1) In general, what is the effect of one party being mistaken about the subject matter of
a contract?
a. The mistaken party can rescind the contract.
b. Either party can rescind the contract, and the mistaken party can recover damages.
c. Neither party can rescind the contract or recover damages.
d. Either party can rescind the contract and/or recover damages.
e. Either party can rescind the contract.
2) In Krysa v. Paine, where Paine’s Car Company was found to have committed fraud
in the sale of a truck to Krysa, what did the court rule regarding the punitive damages
award?
a. Punitive damages are allowed at 9:1 in cases involving personal injury but in con-
tracts must adhere to a 3:1 ratio.
b. Punitive damages are limited to 9:1 in all cases.
c. Punitive damages should never have a cap or their function as a deterrent and punish-
ment would be lost.
d. Punitive damages are not available in a fraud action based on a contract.
e. Punitive damages of 27:1 are permitted in cases of extreme fraud.
3) The knowledge of a statement’s falsity, or the “guilty mind,” in a fraud in the induce-
ment case is also known as:
a. parol knowledge.
b. justifiance.
c. reliance.
d. scienter.
e. guilty intent.
4) Andre has made a statement that the average person would realize is puffery. Andre
is guilty of:
a. duress.
b. fraud.
c. innocent misrepresentation.
d. undue influence.
e. nothing.
5) In Wilson v. Western National Life Insurance Company, involving the party who lied
allegedly regarding prior drug abuse in order to obtain life insurance, what was
the holding of the court when the party later died from a drug overdose?
6) Undue influence is characterized by one party being put at a disadvantage in a con-
tract due to:
a. a party taking advantage of superior knowledge about the subject matter in a contract.
b. a party taking advantage of a fiduciary relationship.
c. a party taking advantage of the other party’s legal circumstances.
d. a party taking advantage of economic advantage in a transaction.
e. a party taking advantage of it being less urgent for that party to reach an agreement.
7) If a judge rules that a party has lost its case because of the Statute of Frauds, the
judge has essentially stated that:
8) Frank had a bicycle that he advertised for sale, honestly believing it to be a 1999 model even though it was actually a 1996 model. There were significant improvements in the frame material, not readily apparent, made between 1996 and 1999 to this model bicycle. The buyer believed Frank’s statement that it was a 1999 model, and was excited to be getting a model incorporating the improvements. After discovering that the bike was actually a 1996 model, the buyer could avoid the contract on the basis of:
a. unilateral mistake.
b. fraud.
c. mutual mistake.
d. B and C.
e. none of the above.
9) The owner of a gym tells Ruppert that if he joins the gym for a year and hires a per-
sonal trainer, his body will be more attractive to women and his life will change for-
ever. Ruppert joins and hires a personal trainer, but otherwise his life remains the
same. The statements of the gym owner could be described as:
a. statements of fact.
b. statements of opinions.
c. predictions about the future.
d. both B and C.
e. A, B and C.
10) Which of the following is the false statement?
11) When there has been an assignment of rights under a contract, who has a duty to
notify the obligor of the assignment?
a. The assignor.
b. The assignee.
c. Both the assignor and the assignee.
d. Neither the assignor nor the assignee.
e. Whichever party is nearer the obligor geographically.
12) When an obligor transfers her obligation to perform a contract duty to another, this is
known as a(n):
a. delegation.
b. accord.
c. denigration.
d. assignment.
e. stipulation.
13) When there is an accord and satisfaction, when are the duties under the original con-
tract discharged?
14) Which of the following is true?
15) WorldRest Hotels has contracted with QuickBuild Construction to build a 650-bed
hotel in Downtown Dallas. Marty has entered into a lease agreement for retail space
in an adjacent building to open a gift shop catering to the hotel guests. QuickBuild
was aware of Marty’s lease agreement. QuickBuild breached its contract with WorldRest by not completing the hotel until seven months after the contractual due date.
Because the hotel was late opening and there were seven months when the hotel had
no guests, Marty lost considerable profits in the retail shop. Marty has sued Quick-
Build to recover these lost profits. Which of the following is true?
a. Marty is a donee beneficiary of QuickBuild’s contract to build the hotel.
b. Because QuickBuild is now in debt to Marty for the lost profits, Marty is a creditor
beneficiary of the hotel construction contract.
c. Marty can recover in the situation on the basis of an assignment of rights.
d. Marty cannot recover because Marty is an incidental beneficiary of the hotel construction contract.
e. The court would likely order QuickBuild to delegate its duties on future contracts so
that they are finished on time.
16) What is tender of performance in connection with a contract?
a. Performance whose terms have been ordered by the court.
b. One party’s completion of duties under the contract.
c. An unconditional offer by a contracting party to perform his or her obligations under a
contract.
d. A party’s offering substitute performance that is superior to the performance called for
in the contract.
e. A party’s offering to perform prior to full payment.
17) What kind of damages will be awarded when there is no actual financial loss?
a. Special damages.
b. Nominal damages.
c. Compensatory damages.
d. Consequential damages.
e. There are no damages that a court will award in the absence of an actual financial
loss.
18) What does the term “mitigation” refer to in connection with damages?
a. The calculation of lost profits in determining damages.
b. The combination of the different kinds of damages into a single dollar amount.
c. The duty of the breaching party to make a damages payment as soon as practical.
d. The requirement of the non-breaching party to allow the breaching party one final
chance to perform the contract before being entitled to collect damages.
e. The duty of a non-breaching party to make reasonable efforts to reduce damages.
19) What is the modern rule for who gets to keep an engagement ring given by the man to
the woman if the planned wedding does not occur?
20) What was the result in the Ethics Spotlight in the book in which “Kurupt” was allegedly
induced by Death Row Records to breach an exclusive recording agreement with
the Brumfield?
a. Death Row Records was held liable for the tort of intentional interference with a con-
tract but could not be held liable for punitive damages.
b. Death Row Records was held liable for the tort of intentional interference with a con-
tract but could not be held liable for compensatory damages.
c. Death Row Records was not held liable for anything because the plaintiff had been
prosecuted for fraudulent activities, and Death Row Records assisted the singer in
avoiding a bad deal.
d. Death Row Records was not held liable for the tort of intentional interference with a
contract.
e. Death Row Records was held liable for the tort of intentional interference with a con-
tract, and was held liable for compensatory and punitive damages.
21) In Reno, Attorney General of the United States v. American Civil Liberties Union,
involving a law restricting the sending of certain sexually oriented information over the
Internet, the U.S. Supreme Court ruled that:
a. the Telecommunications Act of 1996 violated the U.S. Constitution for its restrictions
22) In order to obtain a domain name, one must:
a. obtain clearance from the U.S. Patent and Trademark office that the name is not confusingly similar to another name, and pay the appropriate fee.
23) The Counterfeit Access Device and Computer Fraud and Abuse Act makes it illegal to do each of the following except:
a. access a computer to knowingly obtain financial records of financial institutions.
b. access a computer to knowingly obtain grades and personal information pertaining to
students at a college or university.
c. access a computer to knowingly obtain restricted governmental information.
d. access a computer to knowingly obtain consumer reports of consumer reporting agencies.
e. all of the above are illegal under the Counterfeit Access Device and Computer Fraud
and Abuse Act.
24) Under the Uniform Computer Information Transactions Act, the licensee can revoke
acceptance of the information if:
25) The Electronic Communications Privacy Act makes it a crime to do which of the following?
a. To intercept an electronic communication while in transit.
b. To intercept an electronic communication at the point of transmission.
c. To intercept an electronic transmission when stored by a router or server, or after
receipt by the intended recipient.
d. Both A and B.
e. A, B, and C.
Answer will be sent by email as attachment.
