Business Law Ch. 10

The foreign/natural test for food items is different from the liability issues under the reasonable expectation test.

True

"These cartons will hold up to 100 pounds of books" is an example of:

an express warranty.

"As is" written in a contract: a. serves to disclaim the implied warranty of merchantability. b. serves to disclaim the implied warranty of fitness for a particular purpose. c. has no effect on warranty protection. d. both a and b e. none of the above

both a and b

A company is liable for a design defect in its product only if: a. it was aware of the design defect. b. the design defect has caused a previous injury. c. there was negligence in the product testing. d. none of the above

none of the above

Privity in negligence product liability cases is:

not required.

Section 402A covers:

those who sell products out of their home.

Which of the following does not constitute an express warranty?

"This car will give you a great deal of satisfaction."

Which of the following is not an express warranty?

"This sweater is made of the finest materials."

Which of the following is not an example of an express warranty? a. "This jacket is lined." b. "This water heater holds 50 gallons." c. "This toothpaste makes teeth the whitest around." d. "Preshrunk jeans."

"This toothpaste makes teeth the whitest around."

What is the maximum civil penalty the Consumer Product Safety Commission can assess against a company for violations of the Consumer Product Safety Act?

$500,000

Which of the following would not be a breach of the warranty of merchantability? a. a piece of garden snake in a box of frozen green beans b. a caterpillar in broccoli soup purchased at a restaurant c. a milk carton that leaks d. All of the abov

All of the above are breaches of the implied warranty of merchantability.

Which of the following does not constitute an express warranty? a. "This computer system is accessible by a PB2400 modem." b. "This computer system is IBM-compatible." c. "This computer system has a built-in battery back-up system that gives you two minutes to save files in the event of a power interruption." d. All of the above are express warranties.

All of the above are express warranties.

Which of the following is not an express warranty? a. "fireproof" b. "waterproof" c. "puncture-proof" d. All of the above are express warranties.

All of the above are express warranties.

Which of the following is not regulated by the FTC? a. content accuracy b. celebrity endorsements c. performance claims d. express warranties e. All of the above are regulated by the FTC.

All of the above are regulated by the FTC.

Which of the following issues in advertising is not regulated by the FTC? a. accuracy of ad content b. accuracy of performance claims c. celebrity endorsements d. All of the above are regulated by the FTC.

All of the above are regulated by the FTC.

Which of the following is not required of a celebrity who will be endorsing a product? a. verification of the claims to be presented b. actual use of the product c. disclosure of source of claims not known personally by the celebrity d. All of the above are required.

All of the above are required.

Which of the following duties could not be a basis for a negligence suit? a. hotel to guest b. physician to patient c. accountant to client d. All of the above parties have duties.

All of the above parties have duties.

The Joneses are interested in purchasing new carpet for their family room and note an ad in the paper from Carpet World for carpet at $9.99 per square yard, with pad, fully installed. When the Joneses go to Carpet World, the salesman tells them there is a handling fee of $2.99 per square yard on the advertised special, but he can show them a better carpet for $14.99 per square yard. Which of the following statements is true?

Carpet World's ad and tactics constitute bait and switch.

The 2008 act that includes some regulations on the resale of goods is the:

Consumer Product Safety Improvement Act.

"This car has the finest workmanship money can buy" is an example of an express warranty.

False

A purchase of a deep fryer at a sale of a bankrupt restaurant's equipment by the bankruptcy trustee is covered by the warranty of merchantability.

False

A sale of a toaster at a garage sale is covered by the warranty of merchantability.

False

A salesperson who recommends a fertilizer to a customer for the customer's described purposes is not making a warranty.

False

Bait and switch is not a deceptive advertising technique.

False

Comparative ads are now illegal.

False

Corrective ads can be required only when competition is affected.

False

If there is a breach of the warranty of merchantability, there is no tort liability.

False

In comparative advertising, a company cannot be held liable for misrepresentations regarding products other than its own.

False

Passengers injured in a plane crash caused by the plane's defective design have no rights of recovery against the airplane manufacturer.

False

Privity is required for recovery on the basis of warranty.

False

Proof for a breach of the warranty of merchantability suit requires establishment of the fact that the product was in a defective and unreasonably dangerous condition.

False

Restaurants have no liability for natural items such as bones in chicken that injure customers.

False

Section 402A permits suits only by those in privity of contract.

False

Stating a lamp is a "Tiffany lamp" and stating it is "in the Tiffany style" are both making the same kind of warranty.

False

Strict tort liability under Section 402A is the same as negligence.

False

The Federal Trade Commission does not have the authority to halt deceptive ads.

False

The implied warranty of fitness for a particular purpose (unless disclaimed) is given in every sale of goods by a merchant.

False

The implied warranty of fitness for a particular purpose is given in every sale by a merchant.

False

The implied warranty of merchantability requires proof that the buyer was relying on some language when he or she made the purchase of the good.

False

There can be no recovery on the basis of a breach of a UCC warranty by anyone other than the actual buyer.

False

Today, courts follow a policy of caveat emptor in handling product liability

False

Today, courts require privity of contract for recovery in product liability cases.

False

Toyota had no ethical obligation to issue a recall on its vehicles with sudden unintended acceleration problems because Toyota did not manufacture the parts that caused the problems.

False

Under the Consumer Product Safety Improvement Act a reseller of goods cannot be liable for selling toys or other products with lead paint because the reseller did not manufacture the goods.

False

Which of the following items can be sold now by a reseller? a. A recalled item not purchased originally by the reseller b. A product intended for children containing lead paint c. A product intended for children containing phthalates d. None of these

None of these

Susan Sandren purchased a toaster from Standard Electric. While using the toaster the day after it was purchased, Susan discovered that the toaster slots were too small for a thick piece of bread. The bread was stuck in the slot. With the toaster still plugged in, Susan used a knife to pry loose the toast and was electrocuted. In a suit by her family against Standard Electric:

Susan's family would win if there were no warnings about knives and electrocution.

"Stops assailants dead in their tracks," written on the package for a mace product, is an express warranty.

True

"These dresses are 100% cotton" is an example of an express warranty.

True

A consent decree is similar to a no-contest plea in a criminal proceeding.

True

A disclaimer of liability for personal injuries caused by a breach of warranty would be unconscionable.

True

A lack of adequate warnings can be a defective product.

True

A product can be defective for purposes of liability for injury if proper warnings about its use are not given.

True

Ads by members of professional groups can be regulated by the state.

True

Ads can be a basis for an express warranty.

True

An internal memo in a company that acknowledges the risk of a product prior to the product's release without any kind of change establishes proof for punitive damages under a negligence theory of product liability.

True

Caveat emptor is a Latin term meaning "let the buyer beware."

True

Celebrity endorsements of products are deceptive unless the celebrity has used

True

Express warranties cannot be disclaimed.

True

Federal trademark law provisions provide remedies for companies whose products are misrepresented in comparative advertising.

True

Improper packaging that results in an injury can be a basis for product liability.

True

Misuse of a product is a defense in a product liability suit.

True

Private parties can enforce the FTC regulations on comparative ads.

True

Privity of contract is a direct contractual relationship between the parties.

True

Product packaging stating that the line is "ideal for use on boat or dock" is mere puffery and not an express warranty.

True

Proof of negligence in product design or manufacture allows recovery of punitive

True

Proof that a manufacturer was aware of a defect in its product but did not correct it is proof of negligence.

True

The Consumer Product Safety Improvement Act of 2008 includes rules covering the resale of goods such as in a garage sale.

True

The FTC Improvements Act of 1980 curbed FTC regulation of children's

True

The FTC can issue an order to halt a comparative ad if information used in the ad is inaccurate.

True

The Federal Trade Commission is responsible for the regulation of deceptive advertising.

True

The implied warranty of fitness for a particular purpose requires reliance by the buyer on the seller's expertise.

True

The implied warranty of merchantability (unless disclaimed) is given in every sale of goods by a merchant.

True

The language "as is" disclaims both the warranty of merchantability and the warranty of fitness for a particular purpose.

True

To establish an express warranty under the UCC, the buyer must produce evidence that the seller used the term "warrant" or "guarantee."

True

When a customer tells a pet store employee that she wants two female gerbils, but receives one male and one female gerbil who later have baby gerbils, the pet store has breached the implied warranty of fitness for a particular purpose.

True

Which is a requirement for an express warranty?

a description or promise of performance

Which of the following would be a "defect" for purposes of 402A? a. failure to warn not to put a hair dryer in water b. food package that permits tampering c. a missing bolt on a car steering column d. all of the above

all of the above

The term "AS THEY STAND" serves to disclaim: a. the implied warranty of merchantability. b. the implied warranty of fitness for a particular purpose. c. both a and b d. none of the above unless it is in writing

both a and b

The sellers of "Acne-Statin," a skin cream, claim in their ads that their cream "cures acne." The American Association of Dermatologists has determined that there is no cure for acne, only creams that can curb breakouts. The ad claims:

breach an express warranty.

Pestro is the manufacturer of a weed killer that is used in the parks in Metroville. After the parks were sprayed, a group of children became ill and required hospitalization. Two dogs that had been with the group died. The parents of the children and the dog owners could:

bring suit against Pestro under 402A even though there is no privity.

Contributory negligence:

can be a partial defense in product liability cases for negligence.

The UCC warranty of merchantability:

can be disclaimed by using the term "as is."

Which of the following is not a remedy available to the FTC?

criminal penalties

For an injured party to recover for breach of a UCC warranty under the UCC:

even under the strictest alternative, the party can be a guest.

The Wheeler-Lea Act:

expanded the FTC's authority to regulate advertising.

Ralph Walters wanted to begin an exercise program and decided to enroll in a local aerobics class. He was told that he would need proper aerobic work-out shoes. Ralph went to an athletic shoe store and explained his needs to the sales clerk and also added that since he had never done aerobics, he was unsure what type of shoe he would need. The sales clerk recommended a shoe that Ralph purchased. When Ralph arrived at aerobics class, his instructor said his shoes were not appropriate for aerobics and that Ralph might injure himself if he used them for the workout. When Ralph returned to the store with the shoes, the store refused to exchange them, citing the three-day limitation on returns. The shoe store:

has breached the implied warranty of fitness for a particular purpose and is required to refund Ralph's money or exchange the shoes.

he FTC controls on product comparisons:

have changed dramatically with private enforcement.

Susan Hewitt is eating a bowl of cream of broccoli soup in a bistro when she notices a portion of a caterpillar on her spoon. Susan's best basis for recovery is:

implied warranty of merchantability.

Bait and switch:

is a sales tactic of advertising a cheaper product in order to get a customer in to buy a more expensive product.

Corrective advertising:

is one of the FTC's many remedies.

Ralph Walters wanted to begin an exercise program and decided to enroll in a local aerobics class. He was told that he would need proper aerobic work-out shoes. Ralph went to an athletic shoe store and explained his needs to the sales clerk and also added that since he had never done aerobics, he was unsure what type of shoe he would need. The sales clerk recommended a shoe that Ralph purchased. When Ralph arrived at aerobics class, his instructor said his shoes were not appropriate for aerobics and that Ralph might injure himself if he used them for the workout. When Ralph returned to the store with the shoes, the store refused to exchange them, citing the three-day limitation on returns. Suppose Ralph's sales receipt had stamped on it in red letters "AS IS." The shoe store:

is within its rights to refuse to take the shoes back.

The FTC Improvements Act of 1980:

limited the FTC's authority on regulation of advertising.

"With all faults" serves to disclaim: a. an express warranty. b. liability under 402A. c. liability for negligence. d. none of the above

none of the above

Negligence product liability cases: a. are the same as 402A cases. b. have no defenses. c. require proof of privity. d. none of the above

none of the above

The implied warranty of fitness for a particular purpose requires: a. proof that the seller made the first contact with the buyer. b. proof that the seller used the term "warrant." c. proof that the seller is a merchant. d. none of the above

none of the above

The U.S. Army purchased a large number of Bell Jet Ranger helicopters in 1963. Many of the helicopters served tours of duty in Vietnam and after the war were returned to the United States. Because of damages sustained during the war, many of the helicopters' engines were rebuilt. In 1974, one of the helicopters with a rebuilt engine crashed because of engine failure. The families of the two servicemen killed in the accident wish to recover from Bell under 402A. What defense could Bell probably successfully allege?

product modification

The implied warranty of merchantability requires:

proof that the seller is a merchant.

The opposite of caveat emptor is:

strict tort liability.

Which of the following actions cannot be taken on comparative advertising that is misleading?

the FTC can seek criminal penalties

Which of the following would not be a basis for a negligence product liability

the continued sale of gas pipelines to utilities in the Southwest after explosions caused by peculiar interactions of the pipe with the soil and heat