did not perform the restoration.
e. Barb is obligated to allow John’s brother to complete the restoration if he so
desires.
76) Jana finds a home priced at $180,000 that she would like to buy. She is
concerned, however, about her ability to get a loan. Accordingly, she and
the seller reach agreement that Jana will buy the home if she can get a loan
for $180,000 within 45 days. What type of condition is this agreement?
a. An express condition.
b. A concurrent condition.
c. A condition precedent.
d. a and c.
e. a, b, and c.
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77) When an employee breaches a fixed-term employment contract by quitting
before the end of the term, what can the employer recover as damages?
a. All amounts already paid to the employee under the contract.
b. Nothing, because courts do not order anyone to perform a job against his or
her will.
c. Only specific performance.
d. Only amounts paid to the employee for which the employee has not yet done
the work.
e. The costs of hiring a replacement employee plus any increase in salary paid
to the replacement employee.
78) The doctrine that places a duty on a non-breaching party to take reasonable
steps to reduce damages is called:
a. garn ish ment.
b. mitigation.
c. liquidation.
d. avoidance.
e. reciprocal duties.
79) Alice has a contract with a surgeon to have a medical procedure performed
on July 17. The surgeon notifies Alice on July 5 that he is in the Bahamas
and will be there until the end of August and will not be able to do the sur-
gery. Which of the following is true at this point?
a. Alice must give the surgeon 90 days in which to schedule the surgery after
July 17.
b. There will be no breach until July 17.
c. If Alice contracts with another surgeon prior to July 17, and this second sur-
geon is aware of Alice’s original contract, the second surgeon has no obliga-
tion to perform.
d. Alice must wait until July 17, and if the surgeon does not perform the proce-
dure, then Alice can contract with another surgeon.
e. Alice is free to contract with another surgeon.
80) A construction contractor entered into a contract to build a family room addi-
tion onto Harry’s home for $25,000. In order to encourage timely perfor-
mance, the agreement provided that the contractor wou Id be penal ized
$5,000 as liquidated damages for each day that the project was late in get-
ting finished. The contractor was 30 days late in finishing the project, but
otherwise met the terms of the agreement. What is most likely in this situa-
tion?
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a. The liquidated damages clause would not be enforced due to its being exces-
sive.
b. The liquidated damages clause would not be enforced because the parties
made a mutual mistake about when the contract would be finished.
c. The liquidated damages clause would be enforced only if it can be shown that
the contractor has made that much in profits over the past six months.
d. The liquidated damages clause would be enforced.
e. The liquidated damages clause would be limited to $25,000, the amount of
the contract price.
81) The highest price paid to date for the purchase of a domain name has been
to purchase:
a. www.wine.com.
b. www.wallstreet.com.
c. www.sex.com.
d. www.rockandroll.com.
e. www.drugs.com.
82) Under the Uniform Computer Information Transactions Act, what is the effect
of putting additional terms into an acceptance delivered through an electron-
ic agent?
a. The acceptance is treated as a counteroffer.
b. The additional terms are ignored and a contract is formed based on the origi-
nal terms.
c. The acceptance is treated as a rejection.
d. The acceptance is treated is if it never occurred, leaving the original offer
open.
e. The additional terms become part of the agreement unless objected to within
10 days.
83) Licensing of informational rights can usually best be described as:
a. granting any rights to use the information, which can differ greatly in scope
and duration.
b. the right to temporarily use the domain name of another.
c. granting limited rights to use that cannot be simultaneously granted to others.
d. a lease of tangible personal property to the licensee.
e. a sale of the underlying intellectual property rights.
84) Under the Uniform Computer Information Transactions Act, how long does a
party have in which to commence a cause of action?
a. Two years after the breach was or should have been discovered, but not more
than five years after the breach actually occurred.
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b. One year after the breach actually occurred only.
c. One year after the breach was or should have been discovered, but not more
than five years after the breach actually occurred.
d. Two years after the breach was or should have been discovered, but not more
than three years after the breach actually occurred.
e. One year after the breach was or should have been discovered, but not more
than four years after the breach actually occurred.
85) The parol evidence rule would not allow which of the following items into
evidence when interpreting a written contract?
a. Evidence based on prior conduct in similar contracts between the parties to
explain the meaning of an ambiguous term in the contract.
b. Evidence of an oral statement regarding the contract price made when the
written contract was signed that was different from the price in the written
contract.
c. Evidence of the meaning of a term in the parties’ line of business that differs
from the meaning of that term in everyday language.
d. Evidence of a price change agreed upon after the contract was signed.
e. All the above would be allowed into evidence under the parol evidence rule.
86) For the firm offer rule to apply, who must be a merchant?
a. The offeree.
b. The offeror.
c. Both the offeror and the offeree.
d. Neither the offeror nor the offeree.
e. The offeree only if the offeree is a corporation.
87) Susan decides to buy new carpet for her home. She goes to Carpet City and
chooses the carpet she likes. As part of the deal, Carpet City agrees to install
the carpet. The carpet is installed while Susan is at work. When she returns
home and sees it, Susan immediately notices problems. The carpet is not the
same quality of carpet she ordered, and the color is off. Does the UCC apply,
and why or why not?
a. The UCC does not apply because it does not apply to mixed contracts of
goods and services.
b. The UCC does not apply because the deal with Carpet City included service
that is not covered by the UCC.
c. The UCC applies because the predominant part of the transaction between
Susan and Carpet City was the sale of goods.
d. The UCC does not apply because Susan and Carpet City did not agree in writ-
ing before the carpet was installed that the UCC would apply.
e. The UCC appl ies because it appl ies to service contracts as well as to con-
tracts for the sale of goods.
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88) Which of the following situations creates a sale that falls under UCC sales law
rules?
a. Katherine contracts to pay Mike $880.00 to have her bedroom painted.
$800.00 is for labor and $80.00 is for the paint.
b. All of the above are UCC sales contracts.
c. Katherine makes a contract to purchase a shed that requires assembly. The
contract price is for $8,000.00 which includes $400.00 for labor.
d. Abc rentals rents a cement mixer to Katherine.
e. Dr. Mackey agrees to teach at yahoo university for 1 year.
89) Seller who is located in Atlanta, Georgia contracted to sell a shipment of
peaches to the 1910 fruit gum company located in Buffalo, New York. The
peaches were sold f.o.b. Buffalo. Seller delivered the peaches to the proper
carrier in Atlanta and the peaches were destroyed during shipping. Under
these facts:
a. Seller and buyer share the risk of loss.
b. Seller bears the risk of loss and is responsible.
c. This is a trick question; goods can’t be shipped f.o.b. Buffalo.
d. Buyer bears the risk of loss and is responsible.
e. Neither the seller nor the buyer bear risk of loss, the carrier bears the risk of
loss.
90) Which of the following is true regarding a shipment contract?
a. Such contracts require the seller to bear the risk of loss to the goods during
their transportation.
b. It requires the seller to deliver conforming goods to the buyer by use of the
seller’s own trucks.
c. The risk of loss does not pass until the goods are tendered to the buyer at the
specified destination.
d. It requires the seller to deliver conforming goods to a specific destination.
e. It requires the seller to ship goods conforming to the contract to a buyer via a
carrier.
91) Under Article 2A of the UCC, for which types of lease(s) is the risk of loss on
the lessor during the term of the lease?
a. Loss-shifting leases.
b. Both ordinary and finance leases.
c. Ordinary leases.
d. Finance leases.
e. Neither ordinary nor finance leases.
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92) In Lindholm v. Brandt, when Malmberg sold Lindholm’s “Red Elvis” to
Brandt, the COJrt found that:
a. Malmberg had been entrusted with the artwork and could pass the voidable
title to Brandt because Brandt qualified as a good faith purchaser.
b. Malmberg had been entrusted with the artwork and could pass the void title
to Brandt because Brandt qualified as a good faith purchaser.
c. Malmberg had stolen the artwork and could pass the void title to Brandt be-
cause Brandt qualified as a good faith purchaser.
d. Malmberg had been entrusted with the artwork but had a void title because
he breached the terms of the entrustment so he couldn’t pass good title to
Brandt.
e. Malmberg had stolen the artwork, so he couldn’t pass his void title to Brandt.
93) A destination contract requires that the seller:
a. assist the buyer in handling goods once received by the buyer.
b. give proper and adequate notice to the buyer.
c. deliver the goods to the buyer.
d. a and c.
e. band c.
94) If a seller has delivered nonconforming goods that have been rejected by the
buyer, the seller has a right to cure:
a. only if the buyer agrees.
b. only if the contract specifically allows for cure.
c. under some circumstances, even if the original time for performance has
passed.
d. only if the time for performance has not yet expired.
e. only for 24 hours.
95) Which of the following statements is true regarding installment contracts?
a. To be an installment contract, the contract must state that each delivery is a
separate lot or words to that effect.
b. The buyer may reject the entire order for any nonconformity.
c. The buyer may reject the entire order only if the nonconformity in one ship-
ment affects the value of the entire contract.
d. a, band c.
e. a and conly.
96) Which of the following is true about a buyer’s right of inspection?
a. If not mentioned in the contract, the buyer has the right to inspect goods in a
reasonable time, place and manner once the goods have been accepted.
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b. This right must be agreed to in the contract in order for it to apply.
c. If not mentioned in the contract, the buyer has the right to inspect goods in a
reasonable time, place and manner prior to accepting or paying for them.
d. This right exists even if not mentioned in the contract, and the buyer has the
sole right to determine the time and place the right may be exercised.
e. This right exists even if not mentioned in the contract, and the seller has the
sole right to determine the time and place the right may be exercised.
97) Which of the following is not necessary in order for the implied warranty of
fitness for a particular purpose to apply to a sale of goods?
a. The goods are purchased.
b. The buyer relies on the seller’s skill and judgment.
c. The seller knows or has reason to know of the buyer’s intended use of the
good.
d. The seller is a merchant.
e. The seller states that the goods will serve the purpose of the buyer’s intended
use.
98) What was the result in Shoshone Coca-Cola Bottling Company v. Dolinski, in
which the plaintiff became ill after consuming a soft drink with a dead mouse
in it and sued the manufacturer of the drink?
a. The defendant won because the plaintiff could not explain how the mouse got
in the drink.
b. Plaintiff won because he could prove negligence on the part of the defendant.
c. Plaintiff won because the defendant was held liable under the doctrine of
strict liability in tort.
d. The defendant won because it had been as careful as possible in bottling the
drink.
e. The defendant won because plaintiff’s drink was the only drink in the appli-
cable lot or batch that was defective.
99) Which of the following is not a typical way that a manufacturing defect
arises?
a. Failure to properly check the quality of the completed product.
b. Failure to properly design the product.
c. Failure to properly assemble the product.
d. Failure to properly test the product.
e. Failure to properly engineer the product.
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100) In Sta-Rite Industries, Inc.v. Peterson, the court found Sta-Rites pool drain
defectively designed based on which of the following except:
a. there was no shut off mechanism.
b. it was a screw down design that frequently came loose.
c. the 300 to 400 pounds of pull was excessive and unnecessary for the prod-
uct.
d. there had been over 20 prior suction related accidents with Sta-Rite drain
covers and pumps.
e. all of the above.
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