A contract is implied when the parties directly state its terms at the time the contract is formed.
1. A consumer who misuses a product:
|can hold the manufacturer liable even if the manufacturer uses a defense of strict product liability by knowingly assuming an obvious risk of injury by the consumer.|
|may not recover under the theory of strict liability.|
|will recover under the theory of strict liability if the misuse was not foreseeable.|
|cannot hold the manufacturer liable for not designing the product so that it could not be altered even if the danger it created was foreseeable.|
1. A conditional sales contract is an example of a(n):
|document of title.|
1. Assignments of future wages are not effective because:
|they involve personal relationships.|
|they are contrary to public policy.|
|they materially alter the duties of the promisor.|
|they involve personal rights.|
1. Bella is Ming’s babysitter. She takes Ming to the amusement park for a roller coaster ride. Due to the intensity of the ride, Ming, who has an especially weak heart, dies of a heart attack during the ride. Which of the following concepts best fits Bella’s act of negligence?
|Negligence per se|
|Breach of duty|
|Principles of causation|
1. If Gwen hands Lisa a detailed offer for the purchase of Lisa’s pottery wheel and Lisa signs the offer without changing any of its terms, the parties have created a:
1. A buyer is considered to have accepted a whole commercial unit of goods if:
|the buyer pays for the goods before inspecting them.|
|the buyer accepts any part of the commercial unit.|
|the seller delivers even part of the commercial unit.|
|the seller delivers all the goods in the commercial unit.|
1. A clothing store has opened a credit account in which Judy, a college student, gets Alice, her older sister, to agree to pay the amount owed on the account if Judy fails to do so. Which of the following statements is true of this scenario?
|Judy is the obligor, and she is secondarily liable to the clothing store.|
|Alice is the guarantor, and she is primarily liable to make the payments.|
|Judy is the obligor, and she is contractually liable to the guarantor.|
|Alice is the guarantor, and Alice’s contract must be in writing to be enforceable.|
1. Beck tells his mom that he is thinking of selling his vintage coupe to his neighbor, Sam, for $100. Beck’s mom calls Sam and tells him about her conversation with Beck. Sam then calls Beck and tells him that he accepts his offer. Under these circumstances, _____.
|this is a contract|
|the offer has been conditionally tendered|
|the offer has not been communicated|
|the offer violates the UCC’s rule against third-party interveners in quasi contracts|
1. According to the Fair Credit Billing Act (FCBA), if the credit card holder thinks that the card issuer has made an error on the statement, he has _____.
|90 days from the time the card was issued to report, in writing, the error|
|30 days from the time the statement was mailed to report the error|
|120 days from the time the statement was mailed to report, in writing or orally, the error|
|60 days from the time the statement was mailed to report, in writing, the error|
1. A buyer is _____ if he cannot pay his bills when they become due.
1. Blackhawk Corporation contracted to sell Greeneye Corporation some materials that Greeneye needed to fulfill a contract it had with a third party. Knowing that Greeneye was in desperate need of the materials, Blackhawk called Greeneye the day before delivery was due and threatened to withhold delivery unless Greeneye agreed to pay a higher price. Greeneye could not get the materials elsewhere and would suffer a huge financial loss without them, so it agreed to pay the higher price. Greeneye later asserts that its promise to pay the higher price is unenforceable because it was the product of duress. Which of the following statements is true of this situation?
|Blackhawk only exercised superior bargaining powers and therefore is not at fault.|
|Under modern contract law, Blackhawk’s threat to cause Greeneye economic harm could be considered duress and the contract may be considered voidable.|
|Blackhawk’s threat could not be considered duress because they had a legal right to seek a higher price for its goods.|
|Under modern contract law, Blackhawk’s threat to cause Greeneye economic harm may be unintentional tort, but not duress.|
1. A corporate manager looking for ethical guidance that neither the law nor social norms accounts for must rely on:
|a strategy that will maximize profits.|
|his or her individual conscience.|
|the advice of other managers.|
|his or her system of delegation to subordinates.|
1. Corporations have long been considered “persons” protected by some constitutional guaranties.
1. A young American woman named Monica killed her illegitimate child and buried the body in her backyard. Many years later, Monica called Claudio, the local policeman, and told him the entire story over the telephone before he could utter a single word. She then told him that voices from her backyard told her to confess to the crime. Monica told the police where to dig, and they unearthed a metal box containing the skeletal remains of a baby in her yard. Which of the following statements would be true of this scenario?
|The remains cannot be used as evidence against Monica because this would violate her Fifth Amendment privilege against self-incrimination.|
|Insanity on the part of a criminal defendant can affect a criminal trial.|
|The remains cannot be used as evidence against Monica because Claudio did not inform her of her right to remain silent before she told him her story.|
|Juries are often welcoming toward insanity pleas, because they fear that innocent defendants might be punished.|
1. Identify the statement that is true of perfection by attachment of consumer goods.
|If the secured party filed a financing statement for the collateral, the new buyer takes the collateral free of any security interest.|
|If the goods are to become fixtures, the creditor can get full protection through perfection by attachment.|
|If the new buyer buys from the debtor without knowledge of the interest, for value, and for personal use, the new buyer takes free of the security interest.|
|If the consumer goods are motor vehicles for which the state issues certificates of title, perfection by attachment to the vehicle is effective.|
1. A liquidated debt is one that is due and certain, which means that there is no dispute about the existence or the amount of the debt.
1. If a person has been discriminated by the government on the basis of the fact that he or she is an illegitimate child, the regulation will be evaluated under _____.
|the Takings Clause|
1. Compensatory damages are also known as:
1. A minor can disaffirm a contract if:
|he or she has not ratified the contract on reaching majority.|
|the contract is for real estate.|
|he or she has given a false statement about his or her age.|
|he or she has not returned the adult to status quo first.|
1. Campus Bus Service entered into a contract with Smith Bus Company to purchase 10 buses. One week before Campus Bus was scheduled to receive the buses, a fire destroyed Smith’s warehouse and the buses inside. As a result, Campus Bus had to purchase its buses at a slightly higher cost from another manufacturer. Campus Bus sues Smith Bus for damages for breach of contract under these circumstances. Assume Campus Bus did not bear the risk of loss of the goods under the contract. In this scenario, _____.
|Smith Bus should be excused from performance under the clause for the rights on improper delivery|
|Smith Bus should not be excused from performance because it did not act in good faith|
|Smith Bus should be excused from performance under the test of commercial impracticability|
|Smith Bus can exercise its right of anticipatory repudiation|
1. If a creditor owns a debt that is provable and nondischargeable, he or she _____.
|may participate in the distribution of the debtor’s estate|
|can recover only the money provided by the bankrupt’s discharge|
|must not enter into any voluntary agreement with the debtor for discharge of the debt|
|needs court approval for reaffirmation of loans|
1. A useful tool for understanding and persuading that combines basic analytical thinking with recognition of the special features of the underlying legal system is _____.
1. A buyer has a retail store in Florida and the seller is a manufacturer in California. If the buyer orders goods from the seller and the goods are shipped “FOB Florida,” which of the following statements is true?
|The seller bears the expense and risk of delivering the goods to Florida.|
|Neither the seller nor the buyer bears the risk of delivering the goods as the goods are insured.|
|The seller is allowed to charge a nominal fee for delivering the goods.|
|The buyer bears the risk of loss as he is responsible for taking possession of the goods.|
1. Corporate codes of ethical conduct:
|effectively deter unethical behavior.|
|are sometimes viewed as thinly disguised attempts to mislead the public into thinking that the company behaves ethically.|
|accurately reflect the values of society.|
|tend to expressly publish policies that deal directly with corruption to avert legal measures that might impose severe constraints.|
1. Arbitration of disputes under the purview of “lemon laws” under state statute is:
|not required by most statutes.|
|usually binding on the consumer, not the manufacturer.|
|usually binding on the manufacturer, not the consumer.|
|not binding on either the manufacturer or the consumer.|
1. Beck Inc., a food processing company in Chicago, placed a phone order with Gary, a vineyard owner in California, for a certain quantity of perishable products. The shipping term was “CIF” with payment to be made on delivery. Gary contracted with a carrier to deliver the goods to Beck Inc. However, he neglected to ship the goods under refrigeration. The goods were loaded on a non-refrigerated boxcar and as a result the product was spoiled when it reached Chicago. Under these circumstances, _____.
|neither Gary nor Beck Inc. bears the risk of loss as the goods are insured|
|Beck Inc. bears the risk of loss because, under a CIF shipment, the buyer has to bear all risks|
|Beck Inc. bears the risk of loss as the contract did not mention that Gary will guarantee their delivery|
|Gary bears the risk of loss because, under a CIF shipment, the seller bears the expense and the risk of loading the goods|
1. Chuck Olson, aged 16, buys a used car from Bobby Duncan Used Cars Center on September 15, 2006. Olson agrees to pay $200 a month for 12 months. A month after the purchase, Olson is involved in an accident that wrecks the car. He immediately calls Duncan Cars and informs them that he is disaffirming the contract. According to traditional common laws, which of the following is most likely to be true?
|Olson does not have a duty to place Duncan in status quo ante.|
|Olson can ask Duncan to pay for the damages as he hasn’t made the full payment for the car.|
|Olson has to pay for the damages and then return the car to Duncan.|
|Olson can successfully press charges and force Duncan to take care of the damages caused to the car.|
1. A donee beneficiary:
|is a third-party beneficiary to whom a gift of the contracted performance is given.|
|is a third-party beneficiary who is no longer a part of an agreement.|
|is a third-party beneficiary who incidentally benefits from a contract.|
|is a third party beneficiary who cannot recover the value of the promised performance.|
1. A common law lien essentially includes:
|possession by the court.|
|a debt to the court created by the failure of a surety to pay a creditor.|
|possession by the improver as well as debt created by the improvement.|
|an improvement which does not become a part of the property.|