Business Law Exam 2

Insurance Company violates a state licensing statute when selling a policy to Jay, in whose state it is not licensed to sell insurance. As a member of the class of persons protected by the statute, Jay can a. enforce the policy and recover from the insurer. b. obtain a license to sell insurance and a list of the insurer's customers. c. collect benefits under the policy immediately. d. none of the choices.

a. enforce the policy and recover from the insurer.

Bruno buys and sells stocks and bonds. Bruno may be subject to penalties under the Racketeer Influenced and Corrupt Organizations Act a. for the commission of securities fraud. b. only if the circumstances constitute organized crime. c. for making an unprofitable, but legal, investment. d. only if the situation involves a "racket."

a. for the commission of securities fraud.

Ray, an employee of Shipping Company, makes a substantial mathematical mistake in totaling estimated transportation costs for Tonnage Inc., which is seeking bids. Consequently, Shipping's bid is substantially low. Any contract with Tonnage that includes the mistake may be rescinded a. if the mistake was made inadvertently and without gross negligence. b. if the mistake was intentional. c. under no circumstances. d. if the mistake was unilateral.

a. if the mistake was made inadvertently and without gross negligence.

Bistro Caterers contracts with Corporate Towers to cater the firm's business meetings. Later, the contract between Bistro and Corporate is completely rescinded. Even later, Bistro offers to make a new deal. Corporate is willing to deal, but for a new price. Bistro and Corporate a. may agree to a new contract that includes the new price. b. may agree to a new contract, but it cannot include a new price. c. must perform the part of their original contract that is executory. d. must perform their original contract.

a. may agree to a new contract that includes the new price.

Accepting and giving legal force to an obligation that previously was not enforceable is a. ratification. b. disaffirmance. c. emancipation. d. illegal.

a. ratification.

Greta files a suit against Home Repair Corporation under the doctrine of promissory estoppel. Greta must show that a. she justifiably relied on Home Repair's promise. b. Home Repair justifiably relied on Greta's promise. c. Home Repair justifiably refused to fulfill a promise to Greta. d. she justifiably refused to fulfill a promise to Home Repair.

a. she justifiably relied on Home Repair's promise.

Kelly offers to sell a certain used forklift to Lumber Outlet, but Kelly dies before Lumber accepts. Most likely, Kelly's death a. terminates the offer. b. extends the time of the offer. c. shortens the time of the offer but does not terminate it. d. does not affect the offer.

a. terminates the offer.

Megan gives out a business card with an e-mail address on it. It is reasonable to infer that Megan has consented to a. transact business electronically. b. respond to e-mail sent to that address. c. nothing. d. submit to the recipient's jurisdiction.

a. transact business electronically.

National Trucking Company begins transporting crude for Oil Inc. under a contract for a stated amount per load. After six months, National demands an increase in the stated amount because ordinary business expenses have increased. Oil's agreement to pay the increased amount is a. unenforceable due to the preexisting duty rule. b. enforceable as the consideration is past. c. unenforceable as an illusory promise. d. enforceable due to unforeseen difficulties

a. unenforceable due to the preexisting duty rule.

Sam is mentally incompetent but has not been adjudged by a court to be incompetent. Sam enters into a contract with Tony for the cleaning and maintenance of Uptown Office building. Most likely, the contract is a. voidable if Sam did not comprehend the consequences. b. void. c. enforceable if Tony did not know that Sam was mentally incompetent. d. enforceable if Sam is the owner of the building.

a. voidable if Sam did not comprehend the consequences.

Lee, a minor, enters into a contract to buy a dirt bike from Motor Bikes & Cycles. Lee can ordinarily disaffirm the contract a. in a timely manner. b. all of the choices. c. at any time during minority. d. for a reasonable time after coming of age.

b. all of the choices.

Cloud Storage Inc. promises to pay its employees a year-end bonus "if profits continue to be high and management agrees at the time." This is a. accord and satisfaction. b. an illusory promise. c. an enforceable contract. d. past consideration.

b. an illusory promise.

Saul claims that his contract with Teri for piano lessons is voidable. If their contract is avoided a. the parties' contractual obligations are postponed. b. both parties are released from it. c. both parties must fully perform their obligations under it. d. the parties are proscribed from another contract on the same subject.

b. both parties are released from it.

Frank offers to buy a guitar owned by Holly for twice what she paid for it. She accepts and hands the guitar to Frank. Holly's delivery of the guitar is a. not consideration because the exchange is not a bargain. b. consideration. c. not consideration because the value is not legally sufficient. d. not consideration because its adequacy is unfair.

b. consideration.

Horse racing, video poker games, and charity-sponsored bingo are a. not forms of gambling. b. forms of gambling allowed and regulated by many states. c. forms of gambling allowed and regulated by all states. d. forms of gambling not allowed or regulated by any state.

b. forms of gambling allowed and regulated by many states.

Fess convinces Gwyn to enter into a contract for the purchase of a Falafel Waffle Food Cart by knowingly misrepresenting a number of material features about the facility and the business. Most likely, Gwyn can rescind the contract on the basis of a. none of the choices. b. fraudulent misrepresentation. c. innocent misrepresentation. d. negligent misrepresentation

b. fraudulent misrepresentation.

Lloyd is accused of a crime. Evidence of his allegedly criminal activities can be excluded from a trial a. if the police do not promise to keep the evidence confidential. b. if the evidence is "fruit of the poisonous tree." c. under no circumstances. d. if the evidence will be used to prosecute him.

b. if the evidence is "fruit of the poisonous tree."

Dale's Uncle Ed tells Dale, "If I feel you deserve it at the time, I will give you a new car when you graduate from college." Ed's promise is a. a forbearance. b. illusory. c. enforceable. d. a preexisting duty.

b. illusory.

Rona asks Steve, "Do you want to hire me to repair your fishing net?" This is a. not an offer because Rona did not express an intent. b. not an offer because the terms are not definite. c. an offer. d. not an offer because Steve did not respond.

b. not an offer because the terms are not definite.

Erica, a police officer, wants to search the offices of Debit & Credit, Accountants. She asks Judge Bern to issue a warrant. No warrant for a search can be issued without a. double jeopardy. b. probable cause. c. immunity. d. reasonable doubt.

b. probable cause.

Intoxicated, Hank enters a contract for the sale of ten acres of timberland to Ira for less than its market value. Later, Hank seeks to cancel the deal. In determining whether Hank can avoid his duties under the contract, a court is most likely to look at a. only Hank's intoxicated mental state. b. none of the choices. c. Hank's intoxicated mental state and other factors. d. only factors other than the Hank's intoxicated mental state.

c. Hank's intoxicated mental state and other factors.

Brie buys a subscription to music provided by Concerto, an online streaming service. Before gaining access, Brie must agree to a provision stating that she will not make and sell copies of the music. This provision is a. a browse-wrap term. b. a partnering agreement. c. a click-on agreement. d. a shrink-wrap agreement.

c. a click-on agreement.

Obie, a user of phone-apps.com's website, can download apps for free if he first clicks on "I accept" after viewing certain terms. This is a. not a contract but the terms are enforceable. b. a contract that does not include the terms. c. a contract that includes the terms. d. unenforceable.

c. a contract that includes the terms.

Flo enters into a contract with Global Shipping Ltd. to insure and ship a painting from France to the United States for a certain price. Global makes a mistake in adding the costs, which results in a contract price that is $1,000 less than the true cost. Most likely, a court would a. enforce the contract as is. b. award damages to Flo for the mistake. c. allow the parties to rescind the contract. d. award damages to Global for the mistake.

c. allow the parties to rescind the contract.

Bo signs a lease with Capri Properties to lease a studio apartment for the next year for $850 per month. Daisy signs on Capri's behalf. Bo and Capri have a. an implied contract. b. no contract. c. an express contract. d. a simple contract.

c. an express contract.

Flo tells Ginger during a phone call that she will buy her textbook from last semester for $65. Ginger agrees. These parties have a. no contract. b. an implied contract. c. an express contract. d. a quasi contract.

c. an express contract.

Big Dig LLC makes an offer to perform an excavation and related tasks for Commercial Development Corporation, but due to a substantial mathematical mistake, significantly underprices the work. Commercial accepts the offer. Data Big's best defense against enforcement of the contract is that Commercial knew a. a unilateral mistake supports the cancellation of a contract. b. a bilateral mistake supports the cancellation of a contract. c. the price was below the prices of comparable services. d. a mistake of value supports the cancellation of a contract.

c. the price was below the prices of comparable services.

Sal enters into a contract with Trucking Company to work as a driver. Under the plain meaning rule, the court cannot consider any evidence not contained in the document if a. the contract lacks a provision on a disputed issue. b. the parties' intent cannot be determined from the contract's language. c. the words in the contract appear clear. d. a contract term can be interpreted in more than one way.

c. the words in the contract appear clear.

Intoxicated, Efron enters a contract for the sale of his business, Freight Dispatch, to Gretel for less than its market value. This contract is enforceable if, at the time, a. Gretel fraudulently induced Efron to become intoxicated. b. Efron understood the legal consequences. c. Efron's intoxication was purely voluntary. d. Gretel was also intoxicated.

b. Efron understood the legal consequences.

Gwen is indebted to Home Loan Company for $75,000. Gwen agrees to pay, and Home Loan agrees to accept, a lesser amount than the lender originally claimed was owed. The performance of this agreement is a. a release. b. a satisfaction. c. an illusory promise. d. an accord.

b. a satisfaction.

Owen decides to sell his ranch, Pine Ridge, in a live auction. When the auctioneer puts the property up for bids, it will be a. a circular, not an offer. b. an invitation to submit offers, not an offer itself. c. an offer. d. a price list, not an offer.

b. an invitation to submit offers, not an offer itself.

In selling a 300-acre tract to Organic Farm, Peyton tells the buyer that the land "will be worth twice as much by next year." This statement is not likely to support rescission of the contract because it is a. a mistake. b. an opinion. c. a material fact. d. a misrepresentation.

b. an opinion.

Macy offers to sell his fitness watch for $50 to Nona. Nona promises to pay Macy the price. Later, they exchange the watch for the funds. A contract was created when a. Nona promised to pay for the watch. b. Macy delivered the watch. c. Macy offered to sell the watch. d. Nona paid for the watch.

a. Nona promised to pay for the watch.

A letter-of-credit agreement between Rural Feed Corporation and Soy Farm Inc. requires Rural's bank to pay Soy on receipt of invoices. This is a. a formal contract. b. an informal contract. c. an implied contract. d. a quasi contract.

a. a formal contract.

Ann's Sandwich Shop and Bob's Coffee Bar are adjacent businesses. Ann, whose small shop has little room for her customers to sit, offers Bob a discount on purchases if he will allow her customers to sit at the tables on the sidewalk in front of his store. Bob's forbearance from asking Ann's customers not to use his tables is legally sufficient consideration a. because Bob has a legal right to restrict the use of his tables. b. because Ann's customers will undoubtedly use Bob's tables. c. because Ann's small shop has little room for her customers to sit. d. under no circumstances

a. because Bob has a legal right to restrict the use of his tables.

Kohl receives from Lily a camera stolen from Mark. Kohl knows that the camera is stolen, and he intends to keep it. Kohl is a. criminally liable. b. tortiously liable. c. civilly liable. d. none of the choices.

a. criminally liable.

Yuri agrees to zed.com's terms of service and downloads the site's app. Yuri then reverse-engineers the app to create a competing product. This is a. acceptable as long as the site's owners are unaware of the activity. b. a breach of contract. c. a fair use of the app, with or without a contract. d. within the rights of a contracting party.

b. a breach of contract.

Global Dispatch Corporation and Heavy Hauling Inc. agree in advance to terms that apply to their future e-transactions. This is a. a shrink-wrap agreement. b. a partnering agreement. c. a browse-wrap term. d. a click-on agreement.

b. a partnering agreement.

Kent tries to start his car with no success. He yells that he will sell the car to anyone for $10. Livy, a passerby, hears Kent's yell. This is not an effective offer because it lacks a. definite terms. b. serious intent. c. communication. d. practicality

b. serious intent.

In entering into a contract with Marc for the sale of a cold storage warehouse, Nan fails to reveal the fact that the freezers do not consistently maintain a proper temperature. Most likely, this is fraudulent misrepresentation if a. any of the choices. b. the fact is a serious defect known to Nan but not to Marc. c. the fact concerns the value or quality of the freezers. d. Nan is not aware of the fact.

b. the fact is a serious defect known to Nan but not to Marc.

Edna is induced by her guardian Fran to sign a contract to invest funds in Gold Inc. through Fran's investment firm. Unknown to Edna, Fran realizes a commission from the investment. Most likely, Edna can rescind the contract on the basis of a. duress. b. undue influence. c. fraud. d. mistake.

b. undue influence.

Leo is accused of a crime. To obtain information about the crime from Leo, the state can a. bribe Leo in a way that serves the public interest. b. none of the choices. c. grant Leo immunity from prosecution. d. force Leo to provide information that can be used to prosecute him.

c. grant Leo immunity from prosecution.

Cathy agrees to sell her Daily Donut shop to Ernie. In the agreement, there is a covenant not to compete that prohibits Cathy from operating a donut shop within a certain distance. If the restriction is unreasonable, a court will most likely a. award Cathy damages. b. order Ernie to stop doing business. c. reform the covenant. d. prohibit both parties from operating donut shops.

c. reform the covenant.

Fabien offers to sell his Graphic Signs LLC business to Hanna for $100,000. Hanna replies, "The price is too high. I will buy it for $75,000." Hanna has a. accepted the offer. b. made a counteroffer without rejecting the offer. c. rejected the offer and made a counteroffer. d. rejected the offer without making a counteroffer.

c. rejected the offer and made a counteroffer.

Shep offers to make digital copies of Reliable Company's business conference videotapes, CDs, DVDs, and other media for $500. Under the mailbox rule, Reliable's acceptance by e-mail will be considered effective when a. followed up by a confirmation letter sent by regular mail. b. composed on a Reliable computer. c. sent. d. received.

c. sent.

Omar asserts that a deal he entered into with Pat to sponsor and host a motivational conference for independent sales representatives was formed as the result of a mistake. Omar's best defense to the enforcement of this contract is a. a desire not to perform. b. insufficient capital. c. the lack of a party's voluntary consent. d. preliminary indications of unsatisfactory results.

c. the lack of a party's voluntary consent.

A contract to do something that is prohibited by statute is a. enforceable if the parties are aware of the prohibition. b. enforceable if the parties are ignorant of the prohibition. c. unenforceable. d. enforceable if the contract does not negatively affect society.

c. unenforceable.

To constitute consideration, there must be a. serious thought underlying each party's intent to contract. b. a payment. c. a performance. d. a bargained-for exchange

d. a bargained-for exchange

Analytics LLC processes misinterpreted data furnished by Botched Services to propose a marketing plan for Clientele Inc. Analytics and Clientele are both ignorant of the mistaken data. Their contract can be rescinded on the basis of a. a unilateral mistake. b. a mistake of quality. c. none of the choices. d. a bilateral mistake.

d. a bilateral mistake.

Steel Mill Inc. makes an offer to Tom to enter into a contract to work as a mechanical engineer for a certain salary for one year subject to a five-year renewal based on his performance. Tom accepts the offer. This is a valid contract because it includes a. specific quality standards. b. a duration and a termination. c. a price and a subject. d. an offer and an acceptance.

d. an offer and an acceptance.

Movers LLC promises to deliver a certain couch to Nora, who promises to pay for the service. If Movers does not perform, it may be required to a. cease business. b. perform a different service. c. make another promise. d. pay damages.

d. pay damages.

In selling a vacant building, Riley, a real estate broker, tells Sam that the property has a certain capacity, making it suitable for a nightclub. Riley knows nothing about the capacity of the building, but it is not as he specifies. Sam buys the building. Sam's best course of action is most likely to a. scam Riley. b. sabotage Riley's career with bad publicity. c. induce Riley to give him the commission on her next sale. d. recover damages or rescind the contract to buy the building.

d. recover damages or rescind the contract to buy the building.

Chuck signs Dolly's name, without her authorization, to the back of her paycheck, which was issued by Eastside Market. This is a. robbery. b. no crime. c. larceny. d. forgery.

forgery

Riley commits an act via e-mail against State Bank, a business in Texas, where the act is a cyber crime. Riley resides in Utah where the act is not a crime. Prosecution of Riley in Texas involves questions of a. the immunity of Internet service providers. b. jurisdiction. c. "maximum contacts." d. encryption.

jurisdiction

Bud works at a Cheap Stuff Store from which, without authorization, he takes merchandise that he has not paid for home for his own use. This is a. embezzlement. b. larceny. c. no crime. d. robbery.

larceny

Kim takes off her ring and places it on her desk while she works. Without her knowledge or consent, her coworker Lum picks up the ring, puts it on, and walks away. Lum has likely committed a. no crime. b. embezzlement. c. robbery. d. larceny.

larceny

In determining procedural unconscionability, a court is most likely to consider whether a. any provision deprived one party of the benefits of the agreement. b. any provision left one party without a remedy for nonperformance. c. none of the choices. d. the buyer had an opportunity to ask questions about the contract.

d. the buyer had an opportunity to ask questions about the contract.

Under a contract with Soybean Farms, Tai begins grading a terraced hillside for planting. Halfway through the project, Tai asks for $5,000 over the contract price, claiming an increase in the "cost of doing business." The farm agrees but later refuses to pay. The agreement to pay more is a. unenforceable because the farm's promise was illusory. b. enforceable. c. unenforceable because Tai's request modified the contract. d. unenforceable because Tai's performance was a preexisting duty.

d. unenforceable because Tai's performance was a preexisting duty.

Olinda, an employee of People's Bank, deposits into her account checks entrusted to the bank through its ATM system by customers to deposit into their accounts. This is a. embezzlement. b. wire fraud. c. robbery. d. larceny.

embezzlement