Business Law Test 2

Disputes will be settled in accordance with law or particular jurisdiction

Choice-of-law clause

A contract that had been fully performed by both or all parties

Executed

A contract with no legal or binding effect

Void

Common law governs all contracts ___ sales and leases.

except

the person to whom the promisor made the promise

promisee

OFFER + ACCEPTANCE =

Agreement

parties must show mutual assent to terms of contract

Agreement

Consideration must provide the basis for the bargain struck between the contracting parties.

Bargained for exchange

Oferee must only promise to perform ("promise for a promise")

Bilateral

The value given in return for a promise (in a bilateral contract) or in return for a performance (in a unilateral contract)

Consideration

A private agreement formed by two or more parties who agree to a promise

Contract

A contract that has not been fully performed by one or more parties.

Executory

The terms of an agreement (oral or written) are explicity stated.

Express

A contract that requires a special form or method in order to be enforceable.

Formal

Location or jurisdiction where disputes will be resolved

Forum-selection cause

A promise that appears to be binding on both parties, but it is not. Promisor actually has no obligation to do anything

Illusory Promise

Conduct creates and defines the terms of the contract

Implied

A contract that does not require a specified form or method of information in order to be valid

Informal

The offer must have required elements to be binding on the offeror

Intent, reasonably certain, and communication

Consideration must have

Legally sufficient value and bargained for exchange

When the promisor has the option to cancel the contract before the performance has begun, the promise is illusory

Option to cancel clauses

No consideration because the bargained for exchange element is missing.

Past Consideration

A court will enforce a contract according to its obvious terms when it is clear and unequivocal

Plain meaning rule

Promise to do what one already has a legal duty to do does not constitute legally sufficient consideration

Preexisting duty

Liability for defective products

Product Liability

Negligence, Misrepresentation, strict liability, and warranties are four theories are based on

Product liability

A persons declaration that they will perform or refrain from performing some present or future act.

Promise

1. product was defective when sold. 2. Defendant was in the business of selling the product. 3. Product was unreasonably dangerous at the time of purchase. 4. Plaintiff sustained physical harm. 5. Defect was the proximate cause of the plaintiffs injury. 6. Product is in substantially same condition as when it was sold. these are six requirements for ___ ___ ___

Strict Product Liability

Liability regardless of fault

Strict liability

An otherwise valid contract that is rendered unenforceable by some statute or law

Unenforbeable

What are four ways to accept an offer

Unequivocal acceptance, silence as acceptance, prior dealings, and acts of consistent with acceptance

Sale and lease contracts are governed by the

Uniform Commercial Code

Offeree can accept the offer only by completing the contract performance ("a promise for an act")

Unilateral

A valid contract that can legally be avoided, canceled, or annulled by one of the parties

Voidable

Les agrees to install a new hard drive and operating system in Marilee's computer in exchange for four of her used textbooks. After he installs the hard drive, Les says he won't install the operating system unless Marilee gives him two more books. What legal position are the parties in now? a. Marilee can sue for breach of contract, because Les had a preexisting duty to do all of the work. b. Les can receive the extra books in exchange for doing more work as he has given good and fair consideration in exchange. c. Marilee must give Les the additional books. d. Les will only get one more book, because two is too many more to be fair.

a. Marilee can sue for breach of contract, because Les had a preexisting duty to do all of the work.

Doris, an eighty-seven-year-old widow, collapsed while shopping at a store. She was taken to the Detroit city hospital by ambulance. She stayed there for fourteen days and was then transferred to another hospital, where she later died. She never regained consciousness. After she died, the hospitals and the ambulance company sued her estate to recover their expenses. Will Doris's estate be held liable for the medical bills? a. Yes, because there was a quasi contract. b. Yes, because there was an actual contract. c. No, because she could not have entered a contract while she was unconscious. d. No, because there was no quasi contract.

a. Yes, because there was a quasi contract.

Xavier is an engineer who specializes in computer-aided design. Xavier visits a Web site and purchases computer-aided design software through the site's online store. Xavier clicks on-screen "I agree" boxes indicating agreement with the contract terms. In obtaining the software, Xavier has most likely obtained: a. a license to use a single copy of the software. b. the right to pass title to the software to another. c. joint partnership with the software company. d. ownership of the software.

a. a license to use a single copy of the software.

Jim and Kathy have a contract with a term that is not clear. Kathy and Jim both have a different interpretation of the contract. If Kathy wrote the contract, a court will: a. accept Jim's interpretation because Kathy wrote the contract. b. call in a third party to develop a reasonable interpretation. c. accept Kathy's interpretation because she wrote the contract and should know what she meant. d. evaluate both interpretations and develop a reasonable interpretation that is somewhere in between.

a. accept Jim's interpretation because Kathy wrote the contract.

Shane is the manager of the Twinkle Toy Store. Kate is his best employee. Shane tells Kate: "You've been doing a great job lately. If I like what you do over the next two months, I'll give you a $1,000 bonus." This is: a. an illusory promise. b. an accord and satisfaction. c. a requirements contract. d. valid consideration.

a. an illusory promise.

An inmate escapes from the county prison. There is a $500 reward offered for any information leading to the capture of the inmate. The county sheriff sees the inmate at a local restaurant and calls the department headquarters before arresting the inmate. The sheriff: a. cannot expect to collect the $500 because he had a preexisting duty to arrest the inmate. b. can expect to collect the $500 because he performed a civil service. c. can expect to collect the $500 because he called the department headquarters before arresting the inmate. d. cannot expect to collect the $500 because of the doctrine of unforeseen difficulties.

a. cannot expect to collect the $500 because he had a preexisting duty to arrest the inmate.

Morgan signs an installment loan contract with her banker. The contract specifies that Morgan will pay 3.00% interest every month on the borrowed amount of $50,000 for two years. Both Morgan and the banker know the precise amount of the total obligation. This is an example of: a. liquidated debt. b. satisfaction. c. a covenant not to sue. d. an accord.

a. liquidated debt.

Harry discovers that a chemical compound has had an adverse impact on his land. The chemical compound is manufactured by five companies. Harry cannot identify which manufacturer's chemical caused the adverse impact to his land. Harry files a product liability lawsuit against all five companies. Harry's case will: a. not be dismissed against any manufacturer because of market-share liability. b. not be dismissed because Harry can show harm to his land. c. be dismissed because he cannot identify which company contaminated his land. d. be dismissed because he cannot apportion liability amongst the five companies.

a. not be dismissed against any manufacturer because of market-share liability.

Marcus's family purchased a trampoline in 2000. They sold the trampoline at a garage sale in 2010 to Zac's family. In 2012, Zac is injured while jumping on the trampoline when it collapses. If Zac's family sues the trampoline manufacturer in 2013, their lawsuit will likely be dismissed based on the: a. statute of repose. b. no privity of contract. c. statute of limitations. d. product misuse.

a. statute of repose.

Lila tells her friend Joanne that she will give her $10,000 toward the purchase of a new car. Lila later changes her mind, and Joanne tells her that she will sue to enforce the contract. A court would likely find that this agreement is: a. unenforceable because there is no bargained-for exchange. b. enforceable because Lila made a promise to Joanne, which is the same as a contract. c. enforceable because the $10,000 is the consideration for the agreement. d. unenforceable because their agreement was not in writing.

a. unenforceable because there is no bargained-for exchange.

An offer can be terminated by

action of the parties or operation of law

What are the four requirements for a contract to be valid?

agreement, consideration, contractual capacity, and legal

Harvey is driving while intoxicated in his new truck when his tire blows out. He loses control of the truck and crashes into a tree, causing injury to himself and to his vehicle. The tire is determined to be defective. Which of the following defenses would be the most likely to be raised by the tire manufacturer in a product liability cause of action? a. Assumption of the risk b. Comparative negligence c. Product misuse d. Preemption

b. Comparative negligence

United Tires uses a faulty design in designing its tires that causes them to blow out after 50,000 miles. Jessa is injured when her right-rear tire incurs a blowout. She can sue United Tires under which of the following theories of strict liability? a. Unreasonably dangerous product b. Design defect c. Market-share liability d. Manufacturing defect

b. Design defect

Emily, while driving a car manufactured by Toyosan, suffered a side impact collision from another driver. Despite the fact that Toyosan's air bag deployed, Emily hit her head against the steering wheel, causing damage to her face and teeth. If Emily sued Toyosan for strict product liability, the court would likely conclude that: a. Emily was comparatively negligent for her own injuries. b. Toyosan's air bag was defective because it did not meet the expectations of a reasonable consumer. c. Emily misused the product in driving the car, causing her injuries regardless of any defect in the air bag. d. Toyosan's air bag did not have a defective product design, and it deployed exactly as expected.

b. Toyosan's air bag was defective because it did not meet the expectations of a reasonable consumer.

Bradley is sitting on his porch enjoying his very large front yard and drinking a lemonade when Chris, a kid from down the street, shows up and starts mowing Bradley's yard. Bradley waves and smiles. Chris is mowing the lawn for money, but Bradley doesn't know it (and shouldn't know it because their two families often do nice things for each other without pay). Chris may be able to recover money from the courts on the basis of: a. an express contract. b. a quasi contract. c. an implied contract. d. a bilateral contract.

b. a quasi contract.

McKenna offers to sell Lori her collection of hand-painted European tiles. Before Lori has a chance to accept, McKenna says, "Sorry, I changed my mind. I'm not going to sell the tiles." McKenna has just made: a. a counteroffer. b. a revocation. c. restitution. d. a rejection.

b. a revocation.

Sarah tells Jake that she is thinking about buying a car. Jake replies that he would like to sell Sarah one of his cars in a few weeks for a really good price. Jake has made: a. a statement that is not a valid offer for lack of communication. b. a statement that is not a valid offer for lack of definiteness. c. a valid counteroffer to Sarah's offer. d. a valid offer to Sarah.

b. a statement that is not a valid offer for lack of definiteness.

Carmen owns a 2009 Toyota Camry that has been driven 24,000 miles and, to his knowledge, has no mechanical problems. He offers to sell the car to his friend Jamie for $12,000. Jamie accepts Carmen's offer. Jamie and Carmen have: a. a quasi contract. b. an express contract. c. an implied contract. d. an executed contract.

b. an express contract.

Patricia drives to her favorite gas station and tells the attendant to fill her tank. The attendant asks Patricia what grade she wants, and she tells him, "Regular." The attendant fills the tank. At this point, the contract between the station and Patricia is: a. unenforceable. b. executory. c. executed. d. void.

b. executory.

Julia promises to give Mary a piece of original artwork worth $5,000 in return for Mary's stamp collection, which is worth $500. After the exchange, Julia decides that she does not think the bargain was fair and demands that Mary give her back the painting. A court will most likely: a. force Mary to return the painting because even though the consideration was legally sufficient, there was too great a discrepancy in the value of the goods for the exchange to be considered fair. b. not interfere with the contract, because the consideration is legally sufficient. c. force Mary to return the painting, because the consideration was not legally sufficient. d. force Mary to pay Julia $4500 to make the exchange fair.

b. not interfere with the contract, because the consideration is legally sufficient.

Exxon owned a gasoline station in Virginia that it used for years. The station had five underground gasoline storage tanks that were not properly maintained. The property was sold to AFA, which discovered gasoline contamination of the soil. AFA filed a lawsuit in Virginia state court contending that Exxon should be held strictly liable for the cost of cleaning up the property. The court most likely found that Exxon was: a. liable because Exxon had not exercised reasonable care. b. not liable because gasoline storage is not an abnormally dangerous activity. c. liable because gasoline storage is an abnormally dangerous activity. d. not liable because Exxon had used extreme care to see that no one was harmed.

b. not liable because gasoline storage is not an abnormally dangerous activity.

Donald buys a subscription to a national magazine that gives him two years for the price of one year. After the two years expire, Donald continues to receive the magazine for six more months, although he has not subscribed again. The magazine then sends Donald a bill for the magazines he received after the expiration of his subscription. Donald: a. owes the full amount. b. owes nothing. c. owes half of the bill. d. can be fined for failing to return the magazines.

b. owes nothing.

Astor Manufacturing stores hazardous and volatile chemicals in its warehouse. The warehouse has state-of-the-art equipment to make sure the chemicals do not explode. An unexpected earthquake shakes the warehouse, causing the chemicals to explode and injure William, a passerby on a nearby sidewalk. Astor Manufacturing is: a. not liable to William because he voluntarily assumed the risk of injury. b. strictly liable for William's injuries. c. liable to William only if the company was grossly negligent. d. not liable to William because it satisfied its duty of care to passersby.

b. strictly liable for William's injuries.

Liz agrees to cook twenty dinners for Brian, and in exchange Brian will repair all of the plumbing in Liz's house. Liz has offered legally: a. insufficient consideration, because this kind of bargain is against public policy. b. sufficient consideration, because Liz has promised something of value. c. insufficient consideration, because cooking twenty dinners is not worth as much as repairing all of the plumbing in Liz's house. d. insufficient consideration, because there is a clear lack of any bargain.

b. sufficient consideration, because Liz has promised something of value.

Michael agrees to buy Randy's wheelbarrow for $100. After the agreement is reached, but before performance begins, both Michael and Randy agree to terminate the contract. The effect of agreement to terminate is that: a. their contract is not cancelled due to the existence of a valid agreement. b. their contract is cancelled due to rescission. c. their contract is cancelled due to lack of consideration. d. both Michael and Randy must still perform their obligations because they agreed to a contract.

b. their contract is cancelled due to rescission.

Expect Big Things Company and ABC Data are in a state that has enacted a modified version of the Uniform Electronic Transaction Act (UETA). The act passed by their state contains a procedure for the acceptance of electronic signatures that differs slightly from the one provided by the federal Electronic Signatures in Global and National Commerce (E-SIGN) Act. If the two companies form an e-contract using an e-signature procedure that complies with the state's version of UETA, their signatures will be: a. valid only under state law. b. valid only if the state's procedures are consistent with the E-SIGN Act, and the state's law does not give greater legal effect to one type of technology. c. invalid under the E-SIGN Act because any modification is preemption of federal law, which is unconstitutional. d. valid because states are allowed to preempt the E-SIGN Act if they wish.

b. valid only if the state's procedures are consistent with the E-SIGN Act, and the state's law does not give greater legal effect to one type of technology.

Carol Rogers, a local millionaire, promises to donate $500,000 to the Springfield Humane Society. This money will be used to build a new animal hospital. Based on Carol's promise, the society begins work on the hospital. Carol then backs out of her offer. a. Carol will suffer from a bad conscience, but not from any lawsuit. b. Carol has violated the terms of a quasi in rem contract. c. Carol can be sued for the money under a theory of promissory estoppel. d. Nothing can be done. Carol's donation was a gift. Promised gifts do not have to be delivered.

c. Carol can be sued for the money under a theory of promissory estoppel.

U.S. Bank enters into a new contract with Risk Management Services, Inc. (RMS), to conduct UCC searches. RMS adds a provision to the contract that states: "RMS's liability is limited to the amount of fee paid for each service provided under this contract." RMS generally charges $25 per UCC search conducted. The first search conducted by RMS for U.S. Bank does not find a UCC lien, but causes U.S. Bank a $1,000,000 loss. U.S. Bank claims that the provision added by RMS is ambiguous. In this scenario, a court would apply which of the following rules of interpretation? a. Look to the express terms of the contract. b. Look to the parties' course of dealing. c. Look to custom usage and trade. d. Look to the parties' course of performance.

c. Look to custom usage and trade.

Kristoff wants to sell his collection of shoes and offers to sell them to Marcus, who just got paid. Marcus is hesitant to accept, but Kristoff lets Marcus know that if he doesn't accept, then there may be trouble. Fearing that Kristoff means to physically harm Marcus, or rob him, Marcus accepts the offer. Will a court enforce this contract? a. Yes, because there is a valid offer and acceptance. b. No, because it is illegal to sell shoes. c. No, because the consent was not voluntary. d. Yes, because all four requirements of a contract are present.

c. No, because the consent was not voluntary.

Kelly tells Matthew that she will sell him one of her motorcycles at some time in the future. Matthew eagerly accepts. Do they have a valid contract? a. Probably, because Kelly failed to communicate the offer to the offeree. b. Definitely not, because the offeree did not accept the offer. c. Probably not, because the terms are not definite. d. Probably, because the parties knew what they were discussing.

c. Probably not, because the terms are not definite.

Ryan sends Michael a letter of intent for the purchase of a tract of land. The letter of intent outlines the purchase price, the legal description, and the financing terms. A paragraph is included that states this is a non-binding agreement and is an offer to enter into negotiations. a. The letter of intent is an offer that may be accepted by Michael. b. The letter of intent is a statement of a future intent, which is not an offer. c. The letter of intent is an invitation to negotiate, which is not an offer. d. The letter of intent is an expression of opinion and does not indicate an intention to enter into a binding agreement.

c. The letter of intent is an invitation to negotiate, which is not an offer.

Jackson offers to pay Casey $50 for his used business law textbook. Casey agrees to sell it for that amount. They agree to meet one week later to exchange the money for the book. Casey and Jackson have formed: a. a unilateral contract. b. no contract. c. a bilateral contract. d. a formal contract.

c. a bilateral contract.

West Agricultural Services, Inc. ("WAS"), stores approximately 100,000 pounds of ammonium nitrate on its property in three storage tanks for use in agriculture fertilizer. Ammonium nitrate is highly explosive if it comes into contact with an ignition source. WAS has taken all necessary precautions to prevent any explosions. If an explosion were to occur with resulting injuries, WAS could be liable under the strict liability theory for damages proximately caused by: a. a manufacturing defect. b. product liability. c. an abnormally dangerous activity. d. a design defect.

c. an abnormally dangerous activity.

Kristin contracts with Jacob to buy a car through an online auction service. All of their negotiations and transactions are conducted electronically. None of their communications ever mention the Uniform Electronic Transactions Act (UETA), which was adopted by their state in its entirety in 2001. Their contract is: a. covered by the UETA, only if their contract involves computer information. b. not covered by the UETA. c. automatically covered by the UETA. d. covered by the UETA, only if the transaction occurred after 2004.

c. automatically covered by the UETA.

Tom agrees to hire Dave as a consultant at a salary of $3,000 a month. Tom reserves the right to cancel the contract at any time. Before Dave begins his consultant job, Tom cancels the contract with Dave and hires Stanley. Tom can: a. cancel the contract because of a preexisting duty. b. not cancel the contract because there is sufficient consideration. c. cancel the contract because it is illusory. d. not cancel the contract because Tom and Dave have agreed on terms.

c. cancel the contract because it is illusory.

Fred sued Document Security Company, alleging he had suffered injuries to his hands as a result of attempting to fix a jam in one of Document Security's paper shredders. Fred alleged the shredder was defective because it failed to contain warnings regarding the dangers to fingers and hands while attempting to fix jams. In order to succeed, Fred will have to show that: a. the injuries would not have occurred but for the absence of the warnings. b. all risk of harm could have been reduced or avoided by the provision of reasonable instructions or warnings by the seller. c. foreseeable risks of harm could have been reduced or avoided by the provision of reasonable instructions or warnings by the seller. d. paper shredders are inherently dangerous products.

c. foreseeable risks of harm could have been reduced or avoided by the provision of reasonable instructions or warnings by the seller.

Janice tells Marie that she will buy Marie a new dress if she reads a book by Friday night. Marie begins reading and has only two chapters left to finish when Janice tells Marie that she has changed her mind and will not buy the dress. Under the modern approach to contracts, Janice and Marie: a. formed a bilateral contract. b. have no contract until Marie finishes reading. c. formed a unilateral contract. d. have not formed a contract, and Janice owes Marie nothing.

c. formed a unilateral contract.

Julius asks Rachel if she would like to sell her boat. Rachel privately has no interest in selling her boat and believes that Julius can't afford her boat anyway. Rachel says, "I'd sell my boat to you for $20,000." To Rachel's surprise, Julius responds "Ok, it's a deal." Rachel does not want to sell the boat to Julius for any price. Julius and Rachel have: a. not formed a valid contract because of lack of definiteness in the contract terms. b. not formed a valid contract because Rachel did not want to sell the boat for any price. c. formed a valid contract because Rachel's outward expressions showed the formation of a contract. d. formed a valid contract because Julius expressed outward interest in the boat

c. formed a valid contract because Rachel's outward expressions showed the formation of a contract.

Carl sues Goldman Manufacturing, alleging he suffered injuries as a result of a design defect in Goldman's food processor. To prevail in this lawsuit, Carl must show that Goldman Manufacturing: a. met the relevant statute of limitations or repose. b. met his consumer expectations and that his injury was unintended. c. had a reasonable alternative design available, which it failed to use. d. failed to adequately warn him of the danger of harm.

c. had a reasonable alternative design available, which it failed to use.

Madeline signs a contract agreeing to sell Norman her brand-new Porsche 911 automobile for $50. It is possible that a court will: a. immediately reject the contract because there is no consideration. b. enforce the bargain as agreed because of the presence of consideration. c. look more closely at the bargain to determine whether fraud, duress, or undue influence was involved. d. enforce the bargain as agreed, and not look further into the details.

c. look more closely at the bargain to determine whether fraud, duress, or undue influence was involved.

Glen is a dairy farmer who owns 500 milk cows. His fences are in poor repair, and his cows are often found eating the grass on Hank's land. Hank believes that Glen is responsible for damages to Hank's land on a theory of strict liability. The court will most likely find that Glen is: a. liable even though the animals did not pose a serious risk of harm to people. b. liable because cattle are animals, not humans. c. not liable because raising cattle is not an inherently dangerous activity. d. liable because Glen did not contain his animals.

c. not liable because raising cattle is not an inherently dangerous activity.

Carol's car was hit while it was parked. Carol calls A-1 Towing, tells the dispatcher that the car needs to be towed, and gives her location. Carol never mentions a price and leaves before the tow truck arrives, so she does not talk with the driver or sign any documents. Carol: a. does not owe the company for towing her car because she did not have a chance to reject its services. b. owes the company for towing her car under an express contract. c. owes the company for towing her car under an implied contract. d. does not owe the company for towing her car because she did not know that she would have to pay.

c. owes the company for towing her car under an implied contract.

Kenneth's parents own a cattle ranch. When they became too elderly to run the ranch by themselves, Kenneth moved back to the ranch to help them. With his parents' help and permission, Kenneth builds a house on the ranch. After he builds it, his parents refuse to deed him the land. Kenneth can sue his parents under the doctrine of: a. covenant not to sue. b. unfair accord. c. promissory estoppel. d. satisfaction.

c. promissory estoppel.

Francisco is driving his car when he collides with Wyatt's car. Francisco writes Wyatt a letter in which he offers to pay Wyatt $5,000 if Wyatt will agree to forfeit all of his rights to pursue a lawsuit against Francisco for this accident. If Wyatt agrees and signs the letter, they will have a: a. covenant not to sue. b. delimited accord. c. release. d. concerted satisfaction.

c. release.

Martha is walking from her office building to her car in a torrential downpour with an umbrella manufactured by Umbrellas USA, Inc. She is struck by lightning and files suit, claiming the manufacturer failed to include a warning. A court would likely find that: a. the seller should have provided a warning because of the foreseeable misuse of an umbrella in a rainstorm with lightning. b. the plaintiff was partially at fault under the doctrine of comparative negligence. c. there is no duty to warn about risks that are obvious or commonly known, such as the risk of lightning occurring during a rainstorm. d. the umbrella should have included a warning label against using an umbrella in a lightning storm.

c. there is no duty to warn about risks that are obvious or commonly known, such as the risk of lightning occurring during a rainstorm.

Philip receives a mail-order catalogue featuring a new style of water shoes that look perfect for river kayaking. He calls to order a pair and is told that the shoes are sold out. Philip can now: a. sue for breach of contract. b. sue because the catalogue listing constituted a valid offer. c. try somewhere else; the catalogue did not make an effective offer. d. sue because the catalogue company improperly revoked its offer.

c. try somewhere else; the catalogue did not make an effective offer.

Chloe buys a product from Good Times, Inc., that includes a shrink-wrap agreement. After using the product, she decides it is defective and sues Good Times. If the court determines that Chloe learned of the shrink-wrap terms after the contract was finalized, it may conclude that the terms were proposals for additional terms, which then: a. automatically became part of the contract. b. were not a part of the contract because Good Times had not expressly agreed to them. c. were not a part of the contract unless Chloe expressly agreed to them. d. automatically made the contract void.

c. were not a part of the contract unless Chloe expressly agreed to them.

Ginger is a retired school teacher who makes baked goods in her spare time. She occasionally delivers a batch of her cookies to the neighborhood restaurant to be sold at the cash register. One of her batches of cookies causes more than twenty people to become extremely sick with food poisoning. Which of the following statements is applicable? a. Ginger can be sued under the negligence theory of product liability. b. Ginger can be sued under the manufacturing defect theory of product liability. c. Ginger can be sued under the strict product liability theory of product liability. d. Ginger cannot be sued under the theory of product liability.

d. Ginger cannot be sued under the theory of product liability.

Cathy promises to buy Mark's car for $2,000. Cathy is: a. an officer. b. an offeree. c. a promisee. d. a promisor.

d. a promisor.

Diana tells Crystal, "I think I'll sell that camping gear I bought for hiking the Pacific Trail for $250. I'm never going to make that trip." This constitutes: a. an agreement to agree. b. a valid offer. c. a counteroffer. d. a statement of future intent.

d. a statement of future intent.

John makes an offer. Jane pays him $200 to keep the offer open for a period of 5 days. John cannot revoke his offer any longer because of: a. a lapse of time. b. promissory estoppel. c. voidability of estoppel. d. an option.

d. an option.

RexCo and Wilkinson Motors agree to a contract online. Both companies agree to an encryption security procedure to verify changes in electronic documents and correct errors. RexCo sends a message to Wilkinson Motors that contains an error because RexCo's information-processing system erroneously changed the language of the document. Wilkinson Motors will: a. be required to renegotiate the terms of the message. b. have to comply with the erroneous submission. c. be able to sue RexCo for fraud. d. be able to avoid the effect of the error.

d. be able to avoid the effect of the error.

To download software for his Internet connection, Nelson had to click on several boxes at the Web site that stated "I agree" or "I accept." Nelson did not read the accompanying text before clicking on the boxes. In the event of a dispute between Nelson and the service provider, the contract terms will: a. be enforced only if the service provider shows that Nelson read them. b. become proposals for the terms of a binding contract. c. not be enforced. d. be considered the terms of a binding contract.

d. be considered the terms of a binding contract.

Helping Hands, Inc., wants to repair its aging roof and hot water heater but lacks the funds to do so. Members of the charity publicize a call for donations to fund the necessary repairs. James is a long-time supporter and pledges $30,000 to the charity for this purpose. James pledges because he believes in the mission of the organization. Relying on James's pledge, the charity enters into construction and hiring contracts to begin work. When six months later Irene, the CEO of the charity, asks James for the donation, James declines to provide it. In this case, Helping Hands: a. can enforce James's pledge because James and Helping Hands agreed on a gift. b. cannot enforce James's pledge because the statute of limitations has expired. c. cannot enforce James's pledge because it lacks sufficient consideration. d. can enforce James's pledge on the grounds of promissory estoppel based on a charitable subscription.

d. can enforce James's pledge on the grounds of promissory estoppel based on a charitable subscription.

John purchases a blender from JuiceMart. A crack in the plastic casing causes the blade to swing out of control and fly at John's arm. John is shaken up by the incident but otherwise uninjured. John's strict product liability suit will most likely: a. fail because the blender was not in a defective condition. b. succeed because the blender was not substantially changed from the time the product was sold to the time the injury was sustained. c. succeed because JuiceMart was in the business of selling that product. d. fail because John did not incur physical harm to self or property.

d. fail because John did not incur physical harm to self or property.

Exilware designs software, which it frequently sells to Avertron, the maker of hardware systems. Exilware is in New Hampshire, and Avertron is in Arizona. Because the companies often conduct business via the Internet, they have formed a partnering agreement. When a dispute arises over a delivery date, the court will probably: a. disregard the terms of their partnering agreement. b. consider only those portions of the partnering agreement that are fair to both parties. c. consider the partnering agreement only if its terms are in strict compliance with the Uniform Electronic Transactions Act (UETA). d. look to the terms of the partnering agreement to determine each party's intent.

d. look to the terms of the partnering agreement to determine each party's intent.

David, a ten-year-old, purchased a plastic snow sled from Qmart. He went sledding, lost control, hit a tree, and was injured. David's parents filed a negligence lawsuit in a state court against Qmart, alleging that the store should not have sold this type of sled because it was difficult to steer and had no brakes, making it unreasonably dangerous. Qmart contended that sledding is an inherently dangerous activity and that David assumed the risks involved when he went sledding. The court probably found that Qmart was: a. liable because David did not know the risks of sledding. b. liable because sledding is unreasonable. c. not liable because David's injuries were unforeseeable. d. not liable because David assumed the risks of sledding.

d. not liable because David assumed the risks of sledding.

KJ Games, a company in Colorado, designs computer games that it markets and sells to customers via the Internet. A click-on agreement accompanies every download; no game can be installed on a buyer's computer if the buyer does not click on the words "I agree" when prompted. The click-on agreement clearly states in capital letters that all disputes will be settled in Colorado's state courts. Buyers of KJ's games are most likely: a. not required to file their lawsuits in Colorado. b. required to arbitrate any disputes in Colorado. c. not required to accept this term of the contract. d. required to file any lawsuits in Colorado.

d. required to file any lawsuits in Colorado.

Mack is injured by a tractor manufactured by WestCo. In order to defend against a negligence claim based upon the product, WestCo. may show that it exercised "due care" by all of the following except: a. using the appropriate production process. b. inspecting and testing any purchased components used in the final product. c. placing adequate warnings on the label to inform the user of dangers to which an ordinary person might not be aware. d. showing the absence of privity of contract between it and the consumer.

d. showing the absence of privity of contract between it and the consumer.

Elise enters into a contract to purchase JD's house and then changes her mind. JD sues her for breach of contract. The lawsuit for a breach of contract will be governed by: a. state statute. b. agency regulations. c. the Uniform Commercial Code (UCC). d. the common law of contracts.

d. the common law of contracts.

A fast-food chain restaurant would not be liable for the failure to disclose the adverse health effects of eating its fatty food based on the defense of: a. assumption of the risk. b. a commonly known danger. c. preemption. d. the knowledgeable user.

d. the knowledgeable user.

Kandis offers to pay Tim's way through college if he will kill her ex-boyfriend. He accepts Kandis's offer, signing a contract. Their contract is: a. formal. b. voidable. c. executed. d. void.

d. void.

Jackie agrees to pay Ben $1,000 if Ben agrees to not go skydiving for six months. After Ben avoids skydiving for six months, he asks Jackie for payment. Jackie declines to pay Ben the $1,000. The contract between Jackie and Ben: a. will not be enforced due to lack of consideration. b. will not be enforced because skydiving is a dangerous activity and Ben benefits from the forbearance. c. will be enforced because Jackie had a preexisting duty to pay Ben. d. will be enforced because Ben exercised forbearance, which is legally sufficient consideration.

d. will be enforced because Ben exercised forbearance, which is legally sufficient consideration.

The offer to contract

offer

The party to whom the offer is made

offeree

the party who makes the offer

offeror

Contract law is based on

promises

Makes the promise

promisor

Termination by action of the parties

revocation, rejection, counteroffer

Storing toxic waste, blasting with dynamite, and keeping wild animals are three examples of ___ ___ activites.

strict liability

Manufacturing defects, design defects, and warning defects are three categories that a product is

unreasonably dangerous