1. Farmer grows grain on his farm in Nebraska for feed for the chickens that he raises on that same farm. He later sells the chickens to meat packing companies within the state of Nebraska. The production of grain on the farm:
A. Affects interstate commerce and, therefore, can be subject to federal regulation.
B. Only indirectly affects interstate commerce and, therefore, can be subject to state, but not federal, regulation.
C. Only indirectly affects interstate commerce, and thus is not subject to federal regulation under the commerce clause.
D. Directly affects intrastate commerce, but more indirectly affects interstate commerce and, therefore, can be subject to federal regulation under the commerce clause.
2. Which of the following would typically take place in an appellate court?
A. Direct examination of witnesses by attorneys.
B. Choosing a jury.
C. Testimony of witnesses.
D. None of the above.
3. Larry, an Oregon resident, inherited land in Missouri. Through a Missouri attorney, Larry sold the land to Will, a Missouri resident, under a valid written sales contract. Larry later refused to go through with the sales deal, so Will sued Larry in a Missouri court.
Larry claimed the Missouri court had no jurisdiction over him because has never been in Missouri or had any other contacts with Missouri. Assume that the Missouri court has subject matter jurisdiction in this case. Does the Missouri court otherwise have jurisdiction to hear this case?
A. No, because there is diversity of citizenship in the case, only a federal court has jurisdiction to hear the case.
B. Yes, because the Missouri court can claim in rem (property) jurisdiction over Larry in this case as the owner/seller of the Missouri property.
C. Yes, because the Statute of Frauds applies to the sale of land, and the contract was written, the Missouri court has personal jurisdiction over Will, and Larry.
D. No, because although the Missouri court has property jurisdiction over Will, the court does not have the necessary property jurisdiction over Larry in this case.
4. Jonah hired Marty, who is 16 years old, as his agent to buy up to a maximum of 50 used Dell 101 model laptops at a price of $200 each, or less. Marty bought 30 used Dell 101 model laptops for $100-200 using a written contract. Jonah was pleased with the laptops and accepted the contract and paid for the 20 laptops.
Marty then bought 25 more Dell 101 model laptops for $150 each on Jonah’s behalf. Marty signed a written contract for the purchase of these 25 laptops with the seller, Used Tech, Inc. Jonah refused to accept and pay for these 25 laptops. What reason would justify Jonah’s refusal to pay for the laptops and honor the contract with Used Tech, Inc.?
A. The contract with Used Tech is illegal because Marty is a minor.
B. There is no justification, the contract with Used Tech is valid because Marty signed a contract with Used Tech for the purchase of the 25 laptops.
C. The contract with Used Tech for the 25 laptops is voidable because Marty acted outside the scope of the agency agreement with Jonah.
D. This contract is voidable under the UCC because Marty is not a merchant.
5. Mimi took her granddaughter to Roller Coaster World theme park often to ride the Thriller Diller roller coaster. The roller coaster is in a fenced, gated area. Customers pay for the ride as they board the Thriller Diller, or at the end of the ride as they leaved the gated area.
On Saturday, Mimi and her granddaughter boarded the Thriller Diller, and waved at the attendant as the ride began. At the end of the ride, Mimi refused to pay for the ride.
The most likely conclusion is that:
A. Mimi’s actions implied that she intended to pay for the ride; she is legally bound to pay for the ride.
B. Mimi’s actions implied that she intended to pay for the ride, but she is not legally bound to pay as there was no written agreement, or evidence of an agreement, such as a ticket for the ride.
C. Applying the subjective intent test, Mimi is not bound to pay for the ride because she and the attendant did not discuss the need for paying for a ticket for the ride.
D. Applying the objective test, there was no clearly communicated offer and acceptance, thus no enforceable contract; Mimi is not bound to pay for the ride.
6. Sandy orally agreed to sell Rolf her house for $400,000.00. Rolf gave Sandy a check for $10,000.00 as deposit on the house. They agreed to complete the sale on a specific day in 3 weeks when Rolf would pay Sandy the remaining $390,000.00 and Sandy would give the deed for the house to Rolf.
2 weeks later Sandy went to Rolf’s home, returned his $10,000.00 check, and told Rolf she had changed her mind about selling her house.
Rolf believes they had a binding sales contract and that Sandy must sell him the house because he gave Sandy a deposit for the purchase of the house. Sandy believes she and Rolf did not have a binding contract.
What would you conclude about the agreement between Sandy and Rolf?
A. Sandy and Rolf had a binding contract; both agreed to the sale and oral contracts can be enforceable.
B. Sandy and Rolf had a binding contract because Rolf gave consideration for the contract by giving Sandy the $10,000.00 deposit.
C. Sandy and Rolf did not have a binding contract as the contract had not been fully performed.
D. Sandy and Rolf did not have a binding contract; the contract needed to be written to be enforceable under the circumstances.
7. Edgar, an independent contractor, was hired by ABC Enterprises, Inc. (ABC) as a consultant to assist ABC in implementing a new IT system. Edgar agreed to provide consulting advice to ABC 10 hours per week for 6 weeks. In exchange, ABC agreed to pay Edgar $2500 per week, payable in a lump sum of $15,000 at the end of 6 weeks. Edgar and ABC had a valid written contract including these terms.
After 4 weeks of consulting, Edgar told ABC he needed an additional $500 per week for the remaining 2 weeks to cover expenses. Edgar said ABC needed to pay him a total of $16,000 for the 6 weeks of consulting. ABC orally agreed to amend the contract and pay the additional money.
At the end of 6 weeks, ABC was very satisfied with Edgar’s consulting work. ABC gave Edgar a check for $15,000 for the consulting but refused to pay the additional $1000 Edgar had requested.
Edgar claims he and ABC had a valid contract to pay him an extra $1000, for a total of $16,000.
What is true about the modified agreement, and the amount owed to Edgar?
A. The modified agreement is enforceable because both parties gave legal consideration for the new contract terms: ABC agreed to pay an extra $1000, Edgar agreed to continue to consult for ABC.
B. The modified agreement is enforceable because, under the UCC rules, all contract modifications are valid if the parties consent.
C. The modified agreement is unenforceable; ABC and Edgar agreed orally to the extra $1000, but there was no written contract covering the new contract terms.
D. The modified agreement is unenforceable because both parties did not give new consideration for the contract modification contract.
8. Alternative dispute resolution (ADR) is an important alternative for resolving civil disputes because ADR can:
A. Promote judicial efficiency.
B. Promote compromise and consensus between parties.
C. Promote quicker resolutions to disputes.
D. All of the above.
E. Two of the above only.
9. Park Pharmaceuticals, Inc. manufactured a headache pain relief drug that was marketed under the trade name, Free. A study by the federal Food and Drug Administration (FDA) revealed that Free is likely to cause high blood pressure in users. Consequently, the U.S. Congress enacted legislation prohibiting the shipment and sale of Free in the U.S., pending further testing by Park and the FDA. This law banning Free is probably:
A. Constitutional because the U.S. Congress has the power to regulate activity that directly affects interstate commerce and the ban on the sale of Free is clearly an effort to regulate commerce of pharmaceuticals.
B. Constitutional under the police power doctrine to protect consumers.
C. Unconstitutional because the law violates Park’s rights under the equal protection clause of the U.S. Constitution because the law treats Park differently than other pharmaceutical companies.
D. Unconstitutional because there is no conclusive evidence that Free is unsafe for consumers.
10. Wendell and Langdon signed a business contract with a clause that provides that if a dispute arises they will submit to binding arbitration to resolve the dispute. After they had been doing business together for a year, a dispute arose under the terms of the contract. Rather than submit to arbitration, Wendell filed a lawsuit against Langdon. Most likely the court will:
A. Hear the lawsuit in a trial, and then compel Wendell to submit to arbitration, if appropriate under the circumstances.
B. Hear the lawsuit because Wendell cannot be compelled to submit to arbitration as that would be a violation of his constitutional rights; he is entitled to a jury trial upon request.
C. Require Wendell to submit to arbitration to resolve the dispute.
D. Require Wendell and Langdon to enter into mediation to reach an agreement.
11. An increasing number of food trucks operate in the city center of Washington near tourist attractions and government offices. Sometimes the food trucks park on the sidewalks, curbside in the streets, and in parking spaces and tourist bus routes, thus, impeding pedestrians and interfering with vehicle traffic. The city enacted an ordinance that permits food trucks to operate only in designated, marked areas off sidewalks and off streets within the city.
Several food truck owners are upset and believe the ordinance is an unconstitutional interference with their rights to operate private businesses. They also believe the ordinance discriminates against them because brick and mortar businesses in the area do not have similar restrictions.
Which of the following statements is true about the ordinance?
A. The ordinance unduly discriminates against the food truck vendors as other businesses in the area are not similarly restricted.
B. The ordinance is a violation of the food truck vendors’ constitutional rights to operate their private businesses without undue interference from the government.
C. The city can justify the ordinance as a constitutional exercise of the right of governments to regulate private businesses for any reason under the interstate commerce clause.
D. The city can justify the ordinance as a constitutional exercise of its police power to protect the safety and welfare of the general public.
12. Computers, Inc. (Computers) and Management Enterprises Company (Management) agreed that Computers would sell Management its computing business, including the land on which the business was situated, for $600,000. Both Computers and Management knew at the time the contract was formed that the business and land were actually worth $1,000,000. Is this a valid enforceable sales contract?
A. No, because Computers would not have agreed to sell the business for 40% less than its value unless it was under duress by Management to sell.
B. No, because $600,000 is not valid consideration for a business worth $1,000,000.
C. Yes, provided the contract was in accordance with state statutory law that permits real estate sales for 40% or more below market value.
D. Yes, provided the contract was in writing, in accordance with the Statute of Frauds, and the parties freely consented.
13. Fay was admitted as a new partner in Charmed City Chocolates, a general partnership, in May 2017. In June, while delivering a chocolate order to a residence, Charmed City’s delivery employee negligently crashed into the rear of a parked car destroying a bicycle mounted on the back of the car and damaging the rear of the car.
Which of the following is true about liability for the employee’s negligence?
A. Charmed City is not liable for the accident as it was the result of the employee’s negligence.
B. Charmed City is liable for the accident, but Fay is not liable as she was admitted to the partnership only 1 month prior to the accident.
C. The delivery driver is an employee-agent of Charmed City, and Charmed City is liable for the acts of its employees.
D. The delivery driver is an employee-agent of Charmed City, but Charmed City is not liable for the negligent acts of its employees.
14. Accounting Temps, Inc. (Temps) has 50 employees who work in offices on two floors of Temps’ business office building. There are no elevators in the building. Taylor, a Temps employee for three years, has an office on the second floor. Following a fall, Taylor has a permanent leg injury and difficulty walking up and down stairs. Taylor requested to be moved to a first floor office, but Temps stated there is no space available on the first floor and that it would be unfair to move someone else from a first floor office because all employees on the first floor have seniority over Taylor. Temps promised to move Taylor when a first floor office becomes available. In the meantime, Temps offered to have another employee help Taylor up and down the stairs to the second floor daily.
Is Temps handling the situation properly?
A. Yes, Temps is required to make reasonable accommodation for Taylor, and has done so by promising to move Taylor to a first floor office as soon as possible, and by offering to help Taylor on the stairs daily.
B. Yes, Temps is required to make “reasonable accommodation” for Taylor, but not at the inconvenience of other employees who might have to move offices.
C. No, Temps should immediately move Taylor to a first floor office or find temporary first floor office space until permanent office space is available on the first floor.
D. No, Temps should install an elevator to the second floor if first floor office space is available.
15. Jan went to a truck dealership and said that she wanted to buy a truck capable of hauling a 5000-pound load, and that she wanted the salesperson to recommend an appropriate truck. The salesperson selected a certain truck for Jan that he stated would haul a 5000-pound load. Jan bought the truck the salesperson selected. The truck was mechanically sound, but would haul only a 2500-pound load. If Jan sues the dealership, which product liability claim would provide Jan with the best chance of winning?
A. Breach of implied warranty of fitness for a particular purpose.
B. Breach of contract.
C. Breach of implied warranty of merchantability.
D. Negligence, because the truck that could not handle a 5000-pound load.
E. All of the above.
16. Uncle promised to buy his nephew, Dave, a new truck to use in his business. Counting on having a new truck, Dave sold his old truck. Uncle now refuses to buy Dave the truck. Dave needs the truck to operate his business and to get to his business office.
Can Dave possibly enforce the promise and require Uncle to buy the truck for him?
A. Yes, because the truck is a necessity for Dave and all contracts for necessities are binding and enforceable for all parties even if contract formation is flawed.
B. Yes, under promissory estoppel if Dave reasonably relied on Uncle’s promise and sold his truck.
C. No, because Dave was not unjustly enriched because he did not receive the truck.
D. No, because Uncle’s promise to Dave was a gift to Dave; Dave gave consideration, but Uncle did not.
17. Assume you are the owner of a small business, Greetings, Inc., that sells greeting cards to retailers. Card Sensations sent a written offer to you to buy 1,000 birthday cards for $0.60 each for a total of $600. You can accept the Card Sensations offer by:
A. Sending written notice to Card Sensations promising to ship the cards.
B. Not communicating further with Card Sensations, but by promptly shipping the cards.
C. Accepting the offer by writing, “Greetings, Inc. accepts your offer to buy 1000 birthday cards for $0.60” and sending the written acceptance to Card Sensations.
D. All of the above could be valid acceptance.
18. Carl parked his car on a steep hill, leaving the car in neutral and failing to engage the emergency parking brake. The car rolled down the hill and crashed into the garage door of Chase’s house, damaging the door beyond repair.
Can Chase recover damages from Carl for the damage to his garage door?
A. Yes, because Carl was negligent in parking the car.
B. Yes, if Carl is the owner of the car because he left the car unattended and is responsible for any damage caused by the car.
C. No, because it is not essential to engage the emergency parking brake to safely park a car.
D. No, because the car’s rolling down the hill was unforeseeable.
19. Zoe operates Wood Rail Center Sports, an athletic equipment shop, as a sole proprietorship. She is concerned about her tax liability, and wondering whether to continue as a sole proprietorship or to reorganize under another business structure. Which of the following would be the best advice for Zoe?
A. Zoe should remain a sole proprietorship; she would have the same tax liability if she reorganizes as a LLC.
B. Zoe should remain a sole proprietorship; there are no business taxes on sole proprietorships.
C. Zoe should consider reorganizing as a LLC to reduce her tax liability.
D. Zoe should consider reorganizing as a corporation to avoid personal tax liability on business income.
20. Linda was a guest in the Mardell Hotel. While walking across the hotel lobby, Linda slipped and fell on the wet floor and broke her leg. Linda required surgery to repair the broken leg.
Just prior to Linda’s fall, the hotel floor had been washed by the maintenance staff. The staff had placed a “wet floor” sign on the lobby floor. Linda now wants to collect damages to compensate her for medical expenses for her broken leg.
Is it likely Linda can collect compensatory damages to cover her medical expenses?
A. No, there was a sign posted warning about the wet floor; Linda assumed the risk by walking across the wet floor.
B. No, it is reasonable the hotel staff would need to clean the floor and after posting a warning sign, it is not foreseeable that people would walk on the wet floor and fall.
C. Yes, the hotel had a duty to protect guests from known harm on the premises of the hotel.
D. Yes, unless the warning sign was large and conspicuous.
21. Eagle, Inc. sells motor vehicle parts to dealers. In response to a dealer’s order, Eagle shipped a crate with a label that read, “Crate contains one 150-horsepower diesel engine.” This statement is:
A. An express warranty.
B. An implied warranty of merchantability.
C. An implied warranty of fitness for a particular purpose.
D. None of the above.
22. In December 2016, Charlotte became the 25th partner with International Enterprises, an existing general partnership with 24 partners. In April 2017, an International Enterprises partnership debt came due in full in the amount of $100,000. The debt was originally incurred in June 2016. Charlotte is:
A. Only liable for the debt up to the amount of her capital contribution to the partnership. B. Not liable for the debt because the debt was incurred prior to her joining the partnership.
C. Liable for her pro-rata one-twenty fifth share of the total debt along with the other partners.
D. Liable for one-twenty fifth of the debt if all the other partners default on the debt ad refuse to pay.
23. A orally offered to sell B 100 electric toothbrushes, but neglected to state the price. B accepted the offer via email and requested delivery within 2 weeks. A received the acceptance email, but immediately thereafter, A tried to get out of the deal. Assume that A and B are both merchants, as defined under the UCC, and have engaged in sales contracts together previously. At this point which of the following is most likely to be true about this agreement between A and B?
A. There is no valid contract because the offer is too indefinite.
B. There is no valid contract because any offer for the sale of goods must be in writing and signed by both parties.
C. There is a valid, enforceable contract.
D. There is a valid, enforceable contract only if either A or B are engaged in international business which makes the agreement subject to CISG (Contract for International Sale of Goods) rules.
24. Someone who recovers damages for breach of contract typically can recover:
A. Only those compensatory damages/losses that can be proven with reasonable certainty.
B. For all consequences of the breach, e.g., pain and suffering, whether or not the damages are foreseeable.
C. Only for foreseeable damages.
D. Punitive damages.
25. Cable Corp. contracted online to buy several TV movies from Movies, Inc. Both parties signed the contract with electronic signatures. This contract is probably:
A. Valid and enforceable.
B. Valid and enforceable only if the UCC rules apply to the agreement.
C. Unenforceable under UCITA because electronic signatures are not valid in 2017.
D. Unenforceable because it was not a click-on contract.
26. A computer Dealer whose place of business is in Atlanta contracts on August 12 to sell 100 personal computers to a Retailer whose place of business is in Chicago. The contract does not mention anything about the time or place of delivery. What are the delivery requirements for this contract?
A. At the Retailer’s place of business within a reasonable time from August 12.
B. At a convenient place so long as the Dealer notifies Retailer of the place and time of delivery.
C. At a reasonable place on August 12.
D. There is no obligation for the computer dealer to deliver the computers as this is not a valid enforceable contract because the terms are too vague.
27. Johnston Paints contracted in writing with Buyer to deliver 100 one-gallon cans of exterior house paint to Buyer on or before September 15. On August 15, Johnston informed Buyer via email that it will be unable to deliver the paint as agreed. Buyer demanded that Johnston perform the contract, but Johnston still refused and stated the refusal in a letter to Buyer. Which of the following best describes Buyer’s rights in this situation?
A. Buyer must treat the contract as breached on August 15.
B. Buyer must wait until September 15 to determine with certainty if there has been a breach before entering into another contract to purchase paint.
C. Buyer may treat the contract as breached on August 15 and enter into a contract with another paint supplier.
D. None of the above are correct; Buyer must file a lawsuit against Johnston so that court may determine if a breach of contract has occurred.
28. Which of the following statements by a salesperson would create an express warranty for a buyer?
A. “This refrigerator is a great value; you will not find a better deal.”
B. “This is the best TV we sell; I plan to buy one myself.”
C. “This car is the most reliable and safest vehicle on the road today.”
D. “This truck had the engine replaced last year.”
29. Charles received an offer from Seller that stated: “I will sell you my car for $8,500. You have 10 days to accept.” On day 4, Charles called Seller and stated he would pay $8,000 for the car; Seller refused to accept $8,000. Which of the following is true?
A. There is no contract; Seller is free to sell the car to another buyer.
B. Charles has 6 more days to consider Seller’s offer to buy the car for $8,500; Seller cannot sell the car to another buyer for 6 days.
C. If Seller changes her mind within 6 days, she can make Charles buy the car for $8,000.
D. If Charles later tells Seller by day 10 that he will buy the car for $8,500, a contract is automatically formed.
30. Buyer and Seller orally agree to a contract for the sale of 400 shirts at $10 per shirt. Seller fails to perform and deliver the shirts; Buyer sues. This contract is:
A. Enforceable because the Statute of Frauds does not ever apply to sales of shirts.
B. Unenforceable unless both parties are merchants.
C. Unenforceable because the contract is not in writing.
D. Enforceable; the Statute of Frauds is applicable to this agreement but oral contracts are binding if both parties are merchants.
Scroll down, please, to begin the essay portion of the exam.
Section II. Essay: 4 questions/40 points/10 points per question
Use the answer sheet at the end of the exam. Number each answer. Please do not recopy questions.
Answer each question in complete paragraphs; do not list or answer in phrases. None of these questions can be adequately/comprehensively answered in a single paragraph; it is important to be comprehensive, specific, and detailed in your answers.
Full points will be earned for answers that are accurate, well supported, sufficiently comprehensive, and appropriately cited.
Use APA in text citations and References, as appropriate but please do not use direct quotes. Use only classroom notes/comments and assigned reading or video materials as resources – this is all you need to complete the exam.
Please DO NOT use any outside, internet resources as they are often inaccurate.
1. 10 pts
Joan and Ron bought and paid for six dining room chairs from Hills Interiors (Hills). Joan and Ron drove their car to the Hills warehouse loading dock behind the store to load the chairs into their car. The loading dock attendant was helping another customer load furniture when Joan and Ron arrived at the dock. Joan and Ron waited about ten minutes, then told the dock attendant they would load the chairs themselves. The six chairs were sitting on the dock in plain sight so the attendant agreed. As soon as he was free, the attendant quickly came to help Joan and Ron load the last of the six chairs into their car.
When Joan and Ron unloaded the chairs at their home, the leg on one of the chairs was broken in transit. Joan and Ron returned to Hills with the damaged chair and requested that Hills replace it. They admitted the chair was not damaged when it was sitting on the dock before being loaded into their car. They further claimed that because the dock attendant was unavailable to load the chairs when they arrived at the dock, Hills should be responsible for the damaged chair. Joan and Ron stated they were not professional furniture handlers and should not have had to load the chairs themselves or be responsible for any damage.
Should Hills legally be responsible for the damage to the chair? Why or why not?
If you were the Hills warehouse manager, how would you handle this situation, and what would be your legal justification?
2. 10 pts
McAdams Company, a TV manufacturer and supplier in Minnesota, received an email offer from Discount TVs, a retailer in New York, stating:
“Please send 300 flat screen 32” Smart TVs manufactured by McAdams, to Discount TVs. Deliver to Discount TVs, 1100 Main St, Bluffton, New York by August 1, 2017. E. Smith for Discount TVs.”
McAdams replied by email:
“We accept your purchase offer and will send 300 TVs to your place of business in Bluffton, New York promptly. L. Martinez for McAdams Company.”
McAdams shipped 300 flat screen 36” Smart TVs at a price of $150 each to Discount TVs on August 28.
Upon receipt of the 36” TVs, Discount TVs emailed McAdams Company, stating:
“We ordered 32” TVs and received 36” TVs. We cannot use 36” TVs. Your order is incorrect.”
At this point, what options does Discount TVs have? What options does McAdams Company have?
3. 10 pts
Marty entered a cross country skiing marathon, sponsored by Stowe Hills Resort (Resort). Resort advertised the marathon as being a 10-mile ski course on cleared, groomed trails through a wooded area. During the marathon, Marty fell when he skied over a relatively small tree limb on the trail and broke his leg.
Resort claimed the tree limb was not on the trail when the marathon began and that it could not be responsible for something blowing onto the trail after the marathon began.
Is Resort be legally responsible to compensate Marty for his injury? Why or why not?
4. 10 pts
Sally bought a new SUV from a dealer, Machens, Inc. The SUV was manufactured by International Motors (IM). Sally drove her SUV without problems for 3 months. Shortly thereafter, while driving 60 mph (10 miles below the maximum speed limit) on the highway, the engine suddenly caught fire causing Sally to crash into the guard rail on the side of the highway and crash into a ditch. The car was a total loss, and Sally sustained a broken leg and second degree burns on both arms.
Sally wants to sue for her injuries.
A. What area of law is applicable to Sally’s legal claim and why/how is this area of law applicable?
B. What possible legal claims can Sally sue for to recover damages for her physical injuries and the loss of her car? Why?
C. What party(ies) can Sally sue and why?
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