Solved by a verified expert:t__ 1. The theory of strict product liability primarily functions to limit a manufacturer’s liability to an injured party. __t__ 2. A promise to do something that one has a prior legal duty to do is a valid form of consideration. __f__ 3. An easement arises when the owner of one piece of land occupies the real property of a neighbor and eventually acquires title to it. __t__ 4. The rights established under a contract in one state are honored by other states pursuant to the Full Faith and Credit Clause. ___f_ 5. Article 2 of the UCC never governs a contract in which goods and services are combined. ___t_ 6. Temporal limits on product liability actions are established by statutes of repose. __t__ 7. An instrument promising to pay in goods can constitute a negotiable instrument. __f__ 8. If a party under an obligation to perform delegates that obligation to another, the original party is relieved of the obligation to perform. ___t_ 9. Partner are agents both of the other partners and of the partnerships. __f__ 10. An employer can dismiss an employee because the employee’s wages are being garnished without running afoul of federal law. __f__ 11. Strict liability applies only upon the basis of fault. ___t_ 12. An executory contract is one that has been fully performed. ___f_ 13. A person who takes a negotiable instrument from a thief may never become an HDC. ___t_ 14. Job discrimination on the basis of intelligence is expressly prohibited by the Civil Rights Act of 1964. ___t_ 15. State LLC (limited liability company) statutes govern the outcome of topics under dispute if there is no agreement covering that topic. ___f_ 16. Risks ordinarily assumed in business may not constitute consideration for the modification of a contract. __t__ 17. A business that invites persons to come onto its premises is charged with a duty to exercise reasonable care to protect those invitees. ___f_ 18. A full warranty does not require free repair or replacement of any defective part. __t__ 19. Pursuant to the statute of frauds, a written contract that cannot, by its own terms, be performed within one year from the day after its formation is unenforceable. __f__ 20. An adult may avoid any contract with a minor. ___t_ 21. One benefit of limited liability companies (LLCs) is that members of the LLC are not personally liable for the wrongful acts or omissions of the LLC. ___t_ 22. Without informing Deep Sea Research (DSR), Michael, one of DSR’s directors, starts up Treasure Hunters, Inc. to compete with DSR. Michael is liable for breach of the business judgment rule. ___t_23. Corky Corporation is not engaged in discriminatory employment practices when, utilizing a merit-pay system with respect to its employees pays Anne, a female, more than Nick, a male, due to her Anne’s superior performance. __t__24. An officer of a company is considered a fiduciary in relation to that company. ___t_25. Before completing the purchase and downloading the song All Bets Are Off” from Internet Music, an online music seller, Nina is asked to review a warning not to make and sell a copy of the song, but is not required to click “I agree.” This warning is known as a click-on agreement. PART II – Multiple Choice (Two points each) Choose the BEST answer from the four choices you are given. There is only one correct (i.e., BEST) answer for each question. As with the instructions for Part I, if you believe a question to be ambiguously worded, you may support your answer with an explanation, but the explanation must include citation(s) to the relevant page(s) of your text. __c__ 26. Tanya agrees to cosign a promissory note payable to First Credit Union for Lynn to buy a vintage motorcycle. In this arrangement, Tanya is an accommodation a. maker. b. indorser. c. signatory. d. drawee. __b__ 27. Indiana Mills prohibits solicitations on-site and during work hours by the Belt Maker’s Union (BMU) during a union election campaign in which BMU is seeking the workers’ unionization. At the same time, Indiana Mills permits charities to solicit the same workers without those restrictions in place. This violates a. federal labor law. b. no federal law. c. federal solicitation law. d. federal election law. __c__ 28. As a corporation, B&T Drilling Company can expand its operations through a. the appointment of a receiver to wind up the corporate affairs. b. articles of dissolution filed voluntarily with the state. c. a purchase of substantially all of the assets of another corporation. d. a liquidation and distribution of its assets. __B__ 29. Angus, Inc. sells beef to a commercial processor in Timbuktoo. Concerning the UCC’s good faith requirement, Angus can a. avoid it only by oral disclaimer. b. avoid it only by a conspicuous written disclaimer. c. not disclaim it. d. avoid it with or without a disclaimer. __a?__ 30. Stony Gravel Company, Inc., needs a replacement bucket for its steam shovel to continue operating its gravel pit and orders one for $20,000 from Quarries, Inc. Stony tells Quarries that it must receive the steam shovel by Tuesday or it will lose $50,000. Quarries agrees, but ships the bucket late. Stony can recover a. $20,000. b. $50,000. c. $0. d. $70,000. ___c?_ 31. Mayberry Café, a small business, wants to adjust debts and institute a repayment plan that is less expensive and less complicated than other options. It can accomplish this by filing a petition in bankruptcy for relief through a. a family-farmer bankruptcy plan. b. a liquidation. c. a repayment plan. d. a reorganization. __d__ 32. Marcus contracts to sell Kate his laptop computer for $100. The resulting contract will be fully discharged when Marcus and Kate a. sign a receipt. b. agree to sign a bill of sale. c. shake hands and go their separate ways. d. exchange the laptop for the $100. __d__ 33. Marsha steals a check in Judy’s possession that is payable to “bearer.” Marsha delivers the check to Duane. All rights to the check are a. no one’s. b. Judy’s. c. Marsha’s. d. Duane’s. __d__ 34. AB Company and 123 Company agree to consolidate. This consolidation does not require the approval of a. AB’s shareholders. b. AB and 123’s directors. c. 123’s shareholders. d. AB and 123’s officers. __b__ 35. Euro Autos & Trucks, Inc., licenses Downtown Motors, an automobile dealership, to sell its products. This is a. a manufacturing franchise. b. a distributorship franchise. c. a chain-style franchise. d. no franchise. __b?__ 36. Carman slips and falls on Jake’s sidewalk, suffering injury. To determine whether Jake owed a duty of care to Carman, Jake is subject to the standard of a. a reliable person. b. a reasonable person. c. a realistic person. d. a recognizable person. __d?__ 37. Jack, a minor, takes out an automobile insurance policy and pays a $1,000 premium. If Jack disaffirms the contract, he can most likely recover a. nothing. b. $500. c. $1,500. d. $1,000. __c?__ 38. ABM Co. promises a six-percent raise for its line-workers at year’s end so long as productivity has increased and management “feels it is warranted.” ABM must a. give the line-workers a six-percent raise under any circumstances. b. do nothing. c. give the line-workers a six-percent raise only if productivity increases. d. give the line-workers a six-percent raise only at year’s end. ___a?_39. The Wooden Key Corporation needs to borrow money to meet its payroll. Barry, The Wooden Key’s president and owner, asks Second Bank to loan the funds to The Wooden Key. If Second Bank insists that Barry sign the loan application, making him personally liable for payment only if The Wooden Key defaults, Barry will be a. a surety. b. a garnishee. c. a guarantor. d. a lienor. __c_ 40. Jen has an accident and damages her car. She takes it to Wally’s Garage, which repairs it for $1000. Jen makes out a check drawn on Third Bank to Wally’s for the specified amount. She later issues a stop-pay order on the check because she is dissatisfied with the repair. If Third Bank pays the check over the stop-pay order, Third Bank a. can sue Jen for wrongfully issuing a stop-pay order. b. can sue Wally’s under the theory of breach of contract. c. is liable for Jen’s loss because of the wrongful payment. d. cannot sue anyone because it paid a check that was not properly payable. ___b_ 41. Barb eats candy made and sold by Smith’s Confectionaries and becomes ill. Barb files a suit against Smith’s, alleging that the candy was not merchantable. Merchantable food is food that is fit to eat on the basis of a. its maker’s intentions. b. what constitutes a perfect condition. c. consumer expectations. d. its producer’s experience. _d___ 42. Urban Havens Inc. owns a piece of storefront property that it leases to Retailers-R-Us. Unlike a purchaser of real property, Retailers-R-Us a. enjoys exclusive possession of the premises. b. retains temporary, exclusive possession and title to the premises. c. holds only temporary title to the premises. d. acquires only temporary possession of the premises. __b__43. Maggie and Maddy work as salesclerks at Nana’s Shoes. Nana’s withholds federal taxes from their pay and controls the methods and details of the performance of their work. Maggie and Maddy are not authorized to modify the prices or other terms of a sale at the shop. With respect to Nana’s, Maggie and Maddy are a. independent contractors. b. Nana’s employees only. c. Nana’s employees and agents. d. Nana’s principals. _a__ 44. Breezers, Inc. and Spinners, Inc. enter into a contract for the sale of bicycle equipment. Breezers draws a draft unconditionally ordering Fourth Bank, which is Spinners’ bank, to pay $50,000 to Breezers’ order in 90 days. Spinners signs and dates the draft. The instrument thereby created is a. a banker’s acceptance. b. a promissory note. c. a nonnegotiable instrument. d. a trade acceptance. __a?__ 45. Heather files a successful suit against Arzman’s alleging negligence. An award in this kind of lawsuit usually consists of a. punitive damages. b. compensatory damages. c. contributory damages. d. comparative damages. __d?__ 46. Shrier Builders contracts to buy 200 acres from Wing’s Real Estate to subdivide and sell in one-acre lots for Cabin Estates, a residential development. If Wing’s breaches the contract, Shrier’s remedy would probably be a. a certain ratio of the amount that Wing’s has in liquidated funds. b. a percentage of Wing’s unrealized profit. c. the difference between the land’s contract and market prices. d. specific performance. __d?__ 47. The Town of Lizton enters into a contract with Boring Pavement Company that includes mathematical calculations. Lizton’s engineer compiled the figures in the contract, but later discovered calculation errors. When apprised of the errors, Boring refuses to make the necessary corrections. Lizton can a. rescind the contract on the basis of fraud. b. rescind the contract on the basis of mistake. c. not rescind the contract. d. rescind the contract on the basis of economic duress. __d?__ 48. Readymade Construction Corporation offers to buy from Set-Still Cement Company a certain quantity of cement for a certain price. Set-Still can accept the offer by a. a shipment of nonconforming goods with a notice of accommodation. b. a prompt shipment of the cement only. c. a material alteration of the terms within a reasonable time. d. a promise to ship or a prompt shipment of the cement. ____ 49. Brickert Pottery, Inc. secured a loan from Annapolis Savings & Loan, using its inventory as collateral. The S&L filed a financing statement with the secretary of state’s office in the state in which Brickert was chartered. Twelve months after the financing statement was filed, Brickert changed its name to BP Ceramics. The S&L’s perfection will remain effective for a. no time. b. six years after the date of the original filing. c. four months after the date of the name change. d. five business days after the date of the name change. ___c?_ 50. Yummy, Inc. and Sweet Things Stores enter into a contract for a sale of candy. Yummy, a merchant who deals in candy, makes express warranties in connection with the sale. Under the UCC, at the time a contract is formed, an express warranty can be disclaimed or modified a. in any way that the seller sees fit for the ordinary purpose. b. by implied affirmations of fact relating to the goods. c. by clear, conspicuous language called to the buyer’s attention. d. in no way. PART III – Essay/Short Answer (10 points each) Please answer each question thoroughly, remembering that these are worth 10 points each. Although I appreciate brevity as much as anyone, a sentence or two will not suffice on these. Make sure you explain WHY you arrived at your answer, as you can earn points for correct analysis, even if your ultimate conclusion is incorrect. 51. Bob contracts with Wilma to buy Tea Leaves, a tea shop/restaurant for Wilma, who asks Bob not to reveal her identity. Bob makes a deal with Loren, the owner of the restaurant, and makes a down payment. Wilma fails to pay the rest of the price, and does not pay Bob for his services. Does Bob have any recourse against Wilma? If so, on what basis and to what extent? 52. Mayes works for JB’s Pizza as a delivery driver. JB’s guarantees that orders will be delivered within thirty minutes or there is no charge, and insists that its drivers meet the limit. Mayes is caught in heavy traffic one night while making a delivery. Determined to make the delivery by the thirty-minute deadline, Mayes drives onto a sidewalk in an attempt to get circumvent the traffic, and in doing so accidentally strikes Liz, a pedestrian. Is JB’s liable to Liz for her injuries? Is Mayes liable to Liz? Why or why not? 53. Reta needs $2000 to buy educational supplies. Marvin agrees to loan her the money, accepting her car as collateral. They reduce their agreement to writing and sign it. Reta retains possession of the car. Does Marvin have an enforceable security interest? How can Marvin let other creditors know of his interest in the car? He does have an enforceable security but he needs to file a vested interest on the title of the car. Need to explore title interests. 54. Warehouse Industries Company enters into a contract to sell a warehouse to Racing Teams Corporation, telling Racing Teams that the office furniture is included. The contract does not mention office furniture. However, it provides, “This document supercedes all oral promises relating to the sale.” Is the furniture part of the sale? Why or why not? It is not because the furniture is considered personal property and unless specifically outlined in the contract to be included. 55. Heartland Company’s utility room is flooded when a water main bursts, tripping the circuit breakers on a panel located in the utility room. Heartland contacts Nina, a licensed electrician with ten years experience, to check the damage and turn on the breakers. Nina attempts to switch on a breaker without first checking for a short circuit, although she knew she should have first checked for a short. As a result, Nina is electrocuted and disabled, but survives. She sues Heartland for damages, alleging negligence. What might Heartland claim in defense? The might claim that Nina is a professional and licensed in her field. She should have known better before starting her work.
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