10 May IS THE EXCULPATORY CLAUSE IN THE CONTRACT VALID OR INVALID IN LEON’S CASE AND WHY?
QUESTIONS.Each question is worth 2 points.This is an application-oriented exam; you will not find the answer to questionsverbatim in the text.If you believe a question is not covered in any of the assigned materials you havemissed the issue and need to re-think.Put letter of correct answer on the answer sheet at the bottom of this page. There isonly one correct answer to each question.1. Sam orally agreed to sell Ramie some land for $500 000. Ramie paid Sam the$500 000; Sam gave Ramie the deed to the land. Ramie took possession of the landand began building a cabin on it. One month later Sam tried to retake possessionof the land by arguing that the contract for the sale was invalid because it was oral not written. Sam sued Ramie to invalidate the contract and retake the land.The court will likely conclude that Sam will:a) Win; the sale exceeded $500 so the contract must be written to be valid.b) Win; all land sales contracts must be written.c) Lose; because the contract was fully executed Sam cannot rescind thecontract.d) Lose; because Ramie had begun building a cabin on the property Samcannot rescind the contract.2. On Tuesday Sam offered to sell his CD collection to Sandy for $100. Sandyreplied “I’m interested. I’ll think it over and let you know Thursday whether I wantto buy the CDs.” On Wednesday Sam agreed to sell the CDs to Jason and Jasonimmediately gave Sam a letter that stated:”Sam I will buy your CD collection for $100. As we agreed I will pay you onFriday when I pick up the CDs. Yours truly Jason.”Upon Sam’s receipt of this letter on Wednesday what best describes Sam’scontract agreement(s)?a) By forming an agreement with Jason Sam breached his contract withSandy.b) Sam has formed contracts with both Jason and Sandy.c) Sam and Jason have formed a valid enforceable contract; Sam did notform a contract with Sandy.d) Sam formed a contract with Sandy but has not formed an enforceablecontract with Jason because Jason has not yet paid for the CD collection.3. Mac and Rhamad signed a business contract with a clause that provides that if adispute arises they must submit to binding arbitration to resolve the dispute. Afterthey had been doing business together for a year a dispute arose under the terms ofthe 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 toarbitration; he is constitutionally entitled to a jury trial if he requests a trial.b) Conduct a bench trial then order a remedy without compelling Mac tosubmit 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 ifMac is not satisfied with the trial decision.4. Roxy while driving through Wyoming to her home in Montana accidentallylost 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 overRoxy and cannot exercise its long arm statute in cases only involvingautomobile accidents.b) No because Wyoming has no in personam jurisdiction over Roxy andcannot justify minimum contacts in this case.c) Yes Wyoming can exercise in personam jurisdiction in this case becauseany state court has personal jurisdiction in every diversity of citizenship case.d) Yes because Wyoming can assert in personam jurisdiction over Roxyunder the minimum contacts test.5. 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 thecustomer 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.”6. Don promised to buy his girlfriend Sophie a new car so Sophie sold her old car.Don now refuses to buy Sophie the car. Sophie has a job that requires her to have acar to get to work. If Sophie sues Don to enforce the promise the likely result isthat the promise will:a) Be enforced under promissory estoppel because Sophie reasonably reliedon Don’s promise to her detriment.b) Not be enforced as Sophie was not unjustly enriched simply because she didnot receive the car.c) Be enforced because the car is a necessity for Sophie and all contracts fornecessities are binding and enforceable for all parties even if contractformation is flawed.d) Not be enforced as Don’s promise was a gift to Sophie; Sophie gaveconsideration but Don did not.7. Reg offered to sell his motorcycle to Thelma for $8 000. Thelma replied “Yourprice is too high. I will purchase your motorcycle for $7 000”. Reg agreed andthey committed their agreement to writing. This transaction can be characterizedas:a) An enforceable contract because Reg’s acceptance of Thelma’s offer was aclearly communicated acceptance.b) An enforceable contract because Thelma’s counteroffer was less than Reg’soriginal offer.c) An unenforceable contract because Thelma’s offer was not the mirrorimage of Reg’s original offer as is required under common law contractrules.d) An unenforceable contract unless either Reg or Thelma is a merchant asdefined by the UCC because sale of personal property contracts are validonly if one of the parties to the contract is a merchant.8. Mary sued Don for negligence. Mary’s losses total $100 000. Under acontributory negligence system if Mary is found to be contributorily negligent forher own injuries what damages will Mary likely recover from Don?a) None.b) $100 000.c) $100 000 minus the percentage of fault (e.g. 20% 60% etc.) for whichMary was responsible.d) $100 000 minus the percentage of fault for which Mary was responsible solong as Mary was not more than 50% responsible for the injuries.9. Ram was walking down the sidewalk by a construction project site in adowntown area. The project was owned and operated by Modern Construction Inc. and was surrounded by orange plastic fencing typically used for constructionprojects. 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 tofall and jumped forward quickly off the sidewalk and into the construction projectproperty falling into and smashing the orange plastic fencing. As Ram landedinside the construction project the beam fell near Ram. The beam did not hit Rambut some rocks were thrown onto Ram as the beam fell cutting his arm badly sothat it required 35 stitches.If Ram sues Model Construction for negligence the likely result will be that Ramwill:a) Lose because he assumed the risk as a trespasser on the construction siteand trespassers can never recover damages.b) Lose because pedestrians are always contributorily negligent in such casesinvolving trespassing.c) Win because it is always foreseeable that a beam could fall on a nearbypedestrian.d) Win if the beam fell because of Model Construction’s negligence.10. X and Y agreed that X would sell Y his small business including the land onwhich the business was situated for $500 000. Both X and Y knew at the time thecontract was formed that the business was actually worth $800 000. Is this a valid enforceable contract?a) Yes provided the contract was in writing in accordance with the Statute ofFrauds and the parties freely consented.b) Yes provided the contract was in accordance with state statutory law thatpermits real estate sales for 40% or more below market value.c) No because $500 000 is not valid consideration for a business worth$800 000.d) No because X has no pre-existing legal duty to sell his business.11. Fine Art Corp. sent a written offer to buy 10 000 pencils for a total of$10 000 from Faber Pencil Co. Both parties are merchants. Faber can accept theoffer by:a) Promising to ship the pencils.b) Promptly shipping the pencils.c) Accepting the offer on Faber’s own written standard form contract.d) All of the above could be valid acceptance.12. 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. forthe team party. This contract is:a) Void as a matter of law because it is illegal to sell alcohol to minors by statelaw.b) Void only if Ralph misrepresented his age and told Liquormart he was anadult.c) Valid and enforceable but Ralph has the right to disaffirm because he is aminor.d) Valid and enforceable if Liquormart knew that Ralph was a minor.13. Which of the following activities may involve the use of a contract and/orconstitute 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.14. Fay was admitted to Global Associates an existing partnership as a limitedpartner on January 2015. In June 2015 a partnership debt incurred in October 2014 came due. Fay is:a) Not liable for the debt because the debt was incurred prior to her joiningthe partnership.b) Only liable for the debt up to the amount of her capital contribution to thepartnership.c) Personally liable only for 50% of the total debt if 50% of the other partnersdo not pay.d) Personally liable for the full extent of the debt if the other partners do notpay.15. Earl a nonmerchant offered to sell a chair to Isaac a nonmerchant. Earl’shouse caught fire and destroyed the chair before Isaac accepted Earl’s offer to buythe chair. As a result:a) The destruction of the chair constitutes an automatic valid revocation ofthe offer.b) The fire does not automatically revoke the offer but because neither Earlnor Isaac is a merchant the offer is revocable at any time at Earl’s option.c) Earl did not validly communicate a revocation to Isaac so Isaac still hasthe option of accepting Earl’s offer; if Isaac accepts the offer Earl mustobtain a similar chair for Isaac or pay Isaac the equivalent value of the chair.d) Earl’s offer is automatically revoked by the fire unless the offer was a firmoffer.16. CC’s Day Spa LLC is a member-managed limited liability company. So longas it is in accordance with state law members can agree to apportion voting rightsaccording to:a) Participation in management.b) Capital contributions.c) The number of members.d) Any of the above.17. Jim and Kiley are architects and general partners of JK Designs. Jim and Kileysupervise Luc an employee of JK Designs. As general partners of JK Designs Jimand Kiley:a) Are not personally liable for any tort(s) committed by Kiley.b) May be personally liable for malpractice committed by Luc working withinthe scope of his job at JK.c) Have limited liability for any of Kiley’s acts of malpractice.d) Have no liability for any torts committed by Luc.18. Kisha operates River Valley Soccer an athletic equipment shop as a soleproprietorship. 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 BusinessAdministration loan acquired to start her business.d) The business entity of River Valley Soccer not Kisha personally.19. Assume that Virginia enacted a law prohibiting until further notice all grocerystores in Virginia from selling all powdered spices manufactured in or shippedfrom Maryland. This law was enacted because it was discovered that the spicesrecently manufactured in Maryland were infected with bacteria. Determine theconstitutionality of the Virginia statute. The statute is:a) Unconstitutional; it violates grocery store owners’ substantive andprocedural due process rights under the 5th and 14th Amendments becausethey are private businesses.b) Unconstitutional; the statute imposes an undue burden on interstatecommerce.c) Constitutional; it is a valid exercise of Virginia’s police power.d) Constitutional; the statute imposes an undue burden on intrastate andinterstate commerce.20. Distinguish which of the following is an advantage of limited liabilitycompanies (LLCs) over corporations.a) Only one member of a LLC must have unlimited liability as comparedwith corporations in which all shareholders have unlimited liability.b) LLCs can be formed without any specific steps being taken by the ownersas compared with corporations that must file Articles of Incorporation withthe State.c) In most cases a LLC can choose whether to be taxed as a partnership orcorporation as compared with corporations that are subject to doublecorporate taxation.d) LLCs can choose whether to sell shares publically to investors ascompared to private corporations that must sell shares publically to investors.21. Pete who collects antique cars hired Ann as his agent to find and purchase a1965 Ford Mustang on his behalf. Ann found a Mustang like Pete wanted but Annfell 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 toPete in this situation?a) Ann has not violated the duty of loyalty to Pete; she can find anotherMustang for him.b) Ann has not engaged in self-dealing because she did not purchase theMustang with Pete’s funds.c) Ann usurped an opportunity for Pete but has not violated the duty ofloyalty 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.22. Ed hired Frankie who is 13 years old to buy a computer on Ed’s behalf.Which of the following identifies the legal relationship between Ed and Frankie?a) This is a valid agency relationship even though Frankie is a minor and Edwould be bound by authorized contracts Frankie enters into on Ed’s behalf.b) This is a valid agency relationship even though Frankie is a minor but Edwould have the option of disaffirming any contracts Frankie enters into onEd’s behalf.c) This is a valid agency relationship even though Frankie is a minor butFrankie would not be entitled to any payment under the terms of the agencybecause he is a minor.d) This is an invalid agency relationship because Frankie is a minor.23. Mediation might be more reasonable and appropriate than a trial in which ofthe following situations?a) A lawsuit challenging the constitutionality of a new state statute.b) A dispute between neighbors over a property boundary.c) An alleged theft of patio furniture from the patio of a house.d) None of the above are appropriate for mediation.Answer questions 24-25 regarding the following scenario:Scenario: Jones a resident of Arizona booked reservations for a vacation atWindell Hotels Inc. in Cabo Mar Mexico. Windell Hotels is an international hotelchain incorporated in Delaware with hotels in North and South America; WindellHotels has no hotels in Arizona but does advertise and book reservations for all itshotels over the Internet.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 themaintenance staff. The staff had placed a “wet floor” sign on the lobby floor on theside wall of the lobby.Jones was taken to the nearest Mexican hospital where surgery was necessary toplace 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 andan ambulance to meet him at various airports. His health insurance would notcover his hospital stay in Mexico as it was located outside the U.S. When back inArizona Jones was unable to work for 8 weeks and required another surgery toremove the pin. He also required several weeks of physical therapy.24. Jones wants to sue Windell Hotels Inc. in federal court for $450 000 to recoverall his medical expenses in Mexico and the US; for $50 000 for the cost of theplane trip from Mexico to Arizona the 2 plane seats and ambulance costs invarious airports; $10 000 for 8 weeks of lost wages; and $50 000 for pain andsuffering resulting from the injury. Can he sue in federal court?a) Yes because Federal Court always has jurisdiction over citizens ofdifferent states.b) No because Federal Court does not have jurisdiction in cases that do notinvolve federal laws.c) Yes because the Federal Court may have jurisdiction over citizens ofdifferent states and the lawsuit involves damages greater than $75 000.d) No because the Federal Court has no jurisdiction over an accident thatoccurred in Mexico.25. It would be easier for Jones to bring the lawsuit in Arizona state court but hewonders if the court can get Windell Hotels to come to Arizona. Can the Arizonastate court impose jurisdiction over Windell Hotels to bring the company to courtin 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 contact withArizona to allow the Arizona court to use the long arm statute to establishjurisdiction in Arizona.c) Yes because the Jones is a resident of Arizona and he is the plaintiff in thelawsuit.d) Yes because Windell Hotels has sufficient minimum contact with Arizonathe state to justify the court’s use of the long arm statute.Scroll down please to begin the essay portion of the exam.Section: Section II. Essay: 9 questions/50 pointsQuestions 1-8 = 5 pts each; question 9 = 10 ptsUse the answer sheet at the end of the exam. Number each answer. DO NOTrecopy questions.Answer each question in complete paragraphs; do not list or answer in phrases(points will be deducted for doing so).None of these questions can be adequately/comprehensively answered in just aparagraph so be comprehensive in depth in your answers but be careful to notinclude irrelevant information.Points will be deducted for answers that are not well justified not sufficientlycomprehensive.Use APA in text citations as appropriate but please do not use direct quotes.Use only classroom notes/comment and assigned reading or watchingmaterials as resources which is all you need to complete the exam.DO NOT use any outside Internet resources as they are often inaccurate.Follow directions carefully. Answer all parts of each question.Be sure to directly answer the question(s) asked.__________________________________________________________________Refer to the scenario for Multiple Choice questions 24-25 above to answer thefollowing essay question #1 only:1. Jones sued Windell Hotels Inc. for negligence to recover damages for hisinjuries resulting from the fall in the Cabo Mar hotel.Will Jones likely be successful in the negligence lawsuit against WindellHotels? Explain fully why or why not.2. Clarkson and Lee did not have a contract but Clarkson completed extensivelandscaping in Lee’s yard by mistake while Lee was away on vacation. Clarksonsent Lee a bill for the landscaping service but Lee refused to pay.Determine the likely result if Clark sues Lee to recover the costs of thelandscaping.3. Racer contracted in writing to drive Owner’s one-of-a-kind specially designedchampionship race car in the Miami 500 Race on July 15 for a fee of $2500. OnJuly 1 the race car was destroyed in an accidental fire in a storage warehousewhere the race car was being stored prior to the race. Owner owns no other racecars so Owner considered the contract discharged. Racer claimed that she is stillentitled to the $2500 fee because she and Owner had a valid enforceable contract.Compare and contrast the rights and obligations of Racer and Owner underthe contract as of July 1.4. Compare and contrast the rights and possible liabilities for a merchant sellinggoods in “As Is” condition with the rights and possible liabilities for selling goodswith an express warranty stating “This product is quality Grade A”.5. Aaron plans to open Aaron’s Pets a pet shop selling pets and pet supplies andplans to hire 2 part-time employees. Aaron will invest only his own money in thebusiness. He does not expect to make any profit for at least 2 years and to makevery little profit for the next 3 years after the first 2 years. He does expect to makea profit eventually.Which form of business organization is most appropriate and easiest forAaron to use in opening his pet store – and why? (There is only one correctanswer).6. There are extensive federal regulations governing airplanes and pilots. Assumethat the state of New York passed a statute containing numerous requirements some conflicting with federal regulations covering operation of airplanes andlicensing of airplane pilots.If the New York state statue is challenged as being unconstitutional what isthe likely result? Describe the applicable law and rationale for yourconclusion.7. Fran Joe and Mike formed a general partnership to operate a flower shop calledFresher Flowers. One of Fran’s jobs is to make deliveries using the partnershiptruck. In one such delivery Fran negligently ran a stop sign striking a car drivenby Peggy causing damage to the car and injury to Peggy.Analyze and describe (1) the personal liability of Fran Joe and Mike (2) theliability of the partnership Fresher Flowers.8. Mark plans to open a barbeque restaurant. He can either open the business as asole proprietorship or obtain a franchise for “Smokin’ Hot Bar-B-Q”.Compare and contrast the advantages and disadvantages of opening thebusiness as a sole proprietorship and a franchise.9. 10 pointsLeon a bank vice president joined Fitness Center Inc. (FC). He signed a contractfor the membership. The contract stated among other things an exculpatory clausethat FC…“shall not be liable for any claim demand cause of action of any kindwhatsoever for or on account of death personal injury property damage orloss of any kind resulting from or related to Member’s use of facilities orparticipation in any sport exercise or activity within the club premises…”While working out at FC Leon sustained back injuries when a treadmill on whichhe was walking suddenly collapsed at FC. Leon sued FC for his injuries.Discuss:a. Is the exculpatory clause in the contract valid or invalid in Leon’s case and why?b. Possible product liability claim(s) for which Leon could sue FC and whyproduct liability claims might be applicable to this casec. Possible ordinary (non-product liability) negligence claim for which Leoncould sue FC and why a negligence claim might be applicable to this cased. The likely outcome if Leon sues FC under product liabilitye. The likely outcome if Leon sues FC under ordinary negligence
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