BMGT 380 – Final Exam – Fall 2017
GOOD LUCK!!
Exam Instructions:
Open book exam: may use
textbook, class notes/lectures, class conferences (do not use the internet as
many legal sources are inaccurate; you do not need any material other than the textbook,
class notes/lectures, class conferences to complete the exam).
No time limit on exam.
Submit exam preferably
in word doc to assignment folder under “Final Exam”. ALLOW EXTRA TIME
TO POST PROPERLY. YOU ARE ENTIRELY RESPONSIBLE FOR CHECKING THAT EXAM POSTS
PROPERLY AND that you posted the correct file.
The exam is worth a
total of 100 points.
Section I. Multiple
Choice: 30 questions/60 points
USE THE ANSWER SHEET included at the bottom of this page for
answers; copy and paste it as is, no changes, please. Please do not copy Multiple
Choice questions to the answer sheet.
Put letter of correct
answer on the answer sheet at the bottom of this page.There is only one correct answer to each
question.
Each question is worth 2
points.
This is an application-oriented
exam; you will not find the answer to questions verbatim in the text. If
you believe a question is not covered in any of the assigned materials, you
have missed the issue and need to re-think.
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 Oregonresident,
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
