Posted: January 7th, 2024

umuc BMGT380 final exam latest 2016 may5th

Final
exam
1. On Tuesday, Jon offered to sell his
CD collection to Sandy for $100. Sandy replied, "I'm interested. I'll
think it over and let you know Thursday whether I want to buy the CDs." On
Wednesday, Jon agreed to sell the CDs to Jason, and Jason immediately gave Jon
a letter that stated:
"Jon, I will buy your CD
collection for $100. As we agreed, I will pay you on Friday when I pick up the
CDs. Yours truly, Jason."
Upon Jon's receipt of this letter on
Wednesday, what best describes Jon’s contract agreement(s)?
a)
By forming an agreement with Jason, Jon breached his contract with Sandy
because he did not effectively revoke his offer to Sandy.
b)
Jon has formed contracts with both Jason and Sandy because Jon did not
effectively revoke his offer to Sandy and created an enforceable written
agreement with Jason.
c)
Jon and Jason have formed a valid, enforceable contract; Jon’s offer to Sandy
was properly revoked.
d) Jon effectively revoked his
offer to Sandy, but has not formed an enforceable contract with Jason because
Jason has not yet paid for the CD collection.
2. Mac and Rhamad signed a business
contract with a clause that provides that if a dispute arises they must 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, Mac filed a lawsuit against Rhamad. Most likely the
court will:
a)
Hear the lawsuit because Mac cannot be compelled to submit to arbitration; he
is constitutionally entitled to a jury trial if he requests a trial.
b)
Conduct a hearing, then order a remedy without compelling Mac to submit to
arbitration or to a jury trial.
c) Compel Mac to submit to
arbitration to resolve the dispute.
d)
Hear the lawsuit in a trial, then compel Mac to submit to arbitration, if Mac
is not satisfied with the trial decision.
3. Roxy, while driving through Wyoming
to her home in Montana, accidentally lost control of her car and drove it
through a window into a store owned by Colt. Colt sued Roxy in a Wyoming court
for damages to his store.
Will the Wyoming court likely be able
to exercise jurisdiction over Roxy?
a)
No, because Wyoming has no in personam(personal)
jurisdiction over Roxy, and cannot exercise its long arm statute only in cases
involving automobile accidents.
b)
No, because Wyoming has no in personamjurisdiction
over Roxy, and cannot justify minimum contacts in this case.
c)
Yes, Wyoming can exercise jurisdiction in this case because there is a federal
question involved due to the diversity of citizenship between the parties.
d) Yes, because Wyoming can
assert in personamjurisdiction over
Roxy under the minimum contacts test.
4. Assume a salesperson intentionally
made one of the following statements - knowing that the statement was false -
to a customer considering a purchase. Which statement could create liability
for fraudulent misrepresentation if the customer made the purchase?
a)
“In my opinion, this car is in flawless mechanical condition.”
b)
“This crane will probably lift about 10,000 pounds.”
c)
“This car is a real gem.”
d) “This is an original painting
by the artist, Pablo Picasso.”
5. Ram was walking down the sidewalk
by a construction project site in a downtown area. The project was owned and
operated by Modern Construction, Inc. and was surrounded by orange plastic
fencing typically used for construction projects. Ram stopped to watch a metal
beam being lifted by a crane on the construction site. As the beam swung
through the air, Ram thought it was going to fall and jumped forward quickly
off the sidewalk and into the construction project property, falling into and
smashing the orange plastic fencing. As Ram landed inside the construction
project, the beam fell near Ram. The beam did not hit Ram but some rocks were
thrown onto Ram as the beam fell, cutting his arm so that it required 35
stitches.
If Ram sues Model Construction for
negligence, the likely result will be that Ram will:
a) Lose, because he assumed the
risk as a trespasser on the construction site and trespassers can never recover
damages.
b)
Lose, because pedestrians are always liable under contributory negligence in
such cases involving trespassing.
c)
Win, because it is always foreseeable that a beam could fall on a rescuing
pedestrian.
d)
Win, if the beam fell because of Model Construction’s negligence.
6. Kim carelessly parked her car on a
steep hill, leaving the car in neutral and failing to engage the parking brake.
The car rolled down the hill and knocked down an electric line. The sparks from
the broken line ignited a grass fire that spread to a barn several yards away.
The roof of the burning barn fell and damaged a passing car owned by Ray. Can
Ray likely recover damages from Kim under ordinary negligence?
a)
Yes, because Kim was negligent in parking the car.
b)
Yes, because Kim set in motion the chain of events that resulted in damage to
Ray’s car, even though Kim did not directly hit the car.
c)
No, because of the unforeseeable intervening force doctrine.
d)
No, regardless of Kim’s negligence in parking the car as her negligence was not
the proximate cause of the accident and harm that occurred to Ray.
7. Lee sued Don in negligence. Lee’s
losses total $100,000. Under a contributory negligence system, if Lee is found
to be contributorily negligent for her own injuries, what damages will Lee like
recover from Don?
a)
None.
b)
$100,000.
c)
$100,000, less the percentage of fault (e.g., 20%, 60%, etc.) for which Lee was
responsible.
d)
$100,000, less the percentage of fault for which Lee was responsible, so long
as Lee was not more than 50% responsible for the injuries.
8. Ralph, a 16-year old minor, is
manager for the high school football team. Ralph signed a contract to purchase
alcoholic beverages from Liquormart, Inc. for the team party. This contract is:
a)
Void as a matter of law because it is illegal to sell alcohol to minors by
state law.
b)
Void only if Ralph misrepresented his age and told Liquormart he was an adult.
c)
Valid and enforceable, but Ralph has the right to disaffirm because he is a
minor.
d)
Valid and enforceable, if Liquormart knew that Ralph was a minor.
9. Which of the following activities
may involve the use of a contract, and/or constitute a sales contract?
a)
Purchasing medications from a pharmacy.
b)
Hiring a contractor to make home repairs.
c)
Purchasing insurance policies from an insurance agent.
d)
Selling books to customers in a bookstore.
e)
All of the above.
10. Jim and Kiley are architects and
general partners of JK Designs. Jim and Kiley supervise Luc, an employee of JK
Designs. As partners, Jim and Kiley
a)
Are personally liable for any/all tort(s) committed by Luc.
b)
May be liable for malpractice, but not torts, committed by Luc while Luc is
working within the scope of his job at JK.
c)
May be liable for torts committed by Luc while Luc is working within the scope
of his job at JK.
d)
Have no liability for any torts committed by Luc at any time.
11. Kisha operates River Valley
Soccer, an athletic equipment shop, as a sole proprietorship. Taxes on the business’s
income are paid by
a)
No one; since it is a sole proprietorship there are no business taxes.
b)
Kisha as the sole owner.
c)
The state or federal government if Kisha holds a Small Business Administration
loan acquired to start her business.
d)
The business entity of River Valley Soccer, not Kisha personally.

12. Distinguish which of the following
is an advantage of limited liability companies (LLCs) over corporations.
a)
Only one member of a LLC must have unlimited liability as compared with corporations
in which all shareholders have unlimited liability.
b)
LLCs can be formed without any specific steps being taken by the owners as
compared with corporations that must file Articles of Incorporation with the
State.
c)
In most cases, a LLC can choose whether to be taxed as a partnership or
corporation, as compared with corporations that are subject to double corporate
taxation.
d)
LLCs can choose whether to sell shares publically to investors, as compared to
private corporations that must sell shares publically to investors.
13. Pete, who collects antique cars,
hired Ann as his agent to find and purchase a 1965 Ford Mustang on his behalf.
Ann found a Mustang just like Pete wanted, but Ann fell in love with the car
and purchased it for herself.
Which of the following illustrates
Ann’s liability, if any, in her duty as agent to Pete in this situation?
a) Ann has not violated the duty of loyalty to Pete;
she can find another Mustang for him.
b) Ann has not engaged in self-dealing because she did
not purchase the Mustang with Pete’s funds.
c) Ann usurped an opportunity for Pete, but has not
violated the duty of loyalty to Pete by competing with Pete’s interests.
d) Ann violated the duty of loyalty to Pete by
competing with Pete’s interests, and has usurped an opportunity for Pete.

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Answer
questions 14-15 regarding the following scenario:
Scenario:
Jones, a resident of Arizona, booked reservations for a vacation at World
Hotels, Inc. in Cabo Mar, Mexico. World Hotels is an international hotel chain
incorporated in Delaware with hotels in North and South America; World Hotels
has no hotels in Arizona but does advertise and book reservations for all its
hotels over the internet, in any state. World Hotels has booked reservations in
the past with residents of Arizona.
While
a guest in the hotel in Cabo Mar, Jones was walking across the hotel lobby, and
slipped and fell on the wet marble floor that had been just washed by the
maintenance staff. The staff had placed a “wet floor” sign on the lobby floor
on the sit de wall of the lobby.
Jones
was taken to the nearest Mexican hospital where surgery was necessary to place
a pin in his broken leg. Anxious to return home and see his regular doctor,
Jones flew out of Mexico shortly after the surgery. He required two plane seats
and an ambulance to meet him at various airports. His health insurance would
not cover his hospital stay in Mexico as it was located outside the U.S. When
back in Arizona, Jones was unable to work for 8 weeks and required another
surgery to remove the pin. He also required several weeks of physical therapy.

14. Jones wants to sue World Hotels,
Inc. for negligence for $450,000 to recover all his medical expenses in Mexico
and the US; for $50,000 for the cost of the plane trip from Mexico to Arizona,
the 2 plane seats and ambulance costs in various airports; $10,000 for 8 weeks
of lost wages; and $50,000 for pain and suffering resulting from the injury.
Can he sue in federal court?
a)
Yes, because federal court always has jurisdiction over citizens of different
states.
b)
No, because federal court does not have jurisdiction in cases that do not
involve federal laws.
c)
Yes, because the federal court may have jurisdiction over citizens of different
states and the lawsuit involves damages greater than $75,000.
d)
No, because the federal court has no jurisdiction over an accident that
occurred in Mexico.

15. It would be easier for Jones to
bring the lawsuit in Arizona state court, but he wonders if the court can get
World Hotels to come to Arizona. Can the Arizona state court impose
jurisdiction over World Hotels to bring the company to court in Arizona?
a)
No, because the subject of the lawsuit took place in a foreign country.
b)
No, because the corporation does not have sufficient minimum contacts with
Arizona to allow the Arizona court to use the long arm statute to establish
jurisdiction in Arizona.
c)
Yes, because the Jones is a resident of Arizona and he is the plaintiff in the
lawsuit.
d)
Yes, because World Hotels has sufficient minimum contact with the state of
Arizona to justify the court’s use of the long arm statute.

16. Dan went to
Doctor to have an x-ray. Dan did not sign a written contract, and Dan and
Doctor did not make an oral agreement regarding the x-ray. When Doctor billed
Dan $500 for the x-ray, Dan refused to pay. Doctor sued Dan to recover the
$500. Which of the following is true about Doctor's lawsuit?
a)
Doctor can recover under the quasi-contract theory of promissory estoppel.
b)
Doctor can recover under an implied contract theory.
c)
Doctor cannot recover because there was no express contract.
d)
Doctor cannot recover because Dan did not give consideration for the bargain.

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17. Reg offered
to sell his motorcycle to Thelma for $8,000. Thelma replied, "Your price
is too high. I will purchase your motorcycle for $7,000". Reg agreed and
they committed their agreement to writing. This transaction can be
characterized as:
a)
An enforceable contract because Reg's acceptance of Thelma's offer was a
clearly communicated acceptance.
b)
An enforceable contract because Thelma's counteroffer was less than Reg's
original offer
c)
An unenforceable contract because Thelma's offer was not the mirror image of
Reg's original offer as is required under common law contract rules.
d)
An unenforceable contract unless either Reg or Thelma is a merchant, as defined
by the UCC, because sale of personal property contracts are valid only if one
of the parties to the contract is a merchant.

18. A ordered
100 19-inch color TV sets from B, and requested prompt shipment of the goods. B
promptly shipped to A 100 21-inch color TV sets. Prior to shipment, B did not
notify A that he was shipping nonconforming TVs as an accommodation. Assuming
both A and B are merchants, under UCC rules, in this case:
a)
There is no valid acceptance by B; shipping nonconforming goods acts as a
counteroffer, and thus, cannot constitute an acceptance or create a valid,
enforceable contract.
b)
Although B shipped nonconforming TVs, A is bound to pay the reasonable value of
the 21-inch nonconforming TV sets because B's shipment constituted a valid
acceptance, and a binding contract was formed at the time the goods were
shipped.
c)
Although B shipped nonconforming TVs, if A accepts and later sells the 21-inch
TVs, A has validly accepted the nonconforming goods and is bound to pay B
reasonable value for the 21-inch TVs.
d)
There is no contract because B’s acceptance (by shipping the goods) is not a
mirror image of A’s offer.
19. 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.

20. Leon, a bank
vice president, joined Fitness Center, Inc. (FC). He signed a contract stating,
among other things, an exculpatory clause that FC…
“shall not be liable for any claim, demand,
cause of action of any kind whatsoever for, or on account of death, personal
injury, property damage or loss of any kind resulting from or related to
Member’s use of facilities or participation in any sport, exercise or activity
within the club premises…”
Leon sustained
head injuries when a treadmill on which he was walking collapsed at FC. Leon
sued FC for his injuries. The court most likely will rule:
1.
In favor of Leon because the exculpatory clause is against public
policy.
2.
In favor of Leon because the exculpatory clause is too broad in
scope.
3.
In favor of FC because the exculpatory clause is not unconscionable
under the circumstances.
4.In favor of FC because it
had a valid enforceable contract with Leon as Leon knowingly signed the
contract.
21. Supermarket
offered to buy 1000 boxes of yogurt from Foods Co. The offer did not state a
specific delivery date. 9 weeks later, Supermarket still had not heard from
Foods, nor had Foods shipped the goods. At this point, Supermarket:
a)
Can do nothing but wait to hear an acceptance or rejection from Foods before
Supermarket can revoke the offer.
b)
Can assume that Foods does not intend to accept the contract and is free to buy
to yogurt from another supplier.
c)
Must accept the goods when they arrive, unless Supermarket has relocated.
d)
Must accept the goods when they arrive unless Foods has clearly rejected the
offer.
22. Ed and Nora
signed a contract that included a statement, “No evidence of oral negotiations
may be used to change the terms of this contractual writing.” Later Ed sued
Nora for a breach of contract. In court, Nora testified that she did not breach
their agreement because, after signing the written contract, she and Ed orally
agreed to change the contract terms. Nora’s testimony will:
a)
Be admitted by the court as evidence that Nora did not breach the contract.
b)
Be admitted as a valid exception under the Parol Evidence Rule.
c)
Be admitted if Nora is a minor because the Parol Evidence Rule does not apply
to contracts with minors.
d)
Not be admitted under the Parol Evidence Rule.

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23. A city
ordinance permits street vendors to operate only within certain commercial
areas of the city to prevent dangerous traffic congestion. The street vendors
sued the city claiming that the restrictions were a violation of their equal
protection rights as other businesses are not restricted to operating only in
certain commercial areas within the city.
How would you
classify the ordinance?
a).
Constitutional; because the city has a justifiable purpose in enacting the
ordinance, it does not violate the equal protection rights of street vendors.
b).
Constitutional; because street vendors are private businesses, they are not
protected by the equal protection clause of the 14thAmendment.
c).
Unconstitutional; the ordinance unduly discriminates against street vendors as
compared to other business owners and thus, violates the vendors’ equal
protection rights.
d).
Unconstitutional; privately owned vendors, unlike public businesses, have a
constitutional right to conduct business in any commercial area of their
choice.

24. Charlie
Customer bought an airline ticket on BartAir through Tina Travel Agent.
Identify the
legal relationship of Charlie, BartAir and Tina regarding this transaction.
a). Charlie is the principal; Tina is his agent
representing him with BartAir.
b). BartAir is the principal; Tina is its agent
in the sale of the airline ticket to Charlie.
c). Tina is not the agent of BartAir or Charlie,
but Tina’s employer, the travel agency, is the agent for Charlie.
d). Tina is the agent for both BartAir and Charlie.

25. What is the
burden of proof in a civil trial?
a)
Beyond a reasonable doubt.
b)
By a preponderance of the evidence.
c)
Beyond no doubt.
d)
There is no burden of proof.

Essay
(10 essays; each essay is worth 5 points):
1. Refer to the scenario for Multiple Choice
questions 14-15 above to answer the following essay question #1 only:
Jones
sued World Hotels, Inc. for negligence to recover damages for his injuries
resulting from the fall in the Cabo Mar hotel. Will Jones likely be successful
in the negligence lawsuit against World Hotels? Explain fully why or why not.

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Dan,
Fran and Stan want to establish a bike sales and rental shop. Dan and Fran will
be actively involved in managing the business operations, and Stan is investing
most of the money. The 3 want to use a form of business organization that will
give limited liability to each of them. Discuss what would be the best type of
business organization to limit their liability, and why?

2.
Compare and contrast the rights and possible liabilities for a merchant selling
goods in “As Is” condition with the rights and possible liabilities for selling
goods with an express warranty stating, “This product is quality Grade A”.

3.
Aaron plans to open Aaron’s Pet Supplies, a pet supplies outlet, and plans to
hire 2 part-time employees. Aaron will invest only his own money in the
business. He does not expect to make any profit for at least 2 years and to
make very little profit for the first 3 years after the first 2 years. He does
expect to make a profit eventually.
Which
form of business organization is most appropriate and easiest for Aaron to use
in opening his pet store – and why?
.

4.
There are extensive federal regulations governing airplanes and pilots. Assume
that the state of New York passed a statute containing numerous requirements,
some conflicting with federal regulations, covering operation of airplanes and
licensing of airplane pilots.
If
the New York state statue is challenged as being unconstitutional, what is the
likely result? Describe the applicable law and rationale for your conclusion.
 

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5.
Ted was hired by In Flite, Inc. to purchase an airplane on its behalf. Without
mentioning that he was making the purchase on behalf of the principal, In
Flite, Ted bought a Cessna 310 from Sam. 2 weeks later, In Flite declared
bankruptcy and cannot now buy the airplane.
Compare
and contrast In Flite’s liability under the contract to purchase the Cessna
with Ted’s liability under the contract to purchase the Cessna.
 

6. Mountain View Mall hired Nigel to act as Santa
Claus in the mall. After a tough work day, Nigel stopped in a bar in the mall
and drank 6 beers. Driving home, still wearing his Santa suit, Nigel hit a
Marty, a pedestrian and severely injured her, when Marty darted between 2
parked cars in the middle of a block and ran in front of Nigel’s car.
Analyze and explain all potential liabilities of
Mountain View Mall and Nigel for the pedestrian’s injuries.
 
 

ee
7.
For several years, Agnes had been agent for Pepe for maintaining Pepe’s antique
piano collection, including sale and purchase of antique pianos. Agnes recently
sold one of Pepe’s pianos and kept some of the money for herself. Soon
thereafter, Agnes declared bankruptcy. At about the same time, the State
notified Agnes that she had sold, within the past year, the maximum allowable
number she was permitted to sell without being required to obtain a dealer’s
license. Two weeks later, Pepe died.
Analyze
and describe the legal effect of each of these events on the agency-principal
relationship:
1. Agnes’s keeping for herself the
proceeds from the sale of a piano;
2. Agnes’s bankruptcy;
3. The state requirement that Agnes
obtain a dealer’s license;
4. Pepe’s death.

 

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8.
Fifty CPAs together want to form a new firm. They want to use a business
organization form that will provide each of the 50 owners of the new firm with
limited liability.
Analyze
and describe the business form(s) that will provide the new owners with limited
liability.
I 

9.
Scenario: Sam's Beauty School is a privately owned beauty school that trains
cosmetologists to earn their cosmetology license to become hair stylists and
colorists. Sam's is open to the public for all hair services; students perform
hair services for clients under the supervision of licensed cosmetologists that
work at Sam's.
Jan
went the Sam's to have her hair colored dark brown as she had done many times,
although this was Jan's first time as a client at Sam's. Tom, a student trainee
at Sam's, colored her hair. Jan's hair turned green and fell out within 24
hours. Jan had never had any problems with hair color previously.
Jan
sued Sam's for negligence. Who wins and why?

 

10.
Scenario: Following 2 years of research and an investment of substantial
funding, Coastal Company (CC) developed a new product that will produce
substantial profits for CC. CC learned that a competitor, National Sales and
Marketing, Inc. (National) made and began to sell a nearly identical product to
CC's new product. CC learned from a reliable source that National paid a CC
employee to obtain the plans for CC's new product when it was in the
development states.
A.
Under what legal claim could CC sue National, and why?
B.
If CC does sue National under this legal claim, what is the likely result and
why?

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