76) Jana finds a home priced at $180,000 that she would like to buy. She is
concerned, however, about her ability to get a loan. Accordingly, she and
the seller reach agreement that Jana will buy the home if she can get a loan
for $180,000 within 45 days. What type of condition is this agreement?
a. An express condition.
b. A concurrent condition.
c. A condition precedent.
d. a and c.
e. a, b, and c.
77) When an employee breaches a fixed-term employment contract by quitting
before the end of the term, what can the employer recover as damages?
a. All amounts already paid to the employee under the contract.
b. Nothing, because courts do not order anyone to perform a job against his or
c. Only specific performance.
d. Only amounts paid to the employee for which the employee has not yet done
e. The costs of hiring a replacement employee plus any increase in salary paid
to the replacement employee.
78) The doctrine that places a duty on a non-breaching party to take reasonable
steps to reduce damages is called:
e. reciprocal duties.
79) Alice has a contract with a surgeon to have a medical procedure performed
on July 17. The surgeon notifies Alice on July 5 that he is in the Bahamas
and will be there until the end of August and will not be able to do the surgery. Which of the
following is true at this point?
a. Alice must give the surgeon 90 days in which to schedule the surgery after
b. There will be no breach until July 17.
c. If Alice contracts with another surgeon prior to July 17, and this second surgeon is aware of Alice’s original contract, the second surgeon has no obligation to perform.
d. Alice must wait until July 17, and if the surgeon does not perform the procedure, then Alice can contract with another surgeon.
e. Alice is free to contract with another surgeon.
80) A construction contractor entered into a contract to build a family room addition onto
Harry’s home for $25,000. In order to encourage timely performance, the agreement provided
that the contractor would be penalized $5,000 as liquidated damages for each day that the project
was late in getting finished. The contractor was 30 days late in finishing the project, but
otherwise met the terms of the agreement. What is most likely in this situation?
a. The liquidated damages clause would not be enforced due to its being excessive.
b. The liquidated damages clause would not be enforced because the parties
made a mutual mistake about when the contract would be finished.
c. The liquidated damages clause would be enforced only if it can be shown that the contractor has made that much in profits over the past six months.
d. The liquidated damages clause would be enforced.
e. The liquidated damages clause would be limited to $25,000, the amount of the contract price.
81) The highest price paid to date for the purchase of a domain name has been
82) Under the Uniform Computer Information Transactions Act, what is the effect
of putting additional terms into an acceptance delivered through an electronic agent?
a. The acceptance is treated as a counteroffer.
b. The additional terms are ignored and a contract is formed based on the original terms.
c. The acceptance is treated as a rejection.
d. The acceptance is treated is if it never occurred, leaving the original offer
e. The additional terms become part of the agreement unless objected to within
83) Licensing of informational rights can usually best be described as:
a. granting any rights to use the information, which can differ greatly in scope
b. the right to temporarily use the domain name of another.
c. granting limited rights to use that cannot be simultaneously granted to others.
d. a lease of tangible personal property to the licensee.
e. a sale of the underlying intellectual property rights.
84) Under the Uniform Computer Information Transactions Act, how long does a
party have in which to commence a cause of action?
a. Two years after the breach was or should have been discovered, but not more
than five years after the breach actually occurred.
b. One year after the breach actually occurred only.
c. One year after the breach was or should have been discovered, but not more
than five years after the breach actually occurred.
d. Two years after the breach was or should have been discovered, but not more
than three years after the breach actually occurred.
e. One year after the breach was or should have been discovered, but not more
than four years after the breach actually occurred.
85) The parol evidence rule would not allow which of the following items into
evidence when interpreting a written contract?
a. Evidence based on prior conduct in similar contracts between the parties to
explain the meaning of an ambiguous term in the contract.
b. Evidence of an oral statement regarding the contract price made when the
written contract was signed that was different from the price in the written
c. Evidence of the meaning of a term in the parties’ line of business that differs
from the meaning of that term in everyday language.
d. Evidence of a price change agreed upon after the contract was signed.
e. All the above would be allowed into evidence under the parol evidence rule.
86) For the firm offer rule to apply, who must be a merchant?
a. The offeree.
b. The offeror.
c. Both the offeror and the offeree.
d. Neither the offeror nor the offeree.
e. The offeree only if the offeree is a corporation.
87) Susan decides to buy new carpet for her home. She goes to Carpet City and
chooses the carpet she likes. As part of the deal, Carpet City agrees to install
the carpet. The carpet is installed while Susan is at work. When she returns
home and sees it, Susan immediately notices problems. The carpet is not the
same quality of carpet she ordered, and the color is off. Does the UCC apply,
and why or why not?
a. The UCC does not apply because it does not apply to mixed contracts of
goods and services.
b. The UCC does not apply because the deal with Carpet City included service
that is not covered by the UCC.
c. The UCC applies because the predominant part of the transaction between
Susan and Carpet City was the sale of goods.
d. The UCC does not apply because Susan and Carpet City did not agree in writ-
ing before the carpet was installed that the UCC would apply.
e. The UCC applies because it applies to service contracts as well as to con-
tracts for the sale of goods.
88) Which of the following situations creates a sale that falls under UCC sales law
a. Katherine contracts to pay Mike $880.00 to have her bedroom painted.
$800.00 is for labor and $80.00 is for the paint.
b. All of the above are UCC sales contracts.
c. Katherine makes a contract to purchase a shed that requires assembly. The
contract price is for $8,000.00 which includes $400.00 for labor.
d. Abc rentals rents a cement mixer to Katherine.
e. Dr. Mackey agrees to teach at yahoo university for 1 year.
89) Seller who is located in Atlanta, Georgia contracted to sell a shipment of
peaches to the 1910 fruit gum company located in Buffalo, New York. The
peaches were sold f.o.b. Buffalo. Seller delivered the peaches to the proper
carrier in Atlanta and the peaches were destroyed during shipping. Under
a. Seller and buyer share the risk of loss.
b. Seller bears the risk of loss and is responsible.
c. This is a trick question; goods can’t be shipped f.o.b. Buffalo.
d. Buyer bears the risk of loss and is responsible.
e. Neither the seller nor the buyer bear risk of loss, the carrier bears the risk of
90) Which of the following is true regarding a shipment contract?
a. Such contracts require the seller to bear the risk of loss to the goods during
b. It requires the seller to deliver conforming goods to the buyer by use of the
seller’s own trucks.
c. The risk of loss does not pass until the goods are tendered to the buyer at the
d. It requires the seller to deliver conforming goods to a specific destination.
e. It requires the seller to ship goods conforming to the contract to a buyer via a
91) Under Article 2A of the UCC, for which types of lease(s) is the risk of loss on
the lessor during the term of the lease?
a. Loss-shifting leases.
b. Both ordinary and finance leases.
c. Ordinary leases.
d. Finance leases.
e. Neither ordinary nor finance leases.
92) In Lindholm v. Brandt, when Malmberg sold Lindholm’s “Red Elvis” to
Brandt, the court found that:
a. Malmberg had been entrusted with the artwork and could pass the voidable
title to Brandt because Brandt qualified as a good faith purchaser.
b. Malmberg had been entrusted with the artwork and could pass the void title
to Brandt because Brandt qualified as a good faith purchaser.
c. Malmberg had stolen the artwork and could pass the void title to Brandt be-
cause Brandt qualified as a good faith purchaser.
d. Malmberg had been entrusted with the artwork but had a void title because
he breached the terms of the entrustment so he couldn’t pass good title to
e. Malmberg had stolen the artwork, so he couldn’t pass his void title to Brandt.
93) A destination contract requires that the seller:
a. assist the buyer in handling goods once received by the buyer.
b. give proper and adequate notice to the buyer.
c. deliver the goods to the buyer.
d. a and c.
e. b and c.
94) If a seller has delivered nonconforming goods that have been rejected by the
buyer, the seller has a right to cure:
a. only if the buyer agrees.
b. only if the contract specifically allows for cure.
c. under some circumstances, even if the original time for performance has
d. only if the time for performance has not yet expired.
e. only for 24 hours.
95) Which of the following statements is true regarding installment contracts?
a. To be an installment contract, the contract must state that each delivery is a
separate lot or words to that effect.
b. The buyer may reject the entire order for any nonconformity.
c. The buyer may reject the entire order only if the nonconformity in one shipment affects the value of the entire contract.
d. a, b and c.
e. a and c only.
96) Which of the following is true about a buyer’s right of inspection?
a. If not mentioned in the contract, the buyer has the right to inspect goods in a
reasonable time, place and manner once the goods have been accepted.
b. This right must be agreed to in the contract in order for it to apply.
c. If not mentioned in the contract, the buyer has the right to inspect goods in a
reasonable time, place and manner prior to accepting or paying for them.
d. This right exists even if not mentioned in the contract, and the buyer has the
sole right to determine the time and place the right may be exercised.
e. This right exists even if not mentioned in the contract, and the seller has the
sole right to determine the time and place the right may be exercised.
97) Which of the following is not necessary in order for the implied warranty of
fitness for a particular purpose to apply to a sale of goods?
a. The goods are purchased.
b. The buyer relies on the seller’s skill and judgment.
c. The seller knows or has reason to know of the buyer’s intended use of the
d. The seller is a merchant.
e. The seller states that the goods will serve the purpose of the buyer’s intended
98) What was the result in Shoshone Coca-Cola Bottling Company v. Dolinski, in
which the plaintiff became ill after consuming a soft drink with a dead mouse
in it and sued the manufacturer of the drink?
a. The defendant won because the plaintiff could not explain how the mouse got
in the drink.
b. Plaintiff won because he could prove negligence on the part of the defendant.
c. Plaintiff won because the defendant was held liable under the doctrine of
strict liability in tort.
d. The defendant won because it had been as careful as possible in bottling the
e. The defendant won because plaintiff’s drink was the only drink in the applicable lot or batch that was defective.
99) Which of the following is not a typical way that a manufacturing defect
a. Failure to properly check the quality of the completed product.
b. Failure to properly design the product.
c. Failure to properly assemble the product.
d. Failure to properly test the product.
e. Failure to properly engineer the product. Final Examination 25 Business Law
100) In Sta-Rite Industries, Inc.v. Peterson, the court found Sta-Rites pool drain
defectively designed based on which of the following except:
a. there was no shut off mechanism.
b. it was a screw down design that frequently came loose.
c. the 300 to 400 pounds of pull was excessive and unnecessary for the product.
d. there had been over 20 prior suction related accidents with Sta-Rite drain
covers and pumps.
e. all of the above.
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