Law 3220 Clemson Exam 3 - Jahn

A subagent is an agent of an agent, not an agent of the principal, so owes no duty to the principal, only to the agent. (T/F)

False

Federal regulation prohibits franchise agreements from containing territorial restrictions. (T/F)

False

Power of attorney may only be held by a licensed attorney. (T/F)

False

A contract may be based on a promise not to do something. (T/F)

True

Before the UCC contracts for the sale of goods were primarily governed by common law, which differed from state to state. (T/F)

True

Every state, except Louisiana, has adopted Article 2 of the UCC. (T/F)

True

Jones is "a merchant" under Article 2 even if he knows little about textile machinery but hires Smith as his agent to sell textile machinery. Smith has 25 years' experience in the textile industry. (T/F)

True

The sole proprietorship is the most common business organization in the U.S. (T/F)

True

You return a lost dog to its owner. You did not know a reward was being offered for the dog. You do not have a legal right to the reward. (T/F)

True

Double taxation on profits is: a. a disadvantage to the corporate form of organization b. an advantage to the corporate form of organization c. an incentive for governments to lower sales taxes for corporations d. a driving force behind the trend of businesses moving overseas e. a clever economic strategy

a. a disadvantage to the corporate form of organization

Electing a board of directors, enacting the corporation's bylaws, and issuing the corporation's stock are all things that occur: a. after the state has issued the corporation's certificate of incorporation b. before the state has issued the corporation's certificate of incorporation c. before the state has issued the corporation's articles of incorporation d. before the application for a certificate of incorporation e. these things can occur at anytime

a. after the state has issued the corporation's certificate of incorporation

When a court "pierces the corporate veil" it: a. holds shareholders personally liable for corporate debts b. holds the board of directors jointly and severally liable c. provides the chief financial officer of the corporation with limited liability d. sanctions the under capitalization of the corporation e. provides partial protection from corporation debts

a. holds shareholders personally liable for corporate debts

Ads are usually considered: a. invitations for others to submit offers to buy b. fully binding contracts c. partially binding contracts d. express contracts e. implied contracts

a. invitations for others to submit offers to buy

Under the economic loss rule, when a breach of contract does not include a tort, such as injury to persons, the damages: a. only relate to economic losses suffered from the breach b. are limited to half the economic losses suffered from the breach c. are not related to the monetary losses suffered from the breach d. must exceed the direct costs suffered from the breach e. none of the other choices are correct

a. only relate to economic losses suffered from the breach

The franchisee has the right to sell the product of the parent company in which category of franchise: a. product distributorship b. trademark or trade-name licensing c. business format franchising d. sale format franchising e. all of the other specific choices are correct

a. product distributorship

Cook instructs Chan, her agent, to buy a van for her business. Chan contracts for a van with a third party, who knows that Chan is an agent. If Cook does not like the van and refuses to pay for it, the seller may sue: a. Chan because she did not have authority to enter into a final contract without permission b. Cook because Chan has actual authority to make a contract on behalf of her principal c. Cook if Chan signed the contract expressly on behalf of Cook; that is, the principal was revealed before the contract was made d. Cook but only if Chan has apparent authority to enter into the contract e. no one; there was no valid contract

b. Cook because Chan has actual authority to make a contract on behalf of her principal

Jimmy must be at work no later than 7 AM on the days he works. Because he must hurry to get to work, he runs over a lady going across the street. She sues Jimmy and his employer for her injuries. She has: a. no case unless she was in a crosswalk going with the light b. a case against Jimmy, but no case against his employer c. a case against Jimmy and against his employer under vicarious liability d. a case against Jimmy's employer if Jimmy is found to be negligent, such liability means that Jimmy would not be personally liable e. a right to seek worker's compensation if she was walking to work

b. a case against Jimmy, but no case against his employer

Agency by estoppel means: a. conduct on the part of the agent that implies an agency relationship must be stopped as soon as the principal implies disagreement b. actions by the principal lead a person to believe that the presumed agent has authority to act on the principal's behalf c. the agent creates an appearance of authority in the principal which leads a third party to reasonably conclude that the agent has the authority to perform certain acts d. conduct by the agent through word or actions is not sufficient to bind the principal to contracts the agent creates e. none of the other choices

b. actions by the principal lead a person to believe that the presumed agent has authority to act on the principal's behalf

Lisa mailed an offer to sell cotton to Jeff who sent an acceptance. However, Jeff made changes in the time and place of delivery. Under the UCC's Article 2: a. acceptance cannot change the terms of the offer without being considered either a rejection or a counteroffer b. an acceptance is valid if the parties intend to form a contract⎯even though the acceptance contains some different terms from those in the offer c. alterations are not valid under the UCC so the parties need to look to the common law of contracts for a solution d. acceptance is valid only if this is an option contract e. acceptance is valid only if this is a requirements contract

b. an acceptance is valid if the parties intend to form a contract⎯even though the acceptance contains some different terms from those in the offer

You pay $200 for the right to be the only buyer a seller will deal with for ten days for a piece of property that is for sale for $250,000. This is: a. called a terminable contract b. called an option contract c. called a revocable contract d. not a contract because the consideration is not relevant to the value of the property e. none of the other choices

b. called an option contract

A California winery shipped its Rotgut Red wine to the House of Wines. The wine was improperly bottled, causing the wine to blow its corks and spew wine all over Wines' carpeting. In Wines' suit against the winery, the damages to the carpet will be considered: a. incidental damages b. consequential damages c. exemplary (punitive) damages d. part of any of the other choices e. none of the other choices

b. consequential damages

The Convention on the International Sale of Goods (CISG): a. was developed to manage the contract problems inherent in the sale of good to Third World nations b. does not contain a statute of frauds provision so that either oral or written contracts in international markets may be enforceable c. does not apply to civil law countries d. relies heavily on common law contract law principles developed in the United States e. provides that the commercial laws of the seller's country always apply

b. does not contain a statute of frauds provision so that either oral or written contracts in international markets may be enforceable

Scott is an agent for Lee and his duties require him to fly to Chicago from Cleveland. Scott gets up late and misses his flight to Chicago so he has to buy a second plane ticket. As principal, Lee: a. has a duty to reimburse Scott for the second plane ticket b. does not have a duty to reimburse Scott for the second plane ticket because it was Scott's fault he had to buy it c. has a duty to reimburse Scott for half the plane ticket d. has a duty to reimburse Scott for 1/3 of the plane ticket e. does not have a duty to reimburse Scott for the ticket because he had no duty to reimburse Scott for a plane ticket to Chicago anyway

b. does not have a duty to reimburse Scott for the second plane ticket because it was Scott's fault he had to buy it

Bill is an attorney in Ohio. Marla hires Bill to create a trust for her children. Bill has not been keeping up with developments in trust law, and so creates an inefficient trust. Under recent Ohio law, he could have created a much more beneficial trust. In this case, Bill: a. has violated a duty of loyalty b. has violated a duty of reasonable care c. has violated a duty of obedience d. has violated a duty to account e. may be out-of-date but has violated no duties

b. has violated a duty of reasonable care

The business judgment rule: a. is applied when directors of a corporation act negligently b. protects directors and managers of a corporation who have made honest mistakes in judgment c. is used by courts to impose strict liability on directors and managers when violated d. protects directors and managers of a corporation who have made honest mistakes in judgment and is used by courts to impose strict liability on directors and managers when violated e. none of the other choices

b. protects directors and managers of a corporation who have made honest mistakes in judgment

Len agrees to sell Doug some choice ocean-front property. If Len later refuses to convey the land, Doug may sue for: a. liquidated damages b. specific performance c. ratification damages d. punitive damages e. none of the other choices since contract law does not apply to real property agreements

b. specific performance

In Griffith v. Clear Lakes Trout, Griffith grew trout for Clear Lakes; the parties got into a dispute over what were "market size" trout, as Clear Lakes wanted larger fish. The court held that: a. since the contract between the parties was vague about trout size, there was no enforceable contract b. Clear Lakes was correct about trade usage regarding "market size" so Griffith had an obligation to grow larger fish and be in compliance with the contract c. Clear Lakes was incorrect about trade usage regarding "market size" so Griffith had no an obligation to grow larger fish to be in compliance with the contract d. Clear Lakes had underpaid for the trout given current market prices, so owed Griffith damages equal to the market price versus the price paid e. none of the other choices

c. Clear Lakes was incorrect about trade usage regarding "market size" so Griffith had no an obligation to grow larger fish to be in compliance with the contract

In Yim v. J's Fashion Accessories, Inc., where J's Fashion sued Yim for failing to pay for goods he bought under the name Ho Tae and Yim denied liability on the grounds that he had been acting as an agent for Hosung Enterprise, Inc which also did business under the name Ho Tae, the courts held that: a. Yim was not liable because he was an agent of Hosung Enterprise, Inc. b. Yim was not liable, even though he was an agent of Hosung Enterprise, Inc. c. Yim was liable because he never disclosed Hosung Enterprise, Inc. as the principal d. Yim was not liable because he had apparent authority e. Yim was liable because he disclosed Hosung Enterprise, Inc. as the principal

c. Yim was liable because he never disclosed Hosung Enterprise, Inc. as the principal

General partners in a limited partnership: a. have no liability b. have limited liability c. are personally liable to the partnership's creditors d. are personally liable to the secretary of state e. are personally liable to the partnership's creditors only if they choose to be

c. are personally liable to the partnership's creditors

Roberta says "Susan, I will sell you my car for $5,000." Susan says, "I'll give you $4,500." Roberta says "No." Later Susan calls Roberta and says, "I have $5,000 and want the car." Roberta: a. must sell the car for $5,000, since the offer was accepted b. must sell the car for $5,000 since the offer was accepted in a timely fashion c. does not have to sell the car due to the counteroffer, which is a rejection d. does not have to sell the car because her offer was not accepted in a timely fashion e. none of the other choices

c. does not have to sell the car due to the counteroffer, which is a rejection

The modern corporation was developed: a. in England in the Middle Ages b. in Italy during the Renaissance c. in the United States during the eighteenth century d. in Germany during the nineteenth century e. in New York during the early twentieth century

c. in the United States during the eighteenth century

A buyer ordered custom made equipment. The delivery date was not set, but the seller promised to do the job in a reasonable time. When the equipment was not ready when the buyer hoped, the buyer cancelled the order. The seller demanded payment. You would expect the court to hold that: a. failure to deliver by the delivery date expected by the buyer was a breach of contract, so nothing was owed by the buyer b. because UCC 2-207(b) states that special terms are to be specified in the contract, as was the case with this order, the seller was in breach for not fixing a delivery date c. no delivery date was fixed, but the seller worked on the equipment and so will be paid for the work done up to time of cancellation d. no delivery date was specified by the buyer, so he had no right to cancel the order and is liable for all costs plus lost profits e. the breach was done with malice, so punitive damages could be added to the compensatory damages

c. no delivery date was fixed, but the seller worked on the equipment and so will be paid for the work done up to time of cancellation

Kurt works for Jeris. One evening Kurt decides to use the company truck to pick up his date. On his way home from the movies, after dropping his date off, Kurt runs a red light and smashes into Bob. Is Jeris liable to Bob? a. yes, because Kurt was her agent b. yes, because Kurt was driving her truck c. no, because Kurt was acting outside the scope of his employment d. no, because Kurt was an independent contractor when not on the job e. no, because Kurt's actions negligent, not intentional

c. no, because Kurt was acting outside the scope of his employment

Jennifer enters into a contract when she is sixteen. When she reaches the age of majority she may manifest her intent to be bound to the contract; that is, to ____ the contract. a. adjudicate b. exculpate c. ratify d. covenant e. assert

c. ratify

The owners of a corporation are called: a. partners b. officers c. shareholders d. principals e. none of the other choices

c. shareholders

Warranty of title includes the warrant that: a. the goods being sold can be sold overseas without any tariff penalties b. the goods being sold are marketable c. the goods being sold are free of any claim of infringement d. the goods being sold might be copyrighted e. the goods being sold are capable of being copyrighted

c. the goods being sold are free of any claim of infringement

Twenty years after you take this class you are successful and wealthy. Knowing that this class was the key to your success, you look up your old professor and send a letter saying, "Because you helped me so much, I am going to send you a check for $100,000." Later you come to your senses and do not send the check. Your old professor sues you for the money: a. you have to pay; there is a valid contract b. you do not have to pay; the professor did not send a timely letter of acceptance c. you do not have to pay; there is a lack of consideration d. you do not have to pay; promissory estoppel applies e. you do not have to pay; you were legally insane

c. you do not have to pay; there is a lack of consideration

​Venable bought a car from a dealer. SunTrust financed the purchase. Venable promised to make 75 monthly payments; the car could be taken by SunTrust is she failed to pay. After five years, SunTrust seized the car and sold it at auction. It sued Venable for the remainder owed on the debt. She argued that SunTrust acted improperly because there is a four-year statute of limitations under Article 2 of the USS. SunTrust argued that the six-year statute of limitation that applied to common-law contracts applied to the matter. The trial court agreed with SunTrust. The appeals court held that: ​a. SunTrust was correct; the financing of the car was a common law contract, not an Article 2 UCC contract. ​b. SunTrust was correct; the primary purpose of the contract was for financing, not the sale of a good, so the common law applied. c. ​Venable was correct; the primary purpose of the contract was the sale of the car, so Article 2 of the UCC covered it. d. ​Venable was correct; Article 2 covers all vehicle sales regardless of how the sale occurs and how the vehicle is financed. ​e. none of the other choices are correct.

c. ​Venable was correct; the primary purpose of the contract was the sale of the car, so Article 2 of the UCC covered it.

In Zhou v. Bickley, Zhou helped Bickley start a motorcycle repair shop. When they got into a dispute later, the courts held that: a. Zhou and Bickley were partners, so each was owed the fair market value of his share in the organization b. Bickley was a partner but breached his duty to Zhou by not working, so could be fired from the partnership c. Bickley was not a partner, he was an employee subject to wrongful dismissal and could sue for damages for that d. Zhou and Bickley were not partners, Bickley owed Zhou for money received to start the business run by Bickley e. none of the other choices

d. Zhou and Bickley were not partners, Bickley owed Zhou for money received to start the business run by Bickley

Under Article 2 of the UCC a contract can exist even if which of the following terms is(are) omitted: a.payment terms b. delivery terms c. price d. all of the other specific choices are correct e. none of the other specific choices are correct

d. all of the other specific choices are correct

In Hinson v. N&W Construction, where Hinson submitted the low bid to N&W for plumbing work to be part of a larger construction project by N&W, but then refused to do the work when construction was started by N&W, the court held that Hinson's bid: a. could not be relied upon by N&W because he was not licensed for such work b. was unrealistically low, which N&W recognized, so it could not rely on the bid c. was valid, so there was a breach of contract; Hinson was liable for the full value of the contract d. created liability based on promissory estoppel, so he was liable for the extra costs incurred by N&W e. created liability based on promissory estoppel, so he was liable for the full value of the contract

d. created liability based on promissory estoppel, so he was liable for the extra costs incurred by N&W

You leave your poodle at a new grooming shop and tell them to wash the dog⎯a $30 service. They do that and also paint the poodle's nails and tie ribbons in his hair⎯these services are an extra $10. You pay them for the wash. What about the extra $10 in services? a. an express contract existed; you must pay the $10 b. an implied contract existed; you must pay the $10 c. a quasi-contract existed; you must pay the $10 d. no contract for these services existed, no extra payment e. the UCC would hold that no contract existed, so no payment

d. no contract for these services existed, no extra payment

To create a corporation: a. articles of incorporation and an application must first be filed with the federal government b. the federal government issues a certificate of incorporation, which must be filed with an application to do business in the relevant states c. the incorporators must hold a public organization meeting, then file articles of incorporation d. the corporation's articles of incorporation are filed with the appropriate officer of the state e. none of the other choices

d. the corporation's articles of incorporation are filed with the appropriate officer of the state

Uncle Jim tells his niece as she goes off to Creepy U. that if she maintains a 3.5 average that he will buy her a BMW convertible when she graduates. At graduation she has a 3.7 GPA and so she wants the BMW convertible. Uncle Jim says that he doesn't have to give her the BMW convertible because what she did was for her own good. Niece wants to sue Uncle Jim to get the BMW convertible. There probably is: a. no breach of contract because the benefit to Uncle Jim is trivial compared to the BMW convertible b. no breach of contract because what the niece did was a benefit for herself only c. no breach of contract because it would violate public policy d. no breach of contract; there was only a moral obligation e. a breach of a valid contract

e. a breach of a valid contract

If a North Carolina firm contracts to buy toys from China, and the contract does not specify which law applies, in case of dispute, which law will apply: a. the law of the buyer (North Carolina) b. the law of the buyer's nation (federal law) c. the law of the seller nation d. the UCC e. the CISG

e. the CISG