1. A tort is a wrong or injury to another, other than a breach of contract. 2. The term "tort" is a French word meaning "wrong".

3. Tort litigation has been declining slightly since 1990. 4. Common classifications of torts are intentional, negligent, and strict-liability. 5. Intentional torts occur when the defendant takes an action intending that certain consequences will result or knowing that certain consequences are likely to result. 6. Negligent torts occur when the defendant acts in a way that subjects other people to an unreasonable risk of harm. 7. Strict-liability torts occur when the defendant takes an action that is inherently dangerous and cannot ever be undertaken safely, no matter what precautions the defendant takes. 8. Regarding the intent needed for an intentional tort, the intent at issue is not intent to harm but, rather, is intent to engage in a specific act, which ultimately results in an injury, physical or economic, to another. 9. Categories into which intentional torts are divided are torts against persons, torts against property, and torts against economic interests. 10. An assualt occurs when one person places another in fear or apprehension of an immediate, offensive bodily contact. 11. Robby calls Bobby on the telephone and threatens to come over and break his nose. Robby's conduct does not constitute an assault because there is no question of immediate bodily harm. 12. Mike gets angry because Ben made a better grade on a test than he did. They get into an argument, and Mike takes a swing at Ben intending to hit him. Ben shoves Mike in order to avoid the blow. Ben has not committed an assault or a battery because he acted in self-defense. 13. The Communications Decency Act of 1996 gives immunity to providers of interactive computer services for liability they might otherwise incur on account of material disseminated by them but created by others? 14. A person accused of defamation may raise as a defenseof truth and privilege. 15. When an absolute privilege exists, one cannot be sued for defamation for any false statements made, regardless of intent or knowledge of the falsity of the claim. 16. Under a conditional privilege, a party will not be held liable for defamation unless the false statement was made with actual malice. 17. Politicians and entertainers would typically be public figures for purposes of the public figure privilege to actions for defamation. 18. The tort of trespass to realty occurs when a person causes an object to be placed on the land of another without the landowner's permission, a person stays on the land of another when the owner tells him to depart, or a person refuses to remove something he placed on the property that the owner of the property asked him remove. 19. A false statement of a material fact regarding ownership of business property that results in a loss of sales is referred to as slander of title. 20. Bob, who has a large trust fund, is angry at Alice because she stopped dating him. Alice ran a successful dog grooming shop but Bob decided to open a dog grooming shop next door solely to run her out of business because he was angry over the break up. Bob has committed the tort of unfair competition. 21. Regarding the tort of fraudulent misrepresentation: A party who makes fraudulent misrepresentations must intend that other parties rely upon the misrepresentations. The injured party must have reasonably relied upon the misrepresentations. The inured party must have suffered damages because of reliance upon the misrepresentations. 22. A person who commits a tort is often referred to as a tortfeasor. 23. Attorney fees are not a typical type of compensatory damage. 24. Nominal damages are a small amount of money given to recognize that a defendant did indeed commit a tort in a case in which there were no compensable damages suffered by the plaintiff.

25. Nominal damages are damages awarded to punish the defendant. 26. Assume Bob is driving and suddenly has an unexpected heart attack causing him to run over a student crossing the street breaking the student's leg in the process. It is unlikely that the student can recover because the accident could not have been avoided even with reasonable care. 26. A plaintiff must prove to win a recovery in a negligence case; duty, beach of duty, causation and damages. 27. The reasonable person standard is a measurement of the way members of society expect an individual to act in a given situation. 28. While driving her car down the street, Susan sees a child playing near the road with no adult around. she has no duty to render assistance to the child. 29. Tina negligently hits student Susie with her car. Tina has a duty to come to the aid of Susie because she negligently hit her. 30. Clients who feel that they have suffered damages as a result of a professional's breach of his or her duty of care can bring a negligence case against the professional referred to as a malpractice case. 31. The violation of a duty of care is called breach of duty. 32. Elements of causation are actual cause and proximate cause. 33. Actual cause is also known as cause in fact. 34. Actual cause is the determination that the defendant's breach of duty resulted directly in the plaintiff's injury. 35. Actual cause is sometimes referred to as "but for" causation. 36. Proximate cause is also sometimes referred to as legal cause. 37. Proximate cause refers to the extent to which, as a matter of policy, a defendant may be held liable for the consequences of his actions. 38. In most states, proximate cause is determined by foreseeability. 39. Compensatory damages are intended to reimburse a plaintiff for his or her losses. 40. Punitive damages are awarded to punish the offender and to deter others from committing similar offenses. 41. Courts usually award punitive damages in cases in which the offender has committed gross negligence. 42. A doctrine that has been adopted by courts to aid plaintiffs in establishing negligence claims are res ipsa loquitur and negligence per se. 43. A plaintiff would use the doctrine of res ipsa loquiturt to allow the judge and jury to infer that more likely than not, the defendant's negligence was the cause of the plaintiff's harm, even though there is no direct evidence of the defendant's lack of due care. 44. Assuming res ipsa loquitur is established, the burden of proof shifts to the defendant. 45. Regarding the law of negligence in Germany, courts distinguish between conscious and unconscious negligence with defendants who have engaged in only unconscious negligence being found not guilty. 46. Reference the case in the text, Kambat vs. St. Francis Hospital, the case in which the plaintiff claimed that an eighteen by eighteen inch pad was left inside a patient while the defendant claimed that the patient had swallowed the pad. A holding of the court in regards to the doctrine of res ipsa loquitur is that to rely upon res ipsa loquitur, plaintiff need not conclusively eliminate the possibility of all other causes of the injury. 47. The term "negligence per se" means literally negligence in or of itself. 48. (p. 105) Negligence per se applies to cases in which the defendant has violated a statute enacted to prevent a certain type of harm from befalling a specific group to which the plaintiff belongs. 49. Regarding contributory negligence, it was once available in all states but has been replaced in some states by the defense of comparative negligence. 50. The defendant must prove in order to rely upon the defense of contributory negligence that the plaintiff's conduct fell below the standard of care needed to prevent unreasonable risk of harm and also that the plaintiff's failure was a contributing cause to the plaintiff's injuries.

51. Last-clear-chance doctrine is a doctrine that allows the plaintiff to recover damages despite proof of contributory negligence as long as the defendant had a final clear opportunity to avoid the action that injured the plaintiff. 52. Assume Bobby begins to cross the street. He does not go to a crosswalk but proceeds to illegally cross the street without even checking to see if any vehicles are coming. Slick sees Bobby in the street, notices that he is not in the crosswalk, and proceeds to hit Bobby with his vehicle because he believes that Bobby should be taught a lesson about how to cross the street. Slick does slow down somewhat and only causes Bobby some significant bruising, but Bobby is angry and sues. Bobby will be able to recover despite proof of contributory negligence on his part because Slick had a final clear opportunity to avoid the action that injured Bobby. 53. Most states replaced the contributory negligence defense with a comparative negligence theory because of situations in which a plaintiff is barred from recovery due to minimal contributory negligence. 54. Under pure comparative negligence, the court determines the percentage of the fault of the defendant with the defendant then being liable for that percentage of the plaintiff's damages with no requirement that the defendant be more than 50% at fault. 55. Under modified comparative negligence, the court determines the percentage of fault of the defendant requiring that the defendant be more than 50% at fault before the plaintiff can recover. 56. Asumption of the risk doctrine is a doctrine available to defendants whereby a defendant may avoid liability by establishing that the plaintiff voluntarily and unreasonably encountered the risk of the actual harm that the defendant caused. 57. Express assumption of risk occurs when a plaintiff expressly agrees, usually in a written contract, to assume the risk posed by the defendant's behavior. 58. (p. 107) Implied assumption of the risk occurs when a plaintiff implicitly assumes a known risk. 59. The most difficult part of establishing the defense of assumption of the risk is showing that the plaintiff assumed the risk of the actual harm suffered. 60. Good Samaritan statues are laws holding that people in peril who receive voluntary aid from others cannot hold those offering aid liable for negligence. 61. A suprise event is an unforeseeable event which interrupts the causal chain between the defendant's breach of duty and the damages the plaintiff suffered. 62. Strict liability is liability without fault. 63. The activity is so inherently dangerous that it cannot ever be safely undertaken is a condition required for the imposition of strict liability. 64. Burning trash is an example of an inherently dangerous activity. 65. Steven knows that his dog has bitten several people. Cindy comes to visit him but Steven does not tell her about the dog's propensities. Unfortunately, the dog nips Cindy and she is required to have some stitches in her ankle. If Cindy sues Steven, Cindy will win. SITUATION: Millie breeds German Shepard dogs. Bernard, who lives down the street, took in a stray dog loosely identified as a Corgi-plus. The dog, Casanova, would definitely be classified as a mixed breed. Bernard allowed Casanova to roam freely. Unfortunately, Casanova went to visit Millie's pure-bred German Shepard. Puppies resulted which were Shepard and Corgi-plus puppies. Millie was incensed. She started a campaign to round up all of the stray dogs, including Casanova, and haul them off to the animal shelter. She picked up a few cats as well. She posted signs all over the neighborhood saying that no animal, neither dog, cat, nor fowl, should come into her yard and that she was going to begin shooting the next time, period. Understandably, Bernard and some of the other neighbors take offense. Bernard comes to Millie's house while she is working in the yard. He walks behind her and shoves her. Millie did not see him coming. Millie turned around and proceeded to have a heated conversation with Bernard. Millie drew her fist back and told Bernard that she was going to punch him in the nose. Millie started to punch Bernard but he stepped back, and all she managed to do was jab him in the shoulder, causing no actual pain. Sally, who was going by on the street, saw Millie attempting to hit Bernard. Sally came over and grabbed Millie's hands, pinning Millie's hands behind her back. 66. Regarding Bernard's shoving of Millie in the back, by shoving her in the back, Bernard committed a battery. 67. Millie's threat to punch Bernard in the nose constitutes an assualt.

68. Millie's action in jabbing Bernard after she missed his nose, constitutes battery. 69. Assuming that Millie sues Sally, the most likely result at trialwould be that Sally will not be convicted of anything because she was acting in the defense of others. 1. Terms the parties outline in agreements, custom, and rules outlined by the UCC are terms the parties outline in agreements and custom, but not rules outlined by the UCC. 2. The UCC requires that buyers are obligated to accept and pay for conforming goods in accordance with the contract. 3. When parties are not merchants good faith under the UCC means honesty in fact and honesty in law. 4. When parties are merchants good faith under the UCC means honesty in fact and also reasonable commercial standards of fair dealing. 5. The term "reasonable commercial standards of fair dealing" is often called commercial reasonableness. 6. The UCC requires that sellers and lessors tender conforming goods to the buyer or lessee. 7. Conforming goods are goods that conform to contract specifications. 8 Under the UCC, tender of delivery requires that the seller/lessor have and hold conforming goods at the disposal of the buyer/lessee and give the buyer/lessee reasonable notification to enable him or her to take delivery. 9. The result in the case in the text Alaska Pacific Trading Co. v. Eagon Forest Products Inc. in which the defendant rejected a shipment of logs is that by not shipping the logs in a timely manner according to the contract the seller failed to satisfy the perfect tender rule thereby releasing the defendant buyer from its duty to accept the logs. 10. A common law rule known as the perfedt tender rule required that the seller deliver goods in conformity with the terms of the contract, down to the last detail. 11. UCC sections 2-601 and 2A-509 indicate in reference to the perfect tender rule that if goods or tender of delivery fail in any respect to conform to the contract, the buyer/lessee has the right to accept the goods, reject the entire shipment, or accept part and reject part. 12. Usage of trade is defined by the UCC as any practice that members of an industry expect to be part of their dealings. 13. The UCC defines course of dealing as previous commercial transactions between the same parties. 14. Under the UCC, course of performance refers to the history of dealings between the parties in the particular contract at issue. 15. Regarding limits on the rigidity of the perfect tender rule, parties may agree that the seller must have the opportunity to repair noncomforming goods within a particular period of time, parties may agree that the seller must have the opportunity to replace noncomforming goods within a particular period of time, or parties may agree with a level of performance that is less than perfect. 16. Sellers and lessors can repair, adjust, or replace defective or nonconforming goods so long as requirements for doing so are met. 17. Under the UCC, the parties are excused from performance if goods are identified at the time the parties entered into a contract and these goods are destroyed through no fault of the parties before risk passes to the buyer or lessee. 18. Under the UCC, the buyer may inspect the goods and decide whether to (1) treat the contract as void or (2) ask the seller for a reduction of the contract price and then accept the damaged goodsif goods are identified at the time the parties entered into a contract and these goods are partially destroyed through no fault of the parties before risk passes to the buyer or lessee. 19. A buyer who has accepted goods may later revoke the acceptance if the buyer can show that the defects substantially impaired the value of the goods and the buyer had a legitimate reason for the initial acceptance. 20. Under the UCC a delay in delivery or nondelivery, in whole or in part, is not a breach in circumstances in which performance has been made impracticable because a contingency has occurred that was not contemplated when the parties reached the agreement.

21. Regarding a buyer's acceptance of goods, goods may be accepted in total even if nonconforming, the seller may presume acceptance if the buyer fails to reject goods within a reasonable period of time, or the buyer may make a partial acceptance of nonconforming goods when the seller has failed to cure defects. 22. Belinda orders a certain type of hybrid rose for her wedding. A disease sweeps through that type of rose, and the florist could only obtain the roses at great cost if at all. The florist's best defense commercial impracticability. 23. Express and implied are types of warranties. 24. Implied warranties may be automatically, as a matter of law, injected into a contract. 25. No warranties automatically arise under the common law. 26. It is assumed by the UCC that the seller has good and valid title to the goods; and that the seller has the right to transfer title free and clear of any liens, judgments or infringements of intellectual property rights of which the buyer does not have knowledge; but not that the seller is willing to indemnify the buyer for any problems with title. 27. An implied warranty of quality includes implied warranty of fitness for a particular purpose, implied warranty of merchantability, and implied warranty of trade usage. 28. An express waraanty is any description of the good's physical nature or its use, either in general or specific circumstances, that becomes part of the contract. 29. To use common law language an express warranty is a material term of the sale or lease contract. 30. Express warranties may be part of a brochure. 31. The result in the case of Webster v. Blue Ship Tea Room, Inc., the case in which the plaintiff sued after getting a bone caught in her throat while eating clam chowdert that the plaintiff could not recover because the bone was not a foreign substance to the fish. 32. Examples of what is needed in order for goods to be merchantable include: That goods pass without objection in the trade or market for similar goods. That goods be fit for the ordinary purposes for which such goods are used. That goods be adequately contained, packaged, and labeled as the agreement may require. That goods conform to the promises or affirmations made on the container or label, if any. 33. The seller must be a merchant, and either a sale or lease may be involved in order for the implied warranty of merchantability to be applied. 34. If it is generally accepted in the trade that a certain product is always preassembled and shrink-wrapped, the failure of the seller to deliver the goods in that condition would be a breach of the implied warranty of trade usage. 35. The choices that states have regarding liability of third-party beneficiaries of warranties are that seller's warranties extend to the buyer's household members and guests, that seller's warranties extend to any reasonable and foreseeable user, and that seller's warranties extend to anyone injured by the good. 36. The option that most states have adopted regarding the rights of third-party beneficiaries of warranties is that seller's warranties extend to any reasonable and foreseeable user. 37. The disclaimer regarding the warranty of merchantability may be made orally or in writing, and some states require that the term merchantability be used in the disclaimer. 38. Regarding a buyer's right to waive warranties, a buyer may waive both express warranties and implied warranties. 39. A buyer may waive implied and express warranties by failing to examine goods for which an express warranty was created by a sample or model, and also by failing to comply with the seller's request to inspect the goods. 40. Failure to comply with the statute of limitations operates as a waiver of warranty rights under the contract. 41. Under the UCC, the buyer must bring a lawsuit on a breached contract within four years of when the breach occurred or when the buyer became aware of it. 42. Under the UCC, the seller must bring a lawsuit on a breached contract within four years of when the breach occurred or when the seller became aware of it.

43. Assuming adoption of the UCC, regarding whether the buyer and seller may negotiate a shorter time for the statute of limitations than that allowed by the UCC, the buyer and seller may negotiate a shorter time for the statute of limitations than that allowed by the UCC so long as the time period is not less than one year. 44. The Magnuson-Moss Act passed in 1975. 45. The seller must indicate whether that warranty is a full warranty or a limited warranty is required by the Magnuson-Moss Act when the seller issues a written warranty for a consumer good. 46. Regarding whether a seller must provide a warranty under the Magnuson-Moss Act, the act does not require that the seller provide any warranties. 47. Under the Magnuson-Moss Act, if a written warranty is silent as to whether or not it is a full warranty, it is presumed to be a full warranty. 48. Under the Magnuson-Moss Act, the effect of a full warranty means that if the good fails or is defective, the good or its defective part will be replaced; and if replacement cannot be timely effected, the buyer has the right to a refund or a full replacement. 49. The obligations of sellers/ lessors and buyers/ lessees are determined by terms the parties outline in agreements, custom, and rules outlined by the Uniform Commercial Code. 50. The damages a seller may receive who sells goods to another buyer when the original buyer is in breach is the difference between the resale price and the contract price, plus incidental damages and minus expenses saved. 51.Liquidated damages are damages identified before the breach occurs. 52. Regarding a liquidated damages provision, a provision for liquidated damages is enforceable so long as it is not punitive in nature. 53. Regarding liquidated damages if the parties do not agree to them, the UCC provides that the nonbreaching seller may claim against a breaching buyer 20 percent of the purchase price or $500, whichever is less, as liquidated damages. 54. That the seller or lessor has delivered the goods to a carrier or bailee, but the carrier or bailee has not yet turned them over to the buyer means in transit. 55. Assuming a buyer that is insolvent has breached a contract by not paying for goods that are in transit, the carrier may stop delivery on the entire shipment. 56. Under UCC 2-702(1), a seller nay reclaim goods when the seller discovers the buyer is insolvent. 57. Under UCC 2A-525(2) a lessor mY reclaim goods when a lessee in possession of the goods is in breach when the lessee fails to make payments according to the lease terms. 58. Cover is the right of a buyer and lessee to substitute goods for those due under a sales or lease agreement. 59. A buyer in obtaining cover demonstrate good faith in obtaining the substitute goods, pay a reasonable amount for the substitute goods, act without unreasonable delay in purchasing the substitute goods, and purchase goods that are reasonable substitutes. 60. Conquential damages are damages for lost profits a buyer or lessee may recover in the event of a breach. 61. Lost profits are included in an action for damages for consequential damages so long as the damages are not too speculative. 62. Under the UCC buyers and lessees may recover goods identified in the contract if the seller or lessor becomes insolvent within 10 days after receiving the first payment due under the agreement. 63. Specific performance usually requires that the seller or lessor deliver the particular goods identified in the contract. 64. The UCC allow buyers and lessees to seek the remedy of specific performance when goods are unique or when a remedy at law is inadequate, but not because the goods are worth more than $500. 65. Regarding revocation of accepted nonconforming goods, a buyer or lessee may revoke acceptance of nonconforming goods if, for example, the buyer/lessee made a reasonable assumption that the nonconformity would be cured, but then the nonconformity was not cured within a reasonable time.

66. Regarding buyers or lessees who want to accept nonconforming goods and then seek monetary damages, buyers and lessees are allowed to do so in order to receive the benefit of the bargain, but they must give the seller/lessor reasonable notice of the defect. 67. Regarding the right of parties to sales and lease contracts to modify or limit remedies, the UCC provides that parties to sales and lease contracts are generally allowed to modify or limit remedies. 68. A court will refuse to uphold modifications or limitations to remedies agreed upon by the parties when the remedies fail in their essential purpose. SITUATION: Penny purchased $3,000 worth of furniture from Good Wood Furniture. Through an arrangement with Good Wood, Penny financed the purchase through a financing company called Let Us Help You. Twenty-nine days after the goods were delivered to her, Penny had a disagreement with Let Us Help You regarding the amount of interest she would be required to pay. She notified Good Wood on that day that she was rejecting the goods. Good Wood claimed that she did not properly reject the furniture and also that she acted in bad faith. Penny says that she properly rejected; that she did not act in bad faith. She also says that, in any event, she cannot be charged with both wrongful rejection and also bad faith because of double jeopardy. 69. Regarding the claim of Good Wood that Penny failed to properly reject the goods, Good Wood is correct. 70. Regarding the claim of Good Wood that Penny failed to act in good faith, Good Wood is correct because Penny made no claim that the goods were nonconforming. 71. Regarding the standard of good faith that would be applied, in this situation good faith means honesty in fact. 72. The correct analysis of Penny's claim that she cannot be charged with both a wrongful rejection and bad faith because of the double jeopardy baris that Penny is incorrect. She can be charged with both a wrongful rejection and also bad faith. 1) Legal assent is absent when a legal mistake occurs. 2. The result in Scott v. Mid Carolina Homes, Inc., the case in the text in which the defendant attempted to rescind a contract to sell a mobile home because the salesperson was acting under a mistake of fact when he gave the plaintiff the sales price was that the seller was allowed to rescind the contract because the mistake involved a price differential of over 25%. 3. When a contract is voidable, it may be rescinded. 4. Parties may think they consented to exchange a particular thing only to find out later that no meeting of the minds occurred. 5. When a legal mistake occurs, legal assent is absent. 6. An unilateral mistake is the result of an error by one party about a material fact. 7. A mutual mistake is a mistake that is shared by both parties to an agreement. 8. In the area of mistake, distinguishing between unilateral and mutual mistakes is important because the classification bears on which contracts are voidable. 9. Although there are some exceptions, an unilateral mistake does not generally void a contract. 10. In cases where both parties to a contract are mistaken about either a current or a past material fact, either can choose to rescind the contract. 11. George offers to sell Penelope a ring that George found in his yard. He and Penelope look at the ring and decide that they are not sure what it is, probably just a shiny stone. Penelope pays George $10 for the ring. The ring turns out to be a diamond worth much more than $10. George wants the ring back, and Penelope refuses. The most likely result, the ring will remain with Penelope because the parties contracted on the assumption that they did not know the value of the ring. 12. For a mutual mistake to interfere with legal consent, a basic assumption about the subject matter of the contract, an adverse effect on a party who did not agree to bear the risk of mistake at the time of the agreement, and a material effect on the agreement must exist. 13. The result in the Peerless case discussed in the text in which there were two ships named Peerless and the parties disagreed over which ship was the subject of the contract was that the court rescinded the contract.

14. An innocent misrepresentation results from a false statement about a fact material to an agreement that the person making the statement believed to be true. 15. When a person who makes a misrepresentation has no knowledge about the falsity of the claim, it is said that the person lacked scienter. 16. Regarding the effect of an innocent misrepresentation on a contract, it permits the party that was misled by the false statement to rescind the contract. 17. Rescission of the contract only is the remedy for a party who was misled by a false statement contained in an innocent misrepresentation, 18. A negligent misrepresentation results when the party making the statement would have known the truth about the fact had he used reasonable care to discover or reveal it. 19. A negligent misrepresentation is treated the same as a fraudulent misrepresentation. 20. In China, when fraud is involved, fraudulent misrepresentations have resulted in heavy fines and refusals to allow any more agreements with Chinese firms. 21. A fradulent misrepresentation is a false representation of a material fact that is consciously false and intended to mislead the other party. 22. Concealment involves the active hiding of the truth about a material fact. 23. Nondisclosure refers to a failure to provide pertinent information about a projected contract. 24. Scienter is present when a party accused of making a fraudulent assertion believed that the assertion was false or made the claim without any regard for whether it was true or false. 25. Intent to deceive is present when a party making a false statement claims or implies that he or she has personal knowledge of the accuracy of the assertion. 26. Undue influence refers to special relationships in which one person has taken advantage of his or her dominant position in a relationship to unduly persuade the other person. 27. Duress is found when one party was forced into an agreement by the wrongful act of another. 28. Economic duress is involved in a situation in which a person refuses to perform according to a contract unless the other person either signs another contract with the one making the threat or pays that person a higher price than was specified in the original agreement. 29. Duress occurs when one party threatens physical harm or extortion to gain consent to a contract. 30. Duress occurs when a party threatens to file a criminal lawsuit unless consent is given to the terms of a contract. 31. Duress occurs when a party threatens to file a frivolous civil lawsuit unless consent is given to the terms of a contract. 32. When duress is at issue, the free will needed for legal consent has been removed by the specifics of the threat. 33. Unconscionability occurs when one of the parties to a contract has so much more bargaining power than the other that he or she dictates the terms of the agreement 34. The resulting contract from an agreement reached because one of the parties has so much more bargaining power than the other that he or she dictates the terms of the agreement is called an adhesion contract. 25. Duress of goods occurs in Australia whenever an illegitimate threat is made to hold on to goods unless a payment is made or an agreement is entered into. 36. A relationship in which one party has an unusual degree of trust in the other can trigger concern about undue influence in gaining the assent of the more dependent party. 37. Regarding the application of the concept of unconscionability, it may be the basis for rescinding a contract. SITUATION: Marcy wanted to buy Lucy's land and use it to breed small pigs to be kept as pets. Marcy told Lucy that having water on the property was very important. Lucy assured her that a spring ran through one corner of the property. Therefore, Marcy agreed to buy the farm. Although she did not ask Lucy anything about it, Marcy,

who loved pigs, assumed that the neighbors would be pleased with the pigs being in the area. Lucy also agreed to sell Marcy a used truck for $5,000. After the contract for the land sale was entered into, it was discovered that actually the spring did not run through the corner of Lucy's property. The area in which the spring ran actually belonged to a neighbor. Additionally, when Lucy brought Marcy the used truck, Marcy said, "That's not the truck!" It was discovered that Lucy, who had two trucks, thought that Marcy had bought the older truck when Marcy thought she had purchased the newer truck. Marcy was also surprised when she received a petition signed by all surrounding landowners objecting to the presence of the pigs and threatening to sue Marcy for nuisance. 38. Assuming that Lucy innocently made a misrepresentation regarding the spring running through the corner of the farm with no reason to believe that was not correct, considering only the lack of a spring issue, if Marcy does not want to go through with the sale, Marcy may rescind the contract, but she may not recover damages. 39. Assuming that Lucy fraudulently made a misrepresentation regarding the spring running through the corner of the farm knowing the statement was not correct, considering only the lack of a spring issue, if Marcy does not want to go through with the sale, Marcy may rescind the contract, and she may also sue for compensatory damages if she can establish injury. 40. The result, if Marcy attempts to rescind the contract and recover damages only on the basis of the neighbor's objection to a pig farm woul be that Marcy may not rescind the contract nor may she recover damages because she, Marcy, made a unilateral mistake. 41. The most likely result in the dispute between Marcy and Lucy regarding which used truck was sold assuming that both Marcy and Lucy were each innocently mistaken and did not intend to defraud the other, would be that the contract will be rescinded. 1) Regarding written contracts, disputes are easier to settle when contractual terms are solidified in writing, the moment of writing allows both parties to reconsider terms and ensure what they desire, in general, written contracts aid in the conduct of smooth business contracts, and the idea of requiring a writing comes from an English act. 2. In 1667, the English Parliament passed the Act for the Prevention of Frauds and Perjuries. 3. A purpose of the statute of frauds is to prevent unreliable oral evidence from interfering with a contractual relationship. 4. Contracts whose terms prevent possible performance within one year is a type of contract that falls within the scope of the statute of frauds 5. A type of contract that falls within the scope of the statute of frauds are contracts related to an interest in land and promises made in consideration of marriage, but not contracts related to any lease. 6. Under the Uniform Commercial Code, contracts for the sale of goods totaling more than $500 must be in writing. 7. Regarding the statute of frauds requirement involving contracts that cannot be performed within one year, if a party contracts for lifetime employment, the contract does not have to be in writing in order to be enforceable. 8. A prenuptial agreement is an agreement two parties enter into before marriage that clearly states the ownership rights each party enjoys in the other party's property. 9. Regarding the statute of frauds and promises made in consideration of marriage, agreements regarding marriage in which one party is gaining something other than a return on his or her promise to marry are within the statute of frauds and must be in writing, prenuptial agreements fall within the statute of frauds, a prenuptial agreement is not automatically enforceable just because it is in writing, and when one party promises something to the other as part of an offer of marriage, the contract must be in writing to be enforceable. 10. Secondary obligations is a term for contracts within the statute of frauds involving promises to pay a debt of another if the initial party fails to pay. 11. Primary obligations are debts incurred in an initial contract 12. The main purpose rule is an exception as to when a secondary obligation needs to be in writing 13. Within the statute of frauds, "land" encompasses not only the land and soil itself but anything attached to the land.

14. Regarding the statute of frauds provision relating to an interest in land, the statute is intended to prevent oral claims to the existence of a contract for the sale of land, the statute requires a writing as evidence of a contract to sell land, a claim to an oral contract for the sale of land is not enough to prove a contract of sale existed, and mortgages are within the statute of frauds. 15. Not considered an interest in land within the statute of frauds are promises to sell crops annually, agreements between parties for profit sharing from the sale of real property, or boundary disputes that have been settled through the use of land. 16. In the case in the text Shelby's, Inc. v. Sierra Bravo, Inc., involving the issue of whether an agreement to deposit debris and soil on land came within the statute of frauds, the court ruled that the agreement did not involve an interest in land and did not come within the statute of frauds. 17. Section 2-201 of the Uniform Commercial Code addresses the requirement of a writing when a certain amount of goods are sold. 18. The contract or memorandum needs only to state the quantity to be sold in order to satisfy the UCC's requirement for a written document 19. Under the equql dignity rule in effect in some states, contracts that would normally fall under the statute of frauds and need a writing if negotiated by the principal must be in writing even if negotiated by an agent. 20. Admissions, partial performance, and promissory estoppel are discussed in the text as possible exceptions to the statute of frauds. 21. An admission is a statement made in court, under oath, or at some stage during a legal proceeding in which a party against whom charges have been brought admits that an oral contract existed, even though the contract was required to be in writing. 22. All states except Louisiana and California adhere to the admission exception to the statute of frauds. 23. Under partial performance, if the buyer in an alleged contract for the sale of land has paid any portion of the sale price, has begun to permanently improve the land, or has taken possession of the land, the courts will consider the contract partially performed, and this partial performance will amount to proof of the contract. 24. Promissory estoppel is the legal enforcement of an otherwise unenforceable contract due to a party's detrimental reliance on the contract. 25. Even if they would normally have to be in writing, if applicable criteria are met, oral contracts for customized goods are enforceable. 26. Identification of the parties to the contract and the subject of the agreement, but not penalties for nonperformance are required elements for a writing to be considered sufficient under the statute of frauds. 27. Regarding a signature on a document falling within the statute of frauds, so long as it is meant as a signature, a party required to sign may sign at any place on the document. 28. The party against whom action is sought must sign a document coming within the statute of frauds. 29. Faxes, e-mails, or formal written contracts may constitute a writing under the UCC. 30. The parole evidence rule is a common law rule that addresses the admissibility of oral evidence as it relates to written contracts. 31. The term "parole" in the "parole evidence rule' means speech or words. 32. A purpose of the parole evidence rule is to written to restrict evidence from being admitted that substantially contradicts an agreement in its written form. 33. A court may rule that parole evidence may be admissible to further the court's understanding of an agreement when a court determines that a written agreement does not represent a complete and final version of the agreement. 34. Regarding the parole evidence rule, it is not limited to spoken words, it relates to substantive legal issues, it is not a unitary concept or rule, and it is an amalgamation of different rules and conditions. 35. The parole evidence rule applies to writings created at the same time as the written agreement, writings created at the same time as a written agreement are more readily admitted as part of the written agreement than is oral evidence regarding conditions or terms in the final agreement, and as long as contemporaneous written

documents do not substantially contradict what is in the final writing, judges can deem these other writings to be part of the final written agreement. 36. A merger clause is a clause parties include in a written agreement within the statute of frauds that states that the written agreement accurately reflects the final, complete version of the agreement. 37. Exceptions to the parole evidence rule include contracts that have been subsequently modified,ccontracts conditioned on orally agreed-on terms, contracts that are not final as they are part written and part oral, and contracts with ambiguous terms 38. Integrated contracts are written contracts intended to be the complete and final representation of the parties' agreement. 39. One way parties can indicate their desire to create an integrated contract is through the use of a merger clause. 40. The obligor is a contractual party who agrees to do something for the other party. 41. The obligee is a contractual party who agrees to receive something from the other party. 42. An assignment occurs when a party to a contract transfers her rights to a contract to a third party. 43. The assignor is the term for the party to a contract who transfers her rights to a contract to a third party. 44. The assignee is the term for the third party who receives an assignment of contract rights. 45. Regarding rights of an assignee and assignor, assigneees essentially fill in for the assignor as the legal recipient of contractual duties, assignees acquire the same rights as the assignor had, the obligor may raise any of the same defenses for nonperformance to the assignee that he would have been able to raise against the assignor, and when an assignor transfers rights to an assignee, the assignor legally gives up all rights she previously had to collect on the contract. 46. No form is needed in order for an assignment to be valid. 47. Assignments may be made orally. 48. An exception to the general rule that rights to a contract cannot be assigned when a contract is personal in nature is when the only part of a contract left to be fulfilled is the payment. 49. Sally agrees to mow Paul's yard for $300 for the summer. Paul wishes to assign the contract to his grandmother. Sally objects because Paul's yard is very small while the grandmother's yard is over an acre. The correct legal outcome for the dispute between Sally and Paul would be that Sally will win because Paul's attempted assignment would increase the duties to which she agreed. 50. When parties include an antiassignment clause in their contract, the parties are attempting to limit their ability to assign their rights under the contract. 51. Regarding what may be assigned even in the presence of an anti-assignment clause, assignments made by operation of law, assignments for the right to receive monetary payments, and assignments for the right to receive damages for a breach of contract to sell goods or services. 52. Assignments are valid immediately. 53. The first-assignment-in-time rule states that in the case of multiple assignments of the same right, the first party granted the assignment is the party correctly entitled to the contractual right. 55. A delegation occurs when a party to a contract transfers her duty to perform to a third party who is not part of the original contract. 56. A party to a contract who transfers her duty to perform to a third party who is not part of the original contract is called a delegator. 57. A third party who is not part of an original contract but who is transferred a duty to perform contained in the original contract is called a delegatee. 58. Bill contracts with Judy to wash her car and then delegates the duty to Paul. Paul fails to wash the car. Bill continues to be bound to Judy to see that her car gets washed. 59. Painting a pottrait are duties that typically cannot be delegated to a third party.61. A third-party beneficiary is created when two parties enter into a contract with the intended end purpose of benefiting a third party.

62. An intended beneficiary is a third party to a contract whom the contracting parties intended to benefit directly from their contract. 63. The promisor in a third-party beneficiary contract is the party to the contract who made the promise that benefits the third party. 64. The promisee in a third-party beneficiary contract is the party to the contract who owes something to the promisor in exchange for the promise made to the third-party beneficiary. 65. A creditor and donee, but not incidental is a type of intended beneficiary. 66. A creditor beneficiary is a third party that benefits from a contract in which the promisor agrees to pay the promisee's debt. 67. A donee beneficiary is a third party who benefits from a contract in which a promisor agrees to give a gift to a third party. 68. Vesting references the maturing of rights such that a party can legally act on the rights. 69. Creditor beneficiaries can enforce their rights under a contract whenever the contract is valid. 70. When a donee beneficiary may enforce his rights under a contract, he may do so only against the promisor. 71. An incidental beneficiary is one who unintentionally gains a benefit from a contract between other parties. 72. Regarding the rights of an incidental beneficiary to a contract to sue to recover incidental rights, an incidental beneficiary cannot sue to enforce a contract which provided incidental benefits. 73. A consideration of courts in determining whether a person is an incidental or intended beneficiary, the courts ask if a reasonable person in the position of the party in question would believe the contracting parties intended to benefit the party in question. SITUATION: Bruce is attempting to convince Sally to marry him. He promises her that if she will marry him, he will buy a new Mercedes automobile for her within six months of the marriage and take her on a world tour within a year of the marriage date. Sally reluctantly agrees, and they sign an agreement by which Bruce agrees to provide the Mercedes and world tour. Bruce and Sally marry on January 1. Unexpectedly, on March 1, Bruce's supposedly rich uncle, Frank, dies. Frank has no living relatives other than Bruce and has a will leaving everything to Bruce who is also appointed executor. In attempting to settle the estate, Bruce agrees orally to pay out of his own pocket debts of Frank totaling $10,000. Sally is concerned about Bruce's doing so. Bruce tells her not to worry because he will get all the money back when the estate settles. Bruce admits to a number of friends that he agreed to settle the debts out of his own pocket because he needed to obtain assets from the estate in a hurry. The assets were needed in large part to satisfy his obligations to Sally. Surprisingly, it later came to light that prior to his death Frank had signed away all his assets to his girlfriend in Argentina. There was nothing left in the estate for Bruce to inherit. Bruce disavowed his agreement to pay $10,000 to various creditors. 74. A prenuptial agreement is the appropriate term for the marriage agreement entered into between Bruce and Sally. 75. Regarding Bruce's promises to Sally of a Mercedes and a trip, the promises fall within the statute of frauds. 76. What is the most likely result of Bruce's attempt to avoid his agreement to pay creditors of the estate out of his own pocket? A promise to pay debts of an estate out of an executor's own funds would come within the statute of frauds, but the oral agreement Bruce made will likely be enforceable under the main-purpose rule. 1. When a party's obligations under a contract are terminated, the party is said to be discharged. 2. A party's contractual obligations be terminated by performance, the failure of a condition to occur, or by operation of law. 3. Contracts containing conditions affecting the performance obligations of the parties are called conditional contracts. 4. Precedent, concurrent, and subsequent are types of conditions. 5. A condition precedent is a particular event that must occur in order for a party's duty to arise. 6. A condition subsequent is a future event that terminates the obligations of the parties when it occurs.

7. A condition concurrent occurs when each party's performance is conditioned on the performance of the other. 8. Express describes conditions explicitly stated in the contract. 9. Implied describes conditions that are not explicitly stated but are inferred from the nature and language of the contract. 10. The discharge by parties of their obligations by doing what they respectively agreed to do under the terms of the contract is called discharge by performance. 11. An offer of performance by being ready, willing, and able to perform is known as tender. 12. Two primary kinds of performance are complete and substantial. 13. Complete performance occurs when all aspects of the parties' duties under the contract are carried out perfectly. 14. A contractual condition of satisfaction is considered an express condition that must be met before the other party's obligation to pay for the performance arises. 15. A contractual condition of satisfaction may be judged by either an objective or subjective standard depending on the issue involved. 16. If a contract does no clearly specify that the satisfaction is to be personal, the objective standard applies. 18. A material breach discharges the nonbreaching party from his obligations under the contract. 19. A material breach occurs when a party unjustifiably fails to substantially perform his obligations under the contract. 20. An anticipatory repudiation occurs when a contracting party refuses to complete the contract before the actual time of performance. 21. A mutual decision occurs when parties agree that they simply wish to discharge each other from their mutual obligations and, therefore, rescind or cancel the contract. 22. A substituted contract occurs when, instead of canceling a contract, the parties substitute a new agreement in place of the original. 23. An accord and satisfaction occurs when by agreement one of the parties substitutes a different performance for his original duty under the contract. 24. Novation occurs when the parties to the agreement wish to replace one of the parties with a third party. 25. An alteration of the contract, bankruptcy, or objective impossibility of performance are ways in which a contract may be discharged by operation of law. 26. Commercial impracticability is used as a basis for discharge by operation of law when performance is still objectively possible but would be extraordinarily injurious or expensive to one party. 27. Frustation of purpose arose from cases in England in which parties who had contracted for rooms along a parade route for the king's coronation, received their money back when the coronation was canceled because the king became ill. 28. Monetary damages are also referred to as legal damages. 29. Compensatory damages are designed to put the plaintiff in the position he would have been in had the contract been fully performed. 30. Consequential damages are foreseeable damages within the contemplation of the parties at the time the contract was made and that result from special facts and circumstances arising outside the contract itself. 31. Punitive damages are designed to punish the defendant and deter him and others from engaging in similar behavior in the future. 32. When no actual damages result from the breach of a contract, the court may award the plaintiff nominal damages. 33. Liquidated damages is a type of damages that the parties specify in advance.

34. The obligation to use reasonable efforts to minimize damage resulting form a breach is referred as the duty to mitigate one's damages. 35. Equitable remedies as applied in the U.S. grew from England. 36. Equitable remedies come into being to fashion remedies when the existing laws did not provide any adequate ones. 37. Recission is the termination of the contract, and rstitution is the return of any property given up under the contract. 38. Under the UCC, when may orders for specific performance of a contract for the sale of goods be awarded when the goods are unique or in other proper circumstances. 39. College president Wally contracts with Alice to teach business law. Alice does a fine job teaching but gets mad at Wally and will not turn in grades. Wally seek an order of specific performance to require Alice to abide by her contract. 40. Specific performance requires that the breaching party fulfill the terms of the agreement. 41. Injunction is an order either forcing a person to do something or prohibiting a person from doing something. SITUATION: Maurice finds a dream home on the lake. He wants to buy it but is unsure whether he can get a loan. He signs a contract with the seller that he will buy the home if he can get a loan. Maurice also includes a contractual clause into the contract with the seller that if the purchase goes through but he loses his job within one year, the seller will repurchase the house for the same price Maurice paid for it. After getting a loan and buying the home, Maurice decided that he wanted new windows put into the home. He entered into a contract with a window contractor. The window contractor visited the home, but Maurice was always gone. The contractor made several attempts to reach Maurice, but Maurice would not return phone calls and made no attempt to assist the contractor with installation. 42. The provision that Maurice did not have to buy the house unless he was able to get a loan is referred to as both a condition precedent and an express condition. 43. The provision that the seller will repurchase the home if Maurice loses his job within one year of the sale is referred to as a condition subsequent. 44. The responsibility of Maurice to make arrangements to give the window installer access to the home is referred to as an implied condition. 1. State common law, the Uniform Commercial Code, and state statutory law are used to interpret sales contracts. 2. All states, except Louisiana, follow the English common law. 3. The UCC was created in 1952. 4. The UCC is divided into sections known as articles. 5. Article 2 of the UCC governs sales contracts?. 6. Article 2(A) of the UCC governs lease contracts. 7. When Article 2 is silent on an issue of sales contract formation or interpretation and there is no state statutory law in place on that matter, the common law rules apply. 8. Under Article 2 of the UCC, a sale results in the passing of title form the seller to the buyer for a price. 9. Under Article 2 of the UCC, goods is defined as tangible things which are movable at the time of identification to the contract for sale. 10. Under the UCC, items are tangible if they exist physically. 11. Real estate, corporate stock, or copyrights do not meet the UCC definition of a good. 12. Minerals taken from real estate and sold by the owner and soil taken from real estate and sold by the owner; but not the right, sold by the owner to another party, to remove soil from the real estate are considered goods under the UCC.

13. A contract that combines a good with a service is a mixed sale. 14. The drafters of the UCC assumed that merchants have a greater ability to look out for themselves than do ordinary buyers and sellers. 15. Under Article 2(a) of the UCC, a lease is defined as a transfer of the right to possession and use of goods for a term in return for consideration. 16. Under Article 2(A) of the UCC, a lessor is a person who transfers the right to possession and use of goods under a lease. 17. Under Article 2(A) of the UCC, a lessee is a person who acquires the right to possession and use of goods under a lease. 18. Under the UCC, an acceptance may be made by any reasonable means of communication. 19. Under the UCC, an acceptance is effective when dispatched. 20. Regarding the mirror-image rule and the UCC, the mirror-image rule that applies under common law does not apply under the UCC. 21. Under the UCC contracts for the sale of goods must be in writing in order to be enforceable if they are valued at $500 or more. 22. Under the UCC lease contracts that require payments of $1000 or more must be in writing in order to be enforceable. 23. A contract or contact provision is said to be unconscionable if it is so unfair that a court would be unreasonable if it enforced the contract. 24. Actions that the UCC provide that a court can take if it discovers that a contract or lease provision is unconscionable are that the court either can refuse to enforce the contract or lease, or can enforce the parts of the contract or lease that are fair. 25. The United Nations Convention on Contracts for the International Sale of Goods was offered as a treaty that countries could sign, indicating their willingness to allow this treaty to govern international business-to-business sales contracts. 26. Good title is title that is acquired form someone who already owns the goods free and clear. 27. Void title is not true title such as when someone purchases stolen goods. 28. Voidable title occurs in certain situations where the contract between the original parties would be void but the goods have already been sold to a third party. 28. If an owner entrusts the possession of goods to a merchant who deals in goods of that kind, the merchant can transfer all rights in the goods to a buyer in the ordinary course of business. 29. An insurable interest is the right to insure goods against any risk exposure such as damage or destruction. 30. A simple delivery contract occurs when the purchased goods are transferred to the buyer from the seller at either the time of the sale or some time later by the seller's delivery. 31. A common-carrier delivery contract occurs when goods are delivered to a buyer via a common carrier, such as a trucking line. 32. A goods-in-bailment contract occurs when purchased goods are in some kind of storage under the control of a third party, such as a warehouseman. 33. A conditional sales contract occurs when the sale itself is contingent on approval. 34. With a simple delivery contract, title transfers to the buyer when goods are identified to the contract. 35. With a simple delivery contract involving goods sold by a merchant that are to be delivered, risk of loss transfers to the buyer when goods are delivered to the buyer. 36. With a simple delivery contract, an insurable interest in the buyer is created when the goods are identified to the contract.

37. With a simple delivery contract in which the seller is a merchant, the seller sustains a loss if, through no fault of either party, the goods are destroyed through fire prior to delivery. 38. With a simple delivery contract in which the seller is not a merchant, the buyer if tender has occurred sustains a loss if, through no fault of either party, the goods are destroyed through fire prior to delivery. 39. If a buyer and seller execute a contract and the seller subsequently places the goods with a common carrier for delivery to the buyer, regarding the statue of the common carrier, the common carrier is an independent contractor. 40.The result in the case in the text Emery v.Weed, in which the plaintiff sued for recovery of payments and cancellation of an agreement to purchase a Corvette after the vehicle was stolen from the merchant seller prior to delivery was that the buyer was entitled to a refund and cancellation of the contract because the risk of loss remained with the seller. 41. Types of common-carrier delivery contracts are origin contracts and destination contracts. 42. Origin contracts requires that the seller make proper shipping arrangements and deliver goods to the buyer via a common carrier but not guarantee the safety of goods to their destination. 43. In an origin contract, title passes to the buyer at the time and place of shipment. 44. In an origin contract, the buyer bears the risk of loss while the goods are in transit. 45. In a destination contract, the seller bears the risk of loss while the goods are in transit. 46. The term "FOB" when used as a shipping term represents Fee on Board. 47. Regarding transportation costs when the designation FOB is used, the selling price includes transportation costs. 48. The term "FAS", when used as a shipping term, represents Freedom Alongside. 49. When the designation FAS is used, the seller, at the seller's expense, delivers the goods alongside the ship before the risk passes to the buyer. 50. The term CIF, when used as a shipping term, represents cost, insurance and freight. 51. The seller puts the goods in possession of a carrier before the risk passes to the buyer in a CIF agreement. 52. Goods-in-bailment references goods that are in some kind of storage so the seller cannot transfer physical possession of them. 53. A seller, in order to indicate ownership of goods when goods are in some kind of storage so the seller cannot transfer physical possession of themhas either a negotiable document of title, a nonnegotiable document of title, or a contract or other instrument showing ownership that is not a negotiable or nonnegotiable document of title. 54. The words "deliver to the order of seller" in a goods-in-bailment contract, incicates a negotiable document. 55. The absence of words "to the order of" in a goods-in-bailment contract indicates a nonnegotiable document. 56. In a goods-in-bailment contract, an insurable interest is created when either party has title, risk of loss, or other economic interest attached to the goods. 57. Types of conditional contracts include sale-on-approval contracts and sale-or-return contracts. 58. In a conditional sales contract, a contract is a sale-on-approval contracts if the seller allows the buyer to take possession of the goods before deciding whether to complete the contract by making the purchase. 59. In a conditional sales contract, sale-or-return contracts occurs when he seller and buyer agree that the buyer may return the goods at a later time. 60. If a seller does not provide goods that were described in the contract, a buyer may accept the nonconforming goods as is, reject the goods subject to the seller's curing the deficiency in the goods, or reject the goods if no cure is possible. SITUATION: Beau went shopping at ABC Carpet. He saw some carpet he liked but could not make up his mind. The manager at ABC Carpet wrote down the proposed purchase price for him along with a statement that the price would be

good for three months. Two months later Beau went back to ABC Carpet to purchase the carpet. Unfortunately, the price had gone up. Beau showed the manager his writing and guaranteed price, but the manager said that the offer was no longer good. Although he had to pay more than the ABC manager had initially promised, Beau proceeded to purchase his carpet from XYZ carpet, and he also contracted with XYZ to do the installation. Unfortunately, Beau almost immediately started to have problems with the carpet. Beau told the sales manager for XYZ Carpet that he was planning on bring suit for breach of warranty. The sales manager, however, told him that the breach of warranty provisions only applied to sales of goods and that the carpet purchase was for installation, a service. 61. What kind of offer did the manager at ABC Carpet make to Beau? A firm offer. 62. Regarding the enforceability of the offer made by the manager at ABC Carpet, ABC Carpet was bound by the offer and Beau had the right to sue for the refusal to honor the agreement. 63. Regarding whether the UCC applies to the contract Beau had with XYZ Carpet, the court will determine whether the predominant purpose of the contract was the sale of goods in which case the UCC would apply. 1. According to the principle of federalism established by the U.S. Constitution, the authority to govern is allocated to the federal government. 2. According to the tenth Amendment to the Constitution, all powers that the Constitution neither gives exclusively to the federal government nor takes from the states are reserved for the states. 3. Federal legislation that affects business must be based on an expressed constitutional grant of authority because the federal government has only those powers granted to it by the Constitution. 4. The U.S. Constitution allocates the power of the federal government among three branches of government. 5. The three independent branches of the federal government are legislative, executive, and judicial. 6. The process of judicial review established by which courts review legislative and executive actions to determine whether they are constitutional was by common law. 7. The Supremacy Clause provides that the Constitution, laws, and treaties of the United States constitute the supreme law of the land. 8. Regarding laws passed by the U.S. Congress under the authority of the commerce clause, so long as the law affects commerce among the states, or interstate commerce in some way, the regulation is generally constitutional. 9. An example of the state's exercise of its police power is the enactment of criminal laws, building codes, zoning laws, sanitation standards for restaurants, and regulations for the practice of medicine. 10. Regarding the case in the text titled National Electrical Manufacturers Association v. William H. Sorrell, Attorney General of the State of Vermont, John Kasssel et al. involving an effort to declare unconstitutional a statute passed by the Vermont legislature requiring manufacturers of certain mercury-containing products to label their products and packaging to inform consumers about mercury contained therein and its disposal. Noting that the burden on interstate commerce was not different than the burden on intrastate commerce, the court upheld the statute. 11. Regarding federal taxation: The U.S. Constitution grants Congress the power to tax. The taxes laid by Congress must be uniform across the states. Congress can legitimately use taxes to encourage the development of certain industries and discourage the development of others. 12. Regarding the privileges and immunities clause of the U.S. Constitution: Under the clause, a state cannot prohibit nonresidents from opening restaurants in the state. Under the clause, a state can allow state universities to charge higher tuition to out-if-state students because residents pay taxes that fund state universities, while out-of-state students do not. Under the clause, states may not discriminate against citizens of other states in the buying and selling of property. 13. The clause of the U.S. Constitution that provides that, "Full Faith and Credit shall be given in each state to the public Acts, Records and judicial Proceedings of every other state" is the Full Faith and Credit Clause. 14. The first ten amendments to the U.S. Constitution are known as the Bill of Rights. 15. The fourteenth amendment extends most of the provisions of the Bill of Rights to the states. 16. The second amendment provides that the government cannot infringe on citizens' right to bear arms.

17. The fourth amendment protects citizens from unreasonable searches and seizures. 18. The fifth amendment gives citizens the right not to testify against themselves. 19. The eighth amendment prohibits cruel and unusual punishment. 20. When the First Amendment is concerned, which of the following does the term "political speech" reference, speech that occurs when corporations support political candidates. 21. Regarding the Central Hudson test for commercial speech: Speech that is misleading is not protected by the First Amendment. The government must show that a substantial governmental interest is served by a restriction on commercial speech. A restriction on commercial speech must not be more extensive than necessary. 22.Regarding what the First Amendment does not protect, neither defamation nor obscenity are protected by the First Amendment, but commercial speech that satisfies the requisite test is protected by the First Amendment. 23. Regarding the protection of "fighting words" under the First Amendment, fighting words are unprotected speech under the First Amendment. 24. The first amendment protects freedom of religion. 25. Which of the following is relevant In determining whether a particular government statute violates the Establishment Clause, it is revelent whether the statute has a secular legislative purpose, whether the statute's principal or primary effect either advances or inhibits religion, and whether the statute fosters an excessive government entanglement with religion. 26. The establishment clause of the First Amendment provides that government cannot make a law respecting an establishment of religion. 27. The free-exercise clause of the First Amendment provides that government cannot make a law prohibiting the free exercise of religion. 28. A search warrant is a court order that authorizes law enforcement agents to search for or seize items specifically described in the warrant. 29. Government agents can obtain a search warrant when they can establish probable cause. 30. Government agents can search without a search warrant when law enforcement officials believe it likely that the items sought will be removed before they can obtain a warrant. 31. An exception to the rule that administrative searches usually require search warrants is the pervasiveregulation exception. 32. The Fifth Amendment's protection against self-incrimination meansthat a person does not have to be a witness against himself or herself, period. 33. fifth amendment protects against an individual being deprived of life, liberty, or property without a fair and just hearing. 34. "Double jeopardy" means that the government cannot try a person more than once for the same crime. 35. The result in United States v. Kyllo, the case in which the defendant was growing marijuana inside his home and law enforcement used a thermal imager, an instrument that detects heat emissions, without first obtaining a search warrant is that law enforcement acted improperly by using the thermal imaging device without a warrant. 36. Types of due process are procedural and substantive due process. 37. Substantive due process refers to the basic fairness of laws that may deprive an individual of her life, liberty, or property. 38. The Fifth Amendment's takings clause reference refers to the requirement that the government pay the owner just compensation if the government wants to take private property for public use. 39. The U.S. Supreme Court has found that U.S. citizens have a right to privacy based upon the U.S. Constitution. 40. If a law prevents individuals from exercising a fundamental right, the law will be subject to strict scrutiny. 41. If a law's classification scheme is based on gender, the law will be subject to intermediate scrutiny.

SITUATION: Mary Dogood, a member of the school board in ABC County, is appalled at the amount of junk food in the schools. She convinces the state legislature to pass an ordinance that no stores may sell any unhealthy, junk food within 500 feet of any school or day care center. A teacher of political science raises the issue of whether the regulation is valid and is told that it is a valid exercise of the jurisdiction's police power to protect its citizens. Convenience stores balk at the regulation and challenge it in court. 42. What does the term "police power" reference? The residual powers retained by each state to safeguard the health and welfare of its citizenry. 43. In determining whether the law is constitutional, a court likely ask whether the state regulation is rationally related to a legitimate state end. 44. What do courts generally presume regarding laws passed in accordance with states' police power? That the law is valid. 1. Appellate courts primarily handle questions of law. 2. An example of a question of fact is whether a vehicle ran a traffic light. 3. A defendant in a lawsuit is to be provided by the plaintiff with a copy of the complaint. That process is called service of process. 4. Laws which enable a court to serve a defendant outside the state as long as the defendant has sufficient minimum contacts within the state and it seems fair to assert jurisdiction are called long-arm statutes. 5. Adult siblings, John, Sam, and Andy, are in disagreement over how to split the proceeds of a piece of land left to them by a rich uncle who recently died. The uncle was a resident of Georgia, and the land is in Georgia; but neither John, Sam, nor Andy live there. A court in Georgia would have in rem jurisdiction over the dispute. 6. Susan, a resident of Illinois, ran a traffic light while traveling in Michigan and did significant damage to Paul's car. Susan has no insurance and no assets except for a farm in Alabama. A court in Alabama can exercise quasi in rem jurisdiction over the farm and authorize its sale. Any excess over Paul's amount of damages would go to Susan. 7. Regarding state and federal court jurisdiction, in some cases, state courts have exclusive jurisdiction; in some cases, state courts have concurrent jurisdiction with the federal courts; and state courts also have the power to hear all cases not within the exclusive jurisdiction of the federal court system. 8. Regarding federal jurisdiction, some cases fall within both federal jurisdiction and state jurisdiction, but the federal court system has exclusive jurisdiction over some cases. 9. The federal court system has exclusive jurisdiction over admiralty cases, bankruptcy cases, and federal criminal prosecutions. 10. For purposes of diversify-of-citizenship, where does a corporation reside? Both in the state in which the corporation has its principal place of business and the state of incorporation. 11. Assume a plaintiff files a case in state court that could also have been filed in federal court. The defendant has a right to remove the case to federal court. 12. Typically, an appropriate venue in a lawsuit is the trial court where the defendant resides and also the location where the dispute occurred if the lawsuit focuses on a particular incident. 13. Suppose that Billy knows that he can bring his case against Bob in a state court in Tennessee. He is unsure, however, of which county in which to proceed. The proper county will be determined by the Venue. 14. Assume you know that Robert has told a lie about a friend of yours, Yolanda. You tall Yolanda that she should sue for defamation, but she has no interest in that. You cannot sue on behalf of Yolanda because you have no standing. 15. Bob sued Jane over a motor vehicle accident. Bob and Jane settled the case prior to trial for $1,000. The lawsuit is now moot. 16. Trial courts in the federal court system called U.S. district courts. 17. The U.C. Court of Appeals has 12 circuits. 18. Assuming there are no vacancies, there are nine U.S. Supreme Court justices.

19. Regarding state courts of appeal, not all states have intermediate courts of appeal; and in those states, appeals go to the state court of last resort. 20. The case or controversy requirement ensures that courts do not render advisory opinions. 21. A default judgment is a judgment in favor of the plaintiff that occurs when the defendant fails to answer the complaint and the plaintiff's complaint alleges facts that would support such a judgment. 22. A defendant uses an affirmative defense when her or his answer admits that the facts contained in the complaint are accurate but also includes additional facts that justify the defendant's actions and provide a legally sound reason to deny relief to the plaintiff. 23. The court may properly grant a motion for judgment on the pleadings if after reviewing the pleadings, the judge determines that the only reasonable decision is in favor of the moving party. 24. The court may grant a motion of summary judgment if after reviewing the evidence in the case, there is no factual dispute and one party is entitled to judgment prior to trial. 25. Both interrogatories and depositions, but not summary motions are tools of discovery. 26. Interrogatories are written questions that one party sends to another to answer under oath. 27. At a disposition, attorneys examine a witness under oath with a court reporter present. 28 28. Billy, a witness to a motor vehicle accident, is gravely ill with cancer. Pat, who was injured in the accident, would like to preserve his testimony for trial in case he dies before the trial date. Pat should take Billy's deposition. 29. Amber says at trial that Gwen told her that she saw Tom run the traffic light and hit Christy's car. Amber's testimony is objectionable bsed on hearsay. 30. Attorney Candy represents plaintiff Ann who is suing her neighbor for nuisance claiming that the neighbor plays music too late at night. Candy puts Ann on the stand and asks her questions. Candy is involved in direct examination. 31. Mediation is a type of ADR. 32. Regarding the speed and cost of ADR, it is us usually faster and cheaper. 33. Mediation is an extension of negotiation. 34. An advantage of mediation is that it helps disputing parties preserve their relationships, and also parties to mediation have a high level of autonomy. 35. The arbitrator typically provides a decision within 30 days of an arbitration hearing. 36. An arbitrator's decision is always called an "award. 37. The arbitrator displayed bias is a reason that an arbitration award may be set aside under the Federal Arbitration Act. 38. According to the text, arbitration is less expensive generally than litigation. 39. A binding arbitration clause is a provision in a contract mandating that all disputes arising under the contract be settled by arbitration called. 40. A med-arb dispute resolution process is a process in which the parties agree to start out in mediation and, if the mediation is unsuccessful on one or more points, to move on to arbitration. 41. A summary jury trial is an abbreviated trial that leads to a nonbinding jury verdict. 42. In an early neutral case evaluation, parties select a neutral third party and explain their respective positions to the neutral, who then evaluates the strengths and weaknesses of the case. 43. Private trials is an ADR method in which a referee is selected and paid by the disputing parties to offer a legally binding judgment in a dispute. 44. Criticisms of private trials include both that they may allow defendants to hide wrongdoing and that those who lack funds must use a slower cheaper system. 1. Ethics is the study and practice of decisions about what is good, or right?

2. A local Chamber of Commerce plans a seminar on "the social responsibility of business. The seminar will cover the expectations that the community imposes on firms doing business inside its borders. 3. As pointed out in the text section "Business Ethics and Italian Taxes", ethical considerations vary from country to country as do practices of law enforcement. 4. The letters "WPH" in reference to the "WPH Framework for Business Ethics" discussed in the text means "Who, Purpose, and How". 5. Stakeholders of a business include shareholders, employees, customers, management, the community, and others. 6. Examples of purpose in the WPH process of ethical decision making are freedom, security and efficiency. 7. Part of the "how" in the WPH process of decision making is public disclosure. 8. Positive abstractions that capture our sense of what is good or desirable are called values. 9. The idea that we should interact with other people in a manner consistent with the manner in which we would like for them to interact with us is called golden rule. 10. The "public disclosure" test for ethical behavior is sometimes referred to as the television test. 11. The universalization test for ethical behavior seeks consideration of what the world would be like if a decision is copied by everyone else. 12. Actus rea is the term that describes wrongful behavior in a criminal action 13. Strict liability is a term used to describe liability without fault. 14. An example of the imposition of strict liability is a business selling cigarettes to a minor. 15. A misdemeanor is punishable by imprisonment for less than one year. 16. More serious crimes punishable by fines or imprisonment of more than one year or death are felonies. 17. Insignificant offences are minor offenses usually punishable by a jail sentence of less than six months or a small fine with an example being violation of a building code. 18. The Foreign Corrupt Practices Act serves to combat bribery of foreign officials. 19. Extortion is the making of threats for the purpose of obtaining money or property. 20. False entries is the making of an entry into the books of a bank or corporation that is designed to represent the existence of funds that do not exist. 21. False token is a false document or sign of existence used to perpetrate fraud, such as making counterfeit money. 22. A Ponzi scheme is the misappropriation of trust funds or money held in a fiduciary capacity. 23. Pretexting is an investment swindle in which high profits are promised from fictitious sources and early investors are paid off with funds raised from later investors. 24. Zack, the president of ABC Company, falsified documents to make it appear as if he had been granted stock options on certain dates, and he selected the dates after the fact, picking dates on which the stock price was low. He committed the offense of stock option back-dating. 25. Ed goes door-to-door selling magazine subscriptions. Ed knows, however, that he is simply taking money for subscriptions and has absolutely no intention of ever arranging for the provision of magazines. He is committing the offense of false pretenseses 26. Bank teller John receives $1,000 from a customer for deposit into the customer's bank account. Instead of placing the money into the customer's account, Ben puts it into his pocket. He has committed the offence of embezzlement 27. A person who illegally accesses or enters another person's or a company's computer system to obtain information or to steal money is a hacker. 28. Corporate executives may be found personally liable for a business crime regardless of whether the business crime was committed for personal benefit or for the benefit of the corporation.

29. The sixth amendment provides the right to a speedy and public trial. 30. The Fourteenth Amendment extends the most constitutional rights to defendants at the state level. 31. Ordinarily, to obtain an arrest warrant, a law enforcement agent must demonstrate that there is probable cause that a suspect committed or is planning to commit a crime. 32. A defendant must be informed before questioning that the defendant has the right to consult an attorney before speaking to the police. 33. A magistrate determines whether there was probable cause for the arrest when a defendent makes a first apperance. 34. Nolo Contendre is a plea in which the defendant does not admit guilty but agrees not to contest the charges. 35. A judge reports that a jury was "hung" if the jury could not reach a decision. 36. The Sarbanes Oxley Act was created specifically to combat white-collar crime. 37. Courts have defined a pattern of racketeering under RICO as more than one action. 38. An employee learns that her employer, a healthcare facility, is committing fraud against the government by filing false Medicare claims. She may obtain a portion of any recovery obtained by the government through the False Claims Act. 39. The Sarbanes-Oxley Act was passed largely in response to business scandals of the 2000's, such as Enron. 40. Under the Sarbanes-Oxley Act of 2002, it is a felony for an auditor to willfully fail to maintain proper records of audits and work papers for at least five years. 41. The ethical theory that requires that we evaluate the morality of an action by imagining ourselves in the position of the person facing the ethical dilemma is called situational ethics. 42. Absolutism is different from ethical relativism and situational ethics because it holds that whether an action is moral does not depend on the perspective of the person facing the ethical dilemma. 43. Ethical fundamentalism is another name for absolutism. 44. The ethical theory of absolutism requires that individuals defer to a set of rules to guide them but recognizes that people may disagree about which rules to follow. 45. The basis of consequentialism is an inquiry into the consequences. 46. Kantian ethics is involved with deontology. 47. Ethics of care adherents believe that when one individual, the caregiver, meets the needs of one other person, the cared-for party, the caregiver is helping to meet the needs of all the individuals who fall within the cared-for party's web of care. 48. An ethical theory that urges managers to take those actions that provide the greatest pleasure after having subtracted the pain or harm associated with the action is question is called utilitarianism. 49. A business manager who deceives everyone because the manager believes the deception maximizes pleasure over pain in a given situation is acting consistently with the ethical theory of Act Utilitarianism. 50. A business manager who considers it wrong to terminate a person whose spouse has terminal cancer because a firm has an obligation to support its employees when they are vulnerable is acting consistently with the ethical theory of Deontology. 51. Utilitarianism theories is a form of consequentialism. 52. A person who believes that they should not cheat on a drug test because if everyone did so, the drug test would be meaningless is applying a categorical imperative. 53. The principle of deontology may be difficult to apply because people disagree about what duties we owe to one another. 83. The ethical system in which the development of virtues, or positive character trains such as courage, justice, and truthfulness, is the basis for morality is called Virtue Ethics.

54. The ethics of care theory holds that the right course of action is the option most consistent with the building and maintaining of human relationships. 1. Business law consists of the enforceable rules of conduct that govern commercial relationships. 2. (p. 2) Six functional areas of business as listed in the text are management, production and transportation, marketing, research and development, accounting and finance, and human resource management. 3. What market participants may or may not legally do is spelled out by constitutions, legislatures, regulatory bodies, and courts. 4. Purpose of the law as set forth in the text include, serving as an alternative to fighting, encouraging social justice, guaranteeing personal freedoms, and providing order such that one can depend on a promise or an expectation of obligations. 5. National versus international, federal versus state, and public versus private most accurately sets forth ways into which law may be divided and classified. 6. Private law involves disputes between private individuals or groups. 7. Public law involves disputes between private individuals or groups and their government. 8. Cival law involves remedies available to an individual when his or her rights are violated. 9. Criminal law applies to situations in which someone commits an act against the public as a unit. 10. Laws are enforced by the courts. 11. A majority of citizens in a democracy can agree to permit certain authorities to make and enforce rules describing what behavior is permitted and encouraged in their community. These rules are what we refer to as the law. 12. Assume a businessperson who owns a computer equipment store is delinquent in paying rent to the landlord. The resulting dispute entails private law. 13. If a computer store dumps waste behind its building in violation of local, state, or federal environmental regulations, the resulting dispute focuses on public law. 14. Civil law involves the rights and responsibilities involved in relationships between persons, and between persons and their government. 15. Criminal laws are prosecuted by only injured individuals. 16. Assume a restaurant chain is forced to pay damages to a person who suffered food poisoning after eating at the restaurant. Private law and civil law is involved. 17. Assume the Securities and Exchange Commission prosecutes someone for insider trading. That prosecution is an example of criminal law. 18. The U. S. Constitution is the supreme law of the land. 19. The United States Constitution and the bylaws of each state establish the fundamental principles and rules by which the United States and the several states are governed. 20. The rules and regulations put forth by legislatures are referred to as statutory law. 21. Legislative acts passed by state legislatures can be found in state codes. 22. Legislative acts passed by the U.S. Congress can be found in the U.S. Code. 23. Codes is a term used to refer to laws that are contained in one convenient location?. 24. Ordinances references rules of cities and counties that govern matters not covered by federal or state law. 25. The group that urges states to enact model laws to provide greater uniformity of law is called the National Conference of Commissioners on Uniform State Laws. 26. When the organization in charge of proposing uniform laws proposes a statute, a state legislature can ignore the proposed uniform law, adopt it in full, or adopt it in part. 27. Case law can be revoked by new statutes.

28. The term "precedent" involves the use of past decisions to guide future decisions. 29. The Uniform Commercial Code is a significant body of law to business activities including sales, banking, and warranty. 30. When courts rely on precedent, they are obeying stare decisis. 31. The Brown v. Board of Education case is referenced in the text as a use of stare decisis as binding precedent in that it abolished discriminatory policies for individuals of different racial backgrounds. 32. The U.S. Supreme Court relied on precedent to strike down a school's admissions policy that reserved slots for members of minority races in the University of California v. Bakke case. 33. Restatements of the Law are summaries of common law rules in a particular area of the law that have been enacted by most states. 34. Assume an issue is decided by a state supreme court. On what cases is that decision binding? The decision being appealed from and future cases in the state, but not past cases. 35. Administrative agencies exist at the federal, state, and local level. 36. Restatements are prepared by the American Law Institute. 37. A treaty is generally negotiated by the executive branch and must then be approved by two-thirds of the Senate. 38. The concept of Natural Law suggests that individuals should have the freedom to disobey a law enacted by people if their conscience goes against the law and they believe the law is wrong. 39. Assume a judge writes that she is deciding to enforce a law in question but that her decision does not mean that she sees the law as the morally correct rule. The judge would have leanings in the direction of Legal Positivism. 40. The school of jurisprudence is the concept of stare decisis rooted in the The historical school. 41. Candy wants to start an Internet business. She is told by the Chinese government that certain items on her site are objectionable and illegal, and that if she wants to do business in China, she must remove the objectionable material. If Candy wants to do business in China, she must abide by Chinese law. 42. (Situation) Alice loves all animals and is starting a new grooming business for dogs. She believes that animals are very important and plans to exceed any applicable regulations regarding cleanliness and health standards. Alice thinks some local regulations make no sense. For example, there is a local ordinance that all dogs must be kept on a leash at all times when not in a fenced area. Although Alice lives on a large lot with plenty of room for dogs to run free, she plans to obey the leash regulation and all others. She is aware, however, that members of the community have had success in changing local regulations by petitioning city council. Alice plans to proceed in that manner to attempt a change in the leash law. (p. 6) Alice's idea that dogs have basic rights, and her plan to exceed laws involving cleanliness and health standards is rooted in Natural Law. 43. Alice's plan to obey all laws and regulations even if she does not agree with them is rooted in Legal Positivism. 44. Alice's plan to seek change through following what others have done in the past by petitioning city council is rooted in the historical school. 45. Situation: Zach wants to expand his coffee business internationally - into Zeno, a small remote country in Africa. His best friend Zora asks him if he plans to hire legal counsel for the expansion. Zach replies, "Of course not. The U.S. has the most strict laws regarding contracts, employment, and business practices. So long as I'm legal here, I'm legal anywhere. Besides, I studied up on Zeno law ten years ago, and I know it all." Zach proceeds and lands in jail in the remote country of Zeno for violating recently past laws protecting employees and mandating certain benefits. Authorities there claim that he sexually harassed an employee, failed to pay sufficient wages, and failed to give employees Zeno's mandated 12 weeks of vacation per year. (p. 8) The type of law involved in comparing laws between the U.S. and Zeno is Comparative Law. 46. Zach must obey the laws of Zeno when operating a business in Zeno and cannot rely upon U.S. laws as a defense. 47. Regarding Zach's defense that he thought he knew the law of Zeno because he had studied it some years before and that the laws under which he was arrested were new, rules in international business change

frequently, and Zach had a duty to stay current. It is not a defense that he studied the law at one time and that the laws at issue were new. 1. Consideration is what a person will receive in return for performing a contractual obligation 2. Consideration consists of something of value given to another party in exchange for something else of value. 3. A promise to do something, a benefit to the promisor, or a detriment to the promisee are examples of consideration. 4. In a bilateral contract the consideration for each promise is a return promise. 5. In a unilateral contract the consideration for a promise is action. 6. Promissory estoppel is an exception to the rule requiring consideration. 7. Promissory estoppel occurs when one party makes a promise knowing the other party will rely on it, the other party does rely on it, and the only way to avoid injustice is to enforce the promise. 8. Regarding the adequacy of consideration, courts seldom consider the adequacy of consideration but will do so if an item was sold for a low sum in order to avoid claims of creditors. 9. In the case of Smith v. Riley, referenced in the text, the Court ruled that the purchase amount was sufficient consideration. 10. Sam offers Betty his bicycle for $75. An example of an illusory promise on the part of Betty would be "I'll take it if I decide to do so." 11. Regarding illusory promises, illusory promises are not consideration. 12. Under the law in England, England has the same requirement for consideration as the U.S. In England, specialty contracts or deeds are an additional exception to the requirement for consideration. In England, deeds are used to create enforceable promises of gifts to charity, and in England a "deed" is a document that creates a binding obligation between parties without consideration when certain formalities are honored. 13. For a court to enforce a promise, both sides must offer consideration. 14. Regarding past consideration, it is not consideration that will support a binding contract. 15. Under the Restatement (Second) of Contracts, promises based on past consideration may be enforceable to the extent necessary to avoid injustice. 16. A promise to do something that you are already obligated to do is not valid consideration. 17. The preexisting duty rule consists of that performance of a duty one is obligated to do under the law is not good consideration and that performance of an existing contractual duty is not good consideration. 18. Exceptions to the preexisting-duty rule include unforeseen circumstances and additional work, but not past consideration. 19. Sally goes to have her hair trimmed and agrees to pay $40 to the stylist. While there, Sally decides that she would also like highlights. The stylist informs her that highlights will cost an additional $30. Sally agrees to the price, gets the highlights, but refuses to pay the extra amount. the likely result in a dispute between Sally and the stylist would be that the stylist will win because she did additional work in exchange for the extra payment, and, therefore, Sally's promise was supported by valid consideration. 20. Under Article two of the UCC, an agreement modifying a contract needs no consideration to be binding. 21. Sam, who has a retail clothing store, orders 50 white shirts from XYZ manufacturer. He later calls a representative of XYZ and requests that blue shirts be sent instead. The representative agrees. Sam gets white shirts and complains. The XYZ representative says there was no consideration for the contract. The correct resolution of the disputewould be that Sam is correct because under the UCC no additional consideration was needed. 22. Mary has a pet shop and verbally orders 50 packages of dog food for puppies from a supplier for a total cost of $1,000. Later she calls the supplier and changes the order to food for adult dogs. When 50 packages of puppy food arrive, Mary complains. The supplier tells her that the modification was not valid because nothing was put in writing. The correct resolution of the dispute would be that Mary is correct because under the circumstances, there was no requirement of a writing to modify the agreement.

23. A requirement contract is an agreement whereby the buyer agrees to purchase all his goods from one seller. 24. An output contract is an agreement whereby the seller guarantees to sell everything she produces to one buyer. 25. A requirements contract under common law is not valid because of the lack of consideration. 26. An output contract under common law is not valid because of the lack of consideration. 27. A requirement contract under the UCC is valid so long as the requirement is made in good faith. 28. An output contract under the UCC is valid so long as the output is made in good faith. 29. Regarding whether an accepted offer to satisfy a debt by paying only part is consideration partial payment is consideration if an unliquidated debt is involved. 30. In a liquidated debt, there is no dispute about the fact that money is owed and the amount of money owed. 31. In an unliquidated debt, the parties either dispute the fact that any money is owed or agree that some money is owed but dispute the amount. 32. A valid accord and satisfaction occurs when a dispute over an unliquidated debt is settled and paid for less than the full amount. 33. When an accord and satisfaction is at issue, the accord is the new agreement to pay less than the creditor claims is owed. 34. When an accord and satisfaction is at issue, the satisfaction is the payment, by the debtor, of the reduced amount. 35. Regarding a valid accord and satisfaction, when amounts agreed upon are paid, the debt is fully discharged. 36. Under the UCC regarding checks marked "paid-in-full, if a business inadvertently cashes such a check, the business has 90 days from the date it cashed that check to offer repayment in the same amount to the debtor and avoid an accord and satisfaction. The next questions are based on the following situation. Richard, who is cleaning out his garage, offers to sell Dawn a used computer for $200. Dawn replies that "I'll think about it and buy it if I decide to do so." Richard also calls Denise and offers to give Denise a used business law book. She is excited to receive the book and tells him that she will pick it up the next day. Richard also agrees to sell a communications book for $5 to Jill who promises to pick it up the next day. Meanwhile, Sam comes to visit, offers Richard $20 for the business law book; and Richard sells it to him. Sam also offers Richard $50 for the used computer. Richard sells it to Sam because he does not expect to hear from Dawn. Sam sees the communications book and offers Richard $30 for it. Richard decides to forget about Jill and proceeds to sell the book to Sam for $30. Denise is very angry because Richard did not save the book for her and claims that he breached a contract because she had accepted his offer. Jill is also angry because Richard sold the communications book and informs him that he breached the contract he had with her. Several days later, after any reasonable length of time for the offer to remain open had expired, Dawn tells Richard that she would like the computer. She tells him that her response constituted consideration in that it bound him to an option contract and that he should have awaited her response. Richard tells Sam that he needs to return everything for a full refund. Sam refuses. 37. Based on Dawn's statement that she would think about it and buy the computer if she decided to do so. It is an illusory promise. 38. Regarding Dawn's statement that her response was sufficient consideration in that it bound Richard to an option contract and that he should have awaited her response. She is incorrect on both counts. Her statement did not create an option contract nor was Richard bound to await her response. 39. Regarding Denise's claim that Richard breached a contract with her because Richard did not save the book for her after she had accepted his offer. Denise is incorrect because she did not provide any consideration. 40. Regarding Jill's claim that by selling the communications book for a higher price, Richard breached the contract he had with her. Jill is correct. 41. Regarding the dispute between Richard and Sam regarding whether Sam must return anything. Sam does not legally have to return anything.

1. Capacity is an element of a legally binding contract. 2. A person who has legal capacity to contract is one who has the mental ability to understand his or her rights and obligations under a contract and, therefore, will presumably be able to understand how to comply with the terms of the agreement. 3. Incapacity is some sort of mental or physical defect that prevents a person from being able to enter into a legally binding contract. 4. Historically, minors, insane persons, and women were considered people with limited or no capacity. 5. Today in all but three states, a minor is someone under the age of 18. 6. In most states a person is given full legal capacity to enter into contracts when he or she becomes emancipated before reaching the age of majority. 7. Emacipation occurs when a minor's parents or legal guardians give up their right to exercise legal control over the minor, typically when the minor moves out of the parents' house and begins supporting himself or herself. 8. In most cases, when a minor marries, she or he is considered emancipated. 9. Because their contracts are voidable, minors have the right, until a reasonable time after reaching the age of majority, todisaffirmor avoid their contracts. 10. Regarding the obligation of a minor on disaffirmance, the obligations of a minor on disaffirmance vary from state to state. 11. A disaffirmance of a contract based on minority must occur before or within a reasonable time of the minor's reaching the age of majority. 12. As a general rule, most sates will not allow a minor to disaffirm contracts for life insurance, health insurance, or psychological counseling. 13. The majority rule regarding a minor's misrepresentation of his or her does not affect the minor's right to disaffirm the contract. 14. Regarding contracts for necessaries entered into by minors, a minor can disaffirm a contract for necessaries, but the minor will still be held liable for the reasonable value of the necessary, a contract for a necessary is a contract that supplies the minor with the basic necessities of life, the purpose of the limitation on the minor's right to disaffirm contracts for necessaries is to ensure that minors are able to obtain the basic necessities of life when their parents will not provide them, and whether something is considered a necessary is related to whether the minor's parents are willing to provide the item in question for the minor. 15. Express ratification occurs when a person reaches the age of majority and states, either orally or in writing, that he or she intends to be bound by the contact entered into as a minor. 16. An implied ratification occurs when a former minor does not specifically state that he affirms a contract entered into as a minor but takes some action that is consistent with intent to ratify the contract. 17. Regarding the ability of persons suffering from a mental illness to enter into a binding contract? Persons suffering from a mental illness never have capacity to enter into a binding contract, persons suffering from a mental illness may have full, limited, or no legal capacity to enter into a binding contract depending on the nature and extent of their mental deficiency. 18. Guardians may be appointed for those who are adjudicated insane, those whose judgment has been impaired because of a condition such as Alzheimer's, and also those who are adjudicated habitual drunkards. 19. If a contract is disaffirmed on the basis of intoxication, each party to the contract must return the other to the condition he or she was in at the time the contract was entered into. 20. Because public policy does not favor intoxication, the courts tend to be unsympathetic to intoxicated parties and will fairly liberally interpret as ratification of a contract behavior that appears as ratification. 21. Regarding an agreement to commit a crime or a tort, an agreement to commit a crime is unenforceable, and an agreement to commit a tort is unenforceable. 22. If a legal contract is formed and the subject of the contract then becomes illegal under a new statute, the contract is discharged.

23. (Twenty-five states have statutes requiring that people working in certain professions obtain a license before practicing their craft. 24. A purpose of licensing statutes is to encourage proper performance; to give the government an avenue by which to regulate specific industries; and to protect the public's health, safety, and welfare. 25. If a licensing statute is intended to protect the public's health, safety, and welfare, an agreement with an unlicensed professional is typically deemed enforceable but with a fine. 26. Usary occurs when a party gives a loan at an interest rate exceeding the legal maximum. 27. The maximum interest rate varies depending on the state involved.. (p. 172) 28. Fifty states engage in at least some regulation of gambling. 30. Bob is hired to do computer sales for an electronics store. He agrees that if he leaves his employment, he will not work for another computer store within 25 miles for a period of two years. That type 1. A contractis a promise or set of promises for the breach of which the law gives a remedy or the performance of which the law in some way recognizes a duty. 2. An agreement consists of an offer by one party and an acceptance of the terms by another party. 3. The person who makes an offer is called a offeror. 4. The person who agrees to the terms of an offer by another a party is called the offeree. 5. A bargained-for-exchange is a definition for consideration. 6. Contractual capacity represents the legal ability to enter into a binding agreement. 7. People under the age of majority, people suffering from mental illness, and intoxicated persons are examples of people who do not have the capacity to enter into legally binding contracts. 8. Legal object references the requirement that a contract not be either illegal or against public policy. 9. Acceptance secured through fraud, undue influence, or misrepresentation represents a lack of genuine assent. 10. Case law and the Uniform Commercial Code are the two most important sources of contract law. 11. Today's law of contracts originated from judicial decisions in England. 12. The law of contracts is primarily common law. 13. The Restatement Second of the Law of Contracts was propounded by prominent legal scholars, recruited by the American Law Institute. 14. The reason the Uniform Commercial Code was drafted was that different states had different laws governing contracts which did not result in a smooth flow of interstate commerce. 15. Regarding the Uniform Commercial Code, it became the law in each state that adopted it in whole or in part, and state laws differ somewhat. 16. The part of the Uniform Commercial Code that is relevant to contracts is Article 2. 17. All contracts can be categorized as either unilateral or bilateral. 18. A bilateral contract is commonly defined as a promise in exchange for a promise. 19. In a unilateral contract, the offeror wants a performance to form the contract. 20. Express contracts have all their terms clearly set forth in either written or spoken words. 21. An implied contract is a contract that arises not from words but from the conduct of the parties. 22. Quasi-contracts is sometimes referred to as an implied-in-law contract. 23. The fair market value of the matter involved is a measure of recovery when a quasi-contract is involved 24. A valid contract is one that contains all the legal elements of a contract. 25. A valid contract may be unemforceable when there is some law that prohibits the courts from enforcing it.

26. A void contract is in effect not a contract at all. 27. A contract is voidable if one or both of the parties have the ability to either withdraw from the contract or enforce it. 28. Contracts entered into as a result of fraud, duress, or undue influence are usually voidable. 29. Once all of the terms of the contract have been fully performed, the contract is said to be executed. 30. As long as some of the duties under a contract have not yet been performed, the contract is considered executory. 31. Contracts under seal, letters of credit, and also negotiable instruments are examples of formal contracts. 32. The term contracts under seal comes from the days when the contract was literally sealed by a piece of soft wax into which an impression was made. 33. Ten states still allow a contract without consideration to be enforced if it is under seal. 34.A recognizance arises when a person acknowledges in court that he or she will perform some specified act or will pay a price upon failure to do so. 35. A letter of credit is an agreement by the person who issues the letter to pay a sum of money on receipt of an invoice and other documents. 36. Negotiable instruments are written documents signed by a party that makes an unconditional promise to pay a specific sum of money on demand or at a certain time to the holder of the instrument. 37. An intent is the first element of a contract. 38. Formation of an agreement begins when the offeror makes an offer to the offeree. 39. Constance asks Kathy if Kathy will sell her used business book for $50. What is the status of the negotiations? No offer has been made. 40. What was the result in the case nugget, Lefkowitz v. Great Minneapolis Surplus Store, Inc., involving an advertisement for the sale of fur coats? The court ruled that the ad was an offer and that the plaintiff properly accepted it. 41. If nothing is stated to the contrary in terms of an auction, an auction is presumed to be with reserve. 42. In an auction without reserve, the seller is treated as making an offer to accept the highest bid. 43. The material terms of a contract are those terms that would allow a court to determine what the damages would be in the event that one of the parties breaches the contract. 44. An offer can be terminated by revocation by the offeror, rejection or counteroffer by the offeree, death or incapacity of the offeror, or destruction of the subject matter. 45. The offeror is the "master of his offer" refers to the right of an offeror to revoke an offer. 46. Under the UCC regarding an offeror's ability to revoke an offer, a promise to hold an offer for the sale of a good open for a specified period cannot be revoked if it is made in writing and signed by a merchant. 47. As a general rule, a revocation is effective when it is received by the offeree. 48. Rgarding when an offer may be rejected by an offeree, regardless of how long an offeror states that an offer will be held open, once the offeree rejects it, the offer is terminated. 49. If an option contract exists, the administrator of an offeror's estate must hold an offer open until it expires in accordance with the contract. 50. If the subject matter of an offer is destroyed, the offer immediately terminates. 51. If the subject matter of an offer becomes illegal, the offer immediately terminates. 52. In the absence of a time condition in an offer, the offer will expire after a reasonable amount of time. 53. There is no set amount of time, and what constitutes a reasonable amount of time varies depending upon the subject matter of the offer.

54. A way in which an offeree can manifest intent to enter into a contract is by performance or by a return promise. 55. An offeree may accept a unilateral contract by performance. 56. Gretchen offers $100 to anyone who can return her lost dog, Sparky. Haley returns the dog and requests the money. Gretchen says that there is no binding contract. Gretchen is incorrect because there is a binding unilateral contract which Haley accepted by performing. 57. The Japanese do not desire that any terms be left to be decided later. 58. The mirror-image rule sets forth the common law rule that the terms of an acceptance must mirror the terms of the offer. 59. The UCC modifies the Mirror-Image Rule. 60. Acceptance may be made by any reasonable means if no means of communicating an acceptance is specified in an offer. 61. The mailbox rule provides that an acceptance is valid when it is placed in the mailbox 62. The mailbox rule provides that a revocation is effective only when received by the offeree. Situation: Business law teacher Debby needed some yard work done. She told her class that she would give $50 to the first person who mowed her yard. She also entered into an agreement with Brenda to trim some shrubbery for $40. Max went to mow Debby's yard. Unfortunately, just as he finished mowing, a neighborhood dog bit him, and he had to go to the emergency room for a couple of stitches. Debby refused to pay Max because she said that he ended up being more trouble than he was worth, and the contract was not in writing. Max refused to pay the emergency room because he said that they did not have a binding, bilateral contract. Brenda refused to trim the shrubbery because she got a better offer and claimed that she was not bound on the contract until she started to perform. 63. Regarding Brenda's statement that there was no contract? Brenda is incorrect because there was a bilateral, express agreement. 64. What is an appropriate characterization of the agreement between Debby and Max? They had a bilateral, implied agreement. 65. Regarding Max's statement that he did not have to pay the emergency room charges? He is incorrect because there was a binding implied contract.