LAW 3220: Exam 3 (Actual Exam)

A contract must be in writing in order to be enforceable. True or False

False

A limited partnership provides liability protection for both the general partners and the limited partners of the partnership. True or False

False

An LLC is treated like a corporation for tax purposes and a partnership for liability purposes. True or False

False

In order to have a partnership, there must be a written partnership agreement. True or False

False

The Uniform Commercial Code (UCC) governs contracts for goods and services. True or False

False

The basic elements of a common law contract are: offer, acceptance, consideration, lawful subject matter, and genuine consent. True or False

False

The formal rules for contracts are more strict under the UCC than common law. True or False

False

If there is not adequate consideration for the contract, it cannot be enforced. True or False

True

The business judgement rule make directors and managers immune from liability if they meet its requirements True or False

True

The majority of businesses in the US are sole proprietorships True or False

True

Under the UCC, a contract for the sale of goods for $500 or more is not enforceable unless it is in writing and signed by the party against whom enforcement is sought. True or False

True

A franchise is sold by: a. a franchisor b. a franchisee c. a franchise director d. the Franchise Trade Association

a

A(n) ____ is an order by the court that requires a party to refrain from performing certain acts. a. injunction b. restitution c. quasi contract d. remedy e. specific performance

a

If a price is unclear when a contract is found to exist, the UCC directs the courts to: a. determine "a realistic price" b. determine a fair way to set the price c. determine who should have to pay the price d. determine who should have known the price e. none of the other choices

a

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. even though the contract between the parties was vague about trout size, there was an enforceable contract because of industry practices 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 correct about trade usage regarding "market size" and Griffith had been delivering undersized fish, so Griffith needed to compensate Clear Lakes for the price change 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

a

In In re 1545 Ocean Avenue, LCC, where the two managers of a real estate development LLC disagreed about the project and one of the managers, King, sued for work to stop and the company to be dissolved, the appeals court reversed the trial court's decision to grant King's requests because: a. there was not sufficient evidence that the LLC could not effectively operate under the operating agreement b. there was sufficient evidence that the LLC could not effectively operate under the operating agreement c. the operating agreement specified that one manager could not dissolve the LCC d. the operating agreement gave King only a 49% share of power, so he could not dissolve the company

a

In the event of a breach of sales contract by the seller, all reasonable costs or direct expenses associated with the delay in receiving the goods or in tracking down substitute goods are included in the: a. incidental damages b. exemplary damages c. consequential damages d. total damages

a

LLC stands for: a. limited liability company b. limited liability corporation c. low liability corporation d. low liability company

a

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

a

Under UCC Article 2, terms regarding payment, delivery and price are: a. not necessarily required for the formation of a contract b. required for the formation of a contract c. not allowed in a formal contract d. not allowed in a "casual contract" e. necessary only when one of the parties is a minor

a

When a court "pierces the corporate veil" it: a. holds shareholders personally liable for the corporate debts b. holds the board of directors liable for corporate debts c. holds the officers liable for corporate debts d. none of the above

a

Which of the following is a right of a limited partner in a limited partnership: a. the limited partner does not have a right to make any decisions for the partnership b. the right to hire employees c. the right to take an active role in managing the business d. both b and c are rights of a limited partner

a

A corporation consists of legally distinct groups, not including: a. shareholders b. stakeholders c. directors d. managers

b

An LLC: a. is chartered by the Securities and Exchange Commission b. has the liability of a corporation c. is taxed like a corporation d. is taxed like and has the liability of a corporation

b

An example of an equitable remedy is: a. compensatory damages b. specific performance c. nominal damages d. special damages

b

In Zhou v. Bickley, Zhou helped Bickley start a motorcycle repair shop. When they got into a dispute later, the courts held that: a. the parties had formed a partnership and Zhou and Zhang could not sue Bickley b. no partnership had been formed based on the actions of the parties and therefore Bickley was liable to Zhou and Zhang c. the parties had formed an LLC because the proper paperwork was filed with the state d. the parties had formed a partnership but Zhou and Zhang could sue Bickley

b

Ready Construction buys a computer system from Ace that Ace will also service. Two years after the sale, a disagreement develops. Ace has determined that the common law of contracts favors it. Article 2 favors Ready. Ace should: a. realize that the agreement is for the sale of goods so it must be covered by Article 2, so work to settle on the best terms possible b. try to show that the value of service dominates c. establish the contract as one for the sale of tangible goods d. define itself as a merchant under Article 2 of the UCC

b

Title represents the: a. age of a thing b. legal rights to ownership of a thing c. legal value of a thing d. bill of sale of a thing e. price of a thing

b

To transfer contractual duties to a third party is: a. assignment b. delegation c. repudiation d. beneficiary e. none of the other choices

b

"Bozo, if you wash my car I will pay you $10." Bozo says nothing but washes the car later that day. This is an example of: a. a voidable contract b. an unenforceable contract c. a unilateral contract d. an executory contract e. no contract

c

A sole proprietor must do what to start a sole proprietorship? a. File paperwork with the appropriate government office b. File a separate tax return c. Nothing d. Don't choose this one

c

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: a. could not be relied upon by N&W because he was not licensed for such work b. was not liable because there was no consideration paid by N&W to create a contract c. was liable for damages based on a theory of promissory estoppel, not breach of contract d. was not liable because there was not a contract due to lack of proper acceptance by N&W e. none of the other choices

c

July 10, 2012, the following ad appeared in the newspaper: "Male Collie, age 2, lost near Highway 85 and Laurens Road, $250 reward. Call 654-1909." On July 12, 2014, someone returns the dog. The owner: a. must pay the reward b. does not have to pay the reward c. does not have to pay the reward unless the person can show that they saw the ad d. does not have to pay the reward too, much time has passed for there to be a contract

c

The owners of an LLC are referred to as: a. shareholders b. partners c. members d. proprietors e. none of the other choices

c

Which of the following must have a written documentation to be created? a. sole proprietorship b. partnership c. limited partnership d. none of the other choices

c

With respect to parol evidence and the UCC: a. it follows the same rule as the common law b. it allows oral testimony to contradict written documents c. oral evidence may be used to explain trade dealings or fill in gaps in the written contract d. oral evidence may be used even if the court finds that the written documents are clear and complete e. oral evidence may never be used

c

Buyer is obligated to pay a seller for goods if: a. the seller delivered conforming goods to the buyer b. the seller delivered partially conforming goods to the buyer c. the seller delivered the goods to the buyer after the deadline d. the Buyer is obligated to pay the seller in all of the above

d

In contract law, an agreement means there is a mutual understanding between the parties as to the substance of the contract. This agreement between the parties is legally reached through: a. negotiation and deliberation b. communication of conditions c. revocation or rejection d. offer and acceptance e. none of the other choices

d

In my example that I used showing how setting up an LLC can protect your personal assets in the event of a lawsuit resulting from a business, what was my hypothetical business? a. Auto Repair Shop b. Home Builder c. Manufacturer d. Tree Service e. None of the above

d

The dissolution of a partnership may occur: a. if a partner is found to be bankrupt b. if the business of the partnership is made unlawful c. if a partner dies d. all of the above e. none of the above

d

In Caley v. Gulfstream Aerospace, the employer told the employees that as a condition of continued employment they had to agree to a new dispute resolution policy that would take effect in two weeks. Caley sued, contending the new policy was not backed by consideration, so there was no enforceable contract. The appeals court held that: a. the employees would have to be given something extra beyond the same employment conditions for there to be consideration for a contract b. once the new policy was announced, the employees had to be given a chance to make counter-offers or there would be no contract c. there was no contract because the parties never bargained d. in employment relationships there are no contracts, so consideration is irrelevant e. none of the other choices

e

The UCC's Article 2 does not cover the sale of: a. a truck load of printer paper b. furniture c. a load of corn d. a computer sold to a business e. all of the other choices are covered by Article 2 of the UCC

e

With respect to warranty disclaimers, under the UCC a seller: a. may never disclaim a warranty b. may only disclaim implied warranties c. may disclaim only express warranties d. may disclaim any warranty except a warranty of title e. none of the other choices

e