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Sample multiple choice questions
4. Jane applies to George, a distributor of radios manufactured by Sony, for a "dealer franchise" to sell Sony's products. Such franchises are revocable at will. George erroneously informs Jane that Sony has accepted the application and will soon award the franchise, that Jane can proceed to employ salesmen and solicit orders, and that Jane will receive an initial delivery of at least 100 notebook computers. Jane expends $ 5000 in preparing to do business, but does not receive the franchise or any computers. Jane sues George using a Section 90 (Reliance) of the Restatement theory. How much if anything is George liable to Jane for?
a. $5000 plus any lost profits Jane can prove she would have made.
b. $5000 plus reasonable profits, which may be presumed.
c. $5000 only -- not any profits, even if they could be proven
d. Nothing; there was no contract.
15. Jane is a professional real estate investor. She overhears at her club that Amalgamated Amusements plans to build a gigantic theme park east of the Swamplands National Park. Jane drives there the next day with a suitcase full of cash and buys 1000 acres from impoverished local swamp owners. When asked by local owners why she wants swamp land, she tells jokes and changes the subject. When Amalgamated announces its plan, Jane resells the land for profit of $1 million. The local swamp owners sue to void their contracts on grounds of fraud. Under common law principles, the local owners will probably
a. win because Jane deliberately avoided their legitimate inquires.
b. lose because Jane was not in a relationship of trust with them.
c. win because the amount of Jane’s profits was unconscionable in light of the poverty of the local owners
d. lose because theme parks are inherently dangerous.
24. The UCC does not adopt the common law view that parties may liquidate damages for breach so long as the amount stipulated is reasonable.
6. O contracts with C to replace the roof and water pipes of O’s house. The contract specifies that only “Burnt Sienna No. 2" tiles will be used on the roof. (O loves their distinctive shade of rusty orange). The contract also specifies only pipes made by the Temecula Pipe Company shall be used. (A friend of O owns the company, but C does not know this.) C does the work, but uses Burnt Sienna No. 1 tiles and pipe from the LA Pipe Company. Neither deviation from the contract was intentional, and neither has any effect whatever on the market value of the house. Burnt Sienna No. 1 is just as popular a color as Burnt Sienna No. 2. O just does not like it as much. LA Pipe is slightly better than Temecula pipe in quality. To remove the Burnt Sienna No. 1 roof tiles and replace them with No. 2 tiles would cost O $5000. To remove the LA pipe and replace it with Temecula pipe would cost O $9000. Under common law principles, how much will O probably be able to recover in damages?
7. As a general matter, contract
are not liable for damages caused by their breaches if they did not actually foresee those damages at the time the contract was formed.
8. M, a musician, promised to perform at P’s party for $1000. M normally charged $2000, the going rate. M never showed up, because he instead took the opportunity to play at a rally. His songs were recorded and M later sold them to Microsoft for $10,000. If P had already paid M $1000, P should be able to recover how much from M?
11. Which of the following statements best describes an important step in the evolution of contract law in English legal history?
a. Actions to enforce promises gave rise to actions to enforce debts.
b. Actions to recover lost property evolved into actions to enforce promises.
c. Actions for damages for incorrectly performed promises evolved into actions to enforce non- performed promises.
d. Actions to recover for trespasses evolved into
12. Blue Sky Securities fired E because she refused to answer falsely the questions of a federal investigator who was investigating allegedly fraudulent selling practices at Blue Sky. E is an at-will employee; there was no written employment contract. If E sues Blue Sky for the termination, her best argument probably would be that
a. the termination violated an implied contract with E.
b. the termination violated an implied-in-law covenant.
c. the termination violated the covenant of good faith and fair dealing.
d. the termination was contrary to public policy.
18. Which of the following is the best example of procedural unconscionability?
a. A wily prospector sells a cup of water for $1000 to a city slicker dying of thirst in the desert.
b. A furniture store sells an impoverished mother of five a $5000 audio system.
c. A car salesman leases an expensive car to an recent immigrant; the lease is very unfairly priced, very complicated, and the immigrant understands English poorly.
d. A vendor uses a cross-collateralization provision in a sales