LAW 231- Comprehensive Exam 2 (Part 1)

Beryl enters into a contract with Clay for a guided tour of Deep Canyon. Clay represents that he is an experienced, knowledgeable guide, when in reality he has never been in the canyon. Most likely, Beryl a. can rescind the deal based on fraudulent misrepresentation. b. might recover damages for the mistake. c. could exert duress to obtain a new guide. d. must comply with the contract because the representation is an opinion.

a. can rescind the deal based on fraudulent misrepresentation.

Steel Mill Inc. agrees to deliver a certain quantity of steel to T-Bar Framing Corporation. The agreement states that delivery is to be within "9" days, although the parties intend "90" days. The seller cannot convince the buyer to amend the contract. The most appropriate remedy is most likely a. rescission. b. reformation. c. a quasi contract. d. specific performance.

b. reformation.

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. received. b. sent. c. followed up by a confirmation letter sent by regular mail. d. composed on a Reliable computer.

b. sent.

When applying the rule of reason to an activity that allegedly violates the antitrust laws, a court will not consider a. the purpose of the agreement. b. the parties' market ability to implement the agreement. c. the potential effect of the agreement on competition. d. whether the agreement is a per se violation.

d. whether the agreement is a per se violation.

If a party is already bound by contract to perform a certain duty, that duty can serve as consideration for a second contract. t or f

false

On a contract—"F.O.B. New York"—for a sale of almonds by a broker in California, the risk of loss passes to the buyer when conforming goods are placed in the possession of the carrier. t or f

false

Only a mistake of value or quality makes a contract voidable. t or f

false

Only contracts that have been fully executed can be rescinded by agreement. t or f

false

The Clayton Act of 1914 was the first piece of legislation that broadly prohibited anticompetitive agreements and unilateral conduct that monopolize or attempt to monopolize relevant markets. t or f

false

The Sherman Antitrust Act which prescribes the rule of free competition among those engaged in commerce also established the Federal Trade Commission and outlaws unfair methods of competition and unfair acts or practices that affect commerce. t or f

false

Those who knowingly violate the Clean Air Act may be subject to civil penalties but not criminal penalties. t or f

false

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

b. undue influence.

Len contracts to work for Media Corporation during May for $4,500. On April 30, Media cancels the contract. Len declines a similar job with New Ads Inc., which would have paid $3,500. Len files a suit against Media. As compensatory damages, Len can recover a. $0. b. $4,500. c. $3,500. d. $1,000.

d. $1,000.

Affordable Care Act

Among other things, imposed regulations for caloric content of restaurant foods; also expanded health care coverage for children and seniors.

Affordable Care Act

Among other things, ifted restrictions on preventative services and preexisting conditions, and imposed cost controls with regard to prescription drugs and health insurance.

Resource Conservation and Recovery Act

Authorizes regulations for monitoring, transporting, storage, treatment, and disposal of hazardous substances.

Consumer Product Safety Act

Created a commission with broad regulatory authority over the safety of consumer products; also provides authority to pursue recalls and to ban products under certain circumstances.

Toxic Substances Control Act

Regulates chemicals and chemical compounds that are known to be toxic, such as asbestos and polychlorinated biphenyls (PCB's).

Food Safety Modernization Act

Regulates the way foods are grown, harvested and processed; also provides authority to directly recall any food products that it suspects are tainted, rather than relying on the producers to recall items.

Federal Insecticide, Fungicide, and Rodenticide Act

Requires anyone planning to use chemicals first determine their effect on human health and environment.

Energy Policy and Conservation Act

Requires automakers to attach to every new car an information label that includes the Environmental Protection Agency's fuel economy estimate for the vehicle.

Nutrition Labeling and Education Act

Requires nutrition labeling of most foods regulated; requires that all nutrient content claims (i.e., 'high fiber', 'low fat', etc.) and health claims be consistent with regulations

Fair Packaging and Labeling Act

Requires products identify certain details about the product.

FTC Mail or Telephone Order Merchandise Rule

Requires sellers who solicit buyers to order merchandise through the mail, via the Internet, or by phone to have a reasonable basis to expect that the sellers can ship within the advertised time frame, or, if no time frame is specified, within 30 days.

Telemarketing and Consumer Fraud and Abuse Act

Requires solicitors to identify themselves and not misrepresent facts.

Telemarketing Sales Rule

Requires telemarketers to make specific disclosures of material information; prohibits misrepresentations; sets limits on the times telemarketers may call consumers; prohibits calls to a consumer who has asked not to be called again; and sets payment restrictions for the sale of certain goods and services.

Telephone Consumer Protection Act

Restricts telephone solicitations (i.e., telemarketing) and the use of automated telephone equipment; also limits the use of automatic dialing systems, artificial or prerecorded voice messages, SMS text messages, and fax machines.

Food Court Inc. leases space to Gourmet Café. Gourmet abandons the premises when the amount of the rent due on the lease is $5,000. Food finds a new tenant, Hasty Bowls, which agrees to pay $3,500 for the space over the remainder of Gourmet's term. Food's measure of damages is a. $1,500, plus any additional expenses to find the new tenant. b. $5,000. c. $6,500. d. $1,500, minus any expenses reduced by mitigating the damages.

a. $1,500, plus any additional expenses to find the new tenant.

Reese contracts to sell a Spicy Pizza restaurant to Titian. As part of the deal, Reese agrees not to open a competing business within a hundred-mile radius for ten years. Reese later sues Titian, alleging that the agreement is illegal. To enforce the covenant not to compete, the court will most likely a. reform the contract to make the distance and time limits reasonable. b. rescind the contract and require restitution. c. order specific performance. d. award damages for Reese's complete compliance with the terms.

a. reform the contract to make the distance and time limits reasonable.

Dona offers to sell her used sofa, chair, coffee table, end table, and lamp to Etta for $700. Etta responds that she will pay that price if Dona's TV set is included. Neither party is a merchant. Their contract is formed according to a. the terms of the original offer. b. none of the terms. c. whatever is reasonable. d. the new terms of the acceptance.

a. the terms of the original offer.

Seacoast Transport Company pays Trucks & Trailers Inc. a stated price for the use of seven tractor-trailer rigs for a year. Under the UCC, this is a. a contract for services. b. a lease. c. a sale. d. a sublease.

b. a lease.

Mining Corporation purchases the business assets of Open Pit Inc., including its equipment and supplies, for an agreed-to price, payable in installments. Under the UCC, this transaction is a. a sublease. b. a sale. c. a contract for services. d. a lease.

b. a sale.

The main goals of the Clean Water Act include a. making water safe for swimming. b. all of the choices. c. protecting fish and wildlife. d. eliminating the discharge of pollutants into water.

b. all of the choices.

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

b. an offer and an acceptance.

Holes Inc. begins digging a foundation at a construction site for Investment Company under a contract for a certain price. After six months, Holes demands a higher price because of extraordinary difficulties that were totally unforeseen at the time the contract was formed. An agreement to pay the higher price is a. unenforceable due to the preexisting duty rule. b. enforceable due to unforeseen difficulties. c. unenforceable as an illusory promise. d. enforceable as the consideration is past.

b. enforceable due to unforeseen difficulties.

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. undue influence. b. fraudulent misrepresentation. c. duress. d. none of the choices.

b. fraudulent misrepresentation.

Dig Inc. is the major wholesale distributor of heavy equipment in six states. Dig's closest competitor is Excavator Company. The two firms agree that Dig will operate in four of the states and Excavator in the other two. This is a. a group boycott. b. a trade association. c. a market division. d. a price-fixing agreement.

c. a market division.

Embers Corporation orders twelve fire extinguishers from Firefighting Inc., which delivers the equipment. This is most likely a. a gift. b. a lease of goods. c. a sale of goods. d. a contract for services.

c. a sale of goods.

Maeve posts her motorcycle for sale on an online auction site. This is a. a price list, not an offer. b. an offer. c. an invitation to negotiate, not an offer. d. a request, not an offer.

c. an invitation to negotiate, not an offer.

Coffee Beans Inc. offers to buy Brewing Company's roasting services for a certain price. Brewing responds that the price is too low and thereby rejects the offer. The offer is a. valid until Coffee Beans revokes the offer. b. valid for a reasonable time. c. terminated. d. valid for the period of time prescribed by a state statute.

c. terminated.

The credit department of Mega-Mart often calls Nora at work about an overdue bill over the objection of Nora's employer. This is a violation of a. the Fair and Accurate Credit Transactions Act. b. the Truth-in-Lending Act. c. the Fair Debt Collection Practices Act. d. no federal law.

c. the Fair Debt Collection Practices Act.

Jo owns a condominium that she leases to Kia. Jo gives her daughter Liu $450 on her sixteenth birthday. Jo sells her car to her neighbor Maia for $1,500. Article 2 of the UCC covers a. all of the choices. b. the gift to Liu. c. the sale to Maia. d. the lease with Kia.

c. the sale to Maia.

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. Macy delivered the watch. b. Macy offered to sell the watch. c. Nona paid for the watch. d. Nona promised to pay for the watch.

d. Nona promised to pay for the watch.

Analytics LLC processes misinterpreted data furnished by Botch 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. none of the choices. b. a mistake of quality. c. a unilateral mistake. d. a bilateral mistake.

d. a bilateral mistake.

Components Inc., a maker of vehicle parts, refuses to sell to DIY Repair Inc., a national vehicle service firm. The maker convinces Engine Parts Company, a competitor, to do the same. This is a. a tying arrangement. b. a market division. c. a trade association. d. a group boycott.

d. a group boycott.

To drive its competitors out of a certain geographic segment of its market, Drones Inc. sets the prices of its products below cost for the buyers in that area. This is a. price-fixing. b. smart marketing. c. predatory pricing. d. price discrimination.

d. price discrimination.

Lu's application to Metro Bank for a credit card is denied. Lu can obtain information on his credit history in a credit agency's files under a. the Equal Credit Opportunity Act. b. the Fair Debt Collection Practices Act. c. no federal law. d. the Fair Credit Reporting Act.

d. the Fair Credit Reporting Act.

Contracts entered into by mentally incompetent persons are not valid under any circumstances. t or f

f

A covenant not to compete that is imposed as part of a sale of an ongoing business will be enforced even if the restraints are unreasonable. t or f

false

A novation requires the contracting parties to make restitution of whatever they received under the contract. t or f

true

Acceptance is timely if it is effective before the offer is terminated. t or f

true

Generally, if an acceptance to a sales contract between merchants includes terms additional to those in the offer, the terms automatically become part of the deal. t or f

true

Identification is the express designation of the goods provided for in a contract, and the parties to the deal can agree in their contract when this will take place. t or f

true

If a court determines that a contract involving both goods and services is primarily a goods contract, any dispute over the deal will be decided under the UCC. t or f

true

Regulation Z was issued by the Federal Reserve Board of Governors to implement the disclosure requirements of the Truth-in-Lending Act. t or f

true

The Federal Food, Drug, and Cosmetic Act protects consumers against contaminated and misbranded food and drugs. t or f

true

The contracts entered into by a minor are voidable at the option of that minor t or f

true

When a contract mistakenly specifies a crane instead of a forklift, a court could reform the contract to reflect the parties' original intent as to the equipment. t or f

true

Comprehensive Environmental Response, Compensation, and Liability Act

Designed to ensure the clean-up of hazardous waste sites and to assign liability for the costs of the cleanup.

Federal Food, Drug and Cosmetic Act

Establishes food standards, specifies safe levels of potentially hazardous food additives, and provides classifications of foods and food advertising

Outdoor Outfitters Store contracts to buy fifty tents from Pitched Camp, Inc. Unless the contract states otherwise, this document is assumed to be a. a shipment contract. b. a warehouse receipt. c. a destination contract. d. a bill of lading.

a. a shipment contract.

Rene contracts with Scot to pay him $5,000 for repairs to Rene's lake cabin. After Scot performs, Rene tells him that she cannot pay him in full immediately. They sign an agreement in which Rene promises to pay $2,500 now instead of $5,000 later. This is a. an accord and satisfaction. b. specific performance. c. a mutual agreement to rescind. d. a novation.

a. an accord and satisfaction.

Hearth & Home Furniture store advertises bedroom suites at a "Special Low Price of $599." When Ilene tries to buy one of the suites, Jill, the salesperson, tells her that they are all sold and no more are obtainable. Jill adds that Hearth & Home has other bedroom suites available for as low as $2,599. This is a. bait-and-switch advertising. b. counteradvertising. c. puffery. d. a cease-and-desist order.

a. bait-and-switch advertising.

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

b. reform the covenant.

The state of Nevada enacts a usury statute. With respect to different types of transactions, including ordinary loans, the purpose of the statute is to a. specify clauses that must be included in certain contracts. b. set a maximum rate of interest. c. regulate certain forms of gambling. d. prohibit certain contracts based on their subject matter.

b. set a maximum rate of interest.

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

b. unenforceable.

Megan contracts to sell Nonny her horse for $4,000. This contract will be fully discharged when Megan and Nonny a. execute a bill of sale. b. agree that the deal is fair. c. exchange the horse for the money. d. sign a receipt.

c. exchange the horse for the money.

Marketing Solutions Inc. promises to employ Niki as a software engineer. In reliance on the promise, Niki quits her job with Online Ad Agency, but Marketing Solutions does not hire her. Most likely, Marketing Solutions is a. not liable to Niki. b. liable to Niki under the preexisting duty rule. c. liable to Niki under the doctrine of promissory estoppel. d. liable to Niki under the concept of rescission.

c. liable to Niki under the doctrine of promissory estoppel.

Cosmétique Inc. makes and sells cosmetics and related products. By selling its goods at prices substantially below the normal cost of production, the firm hopes to drive its competitors from the market. This is a. price-fixing. b. price discrimination. c. predatory pricing. d. market power pricing.

c. predatory pricing.

Red offers to pay Sari to deliver certain documents within thirty minutes. Sari can accept the offer only by completing the task within the deadline. If she does, Red and Sari will have a. a bilateral contract. b. a void contract. c. an executive contract. d. a unilateral contract.

d. a unilateral contract.

Teri borrows $10,000 from USA Bank to remodel a room in her home. This transaction is subject to a. no federal law. b. the Consumer Product Safety Act. c. the Consumer Leasing Act. d. the Truth-in-Lending Act.

d. the Truth-in-Lending Act.

Renew Inc. contracts to resurface the pools at Swim Park by June 1. Renew knows that if performance is not timely, Swim Park will have to delay its seasonal opening. Renew finishes the job June 15. In a suit for breach, Swim Park can recover a. the cost of new pools. b. nothing—the work is done. c. the difference between the contract and market prices for the work. d. the loss of profit from the delayed opening.

d. the loss of profit from the delayed opening.

Eugene, an accountant, convinces his client Faye to enter into a contract to invest her savings in Gather, a non-existent social media site. There is clear and convincing evidence that Faye did not act out of her free will. This is a. mistake. b. fraudulent misrepresentation. c. duress. d. undue influence.

d. undue influence.

Any breach of contract effectively excuses both parties from performing. t or f

false

If a person buys cattle at a livestock auction, unless the parties agree otherwise, title will pass to the buyer when the cattle are physically delivered. t or f

t