TRUE/FALSE
1.    A contract voidable because of capacity may only be canceled by the party lacking capacity.

2.    Travis had too many beers at the baseball game. Ed realized Travis was so intoxicated he wouldn’t know what he was doing, so he got Travis to sign a promise to sell his motorcycle to Ed for $50. When Travis gets sober, he may void the contract.

3.    Vernon suffers from a mental impairment due to a brain injury from a motorcycle accident. He contracts with Glena to purchase her dining room furniture. A month later, he tries to void the contract. If he is unable to return the furniture, a court will not rescind the agreement unless Vernon can show that Glena acted in bad faith.

4.    A offers to sell her car to B for $500, and B accepts. A's car has a market value of $1,000 but this fact is unknown to A. The contract is unenforceable.

5.    The age of majority to contract in all states is 21.
6.    If a minor can cancel a contract, it can be done at any time during minority or within a reasonable time after reaching majority.

7.    Roger, a minor, buys a stereo from Tuneland, Inc. Roger uses the stereo for a few months, returns it to Tuneland, and demands his money back. In a majority of states, Roger may return the stereo and he does not have to pay for the use of the stereo or the damages.

8.    If a salesperson says, "This is a great car," but the car turns out to be a lemon, the salesperson has committed fraud.

9.    In a majority of states, a minor cannot avoid a contract if the minor cannot return all of the benefits received from the other person.
10.    Pushy Pat, a persuasive salesman, talked Naive Nancy into purchasing something she didn't really need or want. Naive Nancy may rescind the contract because of undue influence.
11.    A party injured by fraud generally has the choice of suing for damages or rescinding the contract.

12.    A party to a contract has a duty to investigate the other party's factual statements.

13.    If both parties to a contract are mistaken about a fact, it is a unilateral mistake.

14.    The Fimbel v. DeClark case addressed undue influence.

15.    Contract rescission can sometimes be based upon a unilateral mistake.
MULTIPLE CHOICE
1.    Marty, a 16-year-old, contracts with Cream-of-the-Crop Cycles to buy an $8,000 motorcycle. Marty agrees to make monthly payments until the purchase price plus interest are paid in full. Which of the following is correct?
a.    The contract is voidable by Marty.
b.    The contract is void as soon as it is made.
c.    The contract is voidable by Cream-of-the-Crop Cycles.
d.    The contract is voidable by either Marty or Cream-of-the-Crop Cycles.

2.    Marty, a 16-year-old, contracted with Cream-of-the-Crop Cycles to buy an $8,000 motorcycle. He agreed to make monthly payments until the purchase price plus interest were paid in full. It is two years later and Marty has not disaffirmed the contract and has made payments on the cycle since turning 18. Which of the following is correct?
a.    The contract is void and Marty has no obligation.
b.    The contract is now voidable by Cream-of-the-Crop Cycles.
c.    Marty has ratified the contract and is now bound by its terms.
d.    Marty has ratified the contract but can still get a return of the payments made while he was a minor.
3.    When courts consider economic duress, they consider all the following factors EXCEPT:
a.    relative bargaining power.
b.    financial distress.
c.    legitimate business actions.
d.    relative size of the contract.

4.    Which of the following is most likely to constitute fraud?
a.    A false prediction that a painting's value will rise.
b.    A false statement that a used car is "the best deal in town."
c.    A false statement that a $20,000 car attracts members of the opposite sex.
d.    Silence as to a toxic waste problem on real property that the buyer would not reasonably find.

5.    Angie, a minor, wants to avoid a contract she made with Cumberland Cycles. She may disaffirm the contract by:
a.    notifying Cumberland orally that she will not honor the agreement.
b.    filing a lawsuit to have a court formally cancel the contract.
c.    just refusing to perform her obligations under the contract.
d.    All of the answers are correct.
6.    Deborah purchased a boat from Sun ‘N Surf Marine. She later learned that the salesman had made misrepresentations to induce her to make the purchase. Under UCC Section 2-721, Deborah can rescind the contract:
a.    only if the misrepresentation was fraudulent.
b.    and sue for damages whether the misrepresentation was fraudulent or innocent.
c.    but cannot sue for damages if the misrepresentation was innocent.
d.    but must forego all other remedies.

7.    Marty's home had burned to the ground. When he met with his insurance adjuster, she accused him of burning down the house, and said she would have him criminally prosecuted if he didn't settle the claim for much less than the house was worth. Marty agreed to the settlement. If he changed his mind, he can probably rescind the settlement on the basis of:
a.    fraud.
b.    duress.
c.    undue influence.
d.    mistake.
8.    Larson entered Forrester's Auto Mart to purchase a used car. Larson found a vehicle with a sales price of $11,000. After Forrester answered all of Larson's questions, Forrester and Larson agreed to a sale. As Larson was leaving to get the money to pay for the car, Forrester told Larson that Robert Redford formerly owned the car. Larson later learned that Robert Redford had never owned the car. If Larson seeks to rescind the deal, Larson will:
a.    win because he relied on the misrepresentation.
b.    win because there was a misrepresentation of a material fact.
c.    lose because he will not be able to prove reliance on the misrepresentation.
d.    lose because Forrester made a unilateral mistake.

9.    When a party to a contract makes a unilateral mistake, the contract:
a.    generally can be rescinded by the mistaken party.
b.    is void.
c.    can be rescinded by either party.
d.    generally cannot be rescinded by the mistaken party unless the contract is unconscionable or it is proven that the nonmistaken party knew of the error.

10.    Ryan, a minor, contracted to sell his auto to Ed, a 28-year-old. Ryan later refused to complete the sale. If Ed sues to enforce the contract, Ed will:
a.    win because Ryan was the seller.
b.    win because minors can only avoid contracts for the sale of land.
c.    lose, as the contract is void.
d.    lose, because the contract is voidable by Ryan.
11.    Ron, a minor, goes to the hospital for treatment of the flu. On the new-patient form Ron signs, he agrees to pay for any care or treatment he receives. When billed for the treatment:
a.    Ron must pay for the value of the benefit he received, because medical care is a necessary.
b.    Ron must pay for the benefit he received because the contract is fully executory.
c.    Ron must pay for the benefit he received because he ratified the contract.
d.    Ron does not have to pay for the benefit he received.
12.    Punitive damages would be available under which of the following causes of action?
a.    Disaffirming a contract based on intoxication.
b.    Innocent misrepresentation.
c.    Unilateral mistake.
d.    Fraud.
13.    Generally, a seller has no duty to disclose facts. However, there is a duty to disclose information or facts if:
a.    the disclosure is necessary to correct a previous assertion.
b.    the disclosure is necessary to correct a basic mistaken assumption on which the other party is relying.
c.    the disclosure is necessary to report a latent defect that the buyer would not be expected to discover.
d.    All of the above are true.

14.    Mike was previously adjudged to be mentally incompetent. His sister, Teresa, was appointed as his guardian. If Mike calls the Home Shopping Club and orders a 10-carat diamond ring, giving a false credit card number which is a made-up number, the contract is:
a.    voidable, assuming that Teresa can show that Mike did not understand the nature and consequences of his conduct.
b.    valid, as Home Shopping Club doesn't know that Mike has a guardian.
c.    void, as a guardian has been appointed.
d.    voidable or void depending on the state law that would apply.

15.    If Jane persuades Linda to buy her horse by telling Linda that the horse runs "like the wind," then Jane's statement is:
a.    fraud.
b.    misrepresentation.
c.    a unilateral mistake.
d.    puffery.
16.    In the case of Sepulveda v. Aviles, the New York Supreme Court, Appellate Division, found evidence of undue influence in:
a.    the relationship based on family connection between Seals and Aviles.
b.    Aviles’s use of Seals’ funds and credit cards.
c.    opinions of Aviles and Seals’ attorney about Seals’ mental state at the property closing.
d.    All of the answers are correct.

17.    When a business is concerned about selling to minors because of their right to disaffirm contracts, the business might protect itself by:
a.    getting the minor to sign an agreement not to disaffirm.
b.    requiring an adult co-signer.
c.    requiring a court-appointed guardian to be named.
d.    using a layaway system until the minor turns 18.
18.    Which of the following is least likely to be regarded as a necessary?
a.    Rent.
b.    Food.
c.    Medical expenses.
d.    Educational expenses.

19.    The most accurate statement regarding economic duress is:
a.    it is never grounds for rescission.
b.    it is always grounds for rescission.
c.    it is a UCC concept only.
d.    it may be grounds for rescission.

20.    Which of the following statements, if made by a seller who knows the statement to be untruthful, would not be misrepresentation of material fact resulting in a cause of action for fraud?
a.    "This horse is only six years old."
b.    "There is no better car in the world."
c.    "The tires have less than 5,000 miles on them."
d.    "This car gets 28 miles per gallon. "
21.    Vince has begun forgetting things and is becoming very difficult to get along with. He is 85, has been ill, and is very fond of his housekeeper Annie. He gives a deed to Annie for all of his real property. At Vince's death, his children, who got only his photograph albums according to the will, ask that the deed be set aside and the land be put back in the estate for purposes of division among all the children. The probable result will be:
a.    since Vince was 85 he was probably incompetent and the court would rule for the children.
b.    clearly Annie used her position of dominance to persuade Vince to deed her the property, and it will be set aside.
c.    unless the children can prove that Vince was unable to understand what he was doing, or that Annie used her position to improperly influence Vince, Annie can keep the property.
d.    None of the above.

22.    Jeff was a subcontractor, bidding on a contract for ACE Corp., the general contractor. When adding up the total of materials and labor, Jeff's secretary mistakenly moved the decimal point one place, ending up with a bid of $3500 rather than $35,000. ACE Corp. accepted Jeff's bid, mostly because all the other bids were over $30,000. When Jeff learned of the mistake, he tells ACE Corp. that he cannot do the job for $3500. If ACE Corp. sues to enforce this contract, what is the most likely result?
a.    The contract is enforceable, since there was an offer, acceptance, and consideration.
b.    This is a bilateral mistake, so the contract can be rescinded by either party.
c.    This is a unilateral mistake, so the contract cannot be rescinded by Jeff.
d.    This is a unilateral mistake, but one where ACE Corp. knew that a mistake had been made. Jeff should be able to rescind the contract.
23.    Peter, a minor, purchased a car from ACME Motors. Using a fake ID, he misrepresented his age to be 18. The contract is fully executed. Which of the following is correct?
a.    Peter cannot disaffirm the contract because a car is a necessary.
b.    Peter cannot disaffirm the contract because of his misrepresentation.
c.    Peter can disaffirm the contract, but only if ACME Motors will not be harmed.
d.    Either b or c may be applicable depending on the law of the jurisdiction in which the contract was formed.

24.    An example of the type of relationship required to find undue influence would be:
a.    a salesperson-purchaser relationship.
b.    a bartender-customer relationship.
c.    a doctor-patient relationship.
d.    a neighbor-neighbor relationship.

25.    Which of the following is NOT a true statement about fraud?
a.    The plaintiff must prove that the defendant has knowledge of the falsity of his or her statement.
b.    It is necessary for the plaintiff to show that he or she has suffered some type of detriment or injury because of his or her reasonable reliance on the defendant's false statement.
c.    The defendant made the statement with the intent to induce the plaintiff to enter into the contract.
d.    The plaintiff must show that although the defendant acted in good faith, the statement was material because the defendant expected the plaintiff to rely on it and enter into the contract.
ESSAY
1.    Reed, a 15-year-old, has run out of money while on a trip away from home. Martha gives him food, a place to sleep, and his bus fare home, in exchange for Reed's promise to pay $200 after he got home. Is Reed's promise enforceable?
2.    Discuss the concept of a "material fact" in fraud situations.
3.    Discuss two types of misrepresentation and how they differ. List the three things a party must show to rescind a contract based on misrepresentation.
4.    Discuss the factors the courts use when analyzing an economic duress claim.
5.    Larson is the owner of a home in Eagle City, Iowa. He put the home on the market for sale. His good friend Bill, an attorney, came to look at the home for the purpose of possible purchase or rental. Bill noticed a crack in the ceiling and inquired about it to Larson. Larson informed Bill that there had been a water leakage problem in the area but it had been fixed two years ago and had not leaked since. Bill proceeded to make a written offer on the house which was accepted in writing by Larson the next day. On the day prior to closing the transaction, Bill went to the residence to make a final inspection. During the inspection, Bill observed water leaking through another crack in a ceiling of the house and in the garage. On the next day, Bill informed the real estate agent that he was rescinding the contract because of the leaks. Larson subsequently rented the property to another party. A couple of months later, Larson filed a suit seeking a court order to make Bill purchase the house or in the alternative for money damages. Bill defended by claiming that Larson either defrauded him or there was a mutual mistake and asked for the return of his earnest money and/or damages for fraud. The trial court found there was no evidence to find fraud on the part of Larson because the roof had been previously fixed and the two parties had been good friends. However, the trial court held that there was a mutual mistake of fact. What is the law with regard to mistakes? Was Bill under a duty to hire his own inspector to inspect the roof? What is the appropriate remedy when a court concludes that there has been a mutual mistake of material fact?

TRUE/FALSE
1.    Parol evidence is permitted to explain ambiguities or to provide evidence of misrepresentation or duress.

2.    Any contract involving a sale of goods of $100 or more must be in writing.

3.    Bry, Inc. and Gangl, Co. entered into an oral agreement for the sale of 3,000 sweaters. Both parties performed as required under the contract. Bry delivered the sweaters and Gangl accepted and paid for them. Since the contract is fully executed, it makes no difference that it was oral.

4.    The original statute of frauds is the English law that began the practice of requiring written evidence of certain kinds of contracts.

5.    Sweet Plantation, Inc. made a written contract with Candy, Inc. whereby Sweet Plantation agreed to supply all of Candy's sugar requirements for the next year at $.25 per pound. A dispute arose as to how much sugar Sweet is to supply. The parol evidence rule will bar Sweet's introduction of evidence concerning the intent of the requirements of Candy.
6.    Raymond agrees to transfer an easement right to Sandra for $1,000. This contract is within the statute of frauds and therefore needs to be in writing to be enforceable.

7.    Ramona orally agreed to work for Brahma, Inc. for the rest of her life for $50,000 per year. This agreement would not be enforceable since it violates the one-year rule of the statute of frauds.

8.    The "leading object rule" exception to the statute of frauds refers to the fact that contracts involving interests in land must be in writing.
9.    Patrick owned an acre of land which was being divided into building lots. Nancy was interested in purchasing the corner lot. In a signed writing, Patrick stated “I will sell Nancy Grimes a lot on Route 70 for $2,500 cash, payable on April 30, 2006.” This writing is sufficient under the statute of frauds to make the contract enforceable.

10.    The Uniform Commercial Code provides that, under certain circumstances, a merchant may be liable on a written contract, even though that merchant has NOT signed it.
11.    Amanda, a recent university graduate, needed a car to get to her new job. To help Amanda secure a loan for the car, Ted, a friend, agreed to pay the loan should Amanda default. Ted's promise to pay the loan is a collateral promise. His promise must be in writing to be enforceable.

12.    Whittle sent an order over the Internet for a $1,200 garage door. His name keyed onto the order will only be effective as a signature sufficient to create a “writing” “signed by the party against whom enforcement is sought” if he follows up with a signature on paper.

13.    Promises made in consideration of marriage must be in writing to be enforceable.

14.    Under the statute of frauds, the writing must: be signed by the defendant; and must state with reasonable certainty the name of each party, the subject matter of the agreement, and all of the essential terms and promises.

15.    Rest Well Hotel orally ordered 1,000 blankets monogrammed with its initials, RWH, from TriColor Textiles. TriColor had just finished monogramming the blankets when Rest Well called and canceled the order. TriColor will be able to enforce the agreement even though there was no writing.
MULTIPLE CHOICE
1.    For statute of frauds purposes, an interest in land includes:
a.    a house.
b.    a real estate mortgage.
c.    an easement.
d.    All of the above.
2.    Tuan is president and sole shareholder of Entertainment, Inc. Entertainment, Inc. wishes to borrow money, but to do so, the bank requires Tuan to orally agree to pay the debt of the corporation if Entertainment, Inc. cannot. Tuan's guarantee to repay is:
a.    enforceable under the parol evidence rule.
b.    enforceable because there is an insurable interest.
c.    enforceable because of the leading object rule.
d.    unenforceable because it is a collateral promise.

3.    Robin and Bellman, both merchants, orally agree to a contract for the sale of $5000 of accessories. Bellman, the buyer, sends to Robin, the seller, a written confirmation of the sale, which is sufficient against Bellman under the statute of frauds and which Bellman signs. Robin fails to perform the contract and does not ship out the goods. Bellman sues. This contract is:
a.    unenforceable, because Robin did not sign any contract.
b.    unenforceable, because Bellman did not pay for the goods.
c.    enforceable, because Bellman sent the written confirmation of the sale, thereby partially performing the contract.
d.    enforceable even without Robin's signature because both parties are merchants.

4.    In order to satisfy the statute of frauds, a writing must:
a.    be a formal written document drafted by an attorney.
b.    be signed by the defendant and contain the name of each party, the subject matter of the agreement, and the essential terms and promises.
c.    be notarized.
d.    All of the above.

5.    Willis and Leslie orally agree to the sale of a parcel of land for $50,000: one-half payable now as a down payment; one-half payable in 30 days at the time of closing when the title will be transferred. The buyer, Willis, is to have possession immediately. Willis pays Leslie $25,000, takes possession of the land, and starts building a house. At the time of closing, the house is nearly completed. However, Leslie refuses to transfer the title, claiming the oral contract is not enforceable. This contract is:
a.    enforceable, because the statute of frauds does not apply to this interest in land.
b.    unenforceable, because there is no writing signed by Leslie.
c.    enforceable, because Willis has partially performed the oral contract and made improvements on the land.
d.    unenforceable, because the parol evidence rule applies.
6.    Abby dies, and her good friend, Claire is appointed to administer Abby's estate. Abby's house was in poor condition, so Claire orally hired a contractor to make repairs. Claire also orally promised that if the estate could not pay the repair bill, he would pay it even though he does not live in the house and has no entitlement under Abby's estate. The estate does not pay the repair bill. Who can the contractor collect from, if anyone?
a.    The contractor can collect from either the estate or Claire.
b.    The contractor can collect from the estate only.
c.    The contractor can collect from Claire only.
d.    The contractor must collect from the estate first, and then collect any deficiency from Claire.
7.    Derek and Abyan were discussing business over lunch when they agreed on the sale of a five-acre parcel of land. Since neither of them had any paper with them, Derek wrote the following on a napkin: "Abyan agrees to purchase from Derek a 5-acre parcel located at the local address of 123 105th Street, St. Joseph, Minnesota, U.S.A. for the price of $3500 per acre. Transfer of title, payment, and possession to take place on May 1, 2002." Abyan signed the napkin. On May 1, 2002, Derek was ready to close the deal and transfer title but Abyan refused to pay the purchase price. If Derek sues Abyan for the price of the land, the most likely result will be:
a.    Abyan will win because the writing is not sufficient under the statute of frauds.
b.    Derek will win because the writing is sufficient under the statute of frauds.
c.    Abyan will win because Derek did not sign the writing.
d.    Derek will win because the statute of frauds does not apply to this situation.

8.    Which of the following types of contracts cannot be either contradicted or supplemented by evidence of prior agreements or expressions?
a.    Totally integrated contracts.
b.    Incomplete contracts.
c.    Ambiguous contracts.
d.    All of the above.

9.    Claude agrees to lease his house to Irvin for nine months, the lease to begin six months from the signing of the contract. Under the statute of frauds:
a.    the lease is not required to be in writing.
b.    the lease is required to be in writing because of the one-year rule.
c.    the parol evidence rule renders the lease voidable.
d.    the lease is a collateral promise which must be in writing.
10.    The main difference between the UCC requirement for a writing for a contract for the sale of goods and the common law is that the:
a.    UCC requires only the signature of both parties.
b.    UCC does not require all the terms of the agreement to be in writing.
c.    common law requires only an indication that the parties reached an agreement.
d.    common law requires only the signature of the defendant and the quantity of goods being sold.
11.    Which of the following promises ordinarily must be in writing to be enforceable?
a.    Promises made as a part of a prenuptial agreement.
b.    The agreement to sell of a car for $1500.
c.    The promise by an executor of an estate to pay a debt of the decedent.
d.    All of the above.

12.    Renita, a merchant, has received a signed, written confirmation from Merchants, Inc. referring to goods she had not ordered. Renita should:
a.    ignore the confirmation.
b.    call the seller and object to the confirmation as soon as she gets back from her two-week vacation.
c.    object to the confirmation in writing within 10 days.
d.    return the goods within two weeks of their delivery with a note attached saying she will not pay for the goods.

13.    Under the UCC, which of the following contracts may be enforceable, even without a written memorandum?
a.    The seller is specially manufacturing the goods for the buyer.
b.    The seller admits in court that there was a contact.
c.    The seller has delivered the goods.
d.    All of the above.

14.    Brahma entered into an oral agreement to sell 50 jet skis to Summer Sports. Brahma delivered 20 of the skis on May 1. On June 1, Summer Sports notified Brahma that it will not honor the agreement. Which statement is correct?
a.    The contract is void since it was oral.
b.    The contract is enforceable for 20 jet skis.
c.    The contract is enforceable for the 50 jet skis
d.    The contract is obsolete.
15.    Alfred orally promised to pay Robert a salary of $30,000 per year for five years and his moving expenses up to $10,000 if Robert would quit his job and come to work for him at his manufacturing plant. Robert agreed to do so, but requested a written contract. Alfred assured him that the company attorney would prepare such a contract as soon as possible, but Alfred needed Robert to start at once. Accordingly, Robert sold his house, moved his family, and commenced to work for Alfred. He was fired without cause two months later. No written contract was ever executed. Can Robert enforce Alfred's oral promise?
a.    No. This was a contract for longer than one year. Without a writing it violates the statute of frauds and is not enforceable.
b.    Maybe. Robert should go to court under the theory of promissory estoppel. Alfred made an oral promise that Robert relied upon, and the way to avoid injustice is to enforce the promise.
c.    Yes. This is a partial performance of the sale of goods. Robert can recoup the loss he took on the sale of his house.
d.    Yes. This involves the special manufacturing of goods. This situation involves an exception to the UCC statute of frauds.
16.    Scott is trying to introduce oral evidence in court to alter the terms of a written contract he had with Bonnie. Bonnie has raised the parol evidence rule as an objection to Scott's testimony. In which of the following circumstances will Scott not be able to introduce the oral evidence?
a.    The contract has an integration clause in it and Scott's point of contention is covered in detail in the contract, although not to his favor.
b.    There was a mutual mistake of a material fact when the contract was entered into.
c.    The oral evidence is introduced to clarify the meaning of an ambiguous term used in the written contract.
d.    Scott claims that he was defrauded into entering into the contract and wants to testify about the intentional misrepresentations of material facts.

17.    Under a contract for the sale of land, the statute of frauds:
a.    does not apply if the purchase price for the land is less than $500.
b.    requires that the entire agreement be in one single document.
c.    requires the defendant to sign the agreement.
d.    requires that the purchase price be fair.

18.    Ethel's Exercise World plans to order three weight machines from Pete's Push, Pedal and Pull, Inc. for a total of $15,000. Pete's demands that Ethel's friend, Moneybags, a wealthy independent businesswoman (not connected with Ethel's business in any way) promise to pay Pete's for the three machines if Ethel's Exercise World does not. Which of the promises in this problem must be in writing to be enforceable?
a.    The promise made by Ethel's Exercise World to buy the weight machines.
b.    Moneybag's promise to pay if Ethel's Exercise World doesn't.
c.    Both Moneybag's promise and Ethel's Exercise World's promise.
d.    None of the promises in this problem need to be in writing.
19.    Which of the following would suffice for a signature on a writing under the statute of frauds?
a.    A stamped signature.
b.    A retinal scan.
c.    A name keyed at the bottom of an e-mail.
d.    Any of the above would suffice. Judges define “signature” very broadly.

20.    Amy Hudson has been trying to purchase Glen Cappel's antique desk for some time, but Glen has been reluctant to sell. One evening Glen said to Amy, "Okay, I'll sell the desk for $550." Amy replied, "Thank you, Glen. I accept." The agreement was not reduced to writing, but Glen and Amy did shake hands. Two days later, Amy sent Glen a letter outlining the terms of the agreement, and stating that she would deliver $550 cash according to the agreement within ten days. The letter was signed, "Best regards, Amy." Later, Amy had second thoughts, and refused to go through with the purchase. Nothing had been exchanged at this point. Glen:
a.    can enforce the contract against Amy because the statute of frauds is satisfied under this situation.
b.    cannot enforce the contract against Amy because her signature was inadequate without her last name under the statute of frauds.
c.    cannot enforce the contract against Amy because he did not sign the letter.
d.    can enforce the contract because they shook hands on the agreement.
21.    Vicki entered into a written contract to buy a car from Valley Motors. During the negotiations, the sales representative said that the car had a two-year full warranty. The written contract included a provision that stated, "This writing is the full and final expression of the parties' agreement, and that anything said before signing or while signing is irrelevant." The written contract did not include a warranty. Two months after Vicki took delivery of the car, she discovered that the transmission needed to be replaced. Vicki claimed that it was covered by the full warranty. Will Vicki be able to present evidence as to the sale representative's statements concerning the warranty?
a.    No. The parol evidence rule will most likely exclude any evidence of the discussion of the warranty.
b.    Yes. The leading objection rule will allow evidence as to the discussion of the warranty.
c.    Yes. The evidence is needed because the contract is ambiguous.
d.    Yes. The contract was fully executed.

22.    Vicki entered into a written contract to buy a car from Valley Motors. The written contract included a provision that stated, "This writing is the full and final expression of the parties' agreement, and that anything said before signing or while signing is irrelevant." This is:
a.    an integration clause.
b.    a statute of frauds clause.
c.    parol evidence.
d.    an exculpatory clause.
23.    When a contract falls within the statute of frauds but is not reduced to a writing, the contract is:
a.    illegal.
b.    unenforceable.
c.    void.
d.    voidable.

24.    Sonny, a college student, places a telephone order for a new computer from Computers, Inc. The price of the computer is $1500. The clerk who takes the order sends Sonny a copy of the invoice. The next week, Sonny calls back and tries to cancel his order.
a.    Sonny cannot cancel the order because Computers, Inc. accepted his order.
b.    Sonny cannot cancel the order if he has received the invoice.
c.    Sonny can cancel the order; the invoice is unenforceable against him, as he did not sign the invoice.
d.    Sonny can now cancel the order but only if he does so in writing within ten days.

25.    Martin, Human Resources Director for Spring Co., sent Lynn the following signed letter: “This letter confirms our offer to you. We will pay for your moving expenses, up to $1,500. Your starting date will be February 1, and you will become eligible for health care benefits as of May 1. You will receive a starting salary of $36,500 annually, with reviews and eligibility for increases at six months, 12 months, and annually thereafter. Vacation will be for two weeks a year after one year.” Spring fired Lynn eight months after she started to work, and Lynn sued arguing the letter constituted a memorandum of an oral contract for employment for five years. Is the letter sufficient to satisfy the statute of frauds?
a.    Yes, to satisfy the statute of frauds, a memorandum is sufficient if it evidences an oral contract between the parties and is signed by the defendant.
b.    Yes, the memorandum is signed by the defendant and states with reasonable certainty the subject matter and essential terms of the agreement.
c.    No, to satisfy the statute of frauds, the memorandum must contain all essential terms of the contract.
d.    No, the letter was not formal enough to satisfy the statute of frauds.
ESSAY
1.    Herb was interviewed for a job on Wednesday. The employer orally offered Herb a job right on the spot. Herb orally agreed to start working the following Monday, to be employed from that day, Monday, for one year thereafter. Three weeks after starting the job Herb was fired without cause and replaced by the employer's friend. Will Herb be successful in an action brought against the employer for breach of contract?
2.    List the types of agreements that are within the statute of frauds and explain the consequences if the parties do not comply with the requirements of the statute of frauds.
3.    Tony signed a contract agreeing to purchase a used, high-powered boat for $10,000. Prior to signing the contract, the sales representative explained that the boat motor was guaranteed for six months for all labor and parts. The written contract contained nothing about the warranty; however, it did have an integration clause in it. Tony had problems with the boat motor, causing expensive repairs. Tony returned the boat to the sales representative for the repairs, only to learn the salesman denied knowing anything about a six-month warranty. If Tony sues, discuss the likely outcome.
4.    J.T. Tidwell entered into an oral contract with Robert Anthony for the purchase of 100 head of cattle at a price of $500 each. When the oral contract was made, Tidwell gave Anthony a check for $1000 as "earnest money or good faith money towards the purchase of the cattle." Anthony sold the cattle to someone else. Tidwell sued, asking the court to either compel Anthony to perform the contract or to pay damages that Tidwell suffered from the alleged breach of contract. What issues do you see and how would you resolve those issues?
5.    Thomas Reep, was the president of First National Bank in Clarksville. R.L. Moore approached Reep requesting the bank to open an account in the name of Texas Continental Express, Inc., a corporation owned by his two sons. R.L. had no affiliation with the corporation nor any financial interest in it. R.L. promised Reep that he would open several accounts in First National that would more than amount to the business of his sons. R.L. assured Reep that if anything came up in connection with the sons' account, Reep was to contract him directly. Upon these conditions, First National proceeded to furnish a regular checking account and bank draft services for Texas Continental. Sometime later, First National paid two drafts overdrawing the account by $448,942. When Reep contacted R.L. about the overdrawn account, R.L. assured Reep that money would be deposited in the account. When Reep called back a few days later to find out why the money had not been deposited, R.L. informed Reep that his wife had suffered a nervous breakdown the night before and the deal was off. First National Bank brought suit to enforce R.L.'s promise to pay the debts of Texas Continental. What is the likely outcome?

TRUE/FALSE
1.    Incidental beneficiaries generally have the right to sue for breach of contract.

2.    The court in the Watson v. Michigan Bureau of State Lottery case used its discretion to permit the assignment of lottery winnings although a statute barred most assignments.

3.    Most, but not all, contract rights are assignable.

4.    If Casey assigns her rights to receive income from rental property to Errol, then Errol will legally acquire any rights held by Casey to the income.

5.    Char-Glo Industries contracted with Evergreen Lawn Service to mow and trim the company’s lawn. In the contract, Char-Glo included a clause prohibiting Evergreen from delegating its duties. Courts will ordinarily enforce such a clause.
6.    If Ray agrees to rake leaves for Michelle in exchange for Michelle's promise to pay off the debt Ray owes to Dean, then Dean is a donee beneficiary of the agreement between Ray and Michelle.

7.    If Valley Bridge contracts with Rainbow Painters to paint a bridge and the contract requires that only Sherwin Williams paint be used, then Sherwin Williams will be able to enforce the contract against either Valley Bridge or Rainbow Painters.

8.    Claims for personal injury are generally assignable.

9.    Generally, duties may be delegated.
10.    Norm and Frank have a legal contract that is silent with regard to an assignment of the contract. In order for Norm to assign all or part of his rights under a contract, Frank must grant permission to Norm to make the assignment legally effective.
11.    Generally, the assignment of the obligation to perform personal services is invalid.

12.    Contract prohibitions against assignments are invalid as a matter of public policy.

13.    If Velma, as a birthday present, assigns to Jim her contractual right to collect $50 from Wood Co., this would be a gratuitous assignment.

14.    First Bank has agreed to loan Teresa $100,000 for use in her cosmetics business. If Teresa sells the business to Melissa before the loan is consummated, Teresa can assign her right to the loan to Melissa.

15.    Amanda buys a vacuum to use in her home from retailer Andy. Amanda promises to pay for it in six monthly installment of $50 each. Andy assigns the contract to Big Finance Co. who paid value and took without notice of any defense. Big Finance Co. sues Amanda for nonpayment. Amanda has stopped making payments because the vacuum stopped working and Andy refuses to honor the express warranty he made to her at the time of the sale. Generally, any defense that Amanda may have against Andy is good against Big Finance Co.
MULTIPLE CHOICE
1.    Brandon orally assigned his right to $100 to Will as a gift. This assignment is:
a.    not valid because it was not in writing.
b.    valid even though it was oral and there was no consideration from Will.
c.    irrevocable once Brandon has told Will about the gift.
d.    not valid because Will gave no consideration for the assignment.
2.    In the Schauer v. Mandarin Gems of California, Inc.case, the court held:
a.    the plaintiff was entitled to proceed with her contract claim against the jeweler because the jeweler must have understood that she was an intended beneficiary of the sales contract.
b.    both of the contracting parties must intend to benefit the third party to create a right to sue in the third party.
c.    a specific manifestation by the promisor of an intent to benefit the third person is required to create a third party beneficiary contract.
d.    the plaintiff was a donee beneficiary and, as such, she had no right to sue.

3.    A third party beneficiary's status occurs:
a.    after an assignment and delegation.
b.    when the third party is informed of the contract.
c.    when the third party beneficiary agrees to the contract terms.
d.    when the contract is created.

4.    Robert hired James, a CPA, to prepare his tax returns. James was too busy and delegated the work to Sara, also a CPA. This delegation is:
a.    enforceable, as Sara is also a CPA.
b.    enforceable, as there was no expectation James would do the work.
c.    not enforceable, as Robert hired James to perform personal services.
d.    not enforceable, as this violates public policy.

5.    The beneficiary of a life insurance policy would ordinarily be:
a.    a creditor beneficiary.
b.    an incidental beneficiary.
c.    a donee beneficiary.
d.    a debtor beneficiary.
6.    The status of a third party is determined by:
a.    the type of contract.
b.    whether the third party gave consideration.
c.    the reasonable expectations of the third party.
d.    the intent of the contracting parties.

7.    A nonparty to a contract may enforce the contract if the person is:
a.    a donee beneficiary.
b.    an incidental beneficiary.
c.    a creditor beneficiary.
d.    Both a and c.
8.    Johann, a well-known musician, agrees to give ten guitar lessons to Elton for $2,000. Nothing in the contract itself prohibits a delegation. If Johann delegates his obligation to Eugene, a second-year musical student and enthusiastic guitar player, then the delegation will probably be:
a.    permitted because contracts may be freely delegated.
b.    permitted because the contract is just for music lessons.
c.    prohibited because Johann and Eugene have very different skill levels.
d.    prohibited by the UCC.

9.    Linda assigns to Ben a right to receive rent payments. The law implies the following warranty on Linda’s part:
a.    the tenant is solvent.
b.    Linda actually has a right to the rental payments.
c.    the tenant will actually pay.
d.    No warranties are implied by law in an assignment.

10.    Molly and Craig are the original parties to a contract. Craig is obligated to design a Website for Molly. They subsequently make an agreement with Eric that Eric should take the place of Craig and assume all of Craig's rights and duties under the contract. The agreement releases Craig from his obligations under the contract. This agreement is:
a.    a novation.
b.    an accord and satisfaction.
c.    an assignment.
d.    a nullification.
11.    A donee beneficiary:
a.    is not entitled to enforce a contract against either party.
b.    usually does not give consideration in return for the gift.
c.    will generally become a creditor beneficiary after his or her rights vest.
d.    is an incidental beneficiary.

12.    Which statement most accurately describes third party beneficiary rights?
a.    A beneficiary may enforce a contract if the parties intended to benefit him and if enforcing the promise will satisfy a duty of the promisee to the beneficiary.
b.    If a promisee intended to make a gift to the beneficiary, the beneficiary may not enforce the contract.
c.    An intended third party beneficiary has no enforceable rights in a contract.
d.    Incidental beneficiaries have enforceable rights against both contracting parties.
13.    Wright Company contracted with the city of St. Louis to train and employ disadvantaged youth. If Wright fails to fulfill the contract and is sued by one of the disadvantaged youths, the youth would:
a.    win, as he is an intended beneficiary.
b.    win, as he is a donor beneficiary.
c.    lose, as he is a creditor beneficiary.
d.    lose, as he is an incidental beneficiary.

14.    Tyron purchased a vacant lot and entered into a contract with BZ Inc. to construct a shopping center on the site. Douglas heard about this contract and built a restaurant on an adjoining piece of property because of the planned shopping center. Tyron was unable to raise the necessary capital and was unable to perform the contract with BZ, Inc. Douglas sued Tyron for breach of contract as a third party beneficiary. Douglas will probably:
a.    win as a third party creditor beneficiary.
b.    win as a third party donee beneficiary.
c.    lose as a third party incidental beneficiary.
d.    lose as a third party creditor beneficiary.

15.    Which of the following duties can probably be delegated?
a.    An agreement to perform an operation.
b.    A contract to paint a picture.
c.    An agreement by an attorney to draft a contract.
d.    An agreement to paint a house.
16.    Which of the following contract rights is not assignable?
a.    A right to receive real property.
b.    A right to receive an automobile.
c.    A right to receive cash.
d.    A right to receive personal services.

17.    An assignment is valid:
a.    from the moment it is made.
b.    from the moment the assignor notifies the obligor.
c.    from the moment the assignee notifies the obligor.
d.    from the moment the obligor is notified from any source.
18.    Jerry purchased a state-of-the-art computer for his personal use from Computer City on an installment loan contract thinking he would make monthly payments directly to Computer City. The sales contract stated that in the event the contract is assigned to a third party, the purchaser (Jerry) promises he will not assert any claim or defense against the assignee which he might have against Computer City. Computer City immediately assigns the contract rights to Finance USA. The computer stops working within two weeks of the purchase.
a.    This is a valid waiver of defense clause. Jerry signed the contract, so he can't raise a defense to Finance USA.
b.    Finance USA is an intended third party beneficiary and may therefore enforce the contract.
c.    In general, this type of waiver is not permitted in consumer contracts, so Jerry can raise his claim against Finance USA.
d.    This is a delegation of Jerry's duties and the delegator remains liable on the contract unless a novation agreement is made.
19.    Cheryl enters into a contract with Gabe. In this contract, Cheryl asks Gabe to pay the money he owes her from the contract to her friend Leah because Leah is having financial troubles. Leah is:
a.    a third party creditor beneficiary.
b.    a third party donee beneficiary.
c.    a third party incidental beneficiary.
d.    the promisee in the contract.

20.    Susan took out a life insurance policy on herself, paying all of the premium payments. She named her daughter, Jessica, as the beneficiary under the policy. Jessica has not given anything in consideration for the policy. Jessica is:
a.    a donee beneficiary who has rights to enforce the policy once Susan dies.
b.    a creditor beneficiary who has rights to enforce the policy once Susan dies.
c.    an incidental beneficiary because Jessica did not give any consideration for the policy and therefore cannot enforce the policy even when Susan dies.
d.    None of the above is correct.
21.    Generally, in comparison to a donee beneficiary, and a creditor beneficiary has:
a.    about the same legal rights.
b.    substantially greater rights.
c.    substantially fewer legal rights.
d.    virtually no legal rights.
22.    Ted and Alice own their recreational vehicle subject to a security agreement to Third U.S. Bank to secure the repayment of the purchase money loan. Ted and Alice sell their RV to Bob and Carol, who agree to take over the loan payments to the bank. There is no novation with the bank. Under these facts, if Bob and Carol do not make the loan payments, Third U.S. Bank:
a.    can sue Bob and Carol only.
b.    can sue Ted and Alice only.
c.    can sue Bob, Carol, Ted, and Alice.
d.    cannot sue anyone but can repossess the RV.

23.    A rock group assigns its payment under a performance contract to the Costume Shop, a business that has supplied the group with outrageous stage outfits, and to which the group owes a great sum of money. Under this arrangement the rock group is the:
a.    assignor.
b.    assignee.
c.    delegator.
d.    delegatee.

24.    A rock group assigns its payment under a performance contract to the Costume Shop, a business that has supplied the group with outrageous stage outfits, and to which the group owes a great sum of money. This is:
a.    a valid assignment because of the rule of freedom to contract.
b.    a valid assignment because this is a simple transfer of the right to receive money.
c.    an invalid assignment because it increases the burden of the payor.
d.    an invalid assignment because this is a personal service contract.

25.    Garth's Imports sold a car to Wally on credit for $30,000. Garth assigned to Cassandra all of his rights to receive money from Wally. Cassandra did not inform Wally of the assignment. Therefore, Wally continued to make the next three payments directly to Garth. Shortly thereafter, Garth left the country with the money. If Cassandra sues Wally for the missing three payments:
a.    Cassandra will not be able to collect the money from Wally.
b.    Wally is not liable for the three payments because an assignment is not valid unless the obligor is notified.
c.    Wally is liable for the three payments because Cassandra paid consideration for the assignment rights.
d.    Wally cannot raise the defense of previous payment.

ESSAY
1.    Briefly discuss the enforceability of contracts by third parties.
2.    Fairhaven Care Center contracted with Best Uniform Co. for Best to provide weekly pick up, laundry, and delivery service for the uniforms used by the caregivers at Fairhaven. The contract specifically stated that Best’s duties were not to be delegated, but because Best over-commited with contracts, it wants to ask Grand Co. to take some of its workload. Discuss the rights of Fairhaven and Best.
.
3.    Discuss the potential liability differences between a delegation and a novation.
4.    Shirley is an actress under contract with Twentieth Century. Shirley agreed to perform the lead role in a musical to be filmed in Hollywood by Twentieth Century. At the last minute, Twentieth Century decided to scrap the musical and assigned its rights in Shirley to MGM. MGM was planning to film a western in Australia requiring Shirley to spend six months filming in Australia. Can Shirley successfully prevent this assignment?
5.    Andrew Durham was injured in a job-related accident that resulted in a workers' compensation settlement agreement with the employer's insurance carrier, Traveler's Indemnity Company. The settlement agreement required Traveler's to pay Durham $2500 per month for the rest of his life. To finance its obligation, Traveler's purchased an annuity in its name. The settlement agreement required Traveler's approval or consent prior to an assignment of the annuity payments. Durham later decided to open a business and went to a credit union for a $214,000 loan. The credit union loaned the money, taking a security interest in Durham's monthly annuity payments. Traveler's consent was never secured. Was this a valid assignment?

TRUE/FALSE
1.    Alice signs a contract with Bob to buy Bob's house for $150,000 "if I am able to obtain a mortgage loan for $125,000, at no more than 7% interest, payable over 15 years." Assume that Alice tries but is unable to obtain the described loan, and therefore refuses to proceed with the purchase. Alice is in breach of the contract.

2.    The statement, “You will have a job with Snelling & Snelling as long as you complete your degree in business administration this May” does not create a condition because it does not include the phrase “provided that.”

3.    A contract may be discharged if both parties agree to cancel or rescind the contract.

4.    Irving, a computer hacker, is shopping at the local Computers R Us store and agrees to buy a powerful computer for his home "on the condition of personal satisfaction." If Irving takes the computer back to the store for no reason other than that he doesn't like the computer, then the seller will have no choice but to accept the computer and terminate the contract.

5.    Assume that Jessie and Lester have formed a contract whereby Jessie agrees to deliver 10,000 dozen "Grade A Large Eggs" to be shipped in recycled paper cartons. A shortage of paper makes paper cartons much more expensive, so Jessie uses styrofoam cartons and ships the eggs. Lester is entitled to cancel the contract based on this deviation of terms in the contract.
6.    A wholesaler of coffee notifies a retailer that it cannot fulfill its contractual obligation to deliver 1,000 pounds of coffee at the agreed upon price of $2.00 per pound next month because of recent price increases in coffee. The retailer may treat the wholesaler as having breached the contract and sue for damages even though the wholesaler's performance is not due until next month.

7.    The legal right to sue for a breach of contract is subject to a statute of limitations.
8.    Good faith performance is required in all contracts.
9.    Concurrent conditions arise when there is both a condition precedent and a condition subsequent.

10.    Generally, neither a "time is of the essence" clause nor a "force majeure" clause will be recognized by the courts because these types of clauses are seen as a violation of public policy.
11.    Monumental, Inc. contracts with Champion Builders to erect a three-story office building on a parcel of land it has purchased. Before construction begins, the local zoning board changes the zoning of the parcel and those adjoining it to residential use only. Monumental’s contract with Champion is discharged.

12.    In negotiating the purchase of a vehicle, the sales representative told Karla, "I guarantee that you will be personally satisfied with this car." The guarantee was written on the contract when Karla purchased the car. If a controversy arises over Karla's satisfaction, the court will apply a subjective standard. This means Karla's judgment must be reasonable.
13.    Ramon purchased 5,000 pounds of coffee from Quick Jump Coffee. The coffee was to be delivered on September 1. Since the contract included a date for performance, time is of the essence.

14.    Abdulla hired Granite Construction to build an addition onto his home. Granite Construction dug the foundation but then abandoned the project. Granite Construction is entitled to receive the full contract price minus the value of the defects.

15.    The UCC does not recognize commercial impracticability.
MULTIPLE CHOICE
1.    M & E contracted to sell 500 music stands to Coda, Inc. M & E shipped the stands in accordance with the agreement. Coda paid for the stands as promised. The contract between M & E and Coda is discharged by:
a.    full performance.
b.    agreement.
c.    rescission.
d.    accord and satisfaction.
2.    Al contracted to sell his house to Bev. Subsequently, they both changed their minds and agreed to cancel the contract. The contract between Al and Bev is discharged by:
a.    full performance.
b.    rescission.
c.    accord and satisfaction.
d.    novation.

3.    In the Arkansas Farm Bureau Ins. Federation v. Ryman case, the court found the seat belt requirement was:
a.    an exclusion under the policy and the insurance company had the burden of proof.
b.    a condition subsequent, which the plaintiff had the burden of proving.
c.    a condition precedent, which the insurance company had the burden of proving.
d.    a condition precedent, which the plaintiff had the burden of proving.

4.    Melody is a recent graduate of State Law School. She lands an impressive employment contract with the firm of Dewey, Cheathem, and Howe, Attorneys at Law, on the stated provision that she pass the upcoming bar exam. This provision in the employment agreement is a(n):
a.    condition precedent.
b.    condition subsequent.
c.    implied condition.
d.    concurrent condition.

5.    Sam, the seller, enters into a contract agreement to buy Betty Lou's house on the condition that he is able to secure financing at or below 9% per year. This is a:
a.    condition precedent.
b.    condition subsequent.
c.    novation condition.
d.    concurrent condition.
6.    Jennifer substantially performs her service contract with Gretchen. Due to Jennifer's failure to render complete performance, Gretchen:
a.    is discharged from any further contractual obligations.
b.    is required to pay the full contract price, minus the value of Jennifer's defective performance.
c.    is required to pay the full contract price.
d.    may declare a material breach and pay only for the value received.
7.    Statutes of limitations:
a.    define how much money the injured party can sue for under a breach of contract claim.
b.    define whether there has been substantial performance of a contract or a material breach.
c.    limit the time in which an injured party may sue.
d.    only apply to the sale of goods. There is no statute of limitations on a service contract.

8.    In January 2005, Professor Noe entered into a contract with State University. She agreed to teach full time during the 2005-2006 academic year. Professor Noe died on May 31, 2005. Her estate:
a.    is obligated to find another person who will agree to teach during the academic year.
b.    is discharged from any further obligations under the contract.
c.    will be discharged from any obligations under the contract only if it can be shown that her death was unexpected.
d.    will not be discharged. If the University has to pay more in order to hire a comparable substitute professor at the last minute, then the estate will be responsible for the difference in pay.

9.    Mary contracted to buy 100 table lamps. Under the terms of the agreement, Mary is to pay for the lamps upon delivery. This is an example of:
a.    a condition precedent.
b.    a concurrent condition.
c.    a condition subsequent.
d.    a service condition.

10.    Oxtron, Inc. substantially performed its obligations under a contract. Oxtron is entitled to receive:
a.    the full contract price.
b.    substantially nothing.
c.    the fair market value of its performance.
d.    the full contract price minus the value of the defects.
11.    Jackie hires Charles to lay new carpet in her bedroom. Charles does such a bad job, that the only way to fix the carpet is to start over and relay the carpet. Which of the following best describes this situation?
a.    This is substantial performance. Jackie must still pay something to Charles.
b.    This is a material breach. Jackie must still pay something to Charles.
c.    This is substantial performance. Jackie owes nothing to Charles.
d.    This is a material breach. Jackie owes nothing to Charles.
12.    Dana hires Paris to paint a portrait of her poodle, "Mack." The painting is to be done to Dana's personal satisfaction. Upon completion of the painting, which of the following will be true?
a.    Dana may refuse to accept the painting if she really does not like it.
b.    Dana may refuse to accept the painting only if a reasonable person would not like it.
c.    Dana may refuse to accept the painting if she cannot afford to pay for it.
d.    Dana may not refuse to accept the painting.

13.    The Grand Performance Hall is in the process of remodeling and is scheduled to open for business after being closed for 50 years. As part of the remodeling, it is installing a new sound system. The sound system is to be installed by Sound Systems, Inc. on or before April 10. Opening night of the hall is May 1. The contract states that "time is of the essence" because of the opening-night deadline. Sound Systems has some financial difficulties and doesn’t deliver the system until April 20. Grand Hall refuses to accept it, and Sound Systems sues. What result?
a.    Grand Hall wins; the contract date was strictly enforceable.
b.    Sound Systems wins; the contract was substantially performed.
c.    Grand Hall wins; there was commercial frustration.
d.    Sound Systems wins; there was a true impossibility.

14.    Dodger bought an insurance contract from Liberty Farm Co. The policy contained a clause stating that all claims for losses had to be reported within 45 days after the date of the loss or the claim would be barred. Time is stated to be of the essence. Dodger sustained a covered farm loss, but did not report it to Liberty Farm until 50 days later. Liberty Farm denied coverage for the claim. If Dodger sues, who wins?
a.    Dodger wins; the contract was substantially performed.
b.    Liberty Farm wins; there was failure of a condition subsequent.
c.    Dodger wins; courts will not enforce a time-of-the-essence clause.
d.    Liberty Farm wins; the impossibility doctrine applies.
15.    A condition:
a.    is created only when the phrase “provided that” or a similar phrase introduces it.
b.    is an event that must occur before a party becomes obligated under a contract.
c.    must be expressly stated, although it can be created by informal language.
d.    will not be enforced by the courts unless formal language is used, regardless of the intent of the parties to create a condition.
16.    Harry agreed to pay $100 to rent a rooftop spot in downtown Seattle to watch the New Year's Eve festivities. The festivities were unexpectedly cancelled because of concern over a terrorist attack. Harry is:
a.    obligated to pay the $100.
b.    not obligated to pay under the commercial impracticability doctrine.
c.    not obligated to pay under the force majeure doctrine.
d.    not obligated to pay under the frustration of purpose doctrine.
17.    As set forth in the Restatement Second of Contracts, which of the following duties are imposed on the parties in the performance and enforcement of a contract?
a.    perfect performance; honesty
b.    strict performance; team work
c.    good faith; fair dealing
d.    negotiation; arbitration

18.    Ron operates a garbage pickup business. He contracts to pick up garbage from an apartment complex for the next 52 weeks at a price of $50 per week. Unexpectedly, the landfill center where Ron takes the garbage to dispose of it, files for bankruptcy. As a result, Ron must travel an additional 100 miles to the nearest landfill center, turning Ron's expected profit into a loss of $15 per week. Ron's best argument in support of his petition to be discharged from the contract is:
a.    the mail box rule.
b.    commercial impracticability.
c.    frustration of purpose.
d.    true impossibility.

19.    Which of the following events would probably excuse performance of a contract based on commercial impracticability?
a.    The price of a raw material increases slightly so that the contract will not be as profitable.
b.    An unforeseeable trade embargo causes prices to triple.
c.    The promisor of personal services dies.
d.    The subject matter of the contract is destroyed.

20.    The distinction between a condition precedent and a condition subsequent:
a.    is important because it determines whether the burden of proof is beyond a reasonable doubt or preponderance of the evidence.
b.    seldom arises in insurance cases.
c.    determines who has the burden of proof.
d.    is important because it determines whether the condition must be express or whether it can be implied.
21.    A court will:
a.    enforce any express conditions intended by the parties.
b.    refuse to enforce an express condition intended by the parties if the court determines it is unfair and harmful to the general public.
c.    require strict performance if a clause of the contract expressly demands it.
d.    apply an objective standard whenever ruling on a personal satisfaction contract.
22.    A contract between a company in the U.S. and one in China, contained a clause that stated: "If an event happens which is extraordinary and out of the control of the parties such as a strike, Act of God, fire, accident, or transportation difficulties, then the affected party shall be relieved of its obligations under the contract." This type of clause is:
a.    an objective impossibility clause.
b.    a force majeure clause.
c.    a concurrent condition clause.
d.    a condition precedent clause.

23.    Linda agrees to buy Missy's Greyhound race dog for $2,000. Linda is to deliver the money and take possession of the dog the next morning. That night, running his best race ever, the dog runs away from Missy, never to be seen again.
a.    Linda must give $2000 for the dog, but only if the dog was insured.
b.    Linda must give $2000 for the dog, but only if Missy can find a replacement dog within a reasonable time.
c.    Linda must give $2000 for the dog.
d.    None of the above; the contract duties are discharged.

24.    Sea Rovers, Inc. contracted to sell 1,000 pounds of shrimp to the Seafood Shack with delivery on June 1. On May 1 Sea Rovers advised the Seafood Shack that it would not be able to deliver the shrimp. The Seafood Shack:
a.    can sue Sea Rovers immediately for breach of contract.
b.    must wait until June 1 to see if Sea Rovers will perform before suing for breach of contract.
c.    cannot sue Sea Rovers because Sea Rovers gave adequate notice.
d.    must wait until actual damages are determined before it can sue.

25.    If a minor breach is cured or fixed, the non-breaching party:
a.    has the right to rescind the contract.
b.    must resume performance of her contractual duties.
c.    must immediately sue for damages while continuing to perform.
d.    must immediately sue for damages while suspending performance.
ESSAY
1.    Identify four factors courts consider in deciding commercial impracticability and frustration of purpose claims.
2.    What does the term "substantial performance" mean? What factors are generally considered when determining whether one of the parties has substantially performed?
3.    Buddy was hired to play drums for a rock group scheduled to tour the Midwest. Part way through the tour, Buddy was tragically killed in a plane crash. The tour had to be discontinued until a new drummer could be found. The band lost money on the tour. Is Buddy's estate or agent responsible for the loss to the band?
4.    In January, All Seasons, Inc. ordered $4000 of fireworks from Kaboom Ltd. with delivery to be on or before June 1. On April 15, Kaboom notifies All Seasons that it will not be able to perform the contract as agreed. How will the law characterize Kaboom's actions? Does All Seasons have to wait until June 1 before buying fireworks from another supplier?
5.    Southern Fuels Co. and Langham-Hill Petroleum, Inc. are both in the business of buying and selling large quantities of petroleum products. In October, 1985, the parties entered into a fixed price contract wherein Southern agreed to purchase 4,200,000 gallons of No.2 fuel oil at the price of $0.83 per gallon to be delivered in four monthly installments. The contract included a force majeure clause with pertinent language as follows: "If either party is rendered unable by force majeure, or any other cause of any kind not reasonably within its control . . . to perform or comply with any obligation or condition of this Agreement . . . such party shall be relieved of liability and shall suffer no prejudice for failure to perform . . ." The first three monthly shipments of oil were purchased by Southern as agreed. In January of 1986, the price of oil in the world market collapsed as a result of Saudi Arabian attempts to regain its share of the world oil market. Southern refused to purchase the last shipment under the contract. Southern informed Langham-Hill that because the drop in world oil prices was caused by Saudi Arabians who were "outside Southern's control" that it was invoking the force majeure clause. Langham-Hill sued for damages in the amount of $306,075. What is a force majeure clause? Southern's basic argument is that it can now buy oil at a substantially lower price. Will Southern succeed on this basis?

TRUE/FALSE
1.    Injunctions are commonly used by courts to force people to complete their contractual obligations.

2.    Expectation interest can best be described as money spent in reliance upon the agreement.

3.    Damages must be established with reasonable certainty.

4.    Dr. Gonzalez ordered specialized surgical equipment from Physician’s Supply Co., but his order was not delivered by the agreed date. Gonzalez is under no obligation to minimize damages since the contract was breached by Physician’s Supply, not Gonzalez.

5.    The Milicic v. Basketball Marketing Company, Inc. case illustrated the proper use of a preliminary injunction.
6.    Liquidated damages are awarded to parties who have experienced an injury to their legal rights but have no actual loss.

7.    Lucky, a contractor, enters into a contract with Penny, a homeowner, to remodel her kitchen. The contract provides a specific completion date. The contract provides that if Lucky does not have the job finished by the date, Penny may deduct $100 per day from the contract price until the job is finished. This is an example of liquidated damages.

8.    Ernest operates an ice cream stand during the months of May, June, July, and August. Ernest's ice cream machine is broken and needs a new part to run. He contracts to have the part shipped to him by special carrier. Ernest emphasizes that the part needs to be delivered by April 25 or he will not be able to be open on May 1 as he has advertised. If the shipper fails to deliver the part on April 25, Ernest will be able to recover consequential damages caused by the delay.
9.    Punitive damages are often awarded in breach of contract cases.
10.    Tess, a tenant, moves from her apartment in breach of the lease agreement. The landlord Lenny, has a duty to mitigate his damages by attempting to rent the apartment.
11.    Specific performance is available when the subject matter of the contract is unique.

12.    Under the UCC, the buyer is entitled to consequential damages if the seller could have reasonably foreseen them.
13.    Reliance damages are not available in contract cases.

14.    Banner enters into a contract with Sylvia to buy her house for $150,000. Sylvia decides later not to sell because she is so emotionally attached to the house. Banner insists that he is entitled to the house. Banner can successfully sue for specific performance.
15.    Oliver contracts with Carpet Village for replacement carpeting throughout his house. The total contract price is $15,000. Carpet Village's anticipated profit on the job is $7500. If Oliver breaches the contract before Carpet Village has begun work on the job and has not incurred any expenses, then its damages will be $7500.
MULTIPLE CHOICE
1.    Specific performance may be available for the breach of a contract to sell:
a.    an original painting.
b.    20 shares of AT&T stock.
c.    a red "Radio Flyer" wagon, available at toy stores.
d.    a 2001 Lexus in mint condition.
2.    Mulligan Domestics Co. breached a contract by refusing to accept its order for 60 bolts of fabric from Wellington Mills, although the fabric met the contract specifications. Wellington:
a.    has at least four remedies under the UCC.
b.    may resell the goods to someone else and, if it sues Mulligan, Wellington will be assured of being awarded the difference between the original contract price with Mulligan and the price received from the resale.
c.    may choose not to resell the fabric and settle for the difference between the contract price and the market value.
d.    would be awarded consequential damages by most courts.

3.    A contract clause which specifies the amount of damages to be paid in the event of a breach is called:
a.    a covenant of damages clause.
b.    a reliance interest of damages clause.
c.    a liquidated damages clause.
d.    an incidental damages clause.

4.    The concept that an injured party may recover consequential damages only if the breaching party should have foreseen them was established in:
a.    Lake Ridge Academy v. Carney.
b.    Berkel & Company Contractors, Inc. v. Palm & Associates, Inc.
c.    Hadley v. Baxendale.
d.    Toscano v. Greene Music.

5.    Costs to rent a vehicle for a short period of time after an auto dealer fails to deliver a purchased vehicle would be:
a.    compensatory damages.
b.    incidental damages.
c.    consequential damages.
d.    punitive damages.
6.    The first step a court takes in choosing a remedy is to determine:
a.    what interest it is trying to protect.
b.    if the damages can be quantified with reasonable certainty.
c.    if punitive damages should be awarded.
d.    whether the injured party mitigated its damages.
7.    In a promissory estoppel case, a court will generally award:
a.    only reliance damages.
b.    specific performance.
c.    both reliance and punitive damages.
d.    only nominal damages.

8.    Generally, reasonable liquidated damage clauses will be enforced:
a.    when actual damages are easily determined.
b.    when actual damages are difficult to determine.
c.    almost always.
d.    only in real estate sales contracts.
9.    Which statement is correct concerning money damages?
a.    Courts generally award damages for lost profits.
b.    Courts will not speculate about damages.
c.    The plaintiff receives the amount of damages requested.
d.    Courts will often award only actual expenses.

10.    The remedy of reformation:
a.    applies only when money damages are inadequate.
b.    can be used to correct mistakes in the original contract
c.    is available if fraud is involved.
d.    is a commonly used remedy.
11.    Mercury Motors inadvertently mixes up a work order on Peter's car. Peter brought the car in to have the tires rotated. Mercury tuned up the motor by mistake, conferring a benefit on Peter. If Mercury Motors insists that Peter pay for the price of the tune-up:
a.    Mercury Motors will win, as Peter received the benefit of the tune-up and should pay.
b.    Mercury Motors will lose.
c.    Mercury Motors will win based on breach of contract.
d.    Mercury Motors will lose because a personal service contract was involved.
12.    In breach of the partnership agreement, Trimble, a partner in the partnership of Morris, Newt, and Oppie, Ltd. quits the partnership and goes to work for a competitor. The former partners may ask the court for:
a.    specific performance requiring Trimble to return to work for Morris, Newt, and Oppie, Ltd.
b.    an injunction to prevent Trimble from working in competition with the former partners.
c.    special damages under the rule of Hadley v. Baxendale.
d.    liquidated damages as compensation for the breach.
13.    All Seasons, Inc. ordered $5,000 worth of Christmas decorations from Santa, Inc. The shipment of decorations was to arrive no later than October 1, in time for the Christmas season. The shipment did not arrive until December 1. In spite of the delay, All Seasons covered a third of the order through other suppliers, but had to pay 15% more than the price under contract with Santa, Inc. As a further result of the delay, All Seasons' sales were down 25%. All Seasons can recover:
a.    punitive damages.
b.    nominal damages.
c.    compensatory damages and consequential damages.
d.    compensatory damages, consequential damages, and punitive damages.

14.    Solomon breaches his contract with Neal to purchase the 500 pairs of socks he had promised to buy. Neal is able to sell the 500 pairs to Renny for a much lower amount. Neal then sues Solomon for damages. Neal will be able to recover:
a.    the amount in the liquidated damages clause.
b.    the difference between Solomon's contract price and the amount paid by Renny.
c.    Solomon's contract price.
d.    an amount which depends on whether Solomon intentionally breached because he found cheaper socks somewhere else.

15.    Bob, a house builder, contracts with Ollie to build a house on Ollie's lot. The total price of the construction is $100,000, $20,000 of which will be Bob's profit. After Bob has put $10,000 worth of materials into the house, Ollie wrongfully refuses to let him finish the house. If Bob sues for damages, he will be able to collect:
a.    $10,000.
b.    $20,000.
c.    $30,000.
d.    $100,000.
16.    Which of the following statements is incorrect concerning liquidated damages?
a.    A liquidated damages clause will be enforced if, when the contract was made, it was difficult to estimate actual damages.
b.    The amount of liquidated damages must be a reasonable estimation of the actual harm resulting from a breach.
c.    Nominal damages are not the same thing as liquidated damages.
d.    Liquidated damages are enforceable even if the amount is considered to be a penalty on the breaching party.
17.    Ralph is a professional football player. He signs a valid contract with the Jets. Later, the Giants offer him more money, so he signs a contract with them. If the Jets sue Ralph, the most likely result would be?
a.    The court will order Ralph to play with the Jets.
b.    The court will order Ralph to play with the Jets, but Ralph is entitled to be paid the amount he negotiated under the Giants contract.
c.    The court will enjoin Ralph from playing with any team other than the Jets.
d.    The court will order Ralph to pay compensatory damages in the amount of the difference between the two contracts.

18.    Which of the following is an example of incidental damages you might be awarded if you are wrongfully terminated from your job?
a.    The costs of psychological counseling.
b.    The costs of mailing resumes to prospective employers.
c.    The costs of a new wardrobe for future interviews.
d.    The costs of cosmetic surgery.

19.    If a court orders rescission and restitution of a contract under which Nala sold a baseball card to Shirley in exchange for $450:
a.    Shirley must return the baseball card.
b.    Nala must return the $450.
c.    Both a and b.
d.    Neither a nor b.

20.    Rich and Archie sign an agreement in which Archie agrees to deliver ten cases of champagne in 5 days. The parties negotiated and meant to say in the written agreement, delivery in 50 days. If the two cannot settle this dispute, and Archie still wants to deliver the champagne, then Archie should sue for the remedy of:
a.    reformation.
b.    rescission.
c.    restitution.
d.    reliance.
21.    Reformation is:
a.    a legal remedy.
b.    a form of quantum meruit.
c.    a form of quasi-contract.
d.    an equitable remedy.
22.    Fred purchased a Cheapp Lawnmower because the Cheapp Company salesperson intentionally misled him by assuring him that the mower was self-propelled, mulched, and had a five-year unlimited manufacturer's warranty. When Fred finds out that his new Cheapp Lawnmower is not self-propelled, does not mulch, and has a 90-day warranty, he may successfully sue for:
a.    reformation of the contract only.
b.    restitution only.
c.    restitution and possibly punitive damages.
d.    compensatory damages only.

23.    Farmer Elvin is holding 200 pounds of potatoes in storage for Chef Noble but Chef Noble has breached the contract by failing to pay for the potatoes. The potatoes are beginning to rot. If Farmer Elvin sells the potatoes to a local diner to make potato soup and salad, then this action would be considered:
a.    a reasonable mitigation of damages.
b.    an attempt to maximize damages.
c.    an attempt to realize an unwarranted profit.
d.    conversion.

24.    If a court awards nominal damages it will generally:
a.    award compensatory damages as well.
b.    not make a determination as to whether there has been a breach of the contract.
c.    award punitive damages for the intentional breach of the contract.
d.    award very little money.
25.    Compensatory damages are typically assessed against the breaching party:
a.    as a penalty for breaching the contract.
b.    only under the UCC when the sale of goods is the subject of the contract.
c.    to put the non-breaching party in the position it would have been had the contract never been formed.
d.    to put the non-breaching party in the position it would have been if the contract hadn't been breached.
ESSAY
1.    Identify the four principal contract interests a court may seek to protect.
2.    Larry wanted to buy a 1957 Cadillac once owned by Reggie Jackson. Larry entered into a contract with the owner agreeing to pay $102,000. The owner subsequently changed his mind. If Larry sues, what remedies are potentially available?
3.    Discuss the considerations the United States Supreme Court outlined in the BMW of North America, Inc. v. Gore for calculating punitive damages.
4.    In a construction contract, there is a $1000 per day estimate of damages for each day that the contract runs over the completion date. The contractor is 30 days late when the job is completed, resulting in a prospective damage award of $30,000. What is this type of clause, and when will it be enforced?
5.    Abigail signed a contract to purchase a new car from Wolf's Auto Sales Company. The seller breached its agreement by not delivering the car. Abigail went to another car dealer and purchased the same model of car at the same price. Although she had experienced a legal injury, Abigail has no actual financial or other damages as a result of the breach. If Abigail sues and wins, what type of damages will she be awarded?

TRUE/FALSE
1.    In a civil trial for money damages, either party can demand a jury trial.

2.    Disputants Martin and Daulton have hired Thurman to mediate their disagreement.  Although Martin and Daulton must accept whatever decision Thurman makes, the mediation has the advantage of keeping Martin and Daulton out of court.

3.    For diversity purposes, a corporation is considered a resident of its state of incorporation AND the state in which it has its principal place of business.
4.    Primary methods of alternative dispute resolution include litigation and mediation.
5.    Generally, mandatory arbitration provisions in a contract are valid.
6.    Judge Abbott can serve as both a federal judge and a state court judge at the same time.

7.    A prospective juror was excused from serving after being questioned by the plaintiff's attorney. No reason was given for the rejection. This would be accomplished by the use of a peremptory challenge.

8.    Summary judgment is appropriate when there are no essential facts in dispute.

9.    In order for a federal court to have jurisdiction, there must be a federal question involved and at least $75,000 in dispute.

10.    After being served with a summons and a copy of the complaint, a defendant usually files a pleading known as an answer.
11.    In a civil case, the plaintiff must prove the case beyond a reasonable doubt.

12.    A summons is a paper ordering a defendant to answer a complaint within a certain time.

13.    An appeals court can rule that a trial court's ultimate ruling was correct even if the trial court made some minor errors during the trial.

14.    During a deposition, a potential witness or a party must generally answer all the questions under oath.

15.    The trier of fact can be either a judge or a jury.
MULTIPLE CHOICE
1.    The most accurate statement regarding appellate courts is:
a.    appellate courts often hear new evidence and testimony.
b.    appellate courts generally accept the factual findings of the trial court.
c.    only the federal court system has appellate courts.
d.    appellate courts hear only criminal cases.

2.    Advantages of Alternative Dispute Resolution (ADR) include:
a.    ADR is faster than litigation.
b.    ADR keeps the parties talking rather than fighting.
c.    ADR is less expensive than litigation.
d.    All of the above are advantages of ADR.

3.    The fastest growing method of dispute resolution in the United States is:
a.    arbitration.
b.    negotiation.
c.    mediation.
d.    litigation.
4.    Jurisdiction is:
a.    the study of law.
b.    the authority of a court to decide a particular type of case.
c.    a federal court concept.
d.    applicable only to appeals courts.

5.    Tony fell and injured himself in a Mega Toy Store. Mega Toy Store is incorporated in Delaware. Tony is a resident of Nevada but was injured in a Mega Toy Store located in Arizona. Mega Toy does not do business in Nevada. Tony's damages exceed $100,000. If Tony decides to sue Mega Toy Store:
a.    he may file the lawsuit in an Arizona state court.
b.    he may file the lawsuit in a federal district court in Arizona.
c.    he must file the lawsuit in a federal district court because the federal courts would have diversity jurisdiction in this case.
d.    Either a or b.
6.    Federal jurisdiction based upon a "federal question" includes cases based on:
a.    the United States Constitution.
b.    a federal statute.
c.    a federal treaty.
d.    All of the above.
7.    Which of the following are discovery methods?
a.    Interrogatories.
b.    Requests for admission.
c.    Physical or mental examinations.
d.    All the above.

8.    Holt and Collins decide to have their dispute arbitrated by Corrales. Which of the following will NOT be a result of the arbitration?
a.    Corrales will render a binding decision.
b.    Holt and Collins retain the right to a class action.
c.    Holt and Collins give up the right to discovery.
d.    Corrales need not give reasons for the decision.

9.    Roberto sued Monica for injuries received in a traffic accident. If Monica does not respond to the complaint and summons served by Roberto within the prescribed time limits, Roberto may obtain a:
a.    judgment on the pleadings.
b.    summary judgment.
c.    pretrial conference.
d.    default judgment.
10.    Roxanne was injured when she fell in a hole while walking across her landlord's parking lot. She and her lawyer hope they can settle the claim. Which of the following statements about settlements is correct?
a.    A case can be settled provided it has not been filed with the court.
b.    A case can be settled provided that discovery has not commenced.
c.    A case can be settled provided the jury has not heard any testimony.
d.    A case can be settled at any time.
11.    In a civil case, the plaintiff must prove the case:
a.    by a preponderance of the evidence.
b.    by clear and convincing evidence.
c.    beyond a reasonable doubt.
d.    None of the above; the burden of proof is on the defendant.

12.    In Jones v. Clinton, the court held:
a.    Paula Jones did not demonstrate the essential elements for her claim.
b.    Paula Jones was entitled to a summary judgment.
c.    public policy required that the case be dismissed because of the President’s governmental position.
d.    President Clinton failed to comply with a discovery order.
13.    A jury decision in a civil case:
a.    must be unanimous.
b.    only need be a majority in some states.
c.    depends on whether or not the parties have agreed to have their case decided by less than a unanimous verdict.
d.    must be achieved by formal deliberations.

14.    When an appellate court hears a case, it may:
a.    affirm the decision.
b.    reverse the decision.
c.    modify the decision.
d.    All the above are correct.
15.    After the plaintiff has presented her case, the defendant may be granted a:
a.    directed verdict.
b.    summary judgment.
c.    judgment n.o.v.
d.    judgment on the pleadings.
16.    Judge Zellar was asked to decide if a plaintiff could see the interrogatories procured by the defendant. The judge viewed the documents alone and decided that they should be made available to the plaintiff. The judge made:
a.    an in camera inspection.
b.    a motion to compel answers to interrogatories.
c.    a request for admission.
d.    a request for the production of documents.

17.    After answering a summons and complaint, Mike received a set of written questions from the plaintiff's attorney. He was directed to respond to the questions in writing under oath. This discovery technique is called:
a.    a request for admission.
b.    a request for the production of documents.
c.    a deposition.
d.    interrogatories.

18.    A civil case generally proceeds as follows:
a.    answer, complaint, discovery, trial, verdict.
b.    complaint, answer, trial, discovery, verdict.
c.    complaint, answer, discovery, trial, verdict.
d.    discovery, complaint, answer, trial, verdict.

19.    Denzil was one of 50,000 people defrauded of $40 in an advertising scam. His best course of action to recover his money is to:
a.    mediate the claim with the advertiser.
b.    bring an individual lawsuit against the advertiser in a state appellate court.
c.    bring an individual lawsuit in a U.S. District Court.
d.    become part of a class action lawsuit, which might include plaintiffs who are unaware of the lawsuit or are even unaware they were harmed.

20.    When an appeal is filed with the U.S. Supreme Court, the Supreme Court:
a.    must hear the case if the validity of a federal statute is in question.
b.    must hear the case if two or more U.S. courts of appeals have decided the legal issue differently.
c.    has discretion as to which cases it hears.
d.    must hear all cases.
21.    Which of the following is not an example of a trial court of limited jurisdiction?
a.    A domestic relations court.
b.    A municipal court.
c.    A small claims court.
d.    A general civil division court.

22.    The United States has taken a position that legal issues are best resolved by lawsuits involving parties with conflicting interests presenting their strongest possible case to a neutral factfinder. Because of this, the legal system in the United States is considered:
a.    an adversary system.
b.    a conflict system.
c.    an alternative dispute resolution system.
d.    a mediation system.

23.    An inmate in a state prison claims his United States constitutional rights prohibiting cruel and unusual punishment are being violated by the state correctional facility. This case:
a.    may not be decided by a federal court since it involves a state facility.
b.    must be decided by the state court where the inmate established residency before going to prison.
c.    is a federal question case over which the federal courts have jurisdiction.
d.    cannot be heard, as prisoners lose the right to sue.

24.    A United States district court is:
a.    the primary federal trial court.
b.    an appellate court.
c.    a small claims court only.
d.    none of the above.
25.    Randi, a resident of Oregon, was involved in a auto accident while in Idaho. The other party lives in Wyoming. Randi wishes to recover the $28,000 cost to repair her car. The most appropriate court for her to file her lawsuit is in a:
a.    federal court in Idaho.
b.    state court in Idaho.
c.    federal court in Wyoming.
d.    federal court in Oregon.
ESSAY
1.    Briefly describe the process of jury selection.
2.    Define discovery, and identify and explain five of the most important forms of discovery.
3.    Pablo, a resident of New Mexico, while driving through Arizona was struck by a SUV driven by Dick, a resident of California. Dick was speeding when the accident happened and Pablo suffered severe injuries that ruined a potential acting career. Pablo's damages are estimated at $200,000. Discuss the court system(s) in which Pablo may bring a lawsuit.
4.    What are the advantages and disadvantages of using arbitration rather than litigation?
5.    Lance sued Mega Corp. for negligence, and a jury awarded him $1.2 million. Mega Corp. filed a motion for judgment NOV, and that motion was denied by the trial court. Mega Corp. then appealed the case. Discuss a judgment NOV and when it is appropriate for a judge to grant such a judgment.

TRUE/FALSE
1.    The doctrine of stare decisis, though vital to the creation of the common law when this country was settled, is not important to our modern, complex society.

2.    While at the park, Tasha saw a small child fall into the lake. Tasha did not know the child. Under the common law of most states, Tasha has a legal duty to take reasonable steps to assist the child if Tasha is able to provide positive assistance and the assistance will not jeopardize Tasha's well being.

3.    The largest source of new law is court decisions.

4.    The majority of work done by legislative bodies is performed in committees.
5.    Even if a statute’s words have ordinary, everyday significance, the court will look at the legislative history of the law and public policy in order to interpret the statute.
6.    If the President vetoes a bill and if both the House and Senate repass the bill by a two-thirds margin, the bill becomes law.

7.    The Federal Trade Commission promulgated Telemarketing Sales Rules regulating the activities of telemarketers. One of the rules prohibits telemarketers from calling a person's residence at anytime other than between 8:00 a.m. and 9:00 p.m. This legislative rule has the effect of a statute.

8.    The Civil Rights Act of 1964, a federal statute, forbids discrimination on the basis of national origin in employment. The Equal Employment Opportunity Commission (EEOC) is the administrative agency that oversees the law. The EEOC issued Guidelines on Discrimination because of National Origin. According to one of the guidelines, the EEOC will presume a violation of the law if an employer sets a work requirement that employees must speak only English in the workplace. This is an interpretive rule because it interprets the Civil Rights Act.
9.    The Occupational Safety and Health Administration (OSHA) has proposed rules aimed at reducing repetitive-stress injuries. ATC, Inc. disagrees with the proposed rules. ATC, Inc. should challenge the proposed rules in court to prevent them from becoming final rules.

10.    From tax returns, the Internal Revenue Service (IRS) has information concerning Elizabeth Jones. Generally, the IRS may not divulge this information to the Federal Bureau of Investigation unless Elizabeth has given written consent.
11.    The ruling in Griggs v. Duke Power Company is no longer followed.

12.    Because of the concept of stare decisis, the U. S. Supreme Court, in interpreting a statute in 2006, will necessarily interpret certain statutory language in the same way as the U. S. Supreme Court interpreted the same statutory language in 1971.

13.    The President has the power to remove the chairperson of the Consumer Product Safety Commission, an independent federal administrative agency, if the President disagrees with the chairperson's actions.

14.    Almost all criminal law is statutory because statutory law, unlike common law, is prospective.

15.    Actual hearings are required in formal administrative agency rulemaking.
MULTIPLE CHOICE
1.    The concept of stare decisis focuses most on:
a.    predictability.
b.    flexibility.
c.    legislative intent.
d.    change.
2.    Karen is a strong swimmer. One afternoon she is having a picnic at a lake and sees a man she does not know drowning. Generally, Karen:
a.    has a legal duty to rescue the man.
b.    has a legal duty to rescue the man, but only if her efforts will not pose a serious threat to her own safety.
c.    has a legal duty to rescue the man since, as a strong swimmer, she is treated as a "special class" of persons who must get involved in such situations.
d.    has no legal duty to rescue the man.

3.    The U.S. Supreme Court was asked to decide whether same-sex sexual harassment is a violation of Title VII of the Civil Rights Act. This law forbids discrimination in employment on the basis of sex. In interpreting statutes, the court may use which of the following?
a.    The plain meaning rule.
b.    Legislative history.
c.    Public policy.
d.    All of the above.

4.    Statutory law is to legislative bodies as common law is to:
a.    England.
b.    precedent.
c.    courts.
d.    administrative regulations.

5.    The power of federal agencies is limited by:
a.    statutory control in the enabling legislation and the Administrative Procedures Act.
b.    political control by Congress and the President.
c.    judicial review.
d.    All of the above.
6.    Psychologist Holtz is working with a patient, Rebecca, who has expressed the intention to seriously harm two of her acquaintances. If you apply the principle set forth by the Supreme Court of California in the Tarasoff v. Regents of the University of California case, Psychologist Holtz:
a.    has, because of the bystander rule, no duty to warn the foreseeable victims about Rebecca’s expressed intention to harm them.
b.    has a duty to exercise reasonable care to protect foreseeable victims of Rebecca’s violence.
c.    is in a special relationship with patients, and this relationship creates a privilege of confidentiality between the communicants.
d.    will be held to a strict duty of care and will be held liable for any victim’s injuries if Holtz failed to warn a them of Rebecca’s potential violence toward them.
7.    The Environmental Protection Agency was investigating whether Exgrow, Inc. violated the Clean Air Act. Exgrow refused to give the EPA its computerized reports concerning pollution. To get the reports, EPA should use:
a.    a stare decisis.
b.    a de novo.
c.    an excaliber.
d.    a subpoena duces tecum.

8.    In December 1999, the Environmental Protection Agency (EPA) filed an administrative complaint against Marlin Firearms Co. alleging that the company exceeded chromium emissions limits. The EPA proposed a $257,162 fine. Which statement is correct concerning administrative agency adjudication?
a.    A jury decides the matter.
b.    The Federal Rules of Criminal Procedure govern the admissibility of evidence.
c.    The losing party has a right to appeal.
d.    The parties are not represented by attorneys.

9.    In 1900, the Minnesota Supreme Court ruled that a minor can void a contract at any time during minority. In 2000, the courts in Minnesota still follow this ruling. This is an example of:
a.    stare decisis.
b.    the bystander rule.
c.    statutory law.
d.    enabling legislation.

10.    The last protected trait added by Congressman Smith of Virginia to the bill which became Title VII of the Civil Rights Act of 1964 was:
a.    sex.
b.    sexual orientation.
c.    national origin.
d.    race.
11.    What is the major distinction between executive and independent agencies?
a.    Executive agencies govern business issues while independent agencies regulate individual matters.
b.    The President has greater control over executive agencies.
c.    The Administrative Procedure Act regulates independent agencies but not executive agencies.
d.    Subpoenas may be issued by independent agencies; executive agencies do not have subpoena power.
12.    The Administrative Procedure Act:
a.    applies to all federal agencies.
b.    applies to executive branch agencies but not to independent agencies.
c.    applies to independent agencies but not to executive branch agencies.
d.    does not apply to federal agencies.

13.    Administrative agency rules consist of:
a.    executive and independent rules.
b.    legislative and interpretive rules.
c.    informal and "notice and comment" rules.
d.    promulgated and unpromulgated rules.

14.    Which of the following methods of administrative agency rulemaking requires a public hearing?
a.    Informal rulemaking.
b.    Formal rulemaking.
c.    Hybrid rulemaking.
d.    Plain meaning rulemaking.

15.    A subpoena duces tecum is different from an ordinary subpoena in that a subpoena duces tecum:
a.    can only be given to an expert to require a personal appearance before a court or administrative hearing.
b.    is binding on a person even if it is mailed to the person rather than handed to her by a process server.
c.    allows for privileged or confidential information to be turned over the a court or administrative agency.
d.    requires the person to bring specified documents to the court or administrative hearing.
16.    Congresswoman Sloan introduced a bill in the House of Representatives. If the bill is approved by the House committee specializing in that subject, the bill will go to:
a.    a Senate committee specializing in the subject matter of the proposed legislation.
b.    the full House.
c.    a Conference Committee made up of representatives of both the House and Senate.
d.    the voters of her state for approval.
17.    Bert had his driver's license suspended by the state department of transportation. He believes his constitutional due process rights were violated by the administrative agency. Can he immediately file a court action to have agency's actions reviewed?
a.    Yes. A court has the jurisdiction to immediately review an agency's alleged unconstitutional action.
b.    Yes. Bert must specifically allege his constitutional rights have been violated and file a court action in federal court - not a state court.
c.    No. Bert must first utilize the administrative agency's procedures to review the suspension before he seeks judicial review by a court.
d.    No. A court of law does not have jurisdiction to review an administrative agency's actions.

18.    TECO Coal Corporation mines and ships more than six million tons of coal annually. TECO is comprehensively regulated by the U.S. Bureau of Mines. The U.S. Bureau of Mines may conduct a surprise inspection of one of TECO's mines:
a.    only if it has a search warrant.
b.    only if it has a subpoena.
c.    only if it has reason to believe a violation of a regulation has occurred.
d.    without a search warrant to ensure safety.

19.    Generally, an initial adjudication before an administrative agency is conducted by:
a.    an administrative law judge.
b.    an administrative appellate board.
c.    an administrative mediator.
d.    a federal court.

20.    Which statement is correct concerning judicial review of an administrative agency's action?
a.    Courts usually accept the facts of the case as determined by the agency and often defer to the agency's interpretation of the law.
b.    Courts conduct a de novo review of the case.
c.    Courts ignore the facts of the case.
d.    Courts substitute their opinion for that of the agency.
21.    Tina wishes to learn what records the IRS has about her. Under the Freedom of Information Act (FOIA),
a.    Tina can only obtain copies of declassified information.
b.    Tina is entitled to all information the IRS has about her.
c.    Tina can only obtain information about the IRS, not records concerning herself.
d.    Tina cannot obtain any information since the IRS is exempt from the FOIA.
22.    TECO Coal Corporation is interested in the inspections that the U.S. Bureau of Mines has conducted over the past year. To secure this information, TECO should:
a.    issue a subpoena duces tecum.
b.    make a Freedom of Information Act request.
c.    make a de novo request.
d.    assert the substantial evidence rule.

23.    The purpose of the Freedom of Information Act (FOIA) is:
a.    to give the government access to information concerning citizens, businesses, and organizations.
b.    to limit the amount of information that the government can collect about its citizens, businesses, and organizations.
c.    to permit warrantless searches and seizures of evidence when necessary to ensure safety.
d.    to give citizens, businesses, and organizations access to information that federal agencies are using.

24.    The Consumer Product Safety Commission (CPSC) is an independent federal administrative agency. Which statement is correct about the chairperson?
a.    The chairperson serves at the whim of the President and can be fired at any time.
b.    The chairperson can only be fired by the President for good cause.
c.    The chairperson cannot be fired by the President since the CPSC is an independent agency.
d.    The chairperson has a lifetime appointment and cannot be fired.

25.    Which law regulates how federal agencies make rules, conduct investigations, hold meetings and hearings, obtain information, and reach decisions?
a.    The 1964 Civil Rights Act.
b.    The Clean Agency Act.
c.    The Administrative Procedure Act.
d.    The Freedom of Information Act.

ESSAY
1.    Discuss the four most important limitations on the power of federal administrative agencies.
2.    Define the common law.  Discuss its conflicting goals and the doctrine created to serve one of these goals.
3.    Big Corporation is served with a subpoena to turn over business records to an administrative agency. What are three possible legal grounds the company can raise to avoid producing the requested records?
4.    The Consumer Product Safety Commission (CPSC) is an independent federal administrative agency. The Internal Revenue Service (IRS) is an executive federal administrative agency. Contrast an executive agency and an independent agency.
5.    ATC, Inc. offered health insurance benefits to unmarried same-sex domestic partners but not to unmarried, cohabiting heterosexual couples. Ray, an employee of ATC, Inc., challenged the benefit plan, claiming that it was in violation of Title VII of the Civil Rights Act. Under the Civil Rights Act, an employer may not discriminate against any individual on the basis of sex.  Discuss the tools that a court may use in interpreting the Civil Rights Act.

TRUE/FALSE
1.    By creating three independent and equal branches of the federal government, the U.S. Constitution limited the federal government’s power.

2.    The Framers of our Constitution, a true cross section of the population at the time, created the Constitution by amending the Articles of Confederation, which had been the governing document of the colonists.

3.    The Fifth Amendment to the Constitution provides Robert, an employee of Mattax Paper Co., due process protection from being fired without a hearing by a neutral fact finder.

4.    Hall was arrested for burning the United States' flag in a protest of governmental policy. His action is protected under the First Amendment’s guarantee of free speech because the flag burning is considered symbolic speech.

5.    The power to create laws regulating international commerce is given to Congress and the states concurrently under the U.S Constitution.
6.    The "takings clause" prevents the government from taking private property for any reason.

7.    Gadberry lives in a "common interest development" (CID) and has parked his new pickup truck in his driveway. The Neighborhood Association informs him that, according to their regulations, he may not have a truck in the sight of passersby. The Association has made an unconstitutional restriction of the property rights of residents of the CID.

8.    Obscene speech is not protected by the First Amendment.

9.    The Pines, a small motel in central Georgia, may be subject to federal regulation even though it is not close enough to the state borders to have many guests from other states.
10.    The First Amendment to the U.S. Constitution explicitly protects citizens from abridgment of the right of free speech by any level of government.
11.    Governments can place no restrictions on the exercise of free speech.

12.    Professor Jones accuses Rachel, a senior at a large state university, of cheating on an exam. The Professor claims that Rachel must prove to him that she did not cheat. If she fails to convince him, she will be expelled from college. Rachel is being denied her due process rights.

13.    Congress passed the federal OSHA establishing job safety standards. Illinois passed its own statute, seeking to protect the general public and workers from hazardous wastes. The Illinois statute did not violate the Commerce Clause because it imposed no restriction on interstate commerce. Local workers were obligated to obey both the federal and the state regulations.

14.    Judicial review is the power of the federal courts to declare a statute or governmental action void.

15.    A governmental classification based on gender would be subject to strict scrutiny.
MULTIPLE CHOICE
1.    If there is a conflict between a state and federal law, generally the federal law will prevail because of the:
a.    federalism doctrine.
b.    Supremacy Clause.
c.    paramount doctrine.
d.    Interstate Commerce Clause.

2.    The primary source of federal power to regulate business is the:
a.    Supremacy Clause.
b.    Commerce Clause.
c.    Contract Clause.
d.    Privilege and Immunities Clause.
3.    The 14th Amendment's Equal Protection Clause "strict scrutiny" test will be used when the legislation:
a.    affects an economic interest.
b.    affects a person's right to drive.
c.    differentiates on the basis of race.
d.    affects a person's right to drink alcoholic beverages.

4.    The Bill of Rights refers to:
a.    the inalienable rights found at the beginning of the Constitution.
b.    the first ten amendments to the Constitution.
c.    a specific listing of individual rights found in the original text of the Constitution.
d.    a grouping of individual rights set forth by the United States Supreme Court shortly after the Constitution was ratified by the states.

5.    The United States v. Lopez case demonstrates which of the following?
a.    There are no limitations on the federal government's power pursuant to the Interstate Commerce Clause.
b.    The extensive power of the states to regulate interstate commerce.
c.    Limitations on federal power.
d.    Gun ownership cannot be regulated.
6.    Nevada passed a law banning all commercial billboards along state highways to rid the state highways of billboards, which are offensive to citizens. If this law were to be challenged, which of the following would a court examine to determine if the law is constitutional?
a.    It would have to be established that the law furthers an interest of the state of Nevada to create a more aesthetically pleasing environment.
b.    It would have to be shown that the law directly advances the state's goal of a more aesthetically pleasing environment.
c.    It would have to be shown that the law reaches no further than necessary to promote the state goal.
d.    All of the above.

7.    The states have a severely restricted power to enact laws that affect interstate commerce. This concept is called:
a.    federalism.
b.    the undue burden concept.
c.    constitutional hierarchy.
d.    the dormant aspect of the Commerce Clause.
8.    The power to regulate international commerce can best be described as:
a.    the states and the federal government share concurrent power.
b.    the federal government has exclusive power.
c.    the states have exclusive power to regulate.
d.    the executive branch of the government has exclusive power.

9.    When Congress passed a criminal statute called the "Gun-Free School Zones Act," the Supreme Court ruled that:
a.    the law was valid as a proper exercise of the power to regulate interstate commerce.
b.    the law was void for vagueness; thus, it was not valid.
c.    the law was not valid since Congress exceeded its power under the Commerce Clause.
d.    although the law was not a proper exercise of the power to regulate interstate commerce, Congress had the power to create such legislation on other grounds. Therefore, the statute was valid.

10.    A law that prohibits out-of-state residents from using a state's parks violates the Constitution's:
a.    Equal Protection Clause.
b.    Due Process of Law Clause.
c.    Supremacy Clause.
d.    Commerce Clause.
11.    The doctrine of preemption is based on the Constitution's:
a.    Commerce Clause.
b.    Due Process Clause.
c.    Equal Protection Clause.
d.    Supremacy Clause.

12.    Ikerd was entering the United States from a trip abroad when the Customs Service confiscated some goods she had purchased and brought back with her. The determination of whether the government is attempting to take property and what type of hearing the Customs Service must offer Ikerd, is an analysis of:
a.    substantive due process.
b.    procedural due process.
c.    the Takings Clause.
d.    eminent domain.
13.    Every year the U.S. Supreme Court receives about 8,000 requests to review cases. Of this number, the Court will hear about:
a.    10.
b.    100.
c.    200.
d.    1,000.

14.    If Oregon passed a statute that prohibited liquor stores from engaging in any kind of advertising, that statute:
a.    would be valid as an exercise of police power.
b.    would be valid, as alcohol is illegal for minors.
c.    would be invalid as a violation of the Commerce Clause.
d.    would be invalid as an unreasonable restriction of free speech.

15.    When a statute discriminates based upon ethnicity, the courts will review the law using:
a.    strict scrutiny.
b.    intermediate scrutiny.
c.    minimal scrutiny.
d.    common scrutiny.
16.    Fundamental rights include all EXCEPT the right to:
a.    drive.
b.    vote.
c.    free speech.
d.    travel.

17.    Judicial review can best be described as the power of federal courts to:
a.    review state court decisions.
b.    review state executive action.
c.    review state and federal legislative and executive action.
d.    none of the above.

18.    The issue of the constitutional protections afforded flag burning was addressed in:
a.    Texas v. Johnson.
b.    Miranda v. Arizona.
c.    Marbury v. Madison.
d.    Palazzolo v. Rhode Island.
19.    The “dormant” aspect of the Commerce Clause:
a.    is also known as the “negative” aspect.
b.    means that there are many unused powers still available to the government to regulate trade between the states.
c.    guarantees that Congress has the power to regulate trade with foreign countries that have not yet developed trade practices with the United States.
d.    guarantees that the states have the power, even if unused, to impose regulations affecting interstate commerce.

20.    Which of the following limitations does not apply to the government in civil proceedings to take a person's liberty or property?
a.    Procedural Due Process.
b.    The Takings Clause.
c.    Substantive Due Process.
d.    The Equal Protection Clause.
21.    The Supreme Court’s approach during the period from the 1950s through the 1970s in deciding cases on constitutional grounds is described as:
a.    judicial restraint.
b.    judicial activism.
c.    judicial review.
d.    the dormant aspect of its judicial power.

22.    Generally, constitutional protections do NOT apply to:
a.    acts of the federal government.
b.    acts of state government.
c.    acts of administrative agencies.
d.    acts of privately owned businesses.

23.    Lori and her friends burn an American flag as an act of political protest. Lori is arrested for violating a state law that prohibits flag burning. The Supreme Court has ruled that laws making it illegal to burn an American flag:
a.    are void because they deny a person due process rights.
b.    are void because a state court has no power to prosecute a person for burning the federal flag.
c.    are void because they violate a person's right to freedom of speech.
d.    are valid.
24.    A woman wishes to attend an all-male, publicly supported college. She claims the college is violating the Equal Protection Clause of the Constitution. What level of scrutiny will the court use when deciding this case?
a.    Minimal scrutiny
b.    Intermediate scrutiny
c.    Strict scrutiny
d.    Compelling interest scrutiny

25.    Adam moved into an apartment complex. The rules of the complex prohibit unmarried men and women from living together in the same apartment. When Adam's friend, Diane, moved into the apartment he was served with eviction papers. Adam claims the apartment complex is violating his constitutional rights since it allows married couples to live together. Is Adam right?
a.    Yes. His equal protection rights have been violated.
b.    No. His fundamental right of cohabitation has not been violated.
c.    Yes. He and Diane are being treated differently than married couples.
d.    No. Constitutional protections do not extend to privately owned apartment complexes.
ESSAY
1.    Discuss the Miller test to determine if a creative work is obscene.
2.    Assume that the state of Ohio passed a hazardous waste statute, seeking to protect the general public and workers. The state statute did not violate the Commerce Clause because it imposed no restriction on interstate commerce. Both the state statute and the federal Occupational Safety and Health Act established job safety standards and specified worker training and employer licensing, but the requirements differed. Discuss which statute(s) Ohio corporations had to obey, and identify the source of the answer.
3.    Identify the basic job of a President of the United States, the source of executive power, and three key powers associated with the position of President.
4.    Tim received a letter from his state college stating he had been expelled from the school. The letter stated his finance professor reported him to the Dean's office for cheating and that a committee had decided to expel him. He was reminded in the letter he had been disciplined earlier that same year for plagiarizing a term paper. Tim believes his due process rights have been violated by the college. Discuss what factors should be considered to determine the validity of Tim's claim.
5.    Jackie purchased a condominium. When she bought it, she realized the homeowner's association had a variety of rules and regulations that she would need to follow. One regulation was that no children were allowed to live in the complex. Two years after buying the condominium, Jackie gave birth to a child. She was immediately served with papers notifying her to move out of the complex. Discuss the constitutionality of the homeowner association's action.

TRUE/FALSE
1.    A tort is a violation of a duty imposed by the civil law.

2.    The First Amendment guarantee of freedom of speech is an absolute right.
3.    Written defamation is called "slander."
4.    Opinion is generally a valid defense in a defamation lawsuit because it cannot be proven to be true or false.
5.    In order for a plaintiff to win a case involving intentional infliction of emotion distress, she must prove the defendant acted in an extreme and outrageous manner.
6.    In order for a plaintiff to prevail in any suit for slander, the plaintiff must prove injury.

7.    If Gloria threw a rock which hit Merle, she is liable for an intentional tort of battery only if she intended to injure or harm Merle.
8.    Lori works for Big Corporation as an "at will" employee. Richard, owner of a small store, offers to pay Lori much more money if she will leave Big Corp and work for his store. When Lori starts to work for Richard, Big Corp correctly claims Richard is liable for tortious interference with a contract.

9.    A salesclerk at Braybon's Department Store observed a customer remove a ring from a display case and put it in her purse. In most states, Braybon's will be able to detain the customer for suspicion of shoplifting.
10.    Dewayne sold a space heater to Vivian, telling her it would heat a 200-square-foot area, even though he knew it would effectively heat only about one third of that space. Dewayne is liable for the intentional tort of fraud.
11.    The rhythm & blues trio, TLC, was nominated for six Grammy Awards. E-presto, Inc. tried to get TLC to endorse its products but TLC was not interested. Notwithstanding, E-presto hired singers to imitate TLC for its commercials. E-presto defamed TLC.

12.    In an advertisement, FreshAir, Inc. compared its air freshener to a competing brand. The ad stated that FreshAir lasted for 3 hours while the competitor, Smell Sweet, lasted for only 36 minutes. In fact Smell Sweet freshens the air for more than 2 hours. FreshAir has not violated the Lanham Act because of the First Amendment's guarantee of freedom of speech.

13.    Punitive damages are intended to punish the defendant for conduct that is extreme and outrageous.

14.    Ahmi was a witness in a lawsuit. When asked why he fired Rana, Ahmi replied, "Rana was fired for willful misconduct." Indeed, Rana had not engaged in any misconduct. Rana will be able to successfully sue Ahmi for defamation based on what Ahmi said in court.

15.    Krista, the Director of Sales at Trein, Inc., had supervised Rex's work for eight years. Rex applied for a job at E-presto, Inc. E-presto called Krista for a recommendation. In giving the recommendation, Krista will be protected from a claim of defamation by a qualified privilege provided she acts in good faith.
MULTIPLE CHOICE
1.    Which of the following statements about torts is correct?
a.    A tortious act is always a criminal act.
b.    A criminal act is always a tortious act.
c.    A tortious act may also be a criminal act.
d.    All the above are correct.
2.    Shortly after Brian started to work at Trevit, Inc., a co-worker, Lee, began asking him out. Brian said no. Nevertheless, Lee persisted. One day Lee touched Brian's crotch. Which statement is correct?
a.    Lee defamed Brian.
b.    Lee committed the tort of trespass.
c.    Lee committed the tort of interference with a prospective advantage.
d.    Lee committed the tort of battery.
3.    Jim told his manager, Lana, that a co-worker, Diane, had been in prison for theft. Lana checked into the matter and, when she learned that Diane had served time in prison for theft, fired her.
a.    Jim is liable to Diane for defamation.
b.    Jim is liable to Diane for defamation unless he can show a legitimate reason for having to tell Lana about Diane's prison history.
c.    Jim is liable to Diane for defamation per se.
d.    Jim is not liable to Diane for defamation.
4.    A national magazine published an article about a famous television star. The television personality is upset because the information contained in the story is not correct. If the actress sues the magazine:
a.    she will need to show that the magazine has a history of being "reckless" with facts on a regular basis.
b.    she will need to show that the magazine either knew the story was false or acted with reckless disregard of the facts.
c.    she will need to show that the magazine failed to attempt to verify the story by trying to contact her or her agent before the story was printed.
d.    she will need to show that the magazine could have discovered that the story was false but failed to do so.

5.    Theft is to the criminal law as ____ is to the civil law.
a.    stealing
b.    appropriating
c.    conversion
d.    trespass
6.    Wholesome Bread, Inc. advertised that its honey wheat bread had 25% fewer calories than a competing brand, Valley Grains. In fact Wholesome's bread had the same amount of calories as Valley Grains' bread. Wholesome Bread's conduct:
a.    does not violate the Lanham Act because of the First Amendment freedom of speech.
b.    does not violate the Lanham Act because Wholesome did not act with actual malice.
c.    does not violate the Lanham Act because comparative ads are exempt from the law.
d.    violates the Lanham Act.
7.    Adam decided to play a practical joke on Linda, a co-worker. As Linda was leaving the office one night, Adam, wearing a mask, stepped out from behind some bushes. He pointed a handgun made out of licorice at her and demanded her purse. He then pushed the candy gun to her head and told her if she told anybody he'd kill her. Linda was very scared during the whole incident. She did not think it was funny when Adam pulled the mask off and took a bite out of the gun as he gave her the purse back. Which statement is correct?
a.    Adam committed an assault but not a battery.
b.    Adam committed a battery but not an assault.
c.    Adam committed an assault and a battery.
d.    Adam committed neither an assault nor a battery since he used a candy gun and was only playing a joke on Linda.

8.    Adam decided to play a practical joke on Linda, a co-worker. As Linda was leaving the office one night, Adam, wearing a mask, stepped out from behind some bushes. He pointed a handgun made out of licorice at her and demanded her purse. He then pushed the candy gun to her head and told her if she told anybody he'd kill her. Linda was very scared during the whole incident. She did not think it was funny when Adam pulled the mask off and took a bite out of the gun as he gave her the purse back. Did Adam commit the tort of intentional infliction of emotional distress?
a.    Yes, as his conduct was intentional.
b.    Yes, but only if Adam intended to cause Linda serious emotional distress.
c.    No, since he was only playing a practical joke.
d.    No, since Linda was not physically hurt by Adam.

9.    John was driving home one night in a terrible snow storm when his car stalled. He managed to push the car onto a small shopping center's parking lot. The next day about noon he came to get the car and it had been towed away by the owner of the parking lot. The owner explained she had to remove the car to clean the snow off her lot and told John where the car had been towed. Which statement is correct?
a.    The owner of the parking lot is liable for conversion. She took John's car without his consent.
b.    The parking lot owner has a qualified privilege for towing the car since it was a business necessity.
c.    Even though John left his car in the parking lot under emergency conditions, he still committed a trespass on the owner's property.
d.    All the above are correct.

10.    A tort action differs from a contract action in which of the following ways?
a.    How the obligation is created.
b.    How the obligation is enforced.
c.    The usual result for a successful plaintiff.
d.    All of the answers are correct.
11.    Trein, Inc. entered into a one-year, $1 million contract with Mia, a sports celebrity, to promote Trein's products. E-presto Inc., a competitor of Trein, was interested in having Mia promote its products and knew of her contract with Trein. E-presto offered Mia a three-year, $5 million contract. Mia left Trein and signed with E-presto. Which statement is correct?
a.    Trein is liable for tortious interference with a contract.
b.    Mia is liable for tortious interference with a contract.
c.    E-presto is liable for tortious interference with a contract.
d.    Both Mia and E-presto are liable for tortious interference with a contract.

12.    A salesclerk at Sparkle Jewelry Store observed a customer remove a ring from a display case and put it in his pocket. In most states, Sparkle:
a.    can reasonably detain the customer for suspicion of shoplifting.
b.    cannot detain the customer but can alert the police.
c.    cannot detain the customer but once the customer leaves the store, the salesclerk can make a citizen's arrest.
d.    cannot detain the customer but can sue for conversion.

13.    Trein, Inc. entered into a one-year, $1 million contract with Mia, a sports celebrity, to promote Trein's products. E-presto Inc., a competitor of Trein, was interested in having Mia promote its products but knew of her contract with Trein. E-presto offered Mia a three-year, $5 million contract. Mia left Trein and signed with E-presto. If Trein sues E-presto for tortious interference with a contract, E-presto:
a.    will be able to establish a justification since E-presto was acting to protect an existing economic interest.
b.    will be able to establish a justification because, in talking to Mia, E-presto was exercising its First Amendment freedom of speech.
c.    will be able to establish a justification because to decide otherwise would subject Mia to involuntary servitude.
d.    will not be able to establish a justification.

14.    Runyon was ready to sign a two-year agreement with Barnett Corp. to become Barnett’s sales representative for a three-state area.  LaPrise, who wants to be the representative for that area, threatens Runyon with bodily harm if he takes the position.  Runyon decides his physical well being is more important to him than the job, so he does not accept the position. LaPrise:
a.    committed tortious interference with a contract.
b.    comitted tortious interference with a prospective advantage.
c.    committed a battery.
d.    caused a breach of contract and committed the tort of intrusion.
15.    A company that makes a commercial with a person who does an excellent, realistic job of pretending to be a famous movie star could be sued by the real actor for the tort of:
a.    intrusion.
b.    defamation.
c.    commercial exploitation.
d.    none of the above, since public figures are often imitated by other actors.
16.    Which of the following is a valid defense to a defamation claim?
a.    The statement was true.
b.    The statement was only an opinion.
c.    The person making the statement made it only to the plaintiff, not to any third parties.
d.    All the above.

17.    Jerry believes his co-worker, Ben, is using illegal drugs. Since both he and Ben are nurses, Jerry is concerned Ben's drug usage could result in injury to a patient. He tells his supervisor, Cyndi. Cyndi talks with Jerry about the alleged drug usage and Ben produces a bottle of prescription medicine he is required to take for high blood pressure. The medication does not affect his ability to do his work. When Ben learns it was Jerry who reported him, Ben claims that Jerry committed an act of defamation when Jerry told Cyndi he used illegal drugs. Is Ben right?
a.    Yes. Jerry committed slander.
b.    Yes. Jerry committed libel.
c.    No. Ben is, in fact, using drugs.
d.    No. Jerry is protected by the qualified privilege defense.

18.    Angela sued Tom for battery. Angela was awarded $30,000 for future medical expenses. Five years after the award, Angela realizes that her medical expenses will far exceed $30,000. Under the single recovery principle:
a.    Angela will be able to submit the additional medical bills to the court for payment.
b.    Tom will have to pay the additional medical bills.
c.    Tom will have a qualified privilege and only have to pay a portion of the additional medical expenses.
d.    Angela will have no recourse against Tom or the court for the medical expenses.

19.    Rodney was employed by Deluxe Discount Store. Rodney's manager directed him to check the prices of dog food at Huge Savings Store. The manager of Huge Savings Store saw Rodney writing down prices and asked him to leave. Rodney, fearful that he would be fired by Deluxe, refused to leave. Rodney committed the tort of:
a.    larceny.
b.    trespass.
c.    misrepresentation.
d.    conversion.
20.    The elements in a defamation case are:
a.    defamatory statement; falseness; communication; and injury.
b.    a contract; knowledge of the contract; improper inducement; injury.
c.    false or misleading fact statements; statements in commercial advertising; likelihood of harm.
d.    duty; breach of duty; proximate causation; and damages.
21.    Howson won a lawsuit against Hardwick for intentionally inflicting emotional distress. The jury awarded Howson $500,000 in compensatory damages. It also awarded Howson $4 million in punitive damages because Hardwick was quite wealthy and the jury thought a large amount was necessary for Hardwick to feel the punishing effects of the judgment. How does the jury’s award fit into the guidelines offered by the U.S. Supreme Court?
a.    The punitive award is excessive because it exceeds the Supreme Court’s suggested ratio of compensatory damages to punitive damages.
b.    The punitive award is excessive because the Supreme Court has stated that the trial court may not use the defendant’s wealth as an excuse to award an unreasonably high award.
c.    The punitive award is excessive both because of the ratio of compensatory damages to punitive damages and because the punitive damage award was based partly on the defendant’s wealth.
d.    The jury award is not excessive based on the Supreme Court’s guidelines.

22.    E-trex, Inc. wanted Shaquille O'Neal, a professional basketball player, to endorse its products. O'Neal, however, was not interested. E-trex was not deterred and hired a person who looked and sounded liked O'Neal for its commercials.
a.    E-trex has defamed O'Neal.
b.    E-trex has interfered with a contract.
c.    E-trex has interfered with a prospective advantage.
d.    E-trex's conduct raises the issue of commercial exploitation.

23.    In awarding punitive damages, a court must consider:
a.    the reprehensibility of the defendant's conduct.
b.    the ratio between the harm suffered and the award.
c.    the difference between the punitive award and any civil penalties used in similar cases.
d.    All of the above.

24.    Don was standing in a cafeteria line holding a plate. Tim was upset with Don. Tim turned Don around and grabbed the plate out of Don's hand. Tim then held the plate up and threatened to break it over Don's head. Tim has committed:
a.    a battery, but not an assault.
b.    an assault, but not a battery.
c.    both an assault and a battery.
d.    neither an assault nor a battery.
25.    In the case of Texaco v. Pennzoil, the plaintiff, Pennzoil, claimed that Texaco had:
a.    interfered with a contractual relationship.
b.    interfered with a prospective advantage.
c.    defamed its company's reputation with malicious and misleading advertising.
d.    violated the Sherman Antitrust Act.
ESSAY
1.    Wilma’s arm is broken when Paula knocks her down during an argument. If Wilma sues Paula for battery, what damages is Wilma likely to receive?
2.    Identify and discuss two specific causes of action a plaintiff can allege that deal specifically with privacy rights.
3.    Tracy is an "at will" employee of Zebra Toy Company. One afternoon she has lunch with a friend who works in marketing for her company's biggest competitor, Tiger Toys. Over a period of about three months, Tiger Toy representatives convince Tracy to work with them. Tiger offers a larger base salary with bigger commissions than she had with Zebra. When Tracy leaves Zebra, it sues Tiger Toys claiming it intentionally interfered with a contractual relationship. Will Zebra Toy Company be successful?
4.    On its Web site, Otrex, Inc. claimed that its pain reliever was more effective than Nelton, a competing pain reliever. Discuss the elements that Nelton must prove to win a case under Section 43(a) of the Lanham Act.
5.    As assistant manager of a discount department store, you have been asked to review the store's policy concerning shoplifters. (a) Discuss the legal standard used in most states governing the detention of suspected shoplifters. (b) In reviewing the store's policy, discuss some of the items that you will consider.

TRUE/FALSE
1.    Palsgraf v. Long Island Railroad Co. addressed the issue of furnishing alcohol to minors.
2.    A landowner's highest duty is owed to licensees.
3.    Courts have begun to recognize the tort of negligently retaining a violent employee.
4.    A defendant who engages in an ultrahazardous activity is liable for any harm that results from the activity.
5.    Res ipsa loquitur shifts the burden of proof from the plaintiff to the defendant.
11.    Kenneth was exposed to radiation on his job in an environmental cleanup. In a lawsuit against his employer, the court must decide the full extent of both present and future damages rather than allowing Kenneth to return to court years later if medical problems develop at that time.
12.    A sports fan, injured by a hockey puck that flew into the stands during an NHL game, would be subject to the defense of assumption of the risk if she files suit to recover for her injuries.
13.    Negligence and strict liability are both based upon fault.
14.    Dram acts impose liability on those who commercially serve alcohol for injuries caused by their intoxicated patrons.
15.    In a strict liability case, the courts still consider if the defendant acted in a reasonable and prudent manner.
MULTIPLE CHOICE
1.    In a negligence case, the plaintiff must establish:
a.    duty, strict liability, causation, and injury.
b.    mens rea, breach, foreseeable harm, and injury.
c.    duty, actus reus, foreseeable harm, and causation.
d.    duty of due care, breach, causation, foreseeable harm, and injury.
2.    In most states dram acts apply to:
a.    liquor stores, bars, and restaurants but not to social hosts.
b.    liquor stores, bars, restaurants and to social hosts.
c.    social hosts, liquor stores, and bars.
d.    None of the above.
3.    Arturo drove through an intersection without looking and hit Vincent's car that he had driven into the intersection without obeying a stop sign. Arturo sued Vincent. The jury found that Arturo's fault contributed 20 percent to the collision and determined that his total loss was $100,000. Under comparative negligence, the jury should award Arturo:
a.    $20,000.
b.    $80,000.
c.    $100,000.
d.    nothing.
4.    Negligence concerns harm that:
a.    is unforeseeable.
b.    arises intentionally.
c.    arises by accident.
d.    is always substantial.
5.    In Hernandez v. Arizona Board of Regents, the court held:
a.    individuals who intentionally provide alcohol to minors can be liable for negligence to injured third parties.
b.    individuals who intentionally provide alcohol to minors cannot be held liable for negligence to injured third parties.
c.    individuals who carelessly provide alcohol to minors can be liable for damages for resulting injury to third parties.
d.    none of the above.
6.    Bob, a weak swimmer, ignored warning signs in a recreational swimming area and went into deep water. He soon tired and realized that he could not make it back to shore. Seeing Kelly, he cried out for help. Kelly, however, ignored the pleas. Bob was finally saved by Dorothy, but suffered partial brain damage by being submerged without oxygen for a number of minutes. Bob now sues Kelly for negligence for failing to save him:
a.    Bob will prevail because society places a duty on people to help each other and Kelly breached this duty, resulting in Bob's suffering injury.
b.    Bob will lose because Kelly had no legal duty to rescue him.
c.    Bob will lose even though Kelly had a legal duty to save him, since Bob will not be able to prove that Kelly's failure to act was the proximate cause of his injuries.
d.    Bob will lose because a reasonable person could not have foreseen that someone in a recreation area could not swim well.
7.    One morning, Miles placed a thumbtack on the chair of the office manager where he worked. He had no quarrel with the office manager, but thought this would be funny. Two days after sitting on the tack, the office manager was hospitalized with an infection caused by the tack. Which of the following is correct?
a.    Miles actions were negligent.
b.    No tort has been committed.
c.    Miles committed an intentional tort.
d.    Miles is strictly liable.
8.    A plaintiff sues in negligence but has no direct proof that the defendant behaved unreasonably. Which of the following is most likely to help the plaintiff?
a.    Res judicata.
b.    Stare decisis.
c.    Res ipsa loquitur.
d.    Mens rea.
9.    Wayne worked in an office. He had no criminal record, had never had a complaint made against him about his work or his conduct, and had been a faithful employee for nearly 20 years. One day, Wayne followed his supervisor to his home and fatally shot him. The estate of the supervisor sued the company, claiming it should have been aware of Wayne's growing frustration with work. The company's best defense will be:
a.    that there was no way to foresee that the incident would happen.
b.    that the incident occurred away from the office.
c.    that the killing was the result of a personal conflict between Wayne and the supervisor.
d.    that even if the company had been aware of Wayne's difficulty with his supervisor, Wayne did not have any criminal history.
10.    Which of the following acts resulting in injury would be negligence per se?
a.    Janet driving 40 mph over the posted speed limit.
b.    Ted keeping explosives in his private, locked garage without complying with state law regulating the storage of such materials.
c.    A retailer selling glue containing benzene to a 14-year-old boy in violation of state law.
d.    All the above acts are negligence per se.
11.    Which of the following statements regarding a negligence case is correct?
a.    A plaintiff must show that the defendant's act was both the factual cause of her injury as well as a foreseeable injury.
b.    A plaintiff must show that the defendant's act was the factual cause of her injury even if the injury was not foreseeable.
c.    A plaintiff must show that the defendant's act created a foreseeable danger even if it was not the factual cause of her injury.
d.    A plaintiff does not have to show that the defendant's act either created a foreseeable danger or that the act was the factual cause of her injury.
12.    Under a state law, a dog owner is absolutely liable to any person who is injured by a dog. This is an example of:
a.    negligence per se.
b.    strict liability.
c.    res ipsa loquitur.
d.    negligence.
13.    If a court applies res ipsa loquitur:
a.    the plaintiff needs to prove the case by a preponderance of the evidence.
b.    the plaintiff must prove the case by clear and convincing evidence.
c.    the defendant has the burden of proving he or she is not liable.
d.    the defendant is strictly liable.
14.    Kelley climbed a fence and went ice skating on a neighbor’s recently dug pond, but she fell through a thin area into icy waters. Kelley did not have permission to be on the property, and the neighbor did not even know that she was there. Is the neighbor liable for Kelley’s injuries?
a.    Yes. The neighbor should have posted “thin ice” notices.
b.    No. Kelley was a trespasser and the neighbor could only be held liable for intentionally injuring her or for gross misconduct..
c.    It may depend on Kelley’s age.
d.    Yes, the neighbor is strictly liable.
15.    Kyle was eating clam chowder soup in a restaurant when a very small piece of bone lodged in his throat. Fortunately, he was able to remove the bone with his fingers. However, he was upset by the incident and sued the restaurant for negligence. The most likely result would be:
a.    Kyle will not collect any damages since he did not sustain any damages.
b.    Kyle will collect damages as bones in chowder are common.
c.    Kyle will collect damages if he proves it was possible to prevent tiny fish bones from being present in clam chowder.
d.    Kyle will collect damages, as res ipsa loquitur applies.
16.    Phillip was waiting for a bus at a bus stop. Across the street and down the block, a mechanic negligently overinflated a tire he was intending to put onto Marsha’s pickup truck. The exploding tire injured Marsha and frightened a neighborhood dog, which ran down the street and knocked Phillip down, injuring his knee. Phillip sued the mechanic. In applying the Palsgraf v. Long Island Railroad Co. decision to this case, Phillip would:
a.    win because the mechanic was negligent in overinflating the tire, which led to Phillip’s injury.
b.    win based on negligence per se.
c.    win because the court would apply the doctrine of res ipsa loquitur.
d.    lose because, although the mechanic’s conduct was negligent toward Marsha, it was not a wrong in relation to Phillip, who was far away. The mechanic could not have foreseen injury to Phillip and therefore had no duty to him.
17.    In a comparative negligence state, if the plaintiff in a negligence lawsuit is found to be 30 percent negligent, the plaintiff would recover:
a.    70 percent of the damages.
b.    all of the damages.
c.    none of the damages.
d.    30 percent of the damages.
18.    The Supreme Court of California in Wiener v. Southcoast Childcare Centers, Inc.:
a.    ruled that it did not matter whether the driver of the vehicle acted negligently or with criminal intent, the risk of harm from an unsafe fence was the same and defendants owed a duty to make the fence stronger.
b.    required application of a different standard for third-party criminal acts versus acts of ordinary negligence.
c.    determined that foreseeability was not at issue in this case.
d.    placed importance on the fact that the child care facility had been the target of violence in the past.
19.    A customer in a restaurant would be considered:
a.    a licensee.
b.    an invitee.
c.    a social guest.
d.    none of the above.
20.    Tommie, a six-year-old child, was seriously injured when he stuck a fork into an electrical outlet. His parents sued the restaurant where the incident occurred, claiming it should have had child protective guards on the outlets. Whether the restaurant is liable will be dependent upon whether:
a.    the incident was reasonably foreseeable.
b.    research shows it is likely for a child to commit such an act.
c.    this is negligence per se.
d.    this is an ultrahazardous activity.
21.    Laura, a brain surgeon, committed a negligent act when she ran a red light and injured Randy, a pedestrian crossing the street. Randy was a mentally impaired adult.
a.    Laura will be held to a higher standard of conduct than Randy given her superior intelligence.
b.    Both Laura’s and Randy's conduct will be based on the "reasonable person" standard.
c.    The "reasonable person" standard does not apply to Randy since he is mentally impaired.
d.    The "reasonable person" standard does not apply to Laura nor Randy given their respective degrees of extreme intelligence (one high and one low).
22.    Punitive damages are awarded:
a.    for past and future medical expenses.
b.    for past and future economic loss.
c.    to punish the defendant.
d.    for past and future pain and suffering.
23.    Ultrahazardous activities include all but which of the following?
a.    Pile driving.
b.    Maintaining a wild animal.
c.    Crop dusting.
d.    Setting off a lawful fireworks display.
24.    Which of the following elements is not necessary to apply the doctrine of res ipsa loquitur?
a.    An ultrahazardous activity is involved.
b.    The defendant had exclusive control of the thing that caused the harm.
c.    The harm would normally not have occurred without negligence.
d.    The plaintiff had no role in causing the harm.
25.    Don was driving his truck when a board fell out of the truck bed and onto the road. Alice, who was driving behind Don's truck, tried to avoid the board, swerved and struck a telephone pole, causing her severe injuries. Which of the following is correct?
a.    Don is strictly liable to Alice for her injuries.
b.    In a comparative negligence state, the actions of Don and Alice will be weighed to determine liability.
c.    Don was not negligent in allowing the board to fall out of his truck.
d.    Don is engaging in ultrahazardous activity.
ESSAY
1.    Discuss the concepts of contributory negligence and comparative negligence.
.
2.    List and discuss the elements necessary to establish negligence.
.
3.    Mavrex, Inc. received an application from Larry and, since his written qualifications seemed to meet a pressing current need, they hired him without checking his references or prior records.  Actually, Larry had been in prison for murder several years earlier. Tom, a long-time Mavrex employee, angered Larry when Tom tried to tell Larry how to do his job. Larry attacked and injured Tom. If Tom sues Mavrex, what would his cause of action be, and what elements would Tom need to prove to win his case?
4.    In negligence cases the courts often refer to the term "reasonable person." What is meant by this term?
5.    A contractor used dynamite to loosen a rocky hillside. The blast from the dynamite caused a house foundation to crack. The house was located over a half-mile away from the dynamite site. The contractor was careful when using the dynamite and no allegation of negligence is made. However, the house owner claims the contractor is liable for damage to the foundation. Is the house owner correct? Explain.

TRUE/FALSE
1.    When measured in dollars, street crime costs society more than twice as much as white-collar crime.

2.    When the potential criminal penalty includes six months or more in jail, the defendant has a right to a jury trial.

3.    General deterrence is intended to teach a specific defendant not to repeat criminal conduct.

4.    A crime is a violation of statutory law.

5.    The parties to a criminal trial are the government and the defendant.
6.    In order for the government to obtain a criminal conviction, it must prove its case by clear and convincing evidence.
7.    Shoplifting is a common type of larceny.

8.    Under the laws of most states, a corporation cannot be held criminally responsible.

9.    Actus reus means the "guilty act."

10.    German philosopher Immanuel Kant believed there was only one valid reason to punish, which was deterrence.
11.    Criminal defendants have the right to a lawyer at all the important stages of the criminal process.

12.    Ordinarily, the jury imposes the sentence on a defendant who is found guilty of a crime.

13.    The Sixth Amendment declares that a person cannot be tried twice for the same criminal offense.

14.    Bieber v. People considered the intent requirement in an armed robbery case.

15.    Entrapment can be a defense to a criminal act.
MULTIPLE CHOICE
1.    Roger assaulted Jim in a tavern, causing medical expenses and lost wages.
a.    Roger can be prosecuted by the state for a criminal offense and Jim may sue him for money damages.
b.    If Roger is convicted of criminal assault, Jim is not allowed to sue him for money damages since that would violate the double jeopardy clause of the Constitution.
c.    If Jim refuses to press charges against Roger, the state cannot initiate a criminal proceeding against him.
d.    Jim can elect to sue for money damages or proceed with criminal charges.
2.    Which of the following statements is correct?
a.    Street crime (muggings, homicide, etc.) results in a greater monetary loss to society than white-collar crime.
b.    White-collar crime results in a greater monetary loss to society than street crime.
c.    Studies are not able to calculate the estimated value of white-collar crime since most is never publicly disclosed.
d.    Studies are not able to accurately calculate the estimated value of either street crime or white-collar crime.

3.    The primary purpose of criminal law is to:
a.    insure that a person receives a fair trial.
b.    punish persons convicted of crimes.
c.    provide justice to crime victims.
d.    balance the rights of criminals against the rights of victims.
4.    A misdemeanor is distinguished from a felony based upon:
a.    the rules of evidence.
b.    the length and place of possible imprisonment.
c.    the burden of proof.
d.    the type of intent.

5.    When a judge orders a criminal defendant to reimburse the victim, it is called:
a.    reimbursement.
b.    restitution.
c.    restraint.
d.    reformation.
6.    Immanuel Kant would support punishment on the basis of:
a.    rehabilitation.
b.    deterrence.
c.    retribution.
d.    restraint.

7.    The burden of proof required in a criminal case is:
a.    clear and convincing.
b.    a preponderance.
c.    beyond a reasonable doubt.
d.    highest degree of honesty.

8.    The intent required to commit a burglary would be:
a.    general intent.
b.    reckless conduct.
c.    strict liability.
d.    specific intent.

9.    Sara sent letters to 1,000 people offering to send them information that would guarantee them a profit in the stock market if they sent her $99.95. If they sent her the money, the brief, generally known information she sent them was: “Buy stocks when their prices are low, and sell when the prices are high.” Sara is guilty of:
a.    mail fraud.
b.    larceny.
c.    embezzlement.
d.    nothing. She merely thought of and executed a clever way to make money.
10.    Important steps in the criminal process, in the proper order, include:
a.    probable cause hearing, search, arrest, indictment, arraignment, plea bargain, and trial.
b.    arraignment, booking, bail hearing, trial, and grand jury indictment.
c.    arrest, probable cause hearing, motion to suppress, booking, and trial.
d.    indictment, arrest, probable cause hearing, plea bargain, arraignment, trial, and appeal.
11.    The fraudulent conversion of property which is already in the defendant's possession is:
a.    money laundering.
b.    exclusion.
c.    embezzlement.
d.    trespassory taking.

12.    The primary purpose of RICO was:
a.    to be a tool against organized crime.
b.    to raise revenue.
c.    to prosecute non-citizens.
d.    to prosecute those engaged in tax fraud.

13.    The criminal penalties under RICO include all EXCEPT:
a.    imprisonment.
b.    capital punishment.
c.    confiscation of property acquired through the criminal activity.
d.    fines.
14.    Approximately how much merchandise is stolen from United States retail stores every day?
a.    $1 million
b.    $5 million
c.    $2 million
d.    $25 million
15.    Eric was charged with attempted murder. His defense was that he was insane at the time of the act. A jury accepted Eric's defense.
a.    Eric will probably be committed to a mental hospital and when that hospital determines he is no longer a danger to society, he will be released.
b.    Eric will be declared guilty, but will have to serve his sentence in a mental hospital rather than in prison.
c.    Eric will have to be committed to a mental hospital until he regains his sanity, at which time he will be retried.
d.    Eric will be sent to prison once he is released from the mental ward.
16.    Sid burned his own warehouse in order to collect on a fire insurance policy. Sid has committed:
a.    arson.
b.    larceny since he committed an act intended to wrongfully obtain money from his insurance company.
c.    a crime called "burning to defraud insurers" since the crime of arson only applies to property owned by another person.
d.    an intentional tort, but not a crime since a person has a right to destroy his own property.
17.    Tina is an undercover police officer. One evening she is posing as a prostitute in a bar. Larry, a salesman who is attending an out-of-state convention, begins talking with Tina. After about ten minutes, Tina suggests going to her room for a good time but points out he will need to "donate" $100 to her. Arriving at Tina's hotel room, Larry asks if she is a policewoman. Tina lies and says she is not. When Larry gives her $100, Tina shows him her identification and arrests him.
a.    Larry appears to have been the victim of entrapment since Tina lied about being a police officer.
b.    Larry appears to have been the victim of entrapment since Tina was the one who suggested the activity that resulted in Larry's arrest.
c.    Both of the above are correct.
d.    Neither of the above are correct.
18.    Illegally obtained evidence is not permitted to be used at a criminal trial based upon the:
a.    silver plate doctrine.
b.    exclusionary rule
c.    fair play doctrine.
d.    Eighth Amendment.
19.    Alex was charged with stealing music CDs. He claimed that he was the victim of duress since he was told he would be killed if he did not commit the theft. At his trial, he produced three witnesses who verified that members of Alex's gang probably would have killed him if he had not committed the act.
a.    Since Alex was the victim of duress, he must be found not guilty of the theft.
b.    Both Alex and the gang members are guilty of the theft.
c.    Since Alex was the victim of duress, he has an alibi, which is a legal defense to the theft charge.
d.    This is not a legal excuse for the theft, and Alex is criminally responsible for his act.
20.    Sarah, an employee of Amex Corporation, committed a serious criminal act in an attempt to obtain a large sales order for her employer. A court found her guilty of the felony and also found the corporation guilty of criminal conduct. The company was fined $1 million.
a.    Since Sarah was found guilty of committing the crime, the court erred in fining the company since that violates the Double Jeopardy Clause of the Constitution.
b.    The court acted properly if this were a federal proceeding; however, it did not act properly if this were a state proceeding.
c.    The court acted properly if this were a state proceeding but not if this were a federal case.
d.    The court acted properly in this case.
21.    Barden Corporation was convicted of violating federal RICO laws. Accordingly:
a.    the government may file criminal charges against both the company and the individuals associated with the criminal acts.
b.    the government may file a civil lawsuit against the company to obtain injunctions and other relief.
c.    individuals may file civil lawsuits against the company for violating the RICO statute to recover losses sustained by the criminal act.
d.    All the above are correct.
22.    The Miranda warning insures that the criminal suspects understand their constitutional rights relating to:
a.    search and seizure.
b.    self incrimination.
c.    double jeopardy.
d.    res judicata.
23.    Diane, a police officer, stops Tim's car for a traffic offense. While talking to Tim, she shines a flashlight into the passenger compartment of Tim's car and sees evidence of drug paraphernalia. Which statement is correct?
a.    Diane may search the passenger compartment of the car and any place else in the car, including the trunk, without Tim's consent.
b.    Diane may search the passenger compartment of the car without Tim's consent; however, she may not search the trunk of the car without his consent or without a search warrant.
c.    Diane may not search the passenger compartment of the car (nor any place else) without Tim's consent or a search warrant. However, she can require Tim to remain parked until the search warrant is brought to her.
d.    Under the above circumstances, Diane can write Tim a traffic citation but cannot search the vehicle.
24.    Miguel reprogrammed a cellular telephone so that the calls were improperly charged to another account. He has violated which statute?
a.    The federal Wire and Electronic Communications Act.
b.    The federal Access Device Fraud Act.
c.    The federal Identity Theft and Assumption Deterrence Act.
d.    Only a state statute, the Telephone Fraud Act, since there is no federal legislation related to this problem.
25.    Mulcare Corp. started a compliance program to prevent and detect criminal conduct within the company and had specific, high-level officers in charge of overseeing the program. The company effectively communicated the program to its employees and monitored those employees who were in a position to cheat. It promptly disciplined anyone who broke the law. One effect of having this program is:
a.    federal investigators would no longer investigate the company since Mulcare could take care of any problems internally.
b.    federal investigators might be convinced to limit any prosecution to those directly involved rather than attempting to get a conviction against high-ranking officers or against the company itself.
c.    the Federal Sentencing Guidelines no longer apply.
d.    any cases would be prosecuted in state, rather than federal, court.
ESSAY
1.    Briefly explain the exclusionary rule and two important exceptions to it.
2.    List and discuss the protections afforded criminal defendants by the Bill of Rights.
3.    Discuss the growing problem of identity theft, including how thieves get personal information, what they do with this information, and how a victim should respond.
4.    Mary was suspicious of her neighbor, whom she thought was involved in selling illegal drugs. One day Mary arrived at her apartment and saw a large paper sack tied up with string in front of her neighbor's door. She took the bundle into her apartment, opened it, and discovered it was full of cocaine. She called the police and the neighbor was arrested. The neighbor's lawyer claimed the evidence had been illegally obtained since no probable cause existed to justify opening up the paper bundle.
5.    Dan was arrested and taken to an interrogation room for questioning. After signing a statement waiving his Miranda rights, he agreed to answer questions without a lawyer. After about ten minutes, he told the officers he changed his mind and wanted to talk to a lawyer before answering any more questions. The officers left the room and then came back in. They told Dan that his partner was confessing to the crime and that, "If your partner confesses first and makes a deal, you're the one who's going to go down for this." Dan looked at them without saying anything. After a minute, the officer began questioning Dan again and he confessed to the crime after about an hour. Is this confession admissible?

TRUE/FALSE
1.    One purpose of contract law is to make business matters more predictable.

2.    The elements of a contract are agreement, consideration, legality, and capacity.

3.    The New Jersey Supreme Court held surrogacy contracts to be valid and enforceable.

4.    Robert offers to buy a car from Jane for $400. Jane must accept this offer in order to form an enforceable contract.

5.    I'll pay you $1,000 if you promise to paint my house this month. If the offeree accepts, this is a unilateral contract.
6.    Contracts for the sale of fabric, automobiles, computers, furniture, and paper clips would all be governed by Article 2 of the Uniform Commercial Code.

7.    A valid contract can legally be voided by either party.

8.    Lucy and Rick sign a contract in which Lucy agrees to deliver 10 boxes of chocolates in exchange for Rick's promise to pay $5 per box. Lucy delivers the candy. Rick pays for the goods. This contract is fully executory.

9.    A quasi-contract is the same as an oral contract.

10.    Mary goes into Honest Harry's Electronics and purchases a big-screen TV. Mary agrees to pay for the TV in 30 days on the store's "30 days same as cash" plan. This is an executory contract.
11.    Valerie promises Teresa that she will pay Teresa $75 if Teresa will clean Valerie's house by noon on Saturday. If Teresa cleans the house by noon on Saturday and Valerie pays the $75, then this is an implied, bilateral, executory contract.

12.    Upon the recommendation of a friend, Hope hires Joey to rewire her kitchen and he completes the work within the time agreed. Then Hope finds out that Joey is not a licensed electrician, and she refuses to pay him for the work. A court will enforce the agreement because otherwise Hope would be unjustly enriched.

13.    When promissory estoppel is used by the courts, it is because there is NOT an enforceable contract present.

14.    Under a contract, Danielle is required to make a set of draperies out of fabric chosen by the homeowners, the Flynns. After Danielle makes the draperies according to the contract requirements, her duties under the contract are discharged.

15.    Alex promises to pay $100 to anyone who finds his lost watch. Kate finds and returns the watch to Alex after hearing of the reward money. Alex and Kate have an enforceable unilateral contract.
MULTIPLE CHOICE
1.    Jerry offers to shovel the snow from Ben's driveway for $35. Ben replies "OK." This is an example of:
a.    an implied, unilateral contract.
b.    an express, unilateral contract.
c.    an implied, bilateral contract.
d.    an express, bilateral contract.

2.    The common law governs contracts for:
a.    services.
b.    real estate.
c.    employment.
d.    All of the above.
3.    When Myrtle comes home from work one evening, she finds that her yard has been mowed and trimmed. Later, a man comes to collect for the yard work done. Myrtle refuses to pay for the work since she has never seen the man before and did not hire him to do her yard work. Which of the following answers is most accurate?
a.    This is an implied, unilateral contract and she must pay the price requested by the man.
b.    This is an express, voidable contract that either party may avoid.
c.    The court would order Myrtle to pay the reasonable value of the yard work because of the benefit conferred on her.
d.    Myrtle would not have to pay for the yard work.

4.    The Davis v. Mason case addressed the issue of:
a.    a noncompetition agreement.
b.    fraud.
c.    misrepresentation.
d.    competency.

5.    Miles purchased a lawnmower with an attached warning that said, "The manufacturer is not responsible in the case of an injury caused by the lawnmower." If Miles is injured because of a defect in the mower and sues the lawnmower manufacturer, he will most likely:
a.    lose, as he agreed to not hold the lawnmower manufacturer liable.
b.    lose, as he assumed the risk.
c.    win, as this warning would be unenforceable.
d.    win, as all lawnmower manufacturers are strictly liable.
6.    Mike made the following offer to Mick: "I will pay you $500 if you agree to paint my house." Mick replied that he would. At this point, the contract is an:
a.    executed, bilateral, express contract.
b.    executory, bilateral, implied-in-law contract.
c.    executory, unilateral, express contract.
d.    executory, bilateral, express contract.

7.    What is not required to establish promissory estoppel?
a.    A promise made by the defendant.
b.    A promise made by the plaintiff in response to the defendant's promise.
c.    Reliance on the defendant's promise.
d.    Enforcing the promise is the only way to avoid injustice.
8.    One of the factors leading courts away from a laissez-faire approach to contract law was:
a.    the movement away from requiring a writing and a seal on contracts.
b.    a change in relative bargaining power between parties to contracts.
c.    the assumption that promises are not legally significant.
d.    the assumption that parties had freedom to contract and would have to live with the consequences.

9.    Shelly offers to sell Jane goods both parties know are stolen. Jane accepts the offer, and agrees to pay for the goods. Later, Jane refuses to accept or pay for the goods. If Shelly sues Jane for breach of contract, what is the probable result?
a.    Shelly would win as this is a valid, enforceable contract.
b.    Jane would win as this is a voidable contract.
c.    Shelly would win as this is a unilateral contract.
d.    The law would not enforce Jane's promise, as it does not have a lawful purpose.

10.    Larry goes to his barber who has cut his hair for the past several years. The barber proceeds to cut his hair as they talk about the most recent snow storm to hit the area. This is an example of a:
a.    unilateral, implied contract.
b.    bilateral, implied contract.
c.    unilateral, express contract.
d.    bilateral, express contract.
11.    Robert, a minor, buys a stereo from Jane for $200. State law allows a minor to disaffirm contracts within a reasonable time after turning 18. Robert disaffirms the contract the day after turning 18 and returns the stereo.
a.    This contract was a valid contract, Robert cannot disaffirm.
b.    This contract was a voidable contract, Robert can disaffirm.
c.    This contract was a void contract.
d.    This contract was unenforceable because it needed to be in writing to be enforceable.

12.    Patty is a poor college student struggling to work and keep up with her studies. Fred, her uncle, promises to pay Patty support of $200 per month for the next six months. Although Fred didn't ask her to, she quits her current job in order to devote full time to her studies for the next six months. Fred makes one payment and then stops with no explanation. If Patty sues, what is the likely result?
a.    Fred would win, as he did not ask Patty to quit her job.
b.    Patty would win, as a contract was formed when Fred promised to pay her the support.
c.    Fred would win, as family members cannot sue each other for breach of an oral promise.
d.    Patty may win under the doctrine of promissory estoppel.
13.    Sources of contract law include all EXCEPT:
a.    state common law.
b.    the Uniform Commercial Code.
c.    the Restatement (Second) of Contracts.
d.    federal common law.

14.    The basic distinction between a bilateral contract and a unilateral contract is that:
a.    only one promise is involved in a bilateral contract.
b.    only one promise is involved in a unilateral contract.
c.    the Statute of Frauds applies to one and not the other.
d.    one is enforceable, the other is not.

15.    The courts will find an implied contract when:
a.    justice demands it.
b.    conduct of the parties indicates they intended an agreement.
c.    there is promissory estoppel.
d.    there is undue influence.
16.    Which of the following is not required under quasi-contract?
a.    The plaintiff provided a benefit to the defendant.
b.    The plaintiff expected to be paid.
c.    The defendant acknowledges the obligation.
d.    The defendant had an opportunity to reject the benefit, but failed to do so.

17.    On January 16, Deb offers to sell her waterbed to Colleen for $600. Colleen accepts and agrees to pay Deb $600 on January 27. Which of the following is correct?
a.    On January 16, the contract was executory.
b.    On January 16, the contract was executed.
c.    This contract is a unilateral contract.
d.    There is no contract until one party performs.

18.    An express contract:
a.    must be in writing.
b.    may be inferred by the conduct of the parties involved.
c.    has both parties setting forth their intentions.
d.    is not valid in many states.
19.    Which of the following represents a unilateral offer?
a.    "I will pay you $50 if you mow my lawn."
b.    "I will pay you $50 if you promise to trim that tree."
c.    "I will pay you $50 for your CD player."
d.    "I will pay you $50 for your backpack."

20.    Walter enters a dentist office and points to a damaged tooth. The dentist, Matt, treats the tooth. If Walter refused to pay and Matt sued:
a.    Walter would win as there was no contract.
b.    Walter would win because of the UCC.
c.    Matt would win; this is an implied contract.
d.    Matt would win in quantum meruit.
21.    Jennifer has offered to sell her computer for $1750 to Jack. She tells Jack that the computer is only six months old but, in fact, the computer is three years old, and Jennifer wants to unload the lemon. Jack agrees to buy the computer based on Jennifer's representations. This contract is:
a.    a void agreement because of the fraud involved.
b.    a voidable contract, one that Jack can void.
c.    a voidable contract, one that Jennifer can void.
d.    a void contract because of the UCC.

22.    Which of the following types of property would be goods under the Uniform Commercial Code?
a.    A promissory note.
b.    A stock.
c.    A patent.
d.    A computer.

23.    John enters into a contract to paint Chad's house. When Chad decides on a color, John will buy the paint and paint the house for the price of $2,500. This contract is governed by:
a.    the common law of contracts governs because this is a mixed contract (one for services and goods).
b.    the common law of contracts governs because the predominant factor of the contract is for the sale of services and not goods.
c.    the Uniform Commercial Code governs because there is a sale of goods involved.
d.    both the common law and the Uniform Commercial Code will govern this contract.
24.    Zena enters into a contract with Steeley Company to purchase a washer and dryer. She doesn’t understand the financing terms, but signs the agreement anyway because she needs the appliances. The financing terms are very unfavorable to Zena, and she is unable to make all of her payments when they are due. Steeley sues. The court would:
a.    be exercising judicial restraint if it requires Zena to pay as she promised, even if the agreement was unfair and unwise.
b.    have to rewrite the contract to be fair to both parties.
c.    have to declare the contract void since it contained terms unfavorable to the weaker party to the transaction.
d.    use the theory of promissory estoppel to remedy any unfavorable terms in the contract.

25.    Contracts that do not arise from mutual agreement but are created by courts to avoid unjust enrichment are:
a.    express contracts.
b.    implied contracts.
c.    quasi-contracts.
d.    unilateral contracts.
ESSAY
1.    List and briefly describe the basic elements of a contract.
2.    Explain what the Restatement of Contracts is and describe the role it plays in contract law.
3.    Discuss the requirements of promissory estoppel.
4.    ACME, Inc. is a software producer that entered into a verbal agreement with XYZ Corporation wherein XYZ agreed to buy ACME's newly developed software. The agreement also provided that ACME would supply training personnel, as well as technical personnel to work with XYZ employees in installing and learning the software. What law governs this agreement?
5.    Preferred Contractors was a general contractor and owner of a condominium complex which was under construction. Barrett, a subcontractor, had been hired by Henderson Plumbing, another subcontractor, to help it complete the plumbing work on the project. When Henderson began using shoddy installation procedures and subsequently fell behind the scheduled completion time for the project, Preferred Contractors urged Barrett to correct Henderson's mistakes and to finish the job. Barrett refused to continue until he knew who would pay him, since he feared Henderson's financial position was shaky. Nonetheless, Preferred Contractors’ job superintendent told Barrett to go ahead even if Barrett and Preferred Contractors had no contract because "he would use his influence to try to help Barrett get his money." Barrett finished the work and sent a $7,500 bill to Henderson, which was never paid. When Barrett later sent the bill to Preferred Contractors, these facts emerged: Preferred Contractors told him that due to Barrett's failure to notify Preferred Contractors promptly of Henderson's non-payment, Preferred Contractors had already paid Henderson in full and therefore would not pay twice for the work. Discuss possible theories of recovery Barrett may argue.

TRUE/FALSE
1.    When Olga asks Sven if he wishes to sell his Harley motorcycle, he replies that he would not sell it "for less than $2,000. "Olga replies, "I accept," and hands him $2,000. A contract exists.
2.    Revocation is the withdrawal of an offer by the offeror.

3.    April put an advertisement in the newspaper advertising the sale of her computer for $500. Simultaneously, six people responded to the ad by mail with formal written acceptances. April is bound on six contracts to sell her computer for $500.

4.    You have placed an antique desk up for auction and the auctioneer has not made any special announcements about the sale. You can withdraw the desk at any time before the auctioneer closes the sale by announcement or by the fall of the hammer.

5.    In seeking to ascertain whether there is a meeting of the minds, the courts look to how a reasonable person would objectively view the language or actions of the parties.
6.    On Monday, Harry puts an offer in the mail to Sally to sell his guitar for $50. Monday night when jamming with his buddies, he decides he will really miss his old guitar and has second thoughts about selling it. Tuesday morning he puts a revocation in the mail informing Sally he has changed his mind and the guitar is no longer for sale. The revocation is effective upon dispatch.

7.    Vern Valve Company makes valves for plumbing fixtures. At the beginning of the year, it sends out a price list addressing each one, "To our valued customers." Honest Hank Hardware orders a variety of valves at the prices quoted on the price list. Vern Valve must sell the valves to Honest Hank for the prices quoted on the list.

8.    Under the common law, the mirror image rule permitted the offeree's acceptance of a contract to vary to some degree from the offeror's offer.
9.    According to the UCC, one or more open terms will not cause a sales contract to fail for indefiniteness as long as the parties intended to make a contract and there is a reasonably certain basis for the court to grant an appropriate remedy.

10.    Assume that Ben and Perry sign an agreement in which Ben agrees to sell Perry 2,000 gallons of ice cream. If both parties neglect to include a price term in the contract, the contract cannot be enforced.
11.    Nella offers to sell her crop of strawberries, which have just been picked, to Morgan’s Market. Since she does not specify a time limit for acceptance, Morgan’s can accept the offer the following week, as long as Nella has not revoked it.

12.    Candy, Inc. signed an agreement with Sweet Plantation. Under the contract, Candy, Inc. agreed to purchase all the sugar cane Sweet Plantation grew during the coming season. This contract will be unenforceable due to its vagueness.
13.    If the offer does not specify a type of acceptance, the offeree may accept in any reasonable manner and medium.

14.    Software clickwrap and shrinkwrap agreements limiting the manufacturer’s maximum responsibility to a refund of the purchase price even if the software destroys your hard drive have generally been found to be binding against consumers.

15.    Generally, silence is not acceptance.
MULTIPLE CHOICE
1.    John owns a thoroughbred horse named Prince Charming that just ran in the Kentucky Derby. Prince Charming came in last, much to John's frustration and embarrassment. John exclaims in a loud voice, "I'm selling that horse to the first person who hands me $100 bucks!" John has:
a.    made an offer to anyone within hearing distance and will be bound by his offer to the first person who produces $100.
b.    made a firm offer and will be bound by his offer for a reasonable period of time.
c.    made an acceptance to the first person who can produce $100.
d.    not made an offer because under the circumstances a reasonable person would not conclude that John had intent to make an offer.
2.    Which of the following are generally considered to be legal offers?
a.    Placing an item up for auction.
b.    Catalog advertisements.
c.    Price lists.
d.    None of the above are generally considered offers.

3.    The intent of the offeror to extend an offer to the offeree is generally determined by reference to:
a.    the beliefs of the offeror.
b.    the subjective intention of the offeror.
c.    the assumptions of the offeror.
d.    the words and conduct of the offeror.

4.    The Johnsons decided to sell their summer cabin on Beech Lake. They sent flyers out to all who previously had expressed an interest in buying the cabin stating that they were planning on selling their cabin. The flyer described the location of the property, the size of the lot, and the price. If one of the recipients responds by sending a letter accepting, an agreement:
a.    will not be formed because the flyer was sent out as an invitation to negotiate.
b.    will be formed because the first to respond gets the property.
c.    will be formed because the price is included.
d.    will not be formed because of the parol evidence rule.

5.    Regency Construction placed an order for two hundred 2 x 4s from Lumber Jack. If the place of delivery and time for shipping the goods are not specified, the UCC provides:
a.    the place of delivery is Lumber Jack’s and the time for delivering the lumber is a reasonable time based on normal trade practice.
b.    the place of delivery is Regency Construction and the time for shipping is within 30 days.
c.    the place of delivery is Lumber Jack’s and the time for delivering the lumber is within 30 days.
d.    there is no contract because having more than one open term made the offer too indefinite.
6.    Floyd offers to sell his 1967 Ford Mustang convertible to Tim. Before they conclude their negotiations, Floyd dies. Which of the following is true?
a.    Floyd's heirs must sell the car to Tim.
b.    Floyd's heirs must continue to negotiate the offer and sell the car, if a reasonable price can be determined.
c.    The offer terminates automatically upon Floyd's death.
d.    There is a contract if Tim accepts before learning of Floyd's death.
7.    On January 8, Quastrar, Inc. sent Hylavian Company a letter offering to sell $10,000 in restaurant supplies. On January 18, Hylavian mailed a letter to Quastrar accepting the offer. Quastrar received the acceptance letter on January 20. On January 17, Quastrar sent a letter revoking the offer. Hylavian received this letter on January 21. A contract between Quastrar and Hylavian:
a.    was not formed because the revocation was effective before the acceptance was sent.
b.    was not formed because the revocation was effective before the acceptance was received.
c.    was formed on January 18.
d.    was formed on January 20.

8.    Which of the following offers are considered to be irrevocable for a given period?
a.    Firm offers.
b.    Option contracts.
c.    A writing signed by a merchant offering to hold open an offer for a stated period.
d.    All of the above.

9.    Collector Carl displays his beer can collection at the local swap meet. Mary sees the collection and is interested in buying it. Carl says he will sell the collection for $1,500. Mary says she really likes the collection but is only willing to pay $1,000. Which of the following is correct?
a.    Mary's counteroffer terminates Carl's offer of $1,500.
b.    If Carl rejects Mary's counteroffer, she can still accept Carl's offer of $1,500.
c.    Neither offer is valid. Who would ever pay $1,000 or $1,500 for a beer can collection?
d.    Mary's offer is a firm offer. Carl has an exclusive right to consider her offer for a reasonable period of time.

10.    If an offer specifies no time limit in which to accept:
a.    the offeree has 30 days to respond.
b.    the offeree has 10 days to respond.
c.    the offer is not valid and therefore it does not matter when the offeree responds.
d.    the offeree has a reasonable period during which to accept.
11.    Dick offered to sell Jane his 1955 Thunderbird convertible. Before Jane can accept the offer, lightning strikes the car and it is totally destroyed. Which of the following is true?
a.    Jane can still accept the offer and John must find a 1955 Thunderbird to sell.
b.    The offer is terminated by law.
c.    Dick can still revoke his offer so long as he does so before Jane accepts.
d.    Jane can still accept the offer. She will be entitled to the insurance proceeds.
12.    Hensley and Boyer have been negotiating for several months over issues related to the purchase and sale of some real estate. They draft a letter of intent which:
a.    protects both parties by ensuring the other side is serious and creates a binding agreement on the issues on which the parties have agreed thus far.
b.    may or may not be an offer, depending on the exact language and whether the document indicates that the parties have reached an agreement.
c.    has no legal effect, but provides a record for the parties as to where the negotiations stand.
d.    courts will consider to be a valid offer which the other party must accept if offered in good faith.

13.    If Morales and Rolfes Supply negotiate for the purchase and sale of a supply of fuel for a three-year period for Morales’ business:
a.    the contract may indicate a method for determining the price, without stating a definite price.
b.    Morales and Rolfes must depend on the UCC’s gap-filler provisions to determine a price since the fuel is a “good” covered by Article 2 of the UCC.
c.    the contract price must remain the same for the entire three-year contractual period.
d.    their contractual requirements regarding definiteness would be the same under the UCC and the common law.

14.    Jaime offered to buy Kevin's bike. Jamie is the:
a.    offeree.
b.    offeror.
c.    mortgagor.
d.    trustee.
15.    Acme Co. offers to buy 1000 widgets from Widget World Co. The written offer provides for 1000 at $10 per widget, to be delivered May 1. The offer has no other provisions. Widget World sends a written acceptance. However, the acceptance also states that if any claim arises under this contract, Widget World must be notified within 10 days. Acme does not object to this provision. Both parties are merchants. Which of the following best describes this situation?
a.    No contract exists. The purported acceptance contains additional terms, so it is a counteroffer, which has not been accepted.
b.    No contract exists if the additional terms are construed to be material terms.
c.    A contract exists. If the additional terms are construed to be material, they are not part of the contract. If the additional terms are not material, they are part of the contract.
d.    A contract exists, but the additional terms are not part of the contract no matter what.
16.    Vivian goes to an auction and sees a rare antique lamp that is an identical match to one she already has. At the proper time she bids on the lamp and is the highest bidder. Even though she is the highest bidder, the auctioneer refuses to accept her bid and withdraws the lamp from the auction. Can the auctioneer do that?
a.    Unless otherwise stated, the auctioneer had the right to withdraw the item before the fall of the hammer.
b.    Generally, the auctioneer must sell to the highest bidder. Vivian will get the lamp.
c.    Generally, the auctioneer is the offeror and the bidders are the offerees so there is a contract and Vivian will get the lamp.
d.    Most auctions are without reserve and therefore the auctioneer cannot withdraw the lamp.

17.    Oxtron, Inc. sent the following price list to its customers.
Beer Dispensers       
SBC-500J    ………………$670.00
True TDD-1    …........………$875.00
True TDD-2    ………..……$1,465.00
True TDD-3    ....…….…….$1,515.00
CO2 Tank and Regulator    ………..….......$150.00
Which statement is correct?
a.    Price quotes are generally offers.
b.    Price quotes are generally not offers.
c.    Price quotes are generally output contracts.
d.    Price quotes are generally requirements contracts.

18.    David and George have a contract wherein George agrees to buy sporting goods and equipment. Since the goods are not to be delivered for several months, they left the price open. Under the UCC, which of the following will be true?
a.    The price will be the reasonable price based on fair market value of the goods at the time of delivery.
b.    David has the freedom to set any price he wants considering George was foolish enough to enter into a contract without a price established.
c.    George has the right to establish a price because he is the buyer. David should have taken steps to protect his sales interest.
d.    None of the above. The contract is not valid because the terms are not definite and certain.
19.    Bob signed an agreement with Joe under which Bob agreed to purchase all the hay that Joe grew during the coming growing season. This contract will be:
a.    unenforceable due to its vagueness.
b.    unenforceable due to the difficulty of devising an appropriate remedy for a breach.
c.    enforceable as long as both parties act in good faith and Bob doesn't suddenly demand more hay than what was reasonably estimated.
d.    unenforceable unless state real estate law makes an exception.
20.    Travel Lust offered to sell 100 round-trip tickets to Elaine. Travel Lust stated that the acceptance must be in writing by UPS next-day service. Which of the following acceptances will create a contract between Travel Lust and Elaine?
a.    Elaine calls Travel Lust and states that she will buy the tickets.
b.    Elaine sends a fax to Travel Lust stating she will buy the tickets.
c.    Elaine sends a letter by UPS next-day service to Travel Lust stating that she will buy the tickets.
d.    All of the above responses will create a contract between Travel Lust and Elaine since they constitute reasonable means of communication.
21.    Which of the following elements are necessary for a court to enforce a promise under the doctrine of promissory estoppel?
a.    The offeror makes a promise knowing the offeree is likely to rely.
b.    The offeree relied on the promise.
c.    The only way to avoid injustice is to enforce the promise.
d.    All of the above elements are necessary for a court to enforce a promise under the doctrine of promissory estoppel.

22.    Wally owns 200 acres of land. Wally offers to sell the land to Robert for $1,500 per acre. Robert replies that he does not need 200 acres of land but would like to buy 40 acres at $1,500 per acre. Wally agrees to sell but does not identify which 40 acres. Later, Wally refuses to sell any land to Robert. What is the result?
a.    Robert wins; this is an enforceable contract with complete and definite terms.
b.    Robert wins; the UCC will decide which 40 acres are to be sold.
c.    Wally wins; the original offer was not intended to be an offer but merely an invitation to negotiate.
d.    Wally wins; this agreement is too indefinite since it does not identify which 40 acres are to be sold.

23.    Jack mails an offer to Joan that states, "I offer to sell you my car for $2000. If I don't hear from you in 10 days, I will assume you are willing to buy the car for the stated price." Jack hears nothing by the deadline and assumes he has a deal. What is the result?
a.    Jack has a deal. His offer was intended and contains definite terms.
b.    Jack has a deal. Joan should have responded saying she is not interested in the car if she didn't want to be bound to the offer.
c.    Joan is not bound. Generally an offeree must say or do something to accept an offer.
d.    Joan is not bound. Ten days is not a reasonable amount of time to consider the offer and accept by mail.
24.    In which case is the offer still valid at the time the acceptance is made?
a.    Hal offered to sell a book to Sid. Hal died, and Sid sent an acceptance two days later.
b.    By-Waste Co. telephones XXX Co. offering to dispose of XXX Co.'s chemical waste by a particular method. XXX says it has another way to dispose of the waste. Then XXX finds out the method it planned to use violates environmental protection statutes, so it sends a letter of acceptance to By-Waste.
c.    Ray offers to sell his AT&T stock for a particular price by May 1. On May 2, Kathy agrees to buy the stock.
d.    In a face-to-face transaction, Pat offers to sell Mike his stereo and Mike accepts.
25.    Sam's uncle tells him, "For your graduation gift, I'll give you money so that you can buy a computer for college." Sam buys a good used computer but the uncle refuses to give the money. Sam's best theory for recovery when suing his uncle is:
a.    breach of contract.
b.    breach of quasi-contract.
c.    promissory estoppel.
d.    defamation.
ESSAY
1.    Spangel Fashions sends out its spring and summer catalog to Cindy. Cindy falls in love with the cute dress featured on the front cover of the catalog. When Cindy calls to order the dress, she is informed that the company has sold out of the dress. Cindy is upset and claims that the store is in breach of contract. She argues that the catalog presented an offer, which she accepted when she called to order the dress. Is Cindy correct? Why/why not?
2.    Briefly discuss how an offer can be accepted. Include offers for both bilateral and unilateral contracts.
3.    Jerry knows that Lucy has coveted his classic car for quite some time. Finally willing to sell it, he sends a letter to Lucy offering to sell the car for $15,000. Lucy responds by saying she needs time to arrange financing. Lucy offers Jerry $100 to keep the offer open for two weeks. Jerry agrees, taking the $100. Three days later, Roberta contacts Jerry saying she is interested in buying the car and has the cash to buy it outright. Jerry is concerned that if he doesn't sell the car to Roberta now, she may not be interested later. Furthermore, Lucy may never be able to arrange financing. Jerry is afraid he may end up with no buyer at all. He comes to you for advice. What do you advise?
4.    McCann Construction purchased a poured concrete form from Advance Concrete Forms, Inc. McCann purchased the concrete form by placing a phone call to Advance in Madison, Wisconsin. Advance delivered the concrete form with an invoice stating the terms of the sale required payment within 30 days and a 1 1/2 % interest per month finance charge would be charged on accounts over 30 days. When McCann failed to pay the invoice on time, interest was charged according to this rate. Later, McCann refused to pay the accumulated interest charge, claiming there was not a meeting of the minds regarding the finance charge in any conversation prior to the sale. The trial court concluded that the finance charge was in fact an additional term added by Advance when it accepted McCann's purchase order. Discuss Uniform Commercial Code Section 2-207 in general and with regard to this situation. Does McCann owe the interest accrued?
5.    What elements are necessary for an offer to be valid? Give two examples of nonoffers.

TRUE/FALSE
1.    In Kelsoe v. International Wood Products, Inc. the court awarded Carol Kelsoe the stock in question.

2.    Consideration can be a promise or an act.

3.    Agreeing not to open a competing business could be consideration.

4.    The UCC requires consideration for agreements modifying contracts for the sale of goods.

5.    Billy owes a liquidated debt of $3000 to Rayna, his personal weight trainer. Billy sends Rayna a check for $300 on which he has marked, "Payment in Full." If Rayna cashes the check she will not be able to successfully sue Billy for the remainder of the debt.
6.    Boris sky dives out of a plane and gets hung up in a tree, hopelessly suspended and swinging precariously in his parachute from the branches of the tree. Natasha sees that he is in trouble and comes to his rescue. Once Boris is safely on the ground, he gratefully promises to give Natasha half of his life savings account. When he changes his mind, Natasha will probably be unsuccessful in enforcing his promise.

7.    Raul agrees to paint Mike's house for $1,000. Before finishing, Raul states it is too hot to finish, and Mike offers to pay $1,200 if Raul finishes. Mike's statement that he will pay $1,200 is unenforceable.

8.    Contracts in which one party agrees to buy all his requirements of certain goods from the other party are generally unenforceable because there is no definite amount.

9.    The UCC imposes an obligation of good faith on the parties to both output and requirements contracts.
10.    Contracts require bargaining that leads to an exchange between the parties.
11.    Courts normally require adequate consideration.

12.    Section 2-306 of the UCC expressly disallows output contracts in the sale of goods.

13.    Denton agreed to build a cedar deck for the Thrashers for $7,000. After he began the work, the Thrashers asked him to add cedar flower boxes at one side. Denton replied he would, but it would cost an additional $600. The Thrashers would not be obligated to pay the additional sum because the original agreement already obligated Denton to complete the deck for $7,000.

14.    Pastor Tom was employed by the First Church for 40 years. On Pastor Tom's retirement there was no adequate pension plan. Two months after the retirement, a wealthy parishioner, in consideration for Pastor Tom's 40 years of faithful service and for being such a "sweet" man, promised to pay him $500 per month for the rest of his life. This promise probably is not enforceable.

15.    Hilda owes Lex $3,000, which is an undisputed amount. If she offers him her car in full settlement of the debt and he accepts, the agreement is binding and he can no longer claim she owes him anything on the original debt.
MULTIPLE CHOICE
1.    An agreement to pay a lesser amount to settle an unliquidated debt is:
a.    enforceable, as there is consideration.
b.    unenforceable, as there is no consideration.
c.    enforceable in only some states.
d.    unenforceable as a violation of public policy.

2.    In the historic case of Hamer v. Sidway, the nephew:
a.    lost, as there was no consideration.
b.    lost, as the uncle was dead.
c.    won, as there was consideration.
d.    won, as there was a completed gift.
3.    In the case of Jones v. Allstate Insurance Company, the Supreme Court of Washington found that:
a.    the trial court erred in finding there was an accord and satisfaction.
b.    Allstate exercised good faith because its computer-generated checks all contained full satisfaction language and the check at issue was no different in this respect from the company’s other checks.
c.    because the transaction did not meet the requirement of good faith, the affirmative defense of accord and satisfaction could not be asserted.
d.    checks do not come within the purview of the UCC section dealing with accord and satisfaction.

4.    The Utah Court of Appeals in the Dementas v. Estate of Tallas case found:
a.    the trial court correctly determined that there was no consideration to support Tallas’s promise.
b.    Utah applies the “moral obligation” exception to the requirement of consideration, and therefore Tallas’s promise was supported by consideration.
c.    because Utah does not recognize the “moral obligation” exception to the requirement of consideration, Dementas prevails.
d.    the trial court’s finding that the services rendered by Dementas to Tallas were performed gratuitously was erroneous.

5.    In January, Alex promised to pay Y2K Inc. $5,000 if it would refrain from filing suit against him on a breach of contract action. Y2K agreed and accepted a $5,000 check from Alex. Which of the following statements is correct?
a.    Y2K's promise to refrain from suing Alex was not supported by legal consideration.
b.    Y2K's promise to refrain from suing Alex was supported by legal consideration and is enforceable.
c.    This is an accord and satisfaction, and Y2K cannot sue.
d.    The courts would apply promissory estoppel in this situation.
6.    Zero, Inc. agreed to build Millie a storage building for $8,000. After beginning the project, Zero realized that it could not complete the job and make a profit. Zero demanded $9,500 to complete the building. Millie agreed to pay the $9,500. When the project was complete, Millie tendered $8,000 to Zero for the job. If Zero sues Millie for the remaining $1,500:
a.    Zero will win because there was consideration for the additional $1,500.
b.    Zero will win because Millie had a pre-existing duty to pay any additional amounts.
c.    Zero will lose because there was no legal consideration to support the additional $1,500.
d.    Zero will lose because the UCC does not require consideration to modify an existing contract.
7.    An unliquidated debt can be described as:
a.    a debt in which both its existence and amount is in dispute.
b.    a debt in which the existence or amount is in dispute.
c.    a debt disputed by the debtor but not the creditor.
d.    a debt undisputed by either party.

8.    "I'll sell you my car if I decide to sell it" is an example of:
a.    a conditional offer.
b.    an unliquidated offer.
c.    an unilateral contract.
d.    an illusory promise.

9.    A promise by Derkin Restaurants to buy all of the produce it needs this next year at an established price from Elfredo's Produce would be:
a.    an enforceable requirements contract.
b.    an enforceable output contract.
c.    an unenforceable, illusory contract.
d.    an unenforceable promise based on past consideration.

10.    Bernie owes an undisputed amount to Wilde’s Heating & Air Conditioning. Which of the following is true?
a.    If Wilde’s agrees to accept less than the full amount as full payment, the agreement is not binding.
b.    The undisputed amount is also known as an unliquidated amount.
c.    If the parties agree to settle for less than the full amount, their agreement is governed by the ruling in Jones v. Allstate Insurance Company.
d.    If Wilde’s agrees to accept less than the full amount, the agreement is only binding if it is in writing and signed by Bernie.
11.    Police Officer Paul apprehends a wanted criminal and then demands the $10,000 reward offered by Crime Stoppers. Which of the following statements is true?
a.    Police Officer Paul is not entitled to the reward because past consideration is never valid consideration.
b.    Police Officer Paul is entitled to the reward because he puts his life on the line every day.
c.    Police Officer Paul is not entitled to the reward because he was under a pre-existing duty to make the arrest.
d.    Police Officer Paul is not entitled to the reward but may have an argument under promissory estoppel.
12.    Walter worked nights as a clerk in a fast-food store. On his last work shift, Walter's boss told him, "I'm really grateful for the year that you have worked here. I am going to give you a bonus of $1,000 in your last paycheck." When Walter got his last paycheck, there was no bonus. If Walter sues, the likely result will be:
a.    Walter will win, as the promise is enforceable.
b.    Walter will lose, as he gave no consideration.
c.    Walter will lose unless the promise was in writing.
d.    Walter will win, as no consideration is required to modify an employment contract.
13.    If Rudy offers Oscar $200 for his $600 stereo and Oscar agrees, a court will probably:
a.    set aside the agreement as being unfair.
b.    set aside the agreement because the consideration is inadequate.
c.    not set aside the agreement based on the adequacy of the consideration.
d.    not set aside the agreement because of the UCC.

14.    Jamie is building a new house on her lot. She invites Earnie of Earnie's Excavation to bid the excavation job. Earnie observes that the lot next to Jamie's is also under excavation and the soil in that lot is normal and not excessively rocky. Based on the assumption that the soil in Jamie's lot will be similar, he and Jamie agree that the excavation will cost $2000. When Earnie starts digging, he learns there is solid rock under Jamie's lot. Earnie says it will cost an extra $3000 for the excavation work. Jamie agrees just to get the job done but later refuses to pay a dime more than $2000. If Earnie sues, the most likely result would be:
a.    Jamie wins, as Earnie was under a preexisting duty to dig the basement.
b.    Earnie wins as this modification is governed by the UCC and consideration is not required to enforce a modification of the agreement.
c.    Jamie wins as Earnie was not acting in good faith and just wanted to put Jamie in a situation where she didn't have a choice but to agree to more money.
d.    Earnie wins, as the modification was due to unforeseen difficulties.
15.    If Becky promises not to drink alcohol until she becomes a legal adult in exchange for Ben's promise of $1,000, the agreement is:
a.    enforceable because Becky is giving up the right to do something she would otherwise be entitled to do.
b.    enforceable because the agreement accomplishes Ben's goal of keeping Becky from drinking.
c.    not enforceable because Becky does not have a legal right to drink alcohol.
d.    not enforceable because Becky is a minor and could disaffirm the contract.
16.    Upon graduating from college, Kathy announced her plans to enter law school the following fall and to marry Rick in December. Kathy's father was afraid that marriage during her first year in law school might cause her to fall behind in her studies or cause her to drop out of school. He called Kathy and promised her $10,000 if she postponed her wedding until after completion of her first year of law school. Kathy agreed and postponed the wedding for a year. Kathy successfully completed her first year of law school, but soon thereafter, Kathy's father died. The administrator of her father's estate claimed she was not entitled to the $10,000 because there was no consideration for her father's promise. If Kathy sues the estate, she will probably be:
a.    unsuccessful because her father's death terminated the contract.
b.    successful, as there was consideration.
c.    unsuccessful because her father received no benefit.
d.    unsuccessful because it was merely fatherly advice not to get married during the first year of law school.

17.    Under the Uniform Commercial Code, an agreement modifying a contract:
a.    always requires consideration.
b.    requires consideration only when the sale of goods is involved.
c.    may not require consideration.
d.    requires consideration only when one of the parties is incompetent.

18.    Mary owes $3,800 on her credit card. She sends the credit card company a check for $800 with the notation “payment in full” on the check. If the credit card issuer cashes the check:
a.    Mary’s balance will automatically be paid in full if the $3,800 amount was a liquidated debt.
b.    Mary’s balance will automatically be paid in full regardless of whether the amount of $3,800 was liquidated or unliquidated.
c.    the check may be subject to a UCC exception to the general rules for accord and satisfaction cases involving checks.
d.    Mary’s balance will automatically be paid in full if the $3,800 amount was an unliquidated debt.

19.    If Crosby and Dash are in disagreement as to the exact amount of money that Crosby owes Dash, then they may choose to form a new agreement at a set amount. If they both perform the new agreement, their conduct would be an example of:
a.    a rescission.
b.    a contract modification.
c.    a preexisting duty.
d.    an accord and satisfaction.
20.    An agreement in which a buyer agrees to buy all the goods produced by a manufacturer is known as:
a.    a requirements contract.
b.    an output contract.
c.    an exclusive dealing contract.
d.    an option contract.
21.    The Plaza Hotel contracts with EZ Lawn to have EZ mow the grass on the Plaza grounds for the next 10 years. However, there is a clause in the contract that states if the hotel chooses, the contract may be terminated provided Plaza pays EZ $2,000 on termination. Which of the following is correct?
a.    The contract is unenforceable because the option to cancel clause makes the contract an illusory promise.
b.    The contract is unenforceable because the $2,000 is past consideration.
c.    The contract is unenforceable because only one party has the option to cancel.
d.    The contract is enforceable because the option to cancel clause is supported by consideration.

22.    Mid-American Oil had a contract with NSB Company to supply 1,000 gallons of oil by September 1. The contract contained a provision which required all modifications to be written and signed by the company presidents. In early August, an executive of Mid-American talked with the purchasing agent of NSB who orally agreed to two shipments of oil; one in September and the second one in December. By September 30, when only 500 gallons had been delivered, NSB sued. The likely outcome of this lawsuit is:
a.    NSB wins because the modification was not supported by new consideration.
b.    NSB wins because the modification has to be in writing.
c.    Mid-American Oil wins because the UCC governs this case and no new consideration is required.
d.    Mid-American Oil wins because new consideration was present.

23.    Which of the following ordinarily constitutes legal consideration?
a.    A promise to make a gift.
b.    A promise based upon a change in duties.
c.    A promise based upon a moral obligation.
d.    A promise based upon past consideration.

24.    Marco agrees to sell Clowns R Us some balloons. The contract states that Clowns may buy as many balloons as it wishes. This agreement is:
a.    a requirements contract.
b.    an output contract.
c.    an illusory contract.
d.    an enforceable contract.
25.    The Kelsoe v. International Wood Products, Inc. case was an example of:
a.    promissory estoppel.
b.    partial performance.
c.    illusory promises.
d.    lack of consideration.
ESSAY
1.    Discuss the concept of consideration.
2.    Frank's Furniture Company promised in a written agreement to purchase as much walnut wood "as it desires" from Forestry Products, Inc. If Frank's purchased walnut wood from another source and Forestry Products sued, what is the likely result?
3.    What two exceptions did the UCC create for accord and satisfaction check cases?
4.    Shirley Rhone suffered injuries when a truck struck the vehicle in which she was riding. State Auto Mutual Insurance Co. was the insurer involved and provided personal injury coverage. Shirley went to see Dr. Allen, a chiropractor who provided treatments 32 times over a 3-month period. Dr. Allen billed State Auto in three separate billings. After paying the first two billings in full, State Auto expressed concern about whether Dr. Allen's charges were excessive. State Auto hired Chiropractic Consultants, Inc. to evaluate Dr. Allen's billings. The consultants advised that Dr. Allen's billings were indeed excessive. State Auto then telephoned Dr. Allen and offered a partial payment to settle the account. After this conversation, State Auto issued and sent a check for $864 payable to Dr. Allen. On the face of the check, State Auto noted the total amount allocated to each claim and typed "settlement in full." On the reverse side it said, "The endorsement of this draft by the payee constitutes a clear release and full settlement of the claim or account shown on the other side." Upon receipt of the check, Dr. Allen cashed the check. He then sought payment of an additional $895. State Auto claims there was an accord and satisfaction with respect to the amount due for services rendered by Dr. Allen. What are the requirements of an accord and satisfaction? Were those requirements met in this case?
5.    Douros Realty & Construction Co. had a lead on a "prime" piece of real estate. Although Douros did not have a listing agreement with the seller of the property, he contacted Kelley Properties. Douros knew that Kelley was looking for a location for a commercial development. Douros contacted Kelley stating only that he had the "finest, most outstanding, viable location in the county and it just came on the market." Douros said he would reveal the location of the property and the owner's name if Kelley would sign an agreement which would require Kelley to pay a 10% commission if a sale of the property resulted. The agreement was signed. Four months later, Kelley bought the property after negotiating the deal himself. Kelley claims he does not owe a commission to Douros because there was insufficient consideration to support the payment of commission so large. Kelley claims that all Douros did in the entire transaction was to reveal the location of the property and the owner's name. Was there sufficient consideration to make this promise enforceable?

TRUE/FALSE
1.    An agreement may violate public policy even if the agreement does not require a party to commit a crime, tort, or violate a statute.

2.    The court finds as a matter of law that a clause of Superior Siding’s contract was unconscionable at the time the contract was made. The court must refuse to enforce the contract.

3.    In many states it is illegal to lend money to help someone gamble.

4.    If a contract is made with a person required by law to hold a license, and the purpose of the license is protection of the public, the contract made by an unlicensed person will generally be enforceable.

5.    To raise revenues, the City of St. Cloud required restaurants to purchase a special permit if they wanted to serve food in an open-air patio. While at Hola Taco, a restaurant in St. Cloud, a customer notices that Hola Taco's permit expired. Because Hola's Taco's permit expired, the customer is not legally required to pay for her food.
6.    Rudolph overhears Macy's plans to go skydiving over spring break. Not really knowing Macy, but figuring it's worth a chance, Rudolph rushes out and buys an insurance policy for $100,000 on Macy's life. Macy does in fact meet her demise jumping out of the airplane. Rudolph can collect the $100,000.

7.    Roger parked his car at a garage that has a large sign at the entrance saying, "This garage is not liable for items stolen from a car." This type of notice is referred to as an exculpatory clause.

8.    An unconscionable contract is one that the court refuses to enforce because of fundamental unfairness.
9.    L & M loaned Joan $400 so that she could buy her textbooks for the current semester. L & M's terms for repayment of the loan are, $200 in two months, $200 in four months, and another $100 at the end of the fifth month. The legal rate of interest on this type of loan is six percent per annum. L & M's loan is usurious.

10.    When Randy accepted a job with Buren Construction, Randy signed the following agreement, "Upon termination of my employment with Buren Construction, I agree never to work for another employer as an electrician." If Randy resigns from Buren Construction, this agreement would be upheld under the theory of freedom of contract.
11.    A gambling contract is legal unless it is specifically prohibited by state statute.

12.    It is legal to charge higher interest rates those least able to pay those rates.

13.    Cynthia and Brian were friends. Brian was a dare devil. Because of his antics, Cynthia thought that Brian wasn't long for this life. Cynthia purchased a life insurance policy on Brian's life. Subsequently, Brian was killed in a car accident. Since Cynthia and Brian were friends, Cynthia had an insurable interest in his life and will be entitled to the insurance proceeds.

14.    John did not have a license to practice medicine in Florida. Nevertheless, when he retired to Florida, he started providing medical services to the people in his condo. Isaac, John's next-door neighbor, owed John $2000 for medical services. John will not be able to enforce the contract he made with Isaac. When a licensing requirement is designed to protect the public, any contract made by an unlicensed worker is unenforceable.

15.    To be valid, an agreement not to compete must be ancillary to a legitimate bargain.
MULTIPLE CHOICE
1.    Virginia borrowed money from G & L Lending at 35% interest per year. The state maximum interest rate is 20% per year. Virginia defaulted on the loan. What amount can G& L collect from Virginia?
a.    G & L will be able to collect the principal plus 20% interest per year.
b.    G & L will be able to collect the principal but not any interest.
c.    G & L will not be able to collect either the principal or interest.
d.    All of the above may be correct. The answer depends on the particular state law.
2.    E-mation, Inc hires Marvin to steal trade secrets from one of its competitors for $10,000. Marvin demands half of the money up front. E-mation pays Marvin $5000 but Marvin decides not to pursue theft of the trade secrets. E-mation sues Marvin for the return of the $5000. What will the court do with this contract?
a.    The court will order Marvin to return the $5000.
b.    The court will order Marvin to return the $5000 with interest.
c.    The court will order Marvin to obtain the trade secrets.
d.    The court will not do anything to help E-mation get its money back.
3.    Which of the following exculpatory clauses will most likely be enforceable?
a.    An exculpatory clause that relieves a riding stable of negligence.
b.    An exculpatory clause that relieves a riding stable of gross negligence.
c.    An exculpatory clause that relieves a riding stable from intentional torts.
d.    A riding stable’s exculpatory clause that is hidden in an eight-page document that all riders are required to sign.

4.    E-mation entered into a contract with a consumer, Ezra. Ezra was a recent immigrant to the United States, spoke very little English, and had no formal education. The contract provided for Ezra to pay $2500 for a computer system. The system was worth $400. If E-mation sued Ezra under the contract, what is the most likely result?
a.    The contract is enforceable because of the Statute of Frauds.
b.    The contract is enforceable because of the parol evidence rule.
c.    The contract is enforceable because of the underlying reference rule.
d.    The contract is unenforceable because it is unconscionable.

5.    Mark works as a bartender at The Little Nipper, a local bar. Under state law, bartenders are required to be licensed. The licensing requires filling out an application and submitting a $50 application fee. The application does not require any special education or experience, just the $50 fee. Craig enters Mark's bar, orders a round of drinks for the house, then notices that Mark's license is not on display behind the bar. Craig learns that Mark is not licensed and refuses to pay for the round of drinks. The Little Nipper sues. What result?
a.    Since this is an illegal contract, the courts will not enforce it.
b.    Since Mark violated a regulatory statute, the contract is unenforceable.
c.    Since this is a revenue-raising statute, The Little Nipper wins.
d.    Since this is a revenue-raising statute, the licensing law is unconstitutional. Craig wins.
6.    Barb has been a children's day care provider for several years in the small town of Sallton. She has decided to give it all up and move to the big city for excitement and adventure. She sells her business to Ken, agreeing not to open a competing business within 25 miles of Sallton for a period of one year. After six months of the big city life, Barb is broke and moves back to Sallton. She opens a small day care business. Ken sues on the noncompete clause. What is the most likely result?
a.    Ken wins. The agreement is enforceable.
b.    Barb wins. The agreement is denying her the right to do the only thing she knows how to do.
c.    Barb wins. The agreement is not enforceable because it is not ancillary to a legitimate bargain.
d.    Barb wins. The agreement is not reasonable as to time.

7.    In the case of Worldwide Insurance v. Klopp, the Supreme Court of Delaware found that:
a.    a contract provision requiring arbitration and then permitting appeal by either party was void as unconscionable.
b.    the contract provision requiring arbitration was clear, unambiguous, and fair to both parties.
c.    the arbitration clause in Klopp’s auto insurance contract was valid because it furthered the state policy favoring the use of arbitration to resolve disputes.
d.    the automobile insurance policy was governed by UCC, Article 3.

8.    Which of the following is an example of an exculpatory clause?
a.    Seller reserves the right to cancel the contract at any time.
b.    Seller is not responsible for property damage regardless of the cause of the injury.
c.    Buyer agrees to pay any costs of litigation.
d.    Buyer agrees to notify seller of any change in address.

9.    Larry has the largest pizza business in the city. He learns that Henry is thinking of opening a competing pizza and pasta delivery business. Larry gives Henry $25,000 to not open his proposed business in the same city. Which statement is correct?
a.    The contract is voidable at Larry's option.
b.    The contract is void for lack of consideration.
c.    The contract is illegal and void.
d.    The contract is enforceable.

10.    The UCC deals with unconscionability in a contract by providing that a court may:
a.    refuse to enforce the contract.
b.    enforce the remainder of the contract without the unconscionable clause.
c.    limit the application of any unconscionable clause as to avoid any unconscionable result.
d.    All of the above.
11.    A contract most likely will be declared unconscionable if:
a.    it is unfair to one party.
b.    it contains a cancellation clause.
c.    it is oppressive and the weaker party did not fully understand the consequences of the agreement.
d.    it is signed by a minor.

12.    Which of the following exculpatory clauses will a court most likely find legal?
a.    A baseball stadium sign that states, "Not responsible for errant balls."
b.    Restaurant's sign that states, "Not responsible for items left in booths."
c.    A riding stable agreement that states, "Not responsible for injuries due to ordinary negligence."
d.    All of the above.

13.    An insurance contract is not considered to be a legalized form of gambling because:
a.    one must have an insurable interest in the person being insured.
b.    insurance contracts are underwritten by reputable companies.
c.    insurance activities are regulated by the state department of insurance.
d.    All of the above.

14.    Suppose that Lenny Lawyer enters into an agreement with Cindy Client that his fees will be a percentage of the recovery Lenny obtains for Cindy in her pending divorce. State law makes such a contingency fee arrangement illegal in divorce actions. What will be the probable outcome if Lenny attempts to enforce the agreement?
a.    The contract will be valid. Cindy would not have been able to afford an attorney otherwise and therefore Lenny was doing a public service.
b.    The contract will be voidable at Cindy's option.
c.    The contract will be void as violating a statute. Lenny will not be able to recover anything.
d.    The contract will be unenforceable if Lenny did not get the agreement in writing.

15.    When Mohammed was hired by Pomico, Inc., he signed the following agreement, "Upon termination of my employment with Pomico, I agree not to work for a competing company within 30 miles of Pomico's headquarters for one year." This agreement, important to protecting secret information developed in the employer's business, is:
a.    an unenforceable exculpatory agreement.
b.    an unenforceable usurious agreement.
c.    an enforceable bailment agreement.
d.    an enforceable agreement not to compete.
16.    AAA and XXX companies are both major international conglomerates. They are negotiating a contract whereby AAA will install a computer system for XXX. One clause in the contract states that AAA will not be liable for damages caused by the negligent installation of the computer system, except that AAA warrants the system and will fix any problem for a period of two years following installation. AAA completes the installation of the computer system. XXX loads extensive amounts of information on the system, but all of it is destroyed because AAA negligently installed the memory chips. AAA fixes the memory, but XXX incurred significant expenses in recreating the lost information. XXX sues for these expenses. AAA defends with the noted clause in the contract.
a.    XXX wins; these types of clauses are never enforceable.
b.    XXX wins; exculpatory clauses are sometimes valid, but this one would not be valid.
c.    XXX wins; this exculpatory clause is not valid because it is unconscionable.
d.    AAA wins; this exculpatory clause is enforceable.
17.    Mike owns a house in a poor area of a large city. Mike is on disability and his total monthly income is $700. A sales representative visits his home, selling a water purification system. Mike buys and signs a contract that calls for monthly payments of $500 for the next 10 years. The water system is worth no more than $1000. Mike did not understand what he was signing and thought it was a permission slip allowing the salesman to conduct a free water test to determine the number of toxins in the water. How would a court most likely describe this contract?
a.    The contract is fully enforceable as written.
b.    The contract is unenforceable because it is unconscionable.
c.    The contract is unenforceable because it is illusory.
d.    The contract is unenforceable because it is exculpatory.

18.    E-mation hired Jose to bribe a foreign government official. E-mation gave Jose $10,000 in cash to make the bribe payment and $2000 for Jose's efforts. Instead of paying the bribe, Jose pocketed all of the money. If E-mation sues Jose, E-mation will:
a.    be able to recover the $12,000.
b.    be able to recover the $10,000, but not the $2,000.
c.    be able to recover the $2,000 but not the $10,000.
d.    not be able to recover the $12,000.

19.    In bailment cases, exculpatory clauses:
a.    are very rarely used.
b.    are somewhat more likely to be enforced than in other types of cases.
c.    ordinarily involve an attempt to limit liability for damage to persons rather than property.
d.    None of the above.
20.    Which of the following would involve a bailment?
a.    Judith leases an apartment for 6 months.
b.    Judith purchases a fur coat from Minks Unlimited.
c.    Judith leaves her fur coat with Minks Unlimited to be cleaned.
d.    Judith gives her fur coat to a local charity.
21.    Online gambling:
a.    is outlawed by most states.
b.    sites are often operated from offshore locations where they are legal.
c.    has been reviewed by the World Trade Organization to which Caribbean nations are arguing that the United States has no right under international law to restrict casinos in other countries.
d.    All of the above.

22.    Public policy means the law that comes from the:
a.    state legislature.
b.    executive branch of the government.
c.    courts that decide what would have a negative impact on society.
d.    Constitution.

23.    To be valid, a noncompete clause must be:
a.    ancillary to a legitimate bargain.
b.    reasonable in time, geographical area, and scope of activity when ancillary to the sale of a business.
c.    necessary to protect trade secrets, confidential information, or customer lists developed over an extended time when ancillary to an employment contract.
d.    All of the above.

24.    The Tavern's secret recipe for its pizza sauce would be considered:
a.    a trade secret, and an employment noncompete clause would be enforceable to protect it.
b.    a trade secret, and an employment noncompete clause would NOT be enforceable to protect it.
c.    just a secret recipe and not something the Tavern could protect in a noncompete clause.
d.    an exculpatory clause and not enforceable.
25.    Wendell, new to the area, selects a doctor from the telephone book and visits that doctor to have a splinter extracted. Unbeknownst to Wendell, the doctor has never passed the state licensing exams. Later, when Wendell discovers the truth, he refuses to pay his bill. If the doctor sues for recovery of the fee, will the court support the doctor's claim?
a.    Yes, it was up to Wendell to verify the doctor's qualifications prior to having the splinter extracted.
b.    No, the court is likely to take the position that it is not in the public's best interests to enforce contracts with unlicensed doctors.
c.    It depends on whether Wendell's injury healed properly.
d.    No, but the doctor could probably recover under quasi-contract.
ESSAY
1.    Zach sold a restaurant to Shane for $150,000. As part of the agreement, Zach promised not to open another restaurant business for three years within a 50-mile radius of the one sold. Is this agreement enforceable against Zach?
2.    Marcy and Elliot are both sophisticated merchants who deal in diamonds. Marcy contracted to purchase a diamond for $20,000. The day after the purchase, Marcy took the diamond to a jeweler's show but the highest offer for the diamond was only $10,000. Is Marcy's contract for purchase of the diamond for $20,000 unconscionable?
3.    Discuss the pros and cons of gambling and whether there might be any reason for a court or legislature to treat gambling on credit any differently from gambling itself.
4.    Mabel, an 85-year-old widow who is in poor health, signs a contract with the only nursing home in Anytown (the nearest alternative facility is 75 miles away). The contract obligates Mabel to pay $4,000 per month for the rest of her life and for her estate to pay the same amount for the period of time that the unit sits empty upon her death. Mabel's daughter believes this agreement amounts to an adhesion contract. What is an adhesion contract? What factors will a court look at in determining whether an adhesion contract exists?
5.    In 1970, Continental Airlines agreed to buy a number of DC-10 airplanes from McDonnell Douglas Corporation (MDC). Their contract included a limited warranty in which MDC undertook certain servicing obligations and an exculpatory clause in which Continental waived "all other remedies" against MDC. On March 1, 1978, one of these DC-10s was nearing takeoff at Los Angeles International Airport when the two front tires of its left-side landing gear blew out. The pilot aborted the takeoff, but the uncushioned landing gear tore through the tarmac and broke away from the plane. This ruptured the left wing fuel tank, which burst into flames. The emergency escape slides failed, apparently due to the heat of the fire. Some passengers evacuated through the copilot's window, others jumped from the exits. Four passengers died, and over 70 suffered injuries. The plane was destroyed. It should be noted that the exculpatory clause did not prevent the passengers from suing Continental and/or MDC. Continental sued MDC and MDC defended based on the exculpatory clause. Is this type of clause enforceable? Discuss exculpatory clauses, particularly the one involved here.

TRUE/FALSE
1.    An agreement may violate public policy even if the agreement does not require a party to commit a crime, tort, or violate a statute.

2.    The court finds as a matter of law that a clause of Superior Siding’s contract was unconscionable at the time the contract was made. The court must refuse to enforce the contract.

3.    In many states it is illegal to lend money to help someone gamble.

4.    If a contract is made with a person required by law to hold a license, and the purpose of the license is protection of the public, the contract made by an unlicensed person will generally be enforceable.

5.    To raise revenues, the City of St. Cloud required restaurants to purchase a special permit if they wanted to serve food in an open-air patio. While at Hola Taco, a restaurant in St. Cloud, a customer notices that Hola Taco's permit expired. Because Hola's Taco's permit expired, the customer is not legally required to pay for her food.
6.    Rudolph overhears Macy's plans to go skydiving over spring break. Not really knowing Macy, but figuring it's worth a chance, Rudolph rushes out and buys an insurance policy for $100,000 on Macy's life. Macy does in fact meet her demise jumping out of the airplane. Rudolph can collect the $100,000.

7.    Roger parked his car at a garage that has a large sign at the entrance saying, "This garage is not liable for items stolen from a car." This type of notice is referred to as an exculpatory clause.

8.    An unconscionable contract is one that the court refuses to enforce because of fundamental unfairness.
9.    L & M loaned Joan $400 so that she could buy her textbooks for the current semester. L & M's terms for repayment of the loan are, $200 in two months, $200 in four months, and another $100 at the end of the fifth month. The legal rate of interest on this type of loan is six percent per annum. L & M's loan is usurious.

10.    When Randy accepted a job with Buren Construction, Randy signed the following agreement, "Upon termination of my employment with Buren Construction, I agree never to work for another employer as an electrician." If Randy resigns from Buren Construction, this agreement would be upheld under the theory of freedom of contract.
11.    A gambling contract is legal unless it is specifically prohibited by state statute.

12.    It is legal to charge higher interest rates those least able to pay those rates.

13.    Cynthia and Brian were friends. Brian was a dare devil. Because of his antics, Cynthia thought that Brian wasn't long for this life. Cynthia purchased a life insurance policy on Brian's life. Subsequently, Brian was killed in a car accident. Since Cynthia and Brian were friends, Cynthia had an insurable interest in his life and will be entitled to the insurance proceeds.

14.    John did not have a license to practice medicine in Florida. Nevertheless, when he retired to Florida, he started providing medical services to the people in his condo. Isaac, John's next-door neighbor, owed John $2000 for medical services. John will not be able to enforce the contract he made with Isaac. When a licensing requirement is designed to protect the public, any contract made by an unlicensed worker is unenforceable.

15.    To be valid, an agreement not to compete must be ancillary to a legitimate bargain.
MULTIPLE CHOICE
1.    Virginia borrowed money from G & L Lending at 35% interest per year. The state maximum interest rate is 20% per year. Virginia defaulted on the loan. What amount can G& L collect from Virginia?
a.    G & L will be able to collect the principal plus 20% interest per year.
b.    G & L will be able to collect the principal but not any interest.
c.    G & L will not be able to collect either the principal or interest.
d.    All of the above may be correct. The answer depends on the particular state law.
2.    E-mation, Inc hires Marvin to steal trade secrets from one of its competitors for $10,000. Marvin demands half of the money up front. E-mation pays Marvin $5000 but Marvin decides not to pursue theft of the trade secrets. E-mation sues Marvin for the return of the $5000. What will the court do with this contract?
a.    The court will order Marvin to return the $5000.
b.    The court will order Marvin to return the $5000 with interest.
c.    The court will order Marvin to obtain the trade secrets.
d.    The court will not do anything to help E-mation get its money back.
3.    Which of the following exculpatory clauses will most likely be enforceable?
a.    An exculpatory clause that relieves a riding stable of negligence.
b.    An exculpatory clause that relieves a riding stable of gross negligence.
c.    An exculpatory clause that relieves a riding stable from intentional torts.
d.    A riding stable’s exculpatory clause that is hidden in an eight-page document that all riders are required to sign.

4.    E-mation entered into a contract with a consumer, Ezra. Ezra was a recent immigrant to the United States, spoke very little English, and had no formal education. The contract provided for Ezra to pay $2500 for a computer system. The system was worth $400. If E-mation sued Ezra under the contract, what is the most likely result?
a.    The contract is enforceable because of the Statute of Frauds.
b.    The contract is enforceable because of the parol evidence rule.
c.    The contract is enforceable because of the underlying reference rule.
d.    The contract is unenforceable because it is unconscionable.

5.    Mark works as a bartender at The Little Nipper, a local bar. Under state law, bartenders are required to be licensed. The licensing requires filling out an application and submitting a $50 application fee. The application does not require any special education or experience, just the $50 fee. Craig enters Mark's bar, orders a round of drinks for the house, then notices that Mark's license is not on display behind the bar. Craig learns that Mark is not licensed and refuses to pay for the round of drinks. The Little Nipper sues. What result?
a.    Since this is an illegal contract, the courts will not enforce it.
b.    Since Mark violated a regulatory statute, the contract is unenforceable.
c.    Since this is a revenue-raising statute, The Little Nipper wins.
d.    Since this is a revenue-raising statute, the licensing law is unconstitutional. Craig wins.
6.    Barb has been a children's day care provider for several years in the small town of Sallton. She has decided to give it all up and move to the big city for excitement and adventure. She sells her business to Ken, agreeing not to open a competing business within 25 miles of Sallton for a period of one year. After six months of the big city life, Barb is broke and moves back to Sallton. She opens a small day care business. Ken sues on the noncompete clause. What is the most likely result?
a.    Ken wins. The agreement is enforceable.
b.    Barb wins. The agreement is denying her the right to do the only thing she knows how to do.
c.    Barb wins. The agreement is not enforceable because it is not ancillary to a legitimate bargain.
d.    Barb wins. The agreement is not reasonable as to time.

7.    In the case of Worldwide Insurance v. Klopp, the Supreme Court of Delaware found that:
a.    a contract provision requiring arbitration and then permitting appeal by either party was void as unconscionable.
b.    the contract provision requiring arbitration was clear, unambiguous, and fair to both parties.
c.    the arbitration clause in Klopp’s auto insurance contract was valid because it furthered the state policy favoring the use of arbitration to resolve disputes.
d.    the automobile insurance policy was governed by UCC, Article 3.

8.    Which of the following is an example of an exculpatory clause?
a.    Seller reserves the right to cancel the contract at any time.
b.    Seller is not responsible for property damage regardless of the cause of the injury.
c.    Buyer agrees to pay any costs of litigation.
d.    Buyer agrees to notify seller of any change in address.

9.    Larry has the largest pizza business in the city. He learns that Henry is thinking of opening a competing pizza and pasta delivery business. Larry gives Henry $25,000 to not open his proposed business in the same city. Which statement is correct?
a.    The contract is voidable at Larry's option.
b.    The contract is void for lack of consideration.
c.    The contract is illegal and void.
d.    The contract is enforceable.

10.    The UCC deals with unconscionability in a contract by providing that a court may:
a.    refuse to enforce the contract.
b.    enforce the remainder of the contract without the unconscionable clause.
c.    limit the application of any unconscionable clause as to avoid any unconscionable result.
d.    All of the above.
11.    A contract most likely will be declared unconscionable if:
a.    it is unfair to one party.
b.    it contains a cancellation clause.
c.    it is oppressive and the weaker party did not fully understand the consequences of the agreement.
d.    it is signed by a minor.

12.    Which of the following exculpatory clauses will a court most likely find legal?
a.    A baseball stadium sign that states, "Not responsible for errant balls."
b.    Restaurant's sign that states, "Not responsible for items left in booths."
c.    A riding stable agreement that states, "Not responsible for injuries due to ordinary negligence."
d.    All of the above.

13.    An insurance contract is not considered to be a legalized form of gambling because:
a.    one must have an insurable interest in the person being insured.
b.    insurance contracts are underwritten by reputable companies.
c.    insurance activities are regulated by the state department of insurance.
d.    All of the above.

14.    Suppose that Lenny Lawyer enters into an agreement with Cindy Client that his fees will be a percentage of the recovery Lenny obtains for Cindy in her pending divorce. State law makes such a contingency fee arrangement illegal in divorce actions. What will be the probable outcome if Lenny attempts to enforce the agreement?
a.    The contract will be valid. Cindy would not have been able to afford an attorney otherwise and therefore Lenny was doing a public service.
b.    The contract will be voidable at Cindy's option.
c.    The contract will be void as violating a statute. Lenny will not be able to recover anything.
d.    The contract will be unenforceable if Lenny did not get the agreement in writing.

15.    When Mohammed was hired by Pomico, Inc., he signed the following agreement, "Upon termination of my employment with Pomico, I agree not to work for a competing company within 30 miles of Pomico's headquarters for one year." This agreement, important to protecting secret information developed in the employer's business, is:
a.    an unenforceable exculpatory agreement.
b.    an unenforceable usurious agreement.
c.    an enforceable bailment agreement.
d.    an enforceable agreement not to compete.
16.    AAA and XXX companies are both major international conglomerates. They are negotiating a contract whereby AAA will install a computer system for XXX. One clause in the contract states that AAA will not be liable for damages caused by the negligent installation of the computer system, except that AAA warrants the system and will fix any problem for a period of two years following installation. AAA completes the installation of the computer system. XXX loads extensive amounts of information on the system, but all of it is destroyed because AAA negligently installed the memory chips. AAA fixes the memory, but XXX incurred significant expenses in recreating the lost information. XXX sues for these expenses. AAA defends with the noted clause in the contract.
a.    XXX wins; these types of clauses are never enforceable.
b.    XXX wins; exculpatory clauses are sometimes valid, but this one would not be valid.
c.    XXX wins; this exculpatory clause is not valid because it is unconscionable.
d.    AAA wins; this exculpatory clause is enforceable.
17.    Mike owns a house in a poor area of a large city. Mike is on disability and his total monthly income is $700. A sales representative visits his home, selling a water purification system. Mike buys and signs a contract that calls for monthly payments of $500 for the next 10 years. The water system is worth no more than $1000. Mike did not understand what he was signing and thought it was a permission slip allowing the salesman to conduct a free water test to determine the number of toxins in the water. How would a court most likely describe this contract?
a.    The contract is fully enforceable as written.
b.    The contract is unenforceable because it is unconscionable.
c.    The contract is unenforceable because it is illusory.
d.    The contract is unenforceable because it is exculpatory.

18.    E-mation hired Jose to bribe a foreign government official. E-mation gave Jose $10,000 in cash to make the bribe payment and $2000 for Jose's efforts. Instead of paying the bribe, Jose pocketed all of the money. If E-mation sues Jose, E-mation will:
a.    be able to recover the $12,000.
b.    be able to recover the $10,000, but not the $2,000.
c.    be able to recover the $2,000 but not the $10,000.
d.    not be able to recover the $12,000.

19.    In bailment cases, exculpatory clauses:
a.    are very rarely used.
b.    are somewhat more likely to be enforced than in other types of cases.
c.    ordinarily involve an attempt to limit liability for damage to persons rather than property.
d.    None of the above.
20.    Which of the following would involve a bailment?
a.    Judith leases an apartment for 6 months.
b.    Judith purchases a fur coat from Minks Unlimited.
c.    Judith leaves her fur coat with Minks Unlimited to be cleaned.
d.    Judith gives her fur coat to a local charity.
21.    Online gambling:
a.    is outlawed by most states.
b.    sites are often operated from offshore locations where they are legal.
c.    has been reviewed by the World Trade Organization to which Caribbean nations are arguing that the United States has no right under international law to restrict casinos in other countries.
d.    All of the above.

22.    Public policy means the law that comes from the:
a.    state legislature.
b.    executive branch of the government.
c.    courts that decide what would have a negative impact on society.
d.    Constitution.

23.    To be valid, a noncompete clause must be:
a.    ancillary to a legitimate bargain.
b.    reasonable in time, geographical area, and scope of activity when ancillary to the sale of a business.
c.    necessary to protect trade secrets, confidential information, or customer lists developed over an extended time when ancillary to an employment contract.
d.    All of the above.

24.    The Tavern's secret recipe for its pizza sauce would be considered:
a.    a trade secret, and an employment noncompete clause would be enforceable to protect it.
b.    a trade secret, and an employment noncompete clause would NOT be enforceable to protect it.
c.    just a secret recipe and not something the Tavern could protect in a noncompete clause.
d.    an exculpatory clause and not enforceable.
25.    Wendell, new to the area, selects a doctor from the telephone book and visits that doctor to have a splinter extracted. Unbeknownst to Wendell, the doctor has never passed the state licensing exams. Later, when Wendell discovers the truth, he refuses to pay his bill. If the doctor sues for recovery of the fee, will the court support the doctor's claim?
a.    Yes, it was up to Wendell to verify the doctor's qualifications prior to having the splinter extracted.
b.    No, the court is likely to take the position that it is not in the public's best interests to enforce contracts with unlicensed doctors.
c.    It depends on whether Wendell's injury healed properly.
d.    No, but the doctor could probably recover under quasi-contract.
ESSAY
1.    Zach sold a restaurant to Shane for $150,000. As part of the agreement, Zach promised not to open another restaurant business for three years within a 50-mile radius of the one sold. Is this agreement enforceable against Zach?
2.    Marcy and Elliot are both sophisticated merchants who deal in diamonds. Marcy contracted to purchase a diamond for $20,000. The day after the purchase, Marcy took the diamond to a jeweler's show but the highest offer for the diamond was only $10,000. Is Marcy's contract for purchase of the diamond for $20,000 unconscionable?
3.    Discuss the pros and cons of gambling and whether there might be any reason for a court or legislature to treat gambling on credit any differently from gambling itself.
4.    Mabel, an 85-year-old widow who is in poor health, signs a contract with the only nursing home in Anytown (the nearest alternative facility is 75 miles away). The contract obligates Mabel to pay $4,000 per month for the rest of her life and for her estate to pay the same amount for the period of time that the unit sits empty upon her death. Mabel's daughter believes this agreement amounts to an adhesion contract. What is an adhesion contract? What factors will a court look at in determining whether an adhesion contract exists?
5.    In 1970, Continental Airlines agreed to buy a number of DC-10 airplanes from McDonnell Douglas Corporation (MDC). Their contract included a limited warranty in which MDC undertook certain servicing obligations and an exculpatory clause in which Continental waived "all other remedies" against MDC. On March 1, 1978, one of these DC-10s was nearing takeoff at Los Angeles International Airport when the two front tires of its left-side landing gear blew out. The pilot aborted the takeoff, but the uncushioned landing gear tore through the tarmac and broke away from the plane. This ruptured the left wing fuel tank, which burst into flames. The emergency escape slides failed, apparently due to the heat of the fire. Some passengers evacuated through the copilot's window, others jumped from the exits. Four passengers died, and over 70 suffered injuries. The plane was destroyed. It should be noted that the exculpatory clause did not prevent the passengers from suing Continental and/or MDC. Continental sued MDC and MDC defended based on the exculpatory clause. Is this type of clause enforceable? Discuss exculpatory clauses, particularly the one involved here.

TRUE/FALSE
1.    Lorene, an artist, orally agrees to sell Sabrina a painting for $600. While Lorene is busy talking on the phone, Sabrina writes her a note on the back of an envelope she finds in her purse. The signed note states that she will stop by the studio to pick up the painting within the week. Sabrina changes her mind about the painting, and when Lorene sues to enforce the contract, Sabrina defends on the basis of the statute of frauds. Sabrina will succeed with this defense.

2.    Uncle Brandon promises to give his motorcycle to you at the end of the month. This transaction is governed by UCC, Article 2, because a motorcycle is within the definition of “goods.”

3.    The UCC has abolished the common law requirement of consideration in all contracts involving the sale of goods.

4.    Elizabeth worked as a salesperson in a carpet store. She was in the process of divorcing her husband and needed some money. Elizabeth sold her wedding ring. Elizabeth is considered a merchant with regard to the sale of the ring.

5.    The UCC does not apply to contracts for the sale of goods if the value of the goods is less than $500.
6.    If the seller has made a substantial beginning in manufacturing custom-ordered goods, then an oral contract may be enforceable regardless of the amount of money involved in the contract.

7.    Rachel Retailer sends a preprinted purchase order offering to buy goods from Snidley Supplier. Snidley acknowledges Rachel's offer with a preprinted acceptance form. The terms of the two forms do not mirror each other. To analyze whether an enforceable contract exists, one must first determine whether the new language in the acceptance is an additional term or a different term.

8.    The UCC is federal legislation enacted by Congress.
9.    Megan agrees to sell Neff her quartz watch but they do not specify a price. In such a case, the court would not enforce the agreement because all of the essential terms are not present.

10.    The UCC emphasizes getting the right results, rather than following rigid rules of contract law.
11.    E-presto contracted to buy 30 computers from Computers Plus. This contract is governed by Article 2 of the UCC.

12.    Lian contracted for financial services from E-wise. This contract is governed by Article 2 of the UCC.

13.    Zubair, Inc. leased the 34th floor in an office building in downtown Pittsburgh. This contract is governed by Article 2 of the UCC.

14.    In a mixed contract involving goods and services, Article 2 of the UCC will govern if the predominant purpose is the sale of goods.

15.    The UCC imposes a duty of good faith in the performance of all contracts.
MULTIPLE CHOICE
1.    In which of the following situations is the seller a merchant under Article 2 of the UCC?
a.    Paul, a full-time college student, sold his textbooks to State Bookstore.
b.    Randall, a part-time college student and full-time father, sold his textbooks to a friend.
c.    Zompa Inc., a toy manufacturer, contracted to sell dolls to TonTon Department Store.
d.    In all of the above situations the seller is a merchant.
2.    Office Plus, an office supply store, ordered sixty cases of computer diskettes from Curtis Co., a manufacturer of computer products. Office Plus placed the order using a preprinted purchase order form; Curtis acknowledged the order by sending a preprinted acceptance form back to Office Plus. Unlike Office Plus' form which says nothing about packaging, Curtis's form specifies that the diskettes will be packaged in cases of 10 diskettes per box, 10 boxes per case. Which statement is correct?
a.    The UCC does not cover computer diskettes.
b.    Curtis's packaging term is a different term which materially changes the offer. There is no contract.
c.    Curtis's packaging term is an additional term and therefore a part of the contract unless Office Plus objects to the term within 10 days of receiving Curtis's acceptance form.
d.    The UCC does not cover the contract because both parties are merchants.
3.    Stanziano Construction needs a backhoe to complete a project. If it pays Hofmann Rentals for temporary use of the equipment, the transaction will be governed by:
a.    Article 2 of UCC.
b.    Article 2A of the UCC.
c.    Article 3 of the UCC.
d.    bulk transfer law.

4.    Tri, a full-time college student, sold his car to Don, another student. In the performance of this contract, Tri:
a.    has a duty of good faith which means honesty in fact and the exercise of good judgment.
b.    has a duty of good faith which means honesty in fact.
c.    has a duty of good faith which means honesty in fact and the exercise of reasonable commercial standards of fair dealing.
d.    does not have a duty of good faith.

5.    Which of the following types of property would be classified as "goods" under Article 2 of the UCC?
a.    Cash in hand.
b.    A stock certificate.
c.    A computer.
d.    A membership to a health club.
6.    In a "mixed contract," one involving a sale of both goods and services, the court will:
a.    apply the UCC to the provisions of the contract involving the sale of goods and the common law to the provisions involving the sale of services.
b.    apply the lex mercatoria to the contract.
c.    first determine the dominant purpose of the contract. If the sale of goods dominates the contract, then the court will apply the law of the UCC, Article 2. If the sale of services dominates the contract, the court will apply the common law.
d.    apply Article 2A.
7.    Which of the following contracts requires a writing under the UCC, Article 2?
a.    Jeremy, a full-time student, sold his snow blower to a friend for $450.
b.    Jeremy, a full-time student, purchased a used computer from Office Plus for $300.
c.    A toy manufacturer contracted to sell dolls valued at $10,000 to a department store.
d.    Tobias Department Store contracted to sell Jenny a $400 doll.

8.    Newt, a gun dealer, offers to sell a rare civil war musket to Rush, another dealer, for "$15,000, insurance and shipping paid by buyer." Rush responds, "I accept. Insurance and shipping costs divided equally between seller and buyer." The parties:
a.    do not have a contract since the acceptance violated the mirror image rule.
b.    do not have a contract since Rush's response was a counteroffer.
c.    have a contact and, in the majority of states, the terms of the offeree control.
d.    have a contract and, in the majority of states, the different terms will cancel each other out.

9.    Which of the following contracts is most likely to be declared unconscionable?
a.    A consumer sales contract which charges 300 times the fair market value of the goods.
b.    A consumer sales contract which limits the consumer's remedies to repair or replacement.
c.    A contract between wholesaler and retailer which adds delivery charges at 15% of the costs of the goods.
d.    A sales contract between wholesaler and retailer which limits remedies such as consequential damages.

10.    The basic principles of the UCC regarding sales include:
a.    a duty of good faith.
b.    a duty of exercising reasonable commercial standards of fair dealing for merchants.
c.    a prohibition against unconscionable contracts.
d.    All of the above are correct.
11.    The difference between the UCC requirement of good faith and doctrine of unconscionability is that:
a.    good faith prohibits shockingly one-sided terms in a contract.
b.    good faith focuses on the parties' behavior as they perform the contract.
c.    unconscionability looks at the parties' attempt to carry out the terms of the contract in a reasonable manner.
d.    unconscionability focuses on whether a party is honest in fact and exercises reasonable commercial standards of fair dealing.

12.    Which of the following is true regarding an open price term?
a.    It makes the contract unenforceable.
b.    The price may be fixed by the seller.
c.    The price is the "reasonable" price at the time of delivery.
d.    The price is set by the buyer.
13.    To simplify, clarify, and modernize the law governing commercial transactions, the UCC permits the use of "open terms" in sales contracts. In the use of "open terms," which of the following is true?
a.    The court will use market value and other comparable sales to determine what a reasonable price would have been at the time of delivery if the parties have not settled the price in the contract.
b.    If time of payment is not mentioned in the contract, payment within a commercially reasonable time is presumed.
c.    If the contract permits the buyer or seller to determine the price during contract performance, the UCC requires the party to do so in good faith.
d.    All of the above are true.

14.    Harriett raises and sells hippos. In order to keep her hippos happy and healthy, she feeds them Hippo Chow, which she buys from the local pet store. Under the UCC, Harriett is:
a.    a merchant of both hippos and Hippo Chow.
b.    a merchant of hippos, but not of Hippo Chow.
c.    a merchant of Hippo Chow, but not of hippos.
d.    not a merchant of either hippos or Hippo Chow.

15.    Dean Builders agrees to purchase all of its sump pump requirements for the new houses it builds from Satisfactory Sump Pump, Inc. These two business have had similar agreements the last three years and Dean's requirements have averaged 100 sump pumps per year. This year there was an unusually wet spring and Dean's requirements doubled to 200 sump pumps. Because of the high demand of sump pumps, the market price of the pumps tripled. Satisfactory Sump Pump, Inc. delivers 100 pumps at $75, the contract price. Satisfactory has exhausted its inventory and cannot deliver any more, so Dean buys the other 100 pumps from other suppliers at $225 each. Dean sues Satisfactory Sump Pump, Inc. for the additional expense. What is the most likely result?
a.    Satisfactory Sump Pump, Inc. wins; output and requirements contracts are not enforceable since no quantity is stated.
b.    Dean wins; Satisfactory Sump Pump, Inc. agreed to meet the needs of Dean and did not do so, which is a breach.
c.    Satisfactory Sump Pump, Inc. wins; requirements contracts are governed by a good faith standard, and it was unreasonable for Dean to demand so many additional pumps.
d.    Dean wins; the requirement of good faith applies only between merchants, and Dean is not a merchant.
16.    Under the UCC statute of frauds, the writing must:
a.    state quantity.
b.    state price.
c.    be signed by both parties.
d.    be notarized.
17.    A requirements contract is a contract:
a.    in restraint of trade.
b.    in which the seller provides all of the goods that the buyer needs.
c.    in which the buyer purchases all of the goods that the seller produces.
d.    in which a party must buy a product it does not want in order to be allowed to buy a product it requires.

18.    Betty's BBQ orally contracts with Denny's Design House for 10,000 matchbooks at the price of 10 cents per matchbook. The matchbooks are to be embossed with a logo to be designed by Denny's Design promoting Betty's BBQ. Price, payment terms, delivery terms are agreed upon between the parties. Denny's Design creates the logo, gets Betty's BBQ's approval of the design and begins applying the logo on the matchbook covers. Denny's Design has almost finished the order when Betty's BBQ calls to say it has decided to make the eatery a smoke-free restaurant and cancels the order. Denny's Design sues, but Betty's BBQ states that the agreement is unenforceable under the statute of frauds. Who wins?
a.    Denny's Design House wins. This situation falls under an exception to the statute of frauds.
b.    Denny's Design House wins. This is a service contract for design of a logo. Therefore, the UCC, including the statute of frauds provisions of Article 2, does not apply.
c.    Betty's BBQ wins. This is a contract for $1000. The statute of frauds requires all sales contracts in excess of $500 be in writing.
d.    Betty's BBQ wins. The statute of frauds only applies to merchants. Betty's BBQ is not a merchant in this instance because it intended to give the matchbooks away and not sell them.
19.    Price’s Department Store contracted to buy 1,000 drop-waist velour dress in heather gray from TriColor. Subsequently, TriColor called and asked to ship mink-colored dresses instead of heather gray. Price agreed, in writing, to the change. Which statement is correct?
a.    The modification is not enforceable since there was no consideration for the change.
b.    The modification is not enforceable since the parties are merchants.
c.    The modification is enforceable.
d.    Whether the modification is enforceable depends on the gap-filler rule.

20.    The stated purpose(s) of Article 2 of the UCC is/are:
a.    to simplify the law governing sales.
b.    to permit the continued development of business practices through custom and usage.
c.    to make the laws governing sales uniform among the various states.
d.    All of the above are correct.
21.    By definition, a sale under Article 2 of the UCC requires:
a.    that the parties involved be merchants.
b.    that the product involved be goods, services, or a mixture; that the sale be between or among merchants; and that the sale take place in the normal course of business for that industry.
c.    that title to the goods pass between the seller and the buyer and that a price be paid for the goods.
d.    that the service being sold cannot be a gift or a bailment.

22.    UCC Section 2-204 provides three important rules that enable parties to make a contract quickly and informally. These include all but which of the following?
a.    The parties may make a contract in any manner sufficient to show that they reached an agreement.
b.    A writing sufficient under the statute of frauds may be a simple memo, a letter, or informal note, but need not itself be a contract.
c.    The UCC will enforce a deal even though it is difficult to say exactly when it was formed.
d.    A court may enforce a bargain even though one or more terms were left open.

23.    Wayne agrees over the phone to sell L.J. Cartwright 1,000 yards of 1-inch diameter rope. Wayne honestly believes that L.J. Cartwright offered to pay $1.00 per yard whereas L.J.Cartwright actually offered to pay 75 cents per yard. If the parties subsequently take their dispute to court, the fact that L.J.Cartwright admits on the stand that he offered to pay Wayne 75 cents per yard will:
a.    prevent L.J.Cartwright from using the statute of frauds to nullify the contract.
b.    create an unconscionable contract.
c.    make it possible for Wayne to enforce the contract to sell 1,000 yards of rope at a price of 75 cents per yard.
d.    Both a and c are correct.

24.    Modifications to contracts governed by Article 2 of the UCC:
a.    need not be supported by consideration to be binding.
b.    must meet the same requirements as those governed by the common law rule.
c.    must be supported by new consideration to be effective because of the pre-existing duty rule.
d.    are treated as additional terms.
25.    ABC Siding, Inc. manufactures aluminum siding. ABC enters into a contract to deliver siding to Slippery Siding, Ltd., a retailer of aluminum siding. The written agreement insists that all modifications to the agreement be in writing and signed by both parties. This prohibition against oral modifications is:
a.    valid regardless of whether the clause is signed separately.
b.    invalid unless the clause is signed separately by Slippery Siding, Ltd.
c.    invalid unless the clause is signed separately by ABC Siding, Inc.
d.    invalid unless new consideration is supplied by the parties when the modification agreement is made.
ESSAY
1.    Patsy is shopping for a used car. She finds a car she likes at Morley Motors. Discuss the standard of conduct the UCC imposes on the parties in performing the sales transaction.
2.    Jasmine agrees to purchase 1500 tons of recycled glass from Louie, the price to be determined at the time of delivery. Is such an agreement enforceable? Compare the common law with Article 2 of the UCC.
.
3.    Oxtren, Inc. is a tools wholesaler. Oxtren sent M&E Tools a purchase order offering to buy 200 Model 308 milling & drilling machines with R-8 spindles. The purchase order stated the credit term to be 2% discount if payment was made in 10 days, with the full amount due in 30 days. It did not include a forum selection clause. M&E responded with an acceptance form accepting the offer. The acceptance form, however, stated that full payment was due on delivery and that disputes under the contract would be settled by arbitration.
(A)    Do the parties have an agreement?
(B)    What is the payment term?
(C)    Is the arbitration clause part of the agreement?
4.    Sean of Sean's Shrimp House was enjoying a cup of cappuccino while visiting with Ollie at Ollie's Ocean Front Bar & Grill. During the course of their conversation, Sean agreed to supply 100 pounds of shrimp per month for the next year to Ollie's restaurant at the price of $2.50 per pound. When Sean got back to his office, he sent a written confirmation of the agreement to Ollie. Six weeks after receiving the confirmation Ollie wrote back, stating that he had not agreed to the price of $2.50 per pound. Is Ollie bound to the confirmation?
5.    Jones contracts to buy a computer from Martin for $1500. The contract calls for Martin to service the computer quarterly for the first year and to tutor Jones on how to use the software. Is this contract covered by the UCC or common law?

TRUE/FALSE
1.    The highest level of ownership in goods would be a voidable title.

2.    Jamie purchased a compound bow from Tyler. Jamie can prove he is a BFP by showing only that he gave value and acted in good faith.

3.    The UCC looks solely upon "title" to determine ownership in goods.

4.    Crops are considered identified when they are harvested.

5.    A purchaser can never acquire better title than the seller had.
6.    Both the buyer and seller may have an insurable interest in the same goods at the same time.

7.    Under the UCC, the party who has title to the goods always has the risk of loss.

8.    Mike uses fraudulent means to induce Wanda to enter a sales contract. Mike obtains a voidable title to the goods.
9.    Murphy stops at a garage sale and purchases an oak rocking chair. Murphy and the seller agree that Murphy will pick up the rocking chair the next day when Murphy will return with a truck. That night, there is an earthquake and the rocking chair is swallowed up by earth and totally destroyed. In this case, the seller had the risk of loss and must refund the purchase price to Murphy.

10.    Regardless of the language of the contract, title to goods passes to the buyer at the time and place at which the seller physically delivers the goods.
11.    If Terrill steals a digital camera and sells it to Samuel, Samuel will get a valid title as long as he can prove he gave value for the camera and acted in good faith.

12.    Arco sells to Melvin 1,000 computers that are stored in Arco's warehouse. Arco gives Melvin the ownership documents and Melvin will pick up the computers at the warehouse. Title has passed to Melvin.
13.    A buyer has an insurable interest in goods when they are identified.
14.    The Valley Forge Insurance Co. v. Great American Insurance Co. case held title of a vehicle had not yet passed to the buyer at the time of the accident.

15.    In a shipment contract, title and risk of loss pass to the buyer when the goods are properly tendered at the destination point.
MULTIPLE CHOICE
1.    Buyer is located in Des Moines, Iowa and seller is located in Sacramento, California. The contract specifies F.O.B. Des Moines. This contract is a:
a.    destination contract.
b.    sale or return.
c.    shipment contract.
d.    sale on approval.

2.    Ruppart Manufacturing has a contract for the sale of 100 cases of teaching supplies to Teachers Co-op, Inc. Payment of the order is to be made in installments over the next year. Ruppart Manufacturing keeps a security interest in the cases sold to assure payment by Teachers Co-op, Inc. When the order is completed, Ruppart ships the order. Legally:
a.    both Ruppart and Teachers have an insurable interest in the supplies.
b.    only Ruppart has an insurable interest in the supplies.
c.    only Teachers has an insurable interest in the supplies.
d.    neither Ruppart nor Teachers has an insurable interest in the supplies.
3.    George's Grocery orders two dozen live lobsters from Sea Food Flyers. George's is to keep the lobsters happy by keeping them in a tank following certain instructions to keep the water at the right temperature, etc. The sale is made on a trial basis and George's may return all unsold lobsters at the end of 10 days. This contract is a:
a.    contract to sell future goods.
b.    conditional sale.
c.    sale or return.
d.    sale on approval.

4.    Under the ruling in Circuit City Stores, Inc. v. Commissioner of Revenue:
a.    a customer’s sales receipt serves as a document of title to the purchased goods.
b.    identification of electronic goods by serial number is unnecessary to the sale.
c.    the transaction that took place in Massachusetts was merely an order for merchandise, not a concluded sale.
d.    in “alternative location” sales, title does not pass until the customer picks up the goods.

5.    In January, Eddie contracts to sell 100 bushels of soybeans that fall. This contract:
a.    is void. He cannot contract to sell a crop before it is even planted; the goods must be in existence.
b.    is void. The soybeans must be identified to the contract at the time he contracts to sell them.
c.    can be valid; but title to the soybeans cannot pass until the soybeans exist.
d.    can be valid, and title to the soybeans passes when the contract is signed.
6.    Marco Manufacturing contracted to sell Kurtz Industries 3,000 iron clasps. The contract specified: F.O.B. Marco Manufacturing. Upon arrival and inspection, the goods were rejected by Kurtz Industries because they did not conform to the contract specifications. In transit back to Marco Manufacturing, the common carrier's truck overturned and completely destroyed the clasps. Which statement is correct?
a.    Marco may sue Kurtz for the contract price, as risk of loss transferred to Kurtz at the F.O.B. point.
b.    Kurtz will not be liable for the purchase price. The risk of loss had not yet transferred since the goods were nonconforming.
c.    The loss will be split between the parties upon a 50/50 basis.
d.    The loss will be assigned to the party who could best bear the loss.
7.    Rayco Ski Shop purchased 500 pairs of skis from Skitron. Rayco is located in Colorado. Skitron's business is in Tennessee. The purchase order included the following term: "F.O.B. Colorado." The contract makes no mention of risk of loss or title. The contract can be described as a:
a.    shipment contract.
b.    destination contract.
c.    bulk transfer.
d.    sale on approval.
8.    In a consignment contract, the consignee:
a.    holds title.
b.    takes the goods intending to resell them, and the goods are subject to the claims of the creditors of the consignee.
c.    is the party who leaves goods with the consignor to be resold.
d.    cannot transfer title since the consignor retains the title.

9.    Mike sold his car to Beth, who was to pick the car up at Mike's house by 12:00 noon on September 1. Mike was at his house waiting for Beth but she was late. In fact, when Beth arrived she discovered Mike's home and the car destroyed by a fire that started at 1:00 p.m. The risk of loss falls on:
a.    Mike because Beth had not taken possession of the car.
b.    Beth because Mike was ready, willing, and able to tender the car at 12:00 noon.
c.    Beth because under the UCC, the buyer bears the risk of loss.
d.    Mike, as he had possession of the car.

10.    The term F.O.B.:
a.    can indicate a destination or shipment contract.
b.    stands for "freight on board."
c.    requires the seller to insure the goods for the buyer's benefit.
d.    shifts the risk of loss to the buyer when the goods are identified.
11.    Marco sells goods to Byron for his personal use on the basis that the goods may be returned if Byron is not satisfied with them. The sale is:
a.    a "sale or return."
b.    a "sale on approval."
c.    a consignment.
d.    outside the UCC.

12.    On impulse, you purchase a travel trailer and ask your acquaintence, Max, if you can leave the trailer at the edge of his restaurant’s parking lot until you can have a concrete pad built to store the trailer on your property. Max agrees. When you return for the trailer the next week, it is gone and you find out that Max sold it. You can:
a.    recover the trailer because Max did not have any ownership interest to pass.
b.    recover, but only if Max bought insurance to cover the trailer while it was on his property.
c.    not recover because you “entrusted” the trailer to Max, who then had a right to sell it.
d.    not recover because Max had only a voidable title to transfer.
13.    Imogene takes her diamond solitaire ring to Sparkle Jewelry Shop to have the prongs holding the diamond retipped and have the ring cleaned. The clerk at Sparkle says she will have to leave the ring and that it should be ready in about a week. When Imogene returns in a week to get her ring, she finds out that the ring has been sold. Which of the following is true?
a.    Sparkle Jewelry Shop had the power to transfer all of Imogene's rights in the ring to a good faith buyer in the ordinary course of business.
b.    This situation was a theft of the ring by Sparkle, and Sparkle must retrieve the ring and return it to Imogene.
c.    The buyer of the ring must return it to Imogene since the buyer did not fully investigate whether Sparkle had good title to the ring.
d.    Imogene has lost title to her ring and has no recourse since she is responsible for investigating the merchant's integrity before leaving her property.

14.    Graham, an adult, purchases a car from a minor, and subsequently sells it to Harlow, another adult. Harlow paid full value for the car and had no reason to know that Graham had purchased the car from a minor. Which of the following best describes this situation?
a.    Graham had good title and Harlow gets good title.
b.    Graham had good title and Harlow gets a voidable title.
c.    Graham had voidable title and Harlow gets good title.
d.    Graham had void title and Harlow gets void title.

15.    Microchip Computers is a retailer, which buys its inventory from Acme Co. on credit, giving Acme a security interest in the inventory. Hubert buys a computer from Microchip in the normal course of business. Hubert's title in the computer is:
a.    a good title.
b.    a voidable title.
c.    Hubert has no title in the computer. Title does not pass to Microchip and therefore to Hubert until Microchip pays its debt in full to Acme.
d.    Hubert has good title that is subject to Acme's security interest.
16.    Sanco contracted to sell 1,000 cases of oil to AMF. The oil is located in a public warehouse, which has issued a warehouse receipt for it. Which of the following is correct?
a.    The risk of loss passes to the buyer when the contract is made.
b.    The risk of loss passes to the buyer when the goods are tendered to him.
c.    The risk of loss passes to the buyer when the warehouse receipt is delivered to the buyer.
d.    The risk of loss passes to the buyer when the buyer gets the oil to its final destination.

17.    The identification of goods permits the buyer to:
a.    obtain insurance on the goods.
b.    take title to the goods in any manner that the parties agree upon.
c.    enter into a contract with the seller.
d.    Both a and b.
18.    Assume that Dick steals Jane's camcorder and sells it to Sid. Jane can recover the camcorder from Sid:
a.    under any circumstances.
b.    only if Sid knew that the camcorder was stolen from Jane.
c.    only if Sid did not know that the camcorder was stolen from Jane.
d.    only if Sid paid less than the fair market value for the camcorder.

19.    Which of the following sales would fall within the bulk sales provisions of Article 6?
a.    The sale of a substantial part of the equipment of a business.
b.    The sale of a substantial part of a store's inventory.
c.    The sale of an office building.
d.    The sale of the chairs in a barber's shop.
20.    Presuming that a seller ships nonconforming goods to the buyer and the buyer rejects the shipment, the risk of loss:
a.    will pass according to the terms of the contract.
b.    will pass to the buyer pending cure or acceptance.
c.    remains with the seller until he cures the defect or the buyer decides to accept the goods.
d.    is apportioned to the seller to the extent of any insurance coverage.
21.    A gun manufacturer, in Helena, Montana agrees to sell guns and ammunition to the ATF in Washington, D.C. The terms of the contract specify that the goods are to be shipped "FOB, Chicago." When does the buyer acquire title and risk of loss?
a.    When the goods reach Chicago.
b.    When the goods are delivered to the carrier in Montana.
c.    When the goods are tendered in Washington D.C. by the carrier.
d.    When the goods reach Washington D.C.

22.    Tuan, Inc. contracted to buy 200 monogrammed blankets from Titex, Inc. Tuan paid for the blankets in advance. Before segregating and monogramming the blankets, Tuan filed for bankruptcy. Tuan will not be able to recover the blankets because:
a.    Tuan is a merchant.
b.    the blankets were not identified to the contract.
c.    Tuan became bankrupt after the contract was formed.
d.    the goods were specially manufactured.
23.    Assume that Bubba orders 15 cases of BBQ chips from Mays Potato Chips for his restaurant, Bubba's BBQ. Mays ships 15 cases of regular chips by mistake. If Bubba decides to keep the regular chips, in spite of the nonconformity with the contract, then the destruction of the chips when a water pipe breaks in the food storage room will result in:
a.    May's having to bear the loss, because it shipped nonconforming goods to Bubba.
b.    May's having to bear the loss, because it failed to insure the chips.
c.    Bubba having to bear the loss, because he accepted delivery of the nonconforming chips.
d.    Bubba having to bear the loss, because it was a sale on approval contract.

24.    Mayco has received goods from Wallace pursuant to a sale or return agreement. If Mayco subsequently declares bankruptcy, the goods will be:
a.    returned to Wallace because title did not pass to Mayco under this type of sale.
b.    belong to Mayco and will not be a part of the bankruptcy.
c.    subject to the claims of Mayco's creditors under Section 2-326 of the Uniform Commercial Code.
d.    will be kept by the bankruptcy judge and clerk.

25.    A contract that requires a seller to deliver goods to the carrier is:
a.    a destination contract.
b.    a shipment contract.
c.    a C.I.F. contract.
d.    a C.O.D. contract.
ESSAY
1.    Garden World orders 120 hand cultivators from Green Thumb, Inc. When the cultivators arrive, they seem fine, so Garden World accepts them. As the stock person is putting the cultivators on display, she notices that the tines are loose on all the cultivators. Garden World returns the cultivators to Green Thumb, but they are lost when the delivery truck slips on an oily spot in the road and drives into a nearby lake. Discuss who bears the risk of loss for the shipment.
2.    Rayco entered into a contract to buy Chia Pets from We Grow ‘Em. The contract specified that the shipment would be "F.O.B. destination; title to pass on the date of shipment." The goods were destroyed in transit to Rayco. Rayco argues that the loss is We Grow ‘Em's. Analyze the situation and determine who is liable for the loss.
3.    Discuss the concept of insurable interests.
4.    Baker Furniture sold 50 living room sets to King's Department Store. The parties did not agree on passage of title, but the delivery term was F.O.B. place of shipment. Discuss title and risk of loss regarding the furniture.
5.    Oceanside entered into a contract with the seller Old Tennessee, for the purchase of $6,431 worth of plants. The terms were sale and delivery C.O.D. with the express provision of "No Risk to Supplier," and a large logo at the top of papers stating:
"NOTICE: ALL SHIPMENTS TRAVEL AT RISK AND COST OF PURCHASER."
The plants were shipped by an experienced truck common carrier. Upon arrival in New York, it appeared as though some plants were in a poor state because of excessive heat. Although the carrier on its own marked the bill of lading to indicate that the temperature in the truck should be 50 degrees, this was not done for at least a portion of the journey. Oceanside rejected the shipment by writing "rejected" on the back of the trucker's bill of lading. However, the plants were retained "on consignment" at Oceanside's premises. There were no other formal written rejections or official notices of breach or defects given by the buyer to seller at any point prior to trial. Discuss who has the risk of loss.

TRUE/FALSE
1.    Myrtle walks into Hank's Hardware Store and says, "I need metal storage shelves that can hold 500 pounds." Hank directs her to a metal storage shelving system. Myrtle buys the shelving recommended by Hank. When Myrtle puts 475 pounds of weight on the bottom shelf, it breaks. Hank's Hardware breached the warranty of merchantability.

2.    A product liability case may be brought in warranty, negligence, or strict liability, but it must have the element that a person or business has been hurt by goods.

3.    Under the UCC, no warranty of title arises unless the contract is in writing.
4.    Express warranties must be in writing.

5.    Assume that Veronica steals Emilio's set of golf clubs and sells them to Jeremy. Under the UCC, Emilio may reclaim the golf clubs from Jeremy and Jeremy may collect damages from Veronica for breach of warranty of title.
6.    The Magnuson Moss Warranty Act requires sellers to give written warranties.

7.    The concept of strict liability is grounded in fault, whereas the negligence theory is attributed to the defendant's conduct.

8.    Generally, the parties to a contract may limit or alter the damages recoverable for a breach of warranty, as long as their actions are not unconscionable.

9.    Many states prohibit a seller from disclaiming implied warranties in the sale of consumer goods.
10.    Mark, a power tool salesman, promises Jill, a customer, that the Turbo Power Hedge Trimmer 1000 will easily cut through bamboo up to 3 inches thick. Mark's statement constitutes an express warranty if Jill purchases the hedge trimmer.
11.    Strict liability is based on contract law.

12.    A tag attached to a tree in a nursery identifying the tree as a Southern Magnolia creates an express warranty.

13.    In a tort case, the statute of limitations runs from the time the defect was discovered.

14.    A statute of repose places an absolute limit on when a lawsuit may be filed regardless of when the defect is discovered.

15.    The economic loss doctrine states that, when the injured party is a corporation and the harm is purely economic, the only remedies available are those under the Magnuson-Moss Warranty Act.
MULTIPLE CHOICE
1.    The statute of limitations for breach of warranty under the UCC is?
a.    one year.
b.    two years.
c.    three years.
d.    four years.

2.    Which of the following warranties provides that the goods will be fit for the ordinary purposes for which they are used?
a.    Infringement.
b.    Fitness for a particular purpose.
c.    Merchantability.
d.    Title.
3.    An express warranty can be created by which of the following?
a.    An affirmation of fact or promise.
b.    A description.
c.    A model.
d.    All of the above.

4.    Which of the following statements could create an express warranty?
a.    "This is the best car available in town."
b.    "This motorcycle will double in value in the next ten years."
c.    "These tires have 10,000 miles on them."
d.    "This antique is quite a bargain."

5.    Under which of the following warranties must the seller be a merchant?
a.    Express warranties.
b.    Implied warranty of merchantability.
c.    Implied warranty of fitness for a particular purpose.
d.    Both b and c.
6.    Bugs R Us, an organic gardening merchant, sells and delivers 100 units of live lady bugs to eat the bad bugs on the buyer's award-winning vegetables. The buyer ordered the lady bugs without consultation with Bugs R Us for suggestions. Although the buyer correctly knew that lady bugs were the appropriate bugs for eating bad bugs on vegetables, when the lady bugs were delivered, they refused to eat the bad bugs. The merchant has breached which warranty?
a.    Implied breach of fitness for a particular purpose.
b.    Implied breach of merchantability.
c.    Implied warranty of title.
d.    Implied warranty against infringement.

7.    A sales representative at Oxtren, Inc. orally told the purchasing agent at Wety, Inc. that its industrial saw will cut through metal up to 5 inches thick. Wety purchased the saw. Which statement is correct concerning the claim that the saw can cut through metal up to five inches thick?
a.    The claim is an express warranty.
b.    The claim is an implied warranty of merchantability.
c.    The claim is not a warranty because it is not in writing.
d.    The claim is not a warranty because it is sales puffery.
8.    A sales representative at Oxtren, Inc orally told the purchasing agent at Wety, Inc. that its industrial saw is exceptional. Which statement is correct concerning the claim that the saw is exceptional?
a.    The claim is an express warranty.
b.    The claim is an implied warranty of merchantability.
c.    The claim is not a warranty because it is not in writing.
d.    The claim is not a warranty because it is sales puffery.

9.    In all but which of the following instances is a statement more likely to be an affirmation of fact than puffery or an opinion?
a.    It is specific.
b.    It is oral.
c.    The seller has greater expertise than the buyer.
d.    The defects are not obvious.

10.    Tu-thumbs buys a used paint sprayer from the local paint store. The sprayer had a large sign on it which said "AS IS." The dealer made no promises or statements concerning the performance of the paint sprayer. When Tu-thumbs attempts to spray paint his house, the trigger on the sprayer sticks in the "on" position and before Tu-thumbs can pull the electrical cord to cut the power, paint is sprayed all over the neighbor's house and prize Borzoi dog that is scheduled to be shown in a dog show the next day. Tu-thumbs sues the dealership. Who wins?
a.    Dealer wins; there were no express warranties and all implied warranties have been successfully disclaimed.
b.    Tu-thumbs wins; he can recover on the basis of express warranties.
c.    Tu-thumbs wins; he can recover on the basis of the implied warranty of merchantability because the word "merchantability" was not used in the disclaimer.
d.    Tu-thumbs win; he can recover on the basis of either express or implied warranties.
11.    Bill is injured while standing on the corner of Hollyhock and Vine when Mia's new Hog speeds out of control because of a defective part. In most jurisdictions, Bill
a.    can sue the motorcycle manufacturer even though he was only a bystander.
b.    cannot sue the motorcycle manufacturer because his injuries are personal injuries as opposed to economic loss.
c.    cannot sue the motorcycle manufacturer because the lemon laws require arbitration.
d.    cannot sue the motorcycle manufacturer because there is no privity of contact.

12.    Lemon laws, which assist consumers who have purchased automobiles that turn out to be "lemons,":
a.    are enacted by state legislatures.
b.    are enacted by Congress.
c.    are included in the warranty provisions of the UCC.
d.    have been preempted by the Magnuson Moss Warranty Act.
13.    Mason bought a rotisserie in preparation for a party he was planning. When he put a chicken on the rotisserie, it would not rotate, but stayed in one position where it burned the chicken on one side and left it raw on the other. When he returned the rotisserie to the store, the salesperson disclaimed any responsibility because he had never told Mason the rotisserie would rotate the food as it cooked. Does Mason have any recourse?
a.    No, the salesperson did not make any express warranties.
b.    Yes, the salesperson made an express warranty just by selling the goods.
c.    Yes, although the salesperson did not make any express warranties, the UCC imposes an express warranty on the sale.
d.    Yes, although the salesperson did not make any express warranties, the UCC imposes an implied warranty of merchantability under which the rotisserie is guaranteed to be fit for the ordinary purposes for which it is used.
14.    When Angelena was shopping for a new lawn mower, the salesman, Mark, told her the model she was interested in cuts an 18” swath and the only maintenance it needs is an oil change and a new sparkplug at the beginning of each mowing season. He hands her a warranty booklet which describes that model as a mulching mower and says it has a five-year full warranty. The booklet also disclaims “any warranties or statements made by any agent or salesperson or that appear elsewhere in this booklet.” The effect of the written disclaimer is:
a.    that it is valid to disclaim only the written warranties within the booklet.
b.    that it is valid to disclaim both oral and written warranties.
c.    it does not disclaim either the oral or written warranties.
d.    that it disclaims the oral warranties, but not the written warranties.

15.    Daddy buys an electric car for his 10-year-old son. Daddy follows the directions for assembly carefully, but the son gets an injuring shock when he sits in the car. If Daddy and son sue the manufacturer for negligence, they will:
a.    be successful only if they can prove that the car manufacturer knew of the defect and failed to correct it.
b.    be successful only if they can prove that the car manufacturer failed to use reasonable care in designing, manufacturing, or warning the purchasers about intended uses and foreseeable misuses.
c.    lose, because the son has no privity of contract and therefore no standing to sue.
d.    not be successful if the car was sold "AS IS."
16.    Van is using his wrench as a hammer when the wrench breaks and a piece flies off, injuring his neighbor who is helping Van change a tire on Van's car. If Van sues the tool manufacturer, its best defense will be:
a.    consent.
b.    warranties have been disclaimed.
c.    product misuse.
d.    that the claim is an economic loss only.
17.    Ned sold his refrigerator to his next door neighbor, Ian. Ned fails to tell Ian he has not finished paying for the refrigerator and Neighborhood Bank has a lien on it.
a.    Ned has breached the warranty against infringement.
b.    Ned has breached the warranty of title.
c.    Ned has breached the warranty of merchantability.
d.    Ned has not breached any warranties because he did not guarantee that the refrigerator was free and clear of security liens.

18.    Which of the following is not guaranteed under an implied warranty?
a.    The goods are free of hidden security interests or liens.
b.    The goods are not subject to a rightful claim by a third party.
c.    The goods are merchantable.
d.    The goods may be returned for a refund or replaced in the event of any defect.

19.    As a result of the Magnuson Moss Warranty Act, manufacturers of goods produced after 1975 are required to do which of the following?
a.    If an express warranty is given, the seller at least must repair or replace all defective items sold, regardless of who is ultimately responsible for the defect.
b.    If an express warranty is given, the warranty must be labeled as either a "full" or "limited" warranty.
c.    The manufacturer seller must provide follow-up on all sales to ensure consumer satisfaction.
d.    The manufacturer seller must offer full and unlimited warranties on all products.

20.    In order to disclaim a warranty of fitness for a particular purpose, a merchant:
a.    need do nothing; such a warranty will not exist unless the merchant intends to create the warranty.
b.    must make the disclaimer orally and directly to the buyer.
c.    may disclaim the warranty with any language that is clear and conspicuous.
d.    None of the above. Implied warranties cannot be disclaimed.
21.    Alice's Aspirin Inc., produces and packages aspirin for sale to retail stores. Bob buys a bottle of Alice's aspirin at Dahl's Food Stores. Two days later Bob's friend, Hank, takes two aspirin while at Bob's house. Within minutes, Hank is very ill and is rushed to the hospital, where it is found that a defect in the aspirin caused the reaction. Which of the following is correct?
a.    Hank can sue both Alice's Aspirin Inc. and Dahl's under tort theories because he is an injured party due to the defective product.
b.    Hank cannot sue anyone because he assumed the risk of taking the aspirin.
c.    Hank cannot sue anyone because he is not in privity with Dahl's or Alice's.
d.    Hank can sue but will not be able to recover consequential damages for his medical expenses.
22.    M & E sold a lathe "AS IS" to Brenna. M & E has:
a.    disclaimed strict liability.
b.    disclaimed liability for negligence.
c.    disclaimed all implied warranties.
d.    disclaimed all of the above.

23.    A merchant seller who would like to exclude the warranty of merchantability can do so by doing which of the following?
a.    The merchant can sell the goods "As Is."
b.    The merchant can sell the goods "With All Faults."
c.    The merchant can write conspicuously that the warranty of MERCHANTABILITY is excluded.
d.    All of the above.

24.    Which one of the following warranties arises in a sale of goods?
a.    Implied warranty of title.
b.    Warranty against adverse possession.
c.    Implied warranty of quiet enjoyment.
d.    All of the above arise in a sale of goods.
25.    Which of the following would be a breach of the implied warranty of merchantability?
a.    A knife that cuts its user when slicing a bagel.
b.    A radio that does not pick up FM signals.
c.    A match that burns a spot in the carpet when accidentally dropped.
d.    A watch that does not keep accurate time after getting wet.
ESSAY
1.    Inez contracted with Filippo Furnaces Co. for the installation of a new furnace. Inez selected the furnace she wanted, accepting no suggestions from Filippo Furnaces' heating engineer. The furnace operated fine, but it did not heat the entire house. The size of the blower on the furnace was too small to accommodate the third floor of the house. Inez sued Filippo Furnaces Co. for the breach of the implied warranties of merchantability and fitness. What result?
2.    Sonny had a contract to paint the rides at an amusement park and needed a paint that would protect against extensive wear, potentially harsh weather, and rust. Sonny asked for paint samples from several companies, and selected one supplier based on the quality of the sample. When he received his order, he found that the quality did not match that of the sample. What recourse does Sonny have?
3.    The plaintiff, Donald Laird (Laird) has a bachelor of science degree in animal science from the University of Nebraska, had previously been employed at the university's swine research center, had managed a feed mill in North Platte, had been employed as a herdsman for Hog Breeders, Incorporated, had worked for five years for Armour & Company at its feeder pig operations, and was a branch manager of the Scribner Co-op, Inc. (Co-op) for 14 years, until February 1986. Laird's assistant manager while at the Co-op was Gary Ruwe. When Laird quit the Co-op, Ruwe became the manager. In March 1986, Laird went to Co-op to purchase some feed ingredients for his hogs. In speaking with Ruwe, Laird learned that the Co-op grain bin was not operating properly and therefore the corn was not drying properly. If the corn does not dry properly, it can collect mold and insects. Laird said he would take 1300 bushels of corn if Ruwe could pull the corn out of the middle of the grain bin. The corn was delivered to Laird where he noticed some damaged corn and an odor that indicated that the corn may have mold. Laird did not reject the shipment, however. Laird then began to feed the corn to his hogs. The boars began to develop pneumonia, began vomiting, and would not eat regularly. When it was time for the sows to farrow, the sows had an abnormally high number of miscarriages and stillborns. The ultimate conclusion was that the corn delivered was tainted with vomitoxins, a toxic substance that made the corn unmarketable as feed. Laird sued the Co-op for breach of the implied warranties of fitness for a particular purpose and merchantability. In order to recover under the warranty of fitness for a particular purpose what does Laird have to prove? What is the implied warranty of merchantability? Does Laird have a successful claim with this warranty?
4.    How do the tort theories of negligent product liability and strict product liability differ from each other? List and describe the elements an injured party must establish for recovery under each cause of action.
5.    Peter purchased a new car from Monster Motors. As he drove away from the dealership in the new car, the steering mechanism failed. Peter lost control of the car and plunged down an embankment. Peter was seriously injured. If Peter sues the car manufacturer under strict liability, what does he have to prove? Will Peter be successful?

TRUE/FALSE
1.    The UCC requires good faith to be exercised in the performance of contracts by all parties.

2.    Tender means to physically deliver the goods to the buyer.

3.    Under the "perfect tender rule" the buyer may reject the goods if they fail in any respect to conform to the contract.

4.    The common law requirement that the seller make a tender of delivery that conforms in all respects to the contract requirements was retained by drafters of the UCC, although the Code includes sections that limit the rule's effect.

5.    A seller may not make minor necessary repairs or adjustments that will bring the goods into conformity in order to "cure" nonconforming goods.
6.    Wimble ordered $800 worth of pro-quality luminescent orange tennis balls from Sports Unlimited. On June 1, Sports Unlimited shipped standard white tennis balls that were rejected by Wimble. Wimble bought the same number of pro-quality luminescent orange balls from another supplier the same day for $550. In a suit against Sports Unlimited, Wimble may recover $800.

7.    Courts will generally enforce a damage limitation clause even if it is unreasonable.

8.    "Course of dealing" refers to prior commercial transactions between the same parties.

9.    A homeowner has a contract with a firewood supplier to bring a rick of hardwood at the beginning of each month from October through March. If, for the first three deliveries, the supplier has brought a mixture of hard and soft woods, the homeowner cannot reject a delivery in January because it includes some soft wood.
10.    A buyer who accepts nonconforming goods may not revoke the acceptance under any circumstances.
11.    In the Zion Temple First Pentecostal Church of Cincinnati, Ohio, Inc. v. Brighter Day Bookstore & Gifts case, the court found that, because of an error in the catalog, there was no right to cure a nonconformity with the sleeves of the robes.

12.    Liquidated damages are never permitted under the UCC.

13.    If Chuck buys cheese from Cheese Inc., then fails to inspect the cheese within a reasonable amount of time and does not reject the shipment, Chuck has accepted the shipment even if there is non-conformity.

14.    A buyer's material breach gives the seller the right to refuse to deliver the goods.
15.    Matson agrees to purchase 500 wooden chairs from Woodcarvers, Inc. After Woodcarvers sets the chairs aside in its warehouse, but before the risk of loss passes to Matson, the chairs are destroyed in a fire, which was not the fault of Woodcarvers. The contract between Matson and Woodcarvers is void.
MULTIPLE CHOICE
1.    The duties of the buyer include all of the following except:
a.    acceptance of conforming goods.
b.    payment for conforming goods.
c.    delivery of the documents of title to the seller as a tender of goods.
d.    notifying the seller of rejection of non-conforming goods within a reasonable time.

2.    Under the UCC, the seller's right to correct a shipment of non-conforming goods is called:
a.    correction.
b.    cure.
c.    cover.
d.    retender.
3.    Bryson Hardware accepted delivery of the 50 door handles it ordered. If it later finds the handles do not conform to the contract specifications, it may return the goods only if:
a.    it shows the handles are nonconforming.
b.    it shows that the defects substantially impair their value.
c.    it can prove it is commercially impracticable for it to keep the goods.
d.    the documents of title are in order.

4.    If a buyer does not receive goods by the contract deadline, remedies available include:
a.    incidental and consequential damages.
b.    cover.
c.    damages for non-delivery.
d.    All of the above.

5.    Meister Bros. shipped 250 radiator belts to fill Braybon’s order. Quality control measures had been in place in Meister’s factory when the belts were manufactured. When Braybon received the order one day before it was due, it notified Meister that it rejected the belts because of a variation from the contract specifications. Meister, although it believed the original belts met the contract specifications, notified Braybon that it would supply conforming goods within one week. When the conforming goods arrive in one week:
a.    Braybon does not have to accept them because the contract deadline has passed.
b.    Braybon does not have to accept them because Meister Bros. only has one chance to fill the order correctly.
c.    Braybon should accept them because Meister Bros. has a right to cure even after the contract deadline under these circumstances.
d.    Braybon does not have to accept them because Meister Bros. failed to meet its UCC requirement to deal in good faith.
6.    The Cleveland Indians ordered 500 wooden bats from Bats, Inc. Bats shipped 500 aluminum bats. The Cleveland Indians may:
a.    reject the goods.
b.    accept the goods.
c.    sue for breach.
d.    Any of the above.

7.    The Cleveland Indians ordered 500 wooden baseball bats from Bats, Inc., for delivery on June 1. On May 15, the Cleveland Indians received 500 aluminum bats. As of May 16, Bats:
a.    may cure before June 1.
b.    has breached the contract and is liable for damages.
c.    has breached the contract only if the Cleveland Indians reject the goods.
d.    may cure if done within a reasonable time before or after June 1.
8.    Family Time Restaurant has a contract with Prime Meats for Prime to deliver 100 pounds of ground sirloin twice a week for the next three months. If, on one delivery, Prime brings 95 pounds of ground chuck instead of 100 pounds of ground sirloin:
a.    Family Time may unquestionably reject the non-conforming goods because they vary in both quantity and quality.
b.    Family Time may reject the non-conforming installment only if it substantially impairs the value of that installment and cannot be cured.
c.    Prime has no right to cure.
d.    the perfect tender rule applies.

9.    The UCC "perfect tender" provision provides:
a.    the buyer can reject the entire shipment if any portion of the goods are nonconforming.
b.    the buyer must accept the goods if the defects are minor and correctable.
c.    the buyer may not accept the conforming part of a shipment and reject the nonconforming part.
d.    a buyer must reject nonconforming goods.

10.    A buyer who properly rejects goods:
a.    can do so by sending the goods back in any manner.
b.    must notify the seller of the rejection within a reasonable time.
c.    must pay the costs of returning the rejected goods.
d.    None of the above.
11.    Precision had a contract to supply Higgins, Co. with 500 medical instruments for delivery in three months. Several weeks later Higgins reads in the Wall Street Journal that Precision has been sued for selling defective instruments. Higgins could:
a.    require written assurances from Precision.
b.    sue Precision for damages immediately.
c.    "cover."
d.    declare the contract is breached.

12.    Repudiation is a:
a.    breach.
b.    method of rejecting goods.
c.    party's indication of an intention not to perform.
d.    "cure."
13.    If a contract does not provide for a time for inspection, the UCC allows inspection:
a.    in a reasonable time.
b.    the same day as delivery.
c.    within 3 days of delivery.
d.    within 10 days of delivery.

14.    If a seller cures within a reasonable amount of time, the contract:
a.    has been performed.
b.    is breached.
c.    is void.
d.    is voidable.
15.    Neon orders one thousand 25-foot nylon ropes from Hang'em High Co. Upon inspection of the delivery, Neon learns that Hang'em sent five hundred 25-foot ropes and five hundred 20-foot ropes. Neon may:
a.    demand that Hang'em send 500 additional 25-foot ropes.
b.    accept the 500 conforming ropes and reject the 500 nonconforming ropes.
c.    seek an installment contract.
d.    declare an anticipatory repudiation.
16.    A buyer may revoke an acceptance of goods if:
a.    the nonconformity does not impair the value of the goods.
b.    the buyer had a legitimate reason for the initial acceptance.
c.    the buyer knew the nonconformity could not be cured.
d.    the buyer thought they could easily cover.
17.    When a party to a contract notifies the other party that it will not perform the contract as agreed, this conduct is referred to as:
a.    specific performance.
b.    cover.
c.    repudiation.
d.    assurance.

18.    Which of the following statements is not true regarding the buyer's right to cover?
a.    The buyer must cover.
b.    The measure of damages in a cover is the difference between the cover price and the contract price.
c.    Cover must be done by reasonably obtaining substitute goods.
d.    Consequential damages can be recovered in addition to the cover damages.
19.    Master Glue Hairspray, Inc. contracts to purchase 100 umbrellas with its logo and slogan, "A spray a day keeps the rain and wind away!" specially printed on the umbrellas and its 1-800 telephone number on the umbrella handle. After the seller completes the order, Master Glue refuses to accept or pay for the umbrellas. Because of the special logo and telephone number, the seller has been unable to find a new buyer. If the seller sues Master Glue, what is the proper measure of the seller's damages?
a.    Contract price minus market value of the goods at the time of delivery.
b.    Contract price.
c.    Lost profits.
d.    Cover price minus contract price.

20.    Under the doctrine of commercial impracticability, which situation would not excuse the seller's performance?
a.    The seller forgot to include the cost of freight in a C&F contract.
b.    The seller's source of supply is no longer available because of a governmental embargo prohibiting an export from another country.
c.    The seller cannot deliver because severe flooding wiped out three-fourths of the state's produce.
d.    The seller's workforce is out on an unexpected strike.
21.    Assume that Sherrie's Cherries contracts with Dessert World to sell and ship 600 pounds of cherries in three equal installments of 200 pounds each. If the first installment arrives with 5 pounds of spoilage, then Dessert World may:
a.    reject the installment shipment because of the perfect tender rule.
b.    not reject the installment if those in the food industry expect a small percentage of spoilage with fresh fruits or vegetables.
c.    reject the entire contract.
d.    declare a breach and "cover."

22.    Reba orders a pair of custom leather cowboy boots, C.O.D. from Home on the Range Western Wear. When the boots arrive, Reba pays the carrier for the boots, then opens the package, only to discover that the boots are the wrong snake skin color and three sizes too big. At this point:
a.    she is entitled to inspect the goods after payment (due to the C.O.D. terms) and she can reject the boots because they are nonconforming.
b.    Reba cannot revoke the acceptance, because the wrong color and size of the boots are not substantial impairments.
c.    Home on the Range can allege that Reba did not conduct a proper inspection; therefore, though Home on the Range must cure, Reba is obligated to pay for the return of the incorrect boots and the shipment of replacement boots.
d.    None of the above.
23.    The Code's requirement of good faith in the performance and enforcement of every contract imposes:
a.    a greater duty on merchants than consumers.
b.    a greater duty on consumers than merchants.
c.    the same duty on both consumers and merchants.
d.    a greater duty on parties to a sales contract with the purchase price over $500.

24.    Buyer Bob breaches his contract for the sale of goods with Seller Suzie. Suzie still has possession of the goods at the time of the breach. Suzie can refuse to deliver the goods and:
a.    resell the goods and sue Bob for the total contract price.
b.    either resell the goods or sue, but not both.
c.    resell the goods and sue for any loss on the sale plus incidental damages less expenses saved.
d.    resell the goods and sue only for incidental damages.

25.    Turtle World orders 200 small sea turtles from Reptile World. After the sea turtles had been identified to the contract but before the risk of loss had passed to Turtle World, the turtles were released into the ocean by a militant animal rights group who broke into Reptile World to set the animals free. Under this scenario:
a.    Turtle World cannot successfully sue because the contract is void.
b.    Turtle World can cover, then win a judgment against Reptile World for the difference between the contract price and the cover price, plus incidental and consequential damages, minus expenses saved.
c.    Turtle World can successfully sue for specific performance because sea turtles are everywhere.
d.    Turtle World is entitled to a judgment for compensatory damages, but not consequential damages.
ESSAY
1.    Discuss the UCC rules on the limitation of damages in a contract.
2.    Leonna orders five table settings of china from Elite China. Each set includes a dinner plate, cup & saucer, bowl, and dessert plate. The china is sold only in sets. When the delivery arrives, Leonna discovers that Elite China sent the wrong pattern. Leonna immediately calls Elite China and is instructed to send the shipment back. While repacking the shipment, Leonna changes her mind and decides to keep the cups and saucers. She returns everything else. Can she do this?
3.    Define these terms: usage of trade; course of dealing; and course of performance.
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4.    Tiny Tim Toy Company (TTT) entered into a contract with the manufacturing firm of Charles, Dickens, and Scrooge (C,D&S) to purchase Christmas toys. The shipment was due to arrive on September 1, in time for the Christmas sales. By August 15, after hearing from other toy companies that C,D&S were falling far behind on meeting delivery dates, TTT wrote a letter demanding assurances that the goods would arrive as scheduled. The only response received was a letter on C,D&S letterhead that said, "Bah Humbug! You'll get the shipment by November 1." Discuss TTT's possible remedies at this point.
5.    Identify six possible remedies for a seller when the buyer breaches a contract.