EXAM 2 REVIEW – CH 7-10&13 – BUS LAW


Multiple Choice

Identify the letter of the choice that best completes the statement or answers the question.


  1. Jay tells Kim that he will buy her textbook from the last semester for $80.  Kim agrees.  Jay and Kim have
    1. an express contract
    2. an implied-in-fact contract
    3. an implies-in-law contract
    4. a quasi contract
  2. George agrees to deliver fifty MP3 players to Harry’s E-Store.  George delivers but Harry does not pay.  To recover the price, George can collect from Harry on the basis of their
    1. express contract
    2. implied-in-fact contract
    3. implied-in-law contract
    4. quasi contract
  3. Sam and Tiffany enter into an implied-in-fact contract.  The parties’ conduct

a.       defines the contract’s terms.

b.       finds the contract’s facts.

c.       terminates any unintended consequences.

d.       undercuts any terms based on facts.

  1.  Lou claims that he and Mira entered into an implied-in-fact contract.  To establish this contract, it is not necessary to show that

a.       a court imposed a promise in the interest of fairness.

b.       Lou expected to be paid for providing services or property.

c.       Lou provided Mira with services or property.

d.       Mira failed to reject services or property provided by Lou.

  1.  Federal Oil Company and Great Apartments, Inc., sign a contract in which Federal agrees to deliver heating oil in exchange for Great’s promise to pay for it.  Federal delivers the oil.  The contract is

a.       executory on the part of Federal.

b.       executory on the part of Great.

c.       fully executed.

d.       neither executed nor executory on the part of either party.

  1. Curt promises to buy illegal copies of CDs and DVDs from Donna, who promises to deliver on May 1.  These promises are most likely

a.       enforceable.

b.       valid.

c.       void.

d.       voidable.

  1. Delta Electronics, Inc., makes an offer to the owners of Eagle Computer Corporations to buy the entire company.  The power to revoke the offer rests with

a.       Delta and Eagle together only.

b.       Delta or Eagle.

c.       Delta, the offeror, only.

d.       Eagle, the offeree, only.

  1. Ace Sales Corporation plans to move to a new office.  Ace offers to sell its office furniture to Beta Marketing, Inc., but does not specify a time for Beta to respond.  The offer expires

a.       after a reasonable period of time.

b.       after thirty days.

c.       after thirty minutes.

d.       never.


Fact Pattern 7-1

Sally contracts with Tasty Pizza Company to deliver its products.  Both parties change their minds, however, and inform each other that they would like to cancel the contract.


  1. Refer to Fact Pattern 7-1.  The next day, Sally changes her mind and again offers to deliver Tasty’s products.  Tasty is willing to deal, but for a new price.  Sally and Tasty

a.       may agree to a new contract, but it cannot include a new price.

b.       may agree to a new contract that includes a new price.

c.       must perform their original contract.

d.       must perform the part of their original contract that is executory.

  1. Chris, a minor, signs a contract to purchase alcoholic beverages for Dine & Drink, his parents’ restaurant.  The contract is

a.       valid but may be disaffirmed.

b.       valid but may not be disaffirmed.

c.       void as a matter of law.

d.       void unless it is also signed by Edie, the manager of Dine & Drink.

  1. Doug, a minor, signs a contact to buy a truck from Eagle Autos by misrepresenting his age to be twenty-one.  When Doug fails to make the payments, Eagle sues, and Doug tries to disaffirm the contract.  Doug

a.       can return the truck and avoid any further liability.

b.       can return the truck but must make any outstanding payments.

c.       cannot return the truck.

d.       is not required to return the truck due to his minority.

  1. Ruth, a minor, charges groceries at Sam’s Mart.  Two days later, Ruth disaffirms the purchase.  Ruth owes Sam’s Mart

a.       the reasonable value of the groceries.

b.       the retail value of the groceries.

c.       the wholesale value to the groceries.

d.       nothing.

  1. Dave signs a contract with Ellen to kill Frank.  Ellen pays Dave but he refuses to perform.  Ellen can

a.       enforce the contract only if she is not going to participate in the crime.

b.       not enforce the contract.

c.       successfully sue Dave for the return of the money paid.

d.       successfully sue Dave to perform.

  1. Joy and Karl contract for the sale of Joy’s prize-winning show dog for $1000.  Unknown to either party, the dog has died.  Karl is

a.       entitled to another dog of equivalent value.

b.       not required to pay due to the mutual mistake.

c.       not required to pay due to the unilateral mistake.

d.       required to pay because he assumed the risk the dog might die.

  1. Mike and National Computer Service (NCS) enter into an oral contract under which Mike agrees to program computers for NCS for two years.  This contract is

a.       enforceable by Mike only.

b.       enforceable by NCS only.

c.       enforceable by either party.

d.       not enforceable.

  1. Ann sells an apartment building to Beth with a promise to repair the roof, which violates the local housing code, within six months.  One year later, Ann sends Carl, a carpenter, to fix the roof.  Beth orders Carl to leave and refuses to make further payments to Ann, who files a suit against Beth.  According to the court’s reasoning in case 9.2, Kim v. Park, Ann’s late attempt to fix the roof is most likely

a.       a material breach.

b.       complete performance.

c.       excused by Beth’s refusal to make further payments.

d.       substantial, but not complete, performance.

  1. Digital Data Company and E-Services, Inc., enter into a contract.  A material breach of their contract will occur

a.       if a party’s performance is complete, but not substantial.

b.       if a party’s performance is substantial, but not complete.

c.       if a party’s performance is neither complete nor substantial.

d.       only if a party completely fails to perform.

  1. Mona contracts to repair a computer for New Data, Inc. (NDI).  Mona knows that without the computer, NDI will lose a sale.  Mona does not perform as promised.  NDI files a suit against Mona.  As consequential damages, NDI can recover

a.       the cost of a new computer.

b.       the difference between Mona’s price and the actual cost of repair.

c.       the loss of profit from the lost sale.

d.       nothing.

  1. Interstate Purchases, Inc. (IPI), contracts to buy Jiffy Corporation’s assets.  Jiffy breaches the contract. IPI files a suit against Jiffy, seeking a variety of remedies.  The doctrine of election of remedies has been eliminated in contracts involving sales of

a.       goods.

b.       intellectual property.

c.       real property.

d.       services.

  1. Digital Products Company includes a shrink-wrap agreement in a transaction with Eagle Engineering Corporation.  A shrink-wrap agreement is an agreement whose terms are expressed

a.       in a code at the end of a computer program.

b.       inside a box in which goods are packaged.

c.       in small print at the end of a paper contract signed by both parties.

d.       on a computer screen.

  1. Leo and Mona enter into a contract.  A dispute later arises over a particular term.  The law governing contracts requires that for that term to be given effect, both Leo and Mona must have read

a.       all of the terms.

b.       at least the term in dispute.

c.       most of the terms, including the term in dispute.

d.       none of the above.

  1. Kay and Lucy enter into a contract that falls within the provisions of the UETA.  Under the UETA, “an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record” is

a.       an e-document.

b.       an e-signature.

c.       an e-transaction.

d.       a record.

  1. Ann, a seller, and Bill, a buyer, make a deal over the Internet that involves e-signatures.  Under the E-SIGN Act, for the e-signatures to be enforceable

a.       both parties must have agreed to use e-signatures.

b.       neither party must have agreed to use e-signatures.

c.       only Ann must have agreed to use an e-signature.

d.       only Bill must have agreed to use an e-signature.

  1. Silicon Computers manufactures hard drives.  Dave discovers that his Silicon drive is defective.  Dave sues Silicon for product liability based on misrepresentation.  To win, Dave must show that

a.       Dave knew and appreciated the risk caused by the defect.

b.       Dave suffered an injury caused by the defect.

c.       the “defect” was a commonly known danger.

d.       Silicon sold the drive to Dave.

  1. Best Appliances, Inc., makes consumer appliances.  Best could be liable for a design defect if there is a foreseeable risk of harm posed by a product and

a.       the omission of a warning renders the product not reasonably safe.

b.       there is a lack of care in making the product.

c.       there is a reasonable alternative design.

d.       none of the above.

  1. Quality Tools Corporation (QTC) makes hammers and other tools.  Rita is injured while using a QTC hammer.  She sues the company for product liability based on negligence.  To defend successfully against the suit, QTC may show that

a.       QTC did not sell the hammer to Rita.

b.       Rita misused the hammer in a foreseeable way.

c.       Rita’s injury resulted from a commonly known danger.

d.       the hammer was not altered after QTC sold it.

  1. Better Products Corporation makes and markets a variety of household goods.  All Better Products’ product labels must identify

a.       the address to which complaints can be directed.

b.       the federal agency that inspected the product.

c.       the manufacturer.

d.       the percentage of the product that consists of artificial substances.

  1. Jack receives unsolicited merchandise in the mail.  Jack

a.       may keep the merchandise without any obligation to the sender.

b.       must return the merchandise within five days to avoid payment.

c.       must return the merchandise within fifteen days to avoid payment.

d.       must return merchandise within thirty days to avoid payment.

  1. Beth borrows $20,000 from City Bank to repair her home and to buy a car.  Beth buys a stereo from Downtown Store in a transaction financed by the seller.  If these parties are subject to the Truth-in-Lending Act, Regulation Z applies to

a.       the car loan only.

b.       the home repair loan only.

c.       the retail installment sale only.

d.       the car loan, the home repair loan, and the retail installment sale.

  1. Kent receives an unsolicited credit card in the mail and tosses it on his desk.  Without Kent’s permission, his roommate uses the card to buy a new personal computer for $1000.  Kent is

a.       liable for $1000.

b.       liable for $500.

c.       liable for $50.

d.       not liable for any amount.