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Michael Gough - Accounting/Business

Updates for Bus/Para 18

BUSINESS 18 - Key Concepts
Business Law I BUS 018

NOTE: SCROLL DOWN TO BOTTOM OF THIS PAGE TO SEE GUIDE QUESTIONS, KEY TERMS AND MULTIPLE CHOICE QUESTIONS 


Instructor: Michael Gough, goughmichael@fhda.edu

 

 

 

 

BUSINESS LAW TERMS AND CONCEPTS: 

Legal Overview:

Definition of Law Functions of Law Law and Morals Law and Justice Substantive and Procedural • Substantive Law • Procedural Law Public and Private • Public Law • Private Law Civil and Criminal • Civil Law • Criminal Law

Constitutional Law Judicial Law • Common Law • Equity Legislative Law • Treaties • Executive Orders Administrative Law 

Regulation of Business

Corporate Governance Arguments against Social Responsibility Arguments in Favor of Social Responsibility Courts, Civil Procedure, Jurisdiction 

Subject Matter Jurisdiction Definition Federal Jurisdiction • Exclusive Federal Jurisdiction • Concurrent Federal Jurisdiction State Jurisdiction Jurisdiction over the Parties Definition In Personam Jurisdiction In Rem Jurisdiction Attachment Jurisdiction Venue Civil Dispute Resolution The Pleadings • Complaint • Summons • Answer • Reply Pretrial Procedure Trial Appeal Alternative Dispute Resolution Arbitration Conciliation Mediation Mini-Trial Summary Jury Trial Constitution/Administrative

Federal Commerce Power State Regulation of Commerce Federal Fiscal Powers • Taxation and Spending • Borrowing and Coining Money • Eminent Domain Contract Clause Freedom of Speech • Commercial Speech

• Defamation Due Process • Substantive Due Process • Procedural Due Process Equal Protection Federalism Federal Supremacy Federal Preemption Judicial Review Separation of Powers State Action

Operation of Administrative Agencies Rulemaking • Legislative Rules • Interpretative Rules • Procedural Rules Enforcement Adjudication Limits on Administrative Agencies Judicial Review Legislative Control Control by Executive Branch


Nature of Crimes Essential Elements of a Crime • Actus Reus • Mens Rea Classification • Felony • Misdemeanor Vicarious Liability Liability of a Corporation white-collar Crime Computer Crime Crimes against Business Defenses to Crimes Defense of Person or Property Duress Mistake of Fact Entrapment

Torts Intentional, Negligence, Strict Liability
Defamation • Libel • Slander Invasion of Privacy • Appropriation • Intrusion • Public Disclosure of Private Facts • False Light Misuse of Legal Procedure Real Property • Trespass • Nuisance Personal Property • Trespass • Conversion

Interference with Contractual Relations Disparagement Fraudulent Misrepresentation Battery Assault False Imprisonment Infliction of Emotional Distress


Negligence Breach of Duty of Care Definition of Negligence Reasonable Person Standard Duty to Act Duties of Possessors of Land • Duty to Trespassers • Duty to Licensees • Duty to Invitees Res Ipsa Loquitur Proximate Cause Causation in Fact Limitations on Causation in Fact • Unforeseeable Consequences • Superseding Cause Injury Harm to Legally Protected Interest Burden of Proof Defenses to Negligence Contributory Negligence Comparative Negligence Assumption of Risk Activities Giving Rise to Strict Liability Definition of Strict Liability Abnormally Dangerous Activities Keeping of Animals Products Liability Defenses to Strict Liability Contributory Negligence Comparative Negligence Assumption of Risk


Law of Contracts

Definition of Contract a binding agreement that the courts will enforce. Common Law most contracts are primarily governed by state common law, including contracts involving employment, services, insurance, real property (land and anything attached to it), patents, and copyrights. Uniform Commercial Code Article 2 of the UCC governs the sales of goods. • Sale the transfer of ownership from seller to buyer • Goods tangible personal property (personal property is all property other than an interest in land) Essentials of a Contract Mutual Assent Consideration Legality of Object Capacity Classification of Contracts Express and Implied Contracts • Express Contract • Implied in Fact Contract • Bilateral Contract • Unilateral Contract • Valid Contract • Void Contract • Voidable Contract • Unenforceable Contract • Executed Contract • Executory Contract • Formal Contract • Informal Contracts Promissory Estoppel Quasi Contract

 

Mutual Assent 

Offer: Essentials of an Offer Definition indication of willingness to enter into a contract Communication offeree must have knowledge of the offer and the offer and the offer must be made by the offeror to the offeree. Intent determined by an objective standard of what a reasonable offeree would have believed. Definiteness offer's terms must be clear enough to provide a court with a basis for giving an appropriate remedy. Duration of Offers Lapse of Time offer remains open for the time period specified or, if no time is stated, for a reasonable period of time. Revocation generally, an offer may be terminated at any time before it is accepted, subject to the following exceptions. • Option Contracts contract that binds offeror to keep an offer open for a specified time. • Firm Offer a merchant's irrevocable offer to sell or buy goods in a signed writing that assures that the offer will not be terminated for up to three months. • Statutory Irrevocability offer made irrevocable by statute • Irrevocable Offer of Unilateral Contracts a unilateral offer may not be revoked for a reasonable time after performance is begun. • Promissory Estoppel noncontractual promise that binds the promissor because she should reasonably expect that the promise will induce the promisee (offeree) to take action in reliance on it. Rejection refusal to accept an offer terminates the power of acceptance. Counteroffer counterproposal to an offer which generally terminates the original offer. Death or Incompetency of either the offeror or the offeree terminates the offer. Destruction of Subject Matter of an offer terminates the offer. Subsequent Illegality of the purpose or subject matter of the offer terminates the offer.


Acceptance Requirements Definition positive and unequivocal expression of a willingness to enter into a contract on the terms of the offer. Mirror Image Rule except as modified by the Code, an acceptance cannot deviate from the terms of the offer. Communication of Acceptance General Rule acceptance effective upon dispatch unless the offer specifically provides otherwise or the offeree uses an unauthorized means of communication. Stipulated Provisions in the Offer the communication of acceptance must conform to the specification in the offer. Authorized Means Restatement and the Code provide that, unless the offer provides otherwise, acceptance is authorized to be in any reasonable manner. Unauthorized Means acceptance effective when received, provided that it is received within the time within which the authorized means would have arrived. Acceptance Following a Prior Rejection first communication received by the offer is effective. Defective Acceptance does not create a contract but serves as a new offer.

Conduct Invalidating Assent 

Duress Definition Physical Compulsion Improper Threats Undue Influence Effect Fraud Fraud in the Execution Fraud in the Inducement • False Representation • Fact • Materiality • Knowledge of Falsity and Intention to Deceive • Justifiable Reliance Nonfraudulent Misrepresentation Negligent Misrepresentation Innocent Misrepresentation Mistake Definition Mutual Mistake Unilateral Mistake Assumption of Risk Effect of Fault upon Mistake


Consideration

Definition the inducement to enter into a contract Elements legal sufficiency and bargained-for exchange Legal Sufficiency Definition consists of either a benefit to the promisor or a detriment to the promisee • Legal Benefit obtaining something to which one had no prior legal right. • Legal Detriment doing an act one is not legally obligated to do or not doing an act that one has a legal right to do. Adequacy not required where the parties have freely agreed to the exchange. Illusory Promise promise that imposes no obligation on the promisor; the following promises are not illusory. • Output Contract agreement to sell all of one's production to a single buyer. • Requirements Contract agreement to buy all of one's needs from a single producer. • Exclusive Dealing Contract grant to a franchisee or licensee by a manufacturer of the sole right to sell goods in a defined market. • Conditional Contract one where the obligations are contingent upon the occurrence of a stated event. Preexisting Public Obligations public duties such as those imposed by tort or criminal law are neither a legal detriment nor a legal benefit. Preexisting Contractual Obligation performance of a preexisting contractual duty is not consideration. • Modification of a Preexisting Contract under the common law a modification of a preexisting contract must be supported by mutual consideration; under the Code a contract can be modified without new consideration. • Substituted Contracts the parties agree to rescind their original contract and to enter into a new one; rescission and new contract are supported by consideration. • Settlement of an Undisputed Debt payment of a lesser sum of money to discharge an undisputed debt (one whose existence or amount are not contested) does not constitute legally sufficient consideration. • Settlement of a Disputed Debt payment of a lesser sum of money to discharge a disputed debt (one whose existence or amount is contested) is legally sufficient consideration. Bargained-For Exchange Definition a mutually agreed-upon exchange. Past Consideration an act done before the contract is made is not consideration.
Contracts without Consideration Promises to Perform Prior Unenforceable Obligations • Promise to Pay Debt Barred by the Statute of Limitations a new promise by the debtor to pay the debt renews the running of the statute for a second statutory period. • Promise to Pay Debt Discharge in Bankruptcy may be enforceable without consideration. • Voidable Promises a new promise to perform a voidable obligation that has not been previously avoided is enforceable. • Moral Obligation a promise made to satisfy a preexisting moral obligation is generally unenforceable for lack of consideration. Promissory Estoppel doctrine that prohibits a party from denying his promise when the promisee takes action or forbearance to his detriment reasonable based upon the promise. Contracts under Seal where still recognized, the seal acts as a substitute for consideration. Promises Made Enforceable by Statute some gratuitous promises have been made enforceable by statute; the Code makes enforceable (1) contract modifications, (2) renunciations, and (3) firm offers.

Legality

Violations of Statutes General Rule Licensing Statutes • Regulatory License • Revenue License Gambling Statutes Sunday Statutes Usury Statutes Violations of Public Policy Tortious Conduct Common Law Restraint of Trade • Sale of a Business • Employment Contracts Corrupting Public Officials Exculpatory Clauses Unconscionable Contracts • Procedural Unconscionability • Substantive Unconscionability Effect of Illegality Unenforceability Exceptions • Party Withdrawing Before Performance • Party Protected by Statute • Party Not Equally at Fault • Excusable Ignorance • Partial Illegality

Capacity:

Minors Definition a person who is under the age of majority (usually 18 years). Liability on Contracts minor's contracts are voidable at the minor's option. • Disaffirmance avoidance of the contract; may be done during minority and for a reasonable time after reaching majority. • Ratification affirmation of the entire contract; may be done upon reaching majority. Liability for Necessaries a minor is liable for the reasonable value of necessary items (those that reasonably supply a person's needs). Liability for Misrepresentation of Age prevailing view is that a minor may disaffirm the contract. Liability for Tort Connected with Contract if a tort and a contract are so intertwined that to enforce the tort the court must enforce the contract, the minor is not liable in tort. Incompetent and Intoxicated Persons Person under Guardianship Mental Illness or Defect Intoxicated Persons

Contracts in Writing: 
Statute of Frauds Contracts within the Statute of Frauds Rule contracts within the statute of frauds must be in writing to be enforceable. Suretyship Provision applies to promises to pay the debt of another. • Promise Must Be Collateral promisor must be secondarily, not primarily, liable. • Main Purpose Doctrine if primary object is to provide an economic benefit to the surety, then the promise is not within the statute. Executor-Administrator Provision applies to promises to answer personally for a duty of the decedent. Marriage Provision applies to promises made in consideration of marriage but not to mutual promises to marry. Land Contract Provision applies to promises to transfer any right, privilege, power, or immunity in real property. One-Year Provision applies to contracts that cannot be performed within one year. • The Possibility Test the criterion is whether it is possible, not likely, for the agreement to be performed within one year. • Computation of Time the year runs from the time the agreement is made • Full Performance by One Party makes the promise of the other party enforceable under majority view. Sale of Goods a contract for the sale of goods for the price of $500 or more must be in writing to be enforceable. • Admission an admission in pleadings, testimony, or otherwise in court makes the contract enforceable for the quantity of goods admitted. • Specially Manufactured Goods an oral contract for specially manufactured goods is enforceable. • Delivery or Payment and Acceptance validates the contract only for the goods that have been accepted or for which payment has been accepted. Modification or Rescission of Contracts within the Statute of Frauds oral contracts modifying existing contracts are unenforceable if the resulting contract is within the statute of frauds. Methods of Compliance General Contract Law the writing or writings must: • specify the parties to the contract • specify the subject matter and essential terms • be signed by the party to be charged or by her agent Sale of Goods provides a general method of compliance for all parties and an additional one for merchants. • Writing or Writings Must (1) be sufficient to indicate that a contract has been made between the parties, (2) be signed by the party against whom enforcement is sought or by her authorized agent, and (3) specify the quantity of goods to be sold. • Written Confirmation between merchants, a written confirmation that is sufficient against the sender is also sufficient against the recipient unless the recipient gives written notice of his objection within ten days. Effect of Noncompliance Oral Contract within Statute of Frauds is unenforceable Full Performance statute does not apply to executed contracts Restitution is available in quasi-contract for benefits conferred in reliance on the oral contract. Promissory Estoppel oral contracts will be enforced where the party seeking enforcement has reasonably and justifiably relied upon the promise and the court can avoid injustice only by enforcement.

Writing

Parol Evidence Rule and Interpretation of Contracts Parol Evidence Rule Statement of Rule when parties express a contract in a writing that they intend to be the complete and final expression of their rights and duties, evidence of their prior oral or written negotiations or agreements of their contemporaneous oral agreements that vary or change the written contract are not admissible. Situations to Which the Rule Does Not Apply • a contract that is not an integrated document • correction of a typographical error • showing that a contract was void or voidable • showing whether a condition has in fact occurred • showing a subsequent mutual rescission or modification of the contract Supplemental Evidence may be admitted. • Course of Dealing previous conduct between the parties • Usage of Trade practice engaged in by the trade or industry • Course of Performance conduct between the parties concerning performance of the particular contract • Supplemental Consistent Evidence Interpretation of Contracts Definition the ascertainment of the meaning of a promise or agreement or a term of the promise or agreement. Rules of Interpretation include • all the circumstances are considered and the principal purpose of the parties is given great weight. • a writing is interpreted as a whole. • commonly accepted meanings are used unless the parties manifest a different intention. • wherever possible, the intentions of the parties are interpreted as consistent with each other and with course of performance, course of dealing, or usage of trade. • technical terms are given their technical meaning. • specific terms are given greater weight than general language. • separately negotiated terms are given greater weight that standardized terms or those not separately negotiated. • the order for interpretation is express terms, course of performance, course of dealing, and usage of trade. • where a term has several possible meanings, the term will be interpreted against the party who supplied the contract or term.


Third-Party Beneficiary Contracts

Definition Intended Beneficiaries • Donee Beneficiary • Creditor Beneficiary • Rights of Intended Beneficiaries • Vesting of Rights Incidental Beneficiary Assignment of Rights Definition of Assignment • Assignor • Assignee • Obligor • Obligee Requirements of an Assignment • Revocability of Assignment • Partial Assignment Assignability Rights of Assignee • Defenses of Obligor • Notice Implied Warranties Express Warranty Successive Assignments Delegation of Duties Definition of Delegation • Delegator • Delegatee • Obligee Delegability Duties of Parties • Delegation • Novation


Conditions and Performance

Definition of a Condition an event whose happening or nonhappening affects a duty of performance. Express Condition contingency explicitly set forth in language. • Satisfaction express condition making performance contingent upon one party's approval of the other's performance. • Subjective Satisfaction approval based upon a party's honestly held opinion • Objective Satisfaction approval based upon whether a reasonable person would be satisfied.

Remedies:

Monetary Damages Compensatory Damages contract damages placing the injured party in a position as good as the one he would have held had the other party performed; equals loss of value minus loss avoided by injured party plus incidental damages plus consequential damages. • Loss of Value value of promised performance minus value of actual performance • Expenses Saved loss or costs the injured party avoids by not having to perform • Incidental Damages damages arising directly out of a breach of contract • Consequential Damages damages not arising directly out of a breach but arising as a foreseeable result of the breach. Reliance Damages contract damages placing the injured party in as good a position as he would have been in had the contract not been made. Nominal Damages a small sum awarded where a contract has been breached but the loss is negligible or unproved. Damages for Misrepresentation • Benefit-of-the-Bargain Damages difference between the value of the fraudulent party's performance as represented and the value the defrauded party received. • Out-of-Pocket Damages difference between the value given and the value received. Punitive Damages are generally not recoverable for breach of contract. Liquidated Damages reasonable damages agreed to in advance by the parties to a contract. Limitations on Damages • Foreseeabililty of Damages potential loss that the party now in default has reason to know of when the contract was made. • Certainty of Damages damages are not recoverable beyond an amount that can be established with reasonable certainty. • Mitigation of Damages injured party may not recover damages for loss he could have avoided by reasonable effort. Remedies in Equity Availability only where there is no adequate remedy at law. Types • Specific Performance court decree ordering breaching party to render promised performance. • Injunction court order prohibiting a party from doing a specific act. • Reformation court order correcting a written contract to conform with original intent of the contracting parties. Restitution Definition of Restitution restoration of the injured party to the position she was in before the contract was made. Availability • Party injured by Breach if the other party totally breaches the contract by nonperformance or repudiation. • Party in Default for any benefit conferred in excess of the loss caused by the breach. • Statute of Frauds where a contract is unenforceable because of the statute of frauds, a party may recover the benefits conferred on the other party in reliance on the contract. • Voidable Contracts a party who has avoided a contract is entitled to restitution for any benefit conferred on the other party. Limitations on Remedies Election of Remedies if remedies are not inconsistent, a party injured by a breach of contract may seek more than one. Loss of Power of Avoidance a party with the power to avoid a contract may lose that power by • Affirming the contract • Delaying unreasonably in exercising the power of avoidance • Being subordinated to the intervening rights of third parties

Sales

Merchant definition
UCC versus common law
Firm Offer, course of dealing, course of performance, usage of trade, industry standards, rules of acceptance/rejection, battle of the forms

AGENCY
Nature of Agency Definition of Agency relationship authorizing one party (the agent) to act for and on behalf of the other party (the principal). Scope of Agency Purposes whatever business activity a person may accomplish personally he generally may do through an agent. Other Legal Relations • Employment Relationship one in which the employer has the right to control the physical conduct of the employee. • Independent Contractor a person who contracts with another to do a particular job and who is not subject to control of the other. Creation of Agency Formalities though agency is a consensual relationship that may be formed by contract or agreement between the principal and agent, agency may exist without consideration. • Requirements no particular formality is usually required in a contract of agency, although appointments of agents for a period of more than one year must be in writing. • Power of Attorney written, formal appointment of an agent. Capacity • Principal if the principal is a minor or an incompetent not under a guardianship, his appointment of another to act as an agent is voidable. • Agent any person may act as an agent since the act of the agent is considered the act of the principal. Duties of Agent to Principal Duty of Obedience Duty of Diligence Duty to Inform Duty to Account Fiduciary Duty • Conflicts of Interest • Duty Not to Compete • Confidential Information • Duty to Account for Financial Benefits Duties of Principal to Agent Contractual Duties • Compensation a principal must compensate the agent as specified in the contract, or for the reasonable value of the services provided, if no amount is specified. • Reimbursement the principal must pay back to the agent authorized payments the agent has made on the principal's behalf. • Indemnification the principal must pay the agent for losses the agent incurred while acting as directed by the principal. Tort Duties include the duty to provide an employee with reasonably safe conditions of employment and to warn the employee of any unreasonable risk involved in the employment. Termination of Agency Acts of the Parties • Lapse of Time • Fulfillment of Purpose • Mutual Agreement of the Parties • Revocation of Authority • Renunciation by the Agent

AGENCY/EMPLOYMENT: 
Principal and Third Persons Contract Liability of Principal Types of Principals • Disclosed Principal • Partially Disclosed Principal • Undisclosed Principal Authority • Actual Authority • Actual Express Authority • Actual Implied Authority • Apparent Authority Delegation of Authority Effect of Termination of Agency on Authority • Termination by Operation of Law • Termination by Act of Parties Ratification Fundamental Rules of Contractual Liability • Disclosed Principal • Partially Disclosed Principal • Undisclosed Principal Tort Liability of Principal Direct Liability of Principal • Authorized Acts of Agent • Unauthorized Acts of Agent Vicarious Liability of Principal for Unauthorized Acts of Agent • Respondeat Superior • Independent Contractor
Employment
Respondeat Superior, control by employer, at will employment, liability for torts in employment, strict liability

Criminal Liability of Principal Authorized Acts Unauthorized Acts

AGENCY: 

Agents and Third Persons Contract Liability of Agent Disclosed Principals • Unauthorized Contracts • Agent Assumes Liability Partially Disclosed Principal Undisclosed Principal Nonexistent or Incompetent Principal Tort Liability of Agent Authorized Acts Unauthorized Acts Rights of Agent Disclosed Principal Partially Disclosed Principal Undisclosed Principal


INTELLECTUAL PROPERTY:


Patents 
Copyrights
Trademarks 
Requirements, enforcement 
What can be patented/trademarked? What cannot?
Duration


Mult Choice 

Multiple Choice
Chapter 1
Law Overview and Legal History

1. The system of travelling courts as a basis for providing laws comes from: 

a. Roman Law System
b. Code of Hammurabi
c. Feudal Period
d. Mosaic Law

2. The idea that the king was chosen by God and should answer only to God is found in: 

a. The king speaks ex cathedra
b. William the Conquerors Court
c. Charlemagnes Law
d. the divine right of kings

3. The civil law system seen in several European countries today is based on:

a. English law
b. Feudal law
c. Jewish Law
d. Roman Law

4. The American system of law is based primarily on:

a. English Common Law
b. Roman Law
c. Feudal Law
d. Mosaic Code

5. When an authoritative body promulgates law, it:

a. interprets law
b. ignores the law
c. puts forth law
d. repeals the law

Chapter 2 Legal Philosophy


1. The United States passing anti-discrimination laws in the 20th century is an example of adhering to:

a. the individual ethic
b. the moral ethic
c. the societal ethic 
d. the laissez faire ethic

2. Early in U.S. history the idea of “a deal is a deal” and the government staying out of the transaction is an example of:

a. laissez faire philosophy
b. the societal ethic
c. common law system
d. divine or natural law

3. The philosophy of divine or natural law is first ascribed to:

a. Roscoe Pound
b. Immanuel Kant 
c. Ronald Reagan
d. Aristotle

4. Using the law to move society toward certain behavior follows which philosophy?

a. Historical School
b. Social Engineering
c. Divine or Natural Law
d. Economic School

5. Judging an action in the light of what would happen if everyone in society made the same decision and followed it out can be ascribed to:

a. Aristotle - Natural Law
b. Volcker - Economic School
c. Kant - Categorical Imperative
d. The Golden Rule


Chapter 3 Classifications of Law




1. Traffic laws are an example of what type of laws? 


a. Substantive/Private/Criminal
b. Substantive/Public/Criminal
c. Procedural/Public/Civil
d. Procedural/Private/Criminal

2. Sue Baroo suing Chic N. Haus for a contract breach is an example of what type of laws?

a. Substantive/Private/Civil
b. Substantive/Public/Criminal
c. Procedural/Public/Civil
d. Procedural/Private/Criminal

3. The Miranda decision requiring that the police read rights to an arrested suspect is an example of:

a. Civil Law
b. Procedural Law
c. Codified Law
d. None of the above

4. A suit for monetary damages is a suit in:

a. Civil Court
b. Criminal Court
c. Equity Court
d. None of the above

5. An injunction is a:

a. Remedy at equity requiring the losing party to pay damages
b. Remedy at law requiring the losing party to pay damages
c. Remedy at equity requiring the losing party to cease or desist an action
d. Remedy at law requiring the losing party to go to jail

6. A preponderance of the evidence is to civil court as:

a. Monetary damages are to criminal court
b. Monetary damages are to civil court
c. Beyond a reasonable doubt is to criminal court
d. Imprisonment is to criminal court

7. The supreme law of the land is:

a. Federal Statutes
b. Federal Treaties 
c. State Constitutions
d. U.S. Constitution
8. What do we call the individual who files a civil suit?

a. Federal Prosecutor
b. Plaintiff
c. Defendant
d. State Prosecutor

9. Legislative laws are called:

a. Case law
b. Common law
c. Statutes
d. Equitable remedies

10. What is a decision by a court of equity called?

a. Judgment
b. Decree
c. Maxim
d. Code

11. Criminal guilt must be proved:

a. by a preponderance of the evidence
b. without a doubt
c. beyond a reasonable doubt
d. by a legal majority of the evidence

12. Which of the following laws would take precedence over a state constitution?

a. federal common law
b. federal statute
c. state statute 
d. a and b above

13. Federal common law would take precedence over:

a. the U.S. Constitution
b. federal statute
c. state statute
d. federal treaty

14. The defendant in a civil lawsuit:

a. initiated the lawsuit
b. is being sued
c. will appeal in all cases
d. none of the above


Chapter 4 Jurisdiction, Courts, Civil Procedure

1. If David, a resident of California, gets in a car accident with Lisa, a resident of Oregon and Lisa sues David for $125,000. The case will be heard in:

a. U.S. District Court
b. State Trial Court
c. Federal Appeals Court
d. Either a or b above

2. An example of a specialized court at the federal level would be:

a. U.S. District Court
b. State Traffic Court
c. Bankruptcy Court
d. State Superior Court

3. In rem jurisdiction refers to jurisdiction over

a. a person
b. a city or a state
c. property or a thing
d. federal property

4. A civil dispute between a Sunnyvale, CA manufacturer and a San Jose retail shop in the amount of $100,000 would be held in:

a. U.S. District Court
b. State Traffic Court
c. Bankruptcy Court
d. State Superior Court

5. Sergio is a potential juror on a civil case involving a former employee who is suing Intel Corp. for wrongful discharge He is asked by one of the attorneys if he has any opinion about the case or the parties involved. Sergio says he knows that most fired employees are whiners and losers and moreover; Sergio says he owns 200 shares of Intel stock. It is likely Sergio will be excused from serving based on:

a. peremptory challenge
b. inconvenience
c. challenge for cause
d. Buster cannot be excused from jury duty

6. Which of the following terms do NOT belong in the discovery phase of the trial?

a. deposition
b. pleadings
c. interrogatories
d. requests for admissions

7. Benny is a potential juror on a civil case. The defendant’s attorney notices Benny wearing an American flag on his lapel. The attorney is afraid Benny is conservative and will not be sympathetic to his client’s case. Benny is dismissed without reason. This jury dismissal for Benny is termed:

a. challenge for cause
b. constitutional challenge
c. peremptory challenge
d. judicial challenge

8. A motion requesting that the judge rule contrary to the jury’s decision in a case is called:

a. directed verdict
b. summary judgment
c. judgment on the pleadings
d. judgment notwithstanding the verdict

9. The preliminary examination of jurors is termed:

a. voire dire
b. peremptory challenge
c. challenge for cause
d. interrogatory

10. A motion made before the case goes to trial but after the discovery phase of the trial is called:

a. motion for a summary judgment
b. motion for a judgment on the pleadings
c. demurrer
d. motion for a default judgment

11. Which of the following would fall under federal exclusive jurisdiction?

a. a suit between two citizens of Idaho regarding a breach of contract
b. a suit between a citizen of Ohio and a citizen of Nevada in the amount of $120,000
c. a bankruptcy suit
d. a federal tax issue
e. c and d above
Chapter 5 Constitutional and Administrative Law

1. Which of the following rights are guaranteed in the constitution?

a. right to employment
b. freedom of speech
c. right to medical care
d. freedom of religion
e. b and d above

2. An example of government fiscal power is:

a. the Food and Drug Agency
b. excise taxes levied on citizens
c. regulation of firearms
d. free speech rights 

3. An administrative agency has the power to:

a. investigate
b. make rules and regulations
c. issue sanctions
d. all of the above

4. Laws that do not comply with the U.S. Constitution:

a. can be enforced under states rights
b. have validity in federal matters only
c. are enforceable during natural disasters
d. none of the above

5. An advertisement of a product would be considered

a. protected to a lesser degree than individual speech
b. commercial speech
c. both a and b
d. neither a nor b

6. An administrative agency makes law in the form of:

a. adjudication
b. rules and regulations
c. enforcement
d. legislation

7. The “fourth branch of government” refers to:

a. the constitution
b. the military
c. administrative agencies
d. the house of representatives
8. The contract clause in the constitution:

a. allows a state to change private contracts as needed
b. prevents a state from changing contracts after they have been made
c. requires state approval of contracts between and among states
d. none of the above

9. The U.S. Constitution is preempted by:

a. state constitutions
b. federal statutes
c. state common law
d. administrative agency decisions
e. none of the above

10. The commerce clause in the constitution:

a. is a broad source of power held by the federal government to regulate the economy
b. allows states to regulate intrastate commerce with no interference from the federal government
c. includes the right to bear arms
d. is part of the first amendment

11. The Food and Drug Administration, a federal agency, 

a. can suspend constitutional rights in certain regulatory situations
b. must adhere to the constitution in all matters
c. must adhere to its enabling statute
d. b and c, not a
Chapter 6 Torts

1. Juan is walking out of class and Ben angrily knocks Juan’s hat off his head. Ben has committed:

a. assault
b. battery
c. conversion
d. defamation

2. Holding a knife to someone’s neck and threatening to cut him or her and then releasing the knife is:

a. assault
b. battery
c. neither assault nor battery because there is no injury 
d. false imprisonment

3. Spreading negative, false rumors about someone’s business or business interests is:

a. defamation 
b. libel
c. slander
d. disparagement

4. The Alviso Times reports that Lotta Love, a prominent city coucil member of Milpitas, has not paid her property taxes for three years. It turns out that the story is untrue, Lotta’s sister, Little has not paid her property taxes. Lotta sues the Times for defamation. It is clear that the Times were not acting with malice in the story and an interviewed city official gave the wrong information. Lotta will

a. win, because the Times was negligent in its research
b. win, because Lotta is a public figure
c. lose, because Lotta is a public figure and there was no actual malice
d. lose, because of the statute of frauds

5. In determining professional negligence, a licensed real estate agent will be held to:

a. a reasonable person who is knowledgable about real estate
b. a reasonable real estate agent working in the local industry
c. a person the agent’s age and education
d. a newly licensed real estate agent

6. The difference between trespass to personal property and conversion is:

a. one relates to real property and one relates to personal property
b. one has civil liability and one has criminal liability
c. the measure of damages
d. one is intentional and one is a negligence tort


7. The term ‘intent’ in relation to a tort relates to:

a. an evil or hostile motive
b. desiring the consequences of one’s act
c. criminal negligence
d. none of the above

8. Which of the following could be considered a battery?

a. J touches B’s shoulder to get his attention while waiting in line
b. A, a flight steward kisses C, a passenger during a long overnight flight, while C sleeps, 
c. a physician performs a breast examination on a patient
d. B laughs loudly at R who is standing 10 feet away

9. Professor Guggenheim is mixing combustible chemicals in his home driveway and causes a small explosion. His neighbor’s window is shattered and the fence is damaged. He may:

a. be liable for personal property trespass
b. be liable under strict liability
c. be liable for violation of a criminal statute
d. be liable under negligence per se
e. b, c and d

10. Art regularly burns garbage at his industrial plant. He does not violate any local laws, but the neighboring business gets a great deal of his smoke and soot, causing a fall off in customer traffic. Art may be liable for:

a. conversion
b. trespass to real property
c. nuisance
d. contract infringement


11. Storeowners can sometimes have a problem with detaining shoplifters because:

a. a false accusation and detainment often results in a criminal battery charge 
b. detaining a suspected shoplifter can result in a false imprisonment suit
c. stores have no right to detain suspected shoplifters
d. shoplifters are not read their Miranda rights

Chapter 7 Contracts

1. Contracts are governed primarily by

a. federal statutory law
b. federal common law
c. state common law
d. state statutory law

2. An example of a contract that falls under the UCC is:

a. a contract to purchase a computer
b. an employment contract
c. a service contract to prepare taxes
d. a contract to purchase a patent

3. A contract allowing one or both of the parties to withdraw and cancel the agreement is:

a. void
b. voidable
c. statutory
d. unenforceable

4. A contract where both parties exchange promises and make a commitment is:

a. unilateral
b. unenforceable
c. statutory
d. bilateral

5. Unjust enrichment is a concept recognized in:

a. implied contracts
b. quasi-contract
c. unilateral contracts
d. charitable subscriptions

6. A(n)____contract is one that has no effect because it is missing an essential element.

a. void
b. voidable
c. bilateral
d. implied

7. Which of the following is not an essential element of all contracts?

a. mutual assent
b. writing 
c. consideration
d. legality

8. Which of the following is not an essential element of all contracts?

a. mutual assent
b. equity 
c. capacity of both parties
d. legality

9. The term for not performing in a contract without an excuse is:

a. misnomer
b. fraud
c. breach
d. implied

10. Juan promises to give $75,000 to a non-profit art gallery over the next five years. Based on that the gallery takes out a long term lease on a building and starts several new projects. Juan pays the first year, but nothing thereafter. It is likely that the art gallery will be able to collect the money based on the concept of:
a. unjust enrichment
b. charitable subscription
c. promissory estoppel
d. certainty of offer

Chapter 8 Offer, Acceptance, Invalid Assent

1. The three requisites of a valid offer are: manifest an intent to contract, communication and:

a. a writing
b. definite and certain
c. revocation
d. mirror image

2. Which of the following offers cannot be revoked?

a. firm offer under the code
b. option contract
c. unilateral contract where substantial beginning has occurred
d. all of the above

3. Art makes an offer to Juan that is valid for 30 days. On the 10th day a federal law is passed making the subject matter of the offer illegal. The status of the offer:

a. remains on the table for 20 more days
b. terminated
c. is extended only until the first of the month by statute
d. none of the above

4. In a counteroffer, the offeree:

a. rejects an offer and makes an offer
b. accepts the offer
c. rejects an offer and withdraws
d. remains the offeree

5. An exception to the mirror image rule is:

a. in service contracts where price has been agreed
b. in contracts for intangibles
c. in the code under the battle of the forms
d. in a contingent counteroffer

6. An offer to sell goods will terminate:

a. at the date specified by the offeror
b. after a reasonable time if no termination date is stated
c. when the offeree stipulates the date
d. a and b above

7. Acceptance is effective upon_____. Rejection is effective upon____.

a. receipt, dispatch
b. dispatch, receipt
c. communication, counteroffer
d. a and c above
8. An auction with reserve:

a. requires that the highest offer be taken
b. does not allow the auctioneer to withdraw the article
c. allows the auctioneer to withdraw the article if bidding isn’t high enough
d. reserves space for certain bidders

9. Physical duress renders a contract:

a. voidable
b. executory
c. bilateral

Chapter 9 Consideration

1. Manny’s mother offers Manny $50 if he promises to stop cracking his knuckles and burping in public for one month. If Manny agrees this is:

a. not a valid contract because Manny shouldn’t do those things anyway
b. a valid contract because Manny is giving up a legal right
c. a gratuitous promise 
d. an illusory promise

2. If ABC is going to deliver goods later to XYZ than originally contracted, XYZ can demand something in return.

a. False, both are merchants and have no right to additional consideration
b. False, late delivery is a material breach which rescinds the contract
c. True, XYZ has a right to reasonable consideration
d. True, ABC originally had an illusory promise in the contract

3. Generally, common law requires ____ ____ when modifying a contract.

a. bilateral consideration
b. unilateral consideration
c. gratuitous promises
d. illusory promises

4. Under the UCC, modifying a contract where only one party provides consideration is:

a. unacceptable whether the parties agree or not
b. acceptable only in service agreements
c. acceptable if the parties act in good faith
d. only acceptable between two merchants

5. If John promises to purchase all of the soft drinks he might need for his business in 2000 and 2001 from ABC Beverage:

a. ABC is bound to supply all of John’s soft drink needs regardless of what they might be
b. John has made an illusory promise
c. This contract is a conditional contract
d. This contract falls outside of the UCC

6. A promise that induces reliance which will create an injustice if the promise is not performed is:

a. conditional contract
b. quasi-contract
c. promissory estoppel
d. requirements contract




Chapter 10 Legality and Capacity

1. An attorney’s license is:

a. revenue raising
b. regulatory
c. not necessary to practice law
d. none of the above

2. John gets a life insurance contract where his wife will receive money in the event of John’s death. John jokingly refers to the contract as a “death bet.” This is (a/an):

a. gambling agreement
b. usurious
c. risk shifting agreement
d. wagering agreement

3. If Abby sells her hair salon to Larry and Larry requires a term that does not allow Abby to open another hair salon in the country for 12 years, chances are this term will be:

a. unenforceable as unreasonable
b. enforceable if both parties agree
c. enforceable, but for only 10 years
d. unenforceable because restraints of business are wholly illegal

4. Terms in an agreement where one party has substantial bargaining position over the other and appears to take advantage of that position can give rise to:

a. regulatory issues of trade restraint
b. revenue issues of trade restraint
c. unconscionability
d. exculpatory clauses

5. A term that excuses a party from future negligence is called:

a. usury clause
b. wagering clause
c. santa clause
d. exculpatory clause

6. “In pair delicto” means, and the court __________.

a. to each his own, enforces the agreement
b. at equal fault, leaves the parties where they stand
c. at equal fault, requires a bond before the hearing
d. at equal fault, and the court enforces the agreement.




7. Ed, a 17 year old minor, purchases nine compact discs from Moon Records for a price of $81. Ed listens to them for a couple of months and returns the items demanding a full refund.

a. Moon must pay because Ed is a minor
b. Ed will be liable because the cd’s are a necessity
c. Ed’s parents are liable
d. Moon will be successful in suing Ed on breach of contract

8. A minor can ratify a contract:

a. anytime before reaching majority age
b. only after reaching majority age
c. anytime before or after reaching majority age
d. only before reaching majority age

9. Slight intoxication by party in a contract:

a. destroys one’s capacity to contract
b. makes the agreement void
c. does not destroy one’s capacity to contract
d. makes the agreement voidable by the non-intoxicated party. 

Chapter 11 Third Party and Form

1. John is owed $100 by Annie. John assigns his right to the $100 to Art. Who is the obligor?

a. John
b. Annie
c. Art
d. Beavis

2. An express warranty in an assignment is one that is:

a. implied in law
b. implied in fact
c. spoken or written by the assignor
d. implied by the assignee

3. Homer takes out a $250,000 life insurance contract with the bank as a beneficiary in order to get a small business loan. The bank is a(n):

a. donee beneficiary
b. incidental beneficiary
c. creditor beneficiary
d. safe harbor

4. Steve Montana, an all pro quarterback, contracts to run a football camp for three days in the summer. He decides to go fishing instead and delegates the duty to his brother Jaime. This is:

a. an invalid delegation, personal duties
b. a valid delegation, Jaime is liable
c. a valid novation despite the fact that the football campers never agreed to the change
d. none of the above

5. Lucy agrees to pay Ricky’s tuition at college if Ricky does not pay. Lucy receives no benefit from Ricky. This contract:

a. falls outside of the statute of frauds
b. is an integrated contract
c. must comply with the parol evidence rule
d. falls within the statute of frauds

6. Venus agrees to work for Serena as a trainer for a period of two years. Both agree to all the terms of the contract and integrate it. Venus finds out that Serena was fraudulent. Venus may:

a. not introduce fraud because this contract is integrated
b. introduce fraud despite the integration
c. only introduce the fraud if it came after the date of the agreement
d. introduce fraud if Serena agrees to it.


Chapter 12 Performance and Remedies

1. Larry agrees to purchase Linda’s car contingent on his receiving a job offer by the end of the week. This is an example of:

a. condition subsequent
b. implied in fact condition
c. condition precedent
d. concurrent condition 

2. Lonnie needs to have his watch repaired and takes it to the neighborhood jeweler. He tells the jeweler the problem, and then they discuss the baseball season. No terms of the contract are discussed. Lonnie leaving his watch at the jewelers is an example of:

a. condition subsequent
b. implied in fact condition
c. condition precedent
d. concurrent condition 

3. Pablo contracts with Annie to decorate her living room and guarantees personal satisfaction. If Pablo does a wonderful job but Annie dislikes it:

a. Pablo is protected because of reasonability
b. Pablo is not protected because of the subjective standard here
c. If Pablo can get a licensed designer to agree that the job is reasonable, Annie has no recourse
d. None of the above

4. A contract to deliver swimming apparel by May 1 states “time is of the essence” as one of its terms. The clothing is delivered six weeks late on June 15. It is likely that:

a. a material breach has occurred
b. this is a clear case of substantial performance
c. a novation has occurred here
d. none of the above

5. A substituted duty in a contract and the discharge of a prior obligation is termed:

a. novation
b. bankruptcy
c. accord and satisfaction
d. subjective impossibility

6. A novation involves:

a. substitution of consideration
b. substitution of parties
c. bankruptcy
d. accord and satisfaction



7. Which of the following ways can a party NOT be discharged from performing on a contract?

a. objective impossibility
b. frustration of purpose
c. subjective impossibility
d. subsequent illegality

8. Jonathan contracts to provide catering services for the Smith wedding. He hires Martha Bakers to bake the cake at a price of $2000. Two days before the wedding Martha Bakers backs out and Jonathan finds Stewart Bakers and contracts with Stewart to bake the cake at a price of $2900. Jonathan sues Martha for $900. He is seeking:

a. nominal damages
b. liquidated damages
c. compensatory damages
d. restitution

9. Jonathan contracts to provide catering services for the Smith wedding. He hires Martha Bakers to bake the cake at a price of $2000. Two days before the wedding Martha Bakers backs out and Jonathan finds Stewart Bakers and contracts with Stewart to bake the cake at a price of $1900. Jonathan sues Martha and is awarded $1. He received:

a. nominal damages
b. liquidated damages
c. compensatory damages
d. restitution

10. Jonathan contracts to provide catering services for the Smith wedding. He hires Martha Bakers to bake the cake at a price of $2000. He pays Martha $400 as a deposit. Two weeks before the wedding Martha Bakers backs out and Jonathan requests his $400 deposit back. He is seeking:

a. nominal damages
b. liquidated damages
c. compensatory damages
d. restitution

11. The Smiths hire Simon Paul to sing at their daughters wedding at a price of $5000. Their hated neighbors, the Jones, entice Simon to sing at their 20th wedding anniversary on the same day at the same time for a price of $6000. Simon cannot sing at both so he breaks his contract with the Smiths. The Smiths wish to keep Simon from singing at the Jones’. They will sue for:

a. specific performance
b. injunction
c. liquidated damages
d. punitive damages




Chapter 13 Sales and Lease Contracts

1. Elaine purchases a small ranch. The contract for real property will most likely governed by:

a. the UCC
b. common law
c. administrative law
d. none of the above

2. Sun Stereo makes a signed written offer to sell 200 of its “Premium 230” brand speakers to San Jose Theatre at a price of $150 each. The offer is silent as to termination date. The offer will be:

a. revoked 
b. open until acceptance
c. open until acceptance or three months whichever comes first
d. construed as an invitation to negotiate

3. Leonard contracts to lease a new Ford Taurus for a price of $299 per month for 36 months. the contract will fall under:

a. common law
b. the UCC
c. administrative law
d. patend law

4. A sequence of previous conduct between parties that establishes a basis for interpreting agreements is defined as:

a. usage of trade
b. a requirements contract
c. a course of dealing
d. merchant

5. If there is no specified place of delivery in a contract the code provides for delivery to be:

a. at the buyers dock
b. negotiated
c. seller’s place of business
d. none of the above

6. If no payment terms have been indicated in a contract, the code provides for payment:

a. after all warranty periods
b. upon title change at delivery
c. within 90 days of acceptance
d. to be negotiated




7. The allowance for lack of a mirror image in an acceptance is seen in:

a. common law contracts
b. administrative contracts
c. UCC contracts
d. no contracts

8. A firm offer under the code:

a. may be revoked
b. may not be revoked
c. need not be in writing
d. none of the above

9. A lease contract for goods:

a. is intangible and therefore falls under common law
b. falls under the UCC
c. cannot be contracted for between states
d. none of the above

10. Modification to a contract under the code requires:

a. consideration and agreement by both parties
b. agreement and good faith by both parties
c. consideration but no agreement
d. agreement but no good faith


Chapter 14 Agency

1. Anna works at Super Foods. She mistakenly tells a customer that premium chicken breasts are being sold for 29 cents per pound instead of $1.29 per pound. The customer purchases 20 pounds of the chicken breasts. Later in the day the store owner finds out about Anna’s mistake. The owner will:

a. be able to rescind the contract with the customer - lack of express authority on Anna’s part.
b. have to live with the contract because Anna is an agent with enough authority in this case.
c. ratify her unauthorized acts
d. none of the above

2. Juan gives his colleague Edwina $2 to purchase a cup of coffee. Juan is the ___ Edwina is___.

a. agent/principal
b. third party/agent
c. principal/agent
d. manager/subordinate

3. Joe owns a carpet business. He hires workers on a daily basis to lay carpet. The workers provide their own tools and drive their own cars to the jobs where company trucks deliver the carpet. Joe tells them where they will work, how much time each project will take, when to show up and when to take lunch and quit for the day. This is most likely a/an:

a. independent contractor relationship
b. employer/employee relationship
c. power of attornye relationship
d. none of the above

4. One of the key terms in determining employer/employee vs independent contractor is:

a. control by the principal
b. subjective intent of the parties
c. agreement by the parties
d. ratification by the third party

5. A third party has ____ to verify the authority of a purported agent.

a. no duty
b. a duty 
c. no recourse
d. none of the above

6. Paul works for ABC as a purchasing agent. A salesman from XYZ who does a lot of business with ABC through Paul gives Paul a $250 gift certificate for Christmas. Paul:

a. may keep the gift and not tell ABC
b. may keep the gift and not tell ABC because its Christmas
c. must inform ABC and turn the gift over to the company
d. must inform ABC but may keep the gift in any event
7. Maria works full time as a CPA for Numbers Inc. While doing taxes for one of Number’s clients she suggests that the client come to her directly on the weekends where she does taxes on the side.

a. this is proper in competitive business
b. while this is questionable this is acceptable in business
c. she is breaching her agency duties in this instance
d. she has no obligation to Numbers Inc.

8. A disclosed principal causes liability to fall on:

a. himself or herself
b. the agent exclusively
c. the third party
d. all of the above

9. An agent misrepresents a fact to a principal’s client. The agent is acting entirely within the scope of his agency. The principal is:

a. liable to third party
b. held harmless
c. liable only if the agent admits the misrepresentation
d. none of the above

10. Which of the following ways do NOT end an agency agreement?

a. time lapse
b. revocation
c. renunciation
d. affirmation

Exercises and Key Terms 

Key Terms Chapter 1 Name___________________________


Law


Norms


Sanctions

Promulgate

Code

Common Law System

Civil Law System

Divine Right of Kings

Feudalism 

Summons

Felon

Summons

Precedent

Laissez Faire

Stare Decisis



Exercises Chapter 1 Name___________________________

1. Explain the origins of civil and common law systems. 


__________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ 
______________________________________________________________________________

2. Define the term “laissez faire” and explain how it is (was) applied in the making and carrying out of law in the United States. 


__________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ 
______________________________________________________________________________

3. What does the term ethical behavior mean to you? Do business law and ethics go together? Why or why not? 


__________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
______________________________________________________________________________

4. List three reasons for having law in a society that were not discussed in the Guide. 


__________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ 
______________________________________________________________________________

5. Why do you think that the idea of the “Divine Right of Kings” came into being in certain societies? 


__________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ 
______________________________________________________________________________

Key Terms Chapter 2 Name___________________________ 

Laissez Faire

Individual Ethic

Societal Ethic

Divine/Natural Law

Social Engineering

Historical School of Jurisprudence

Economic School of Jurisprudence

Kohlberg’s Theory of Moral Development

Kant’s Categorical Imperative


Exercises Chapter 2

1. A company you own stock in chooses to support the following in a given year:

A non-profit theatre with a donation of $50,000
The United Way with a donation of $100,000
$25,000 to a non-profit agency called Freedom of Choice that does pregnancy counseling and provides abortions
25,000 to a non-profit agency called Children’s Saviors that does pregnancy counseling and is firmly anti-abortion in its principles

How do you feel about these choices? Write a short letter to the president of the company explaining how you feel and why you think what she did was right or wrong.


2. Discuss a company that you know has been socially responsible. What has it done and what is the effect? Compare that to a company that appears not to be socially responsible. What is the effect? 



Exercises Chapter 2 Continued Name___________________________

3. What kind of life experiences do you think an individual must have to reach Kohlberg’s postconventional stage of moral development? Can you give an example of an individual who you believe operates at that stage?

__________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ 
______________________________________________________________________________

4. Would you invest in any of the following companies? Why or why not?


Tobacco

__________________________________________________________________________________________________________________________________________________________________________________________________________________________________________


A defense company that produces nuclear missiles

__________________________________________________________________________________________________________________________________________________________________________________________________________________________________________


A defense company that produces early warning radar and defense satellites

__________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

A baby food company that markets its formula to third world nations where because of unsanitary conditions and bad water several infants have suffered dysentery causing some deaths

__________________________________________________________________________________________________________________________________________________________________________________________________________________________________________



5. Explain the pros and cons of social responsibility in business. How active in the community should a business be and why?

__________________________________________________________________________________________________________________________________________________________________________________________________________________________________________




Key Terms Chapter 3 Name___________________________

Public Law

Private Law

Substantive Law

Procedural Law

Civil Law

Criminal Law

Plaintiff

Defendant

U.S. Constitution

State Constitution

Federal Treaty

Executive Order 

Statute

Administrative Agencies

Beyond a Reasonable Doubt

Preponderance of the Evidence

Equitable Remedies

Codified Law
Exercises Chapter 3 Name___________________________

1. Give an example of several different equitable remedies available in civil law.

________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

2. What are the reasons for not having private parties initiate and try criminal cases?

________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

3. Discuss and give examples of the differences between civil and criminal law.

________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

4. If you sued the governor for a dog bite you received while visiting at his home, would the case fall under public or private law? Explain why.
________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

5. Can a state constitution provide additional rights beyond the U.S. Constitution? Why or why not?
________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
Key Terms Chapter 4 Name___________________________


Exclusive Federal Jurisdiction

Concurrent Jurisdiction

Diversity Jurisdiction

Exclusive State Jurisdiction

In Personam Jurisdicition

In Rem Jurisdiction

Attachment
Venue

Minimum Contacts

Trial Courts - Federal 

Trial Courts - State

Appeals Courts

U.S. Supreme Court

State Supreme Court

All terms associated with the chronology of a lawsuit


Exercises Chapter 4 Name___________________________

1. Give an example of a case that would fall under diversity jurisdiction. Explain all of the key elements of such a case
________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

2. What is the reason for having exclusive federal jurisdiction in issues such as bankruptcy, copyright and patents?

________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

3. What are the differences between an appeals court and a trial court?
________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

4. Explain the process that takes place in the pleadings portion of the trial
________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

5. What are the differences between conciliation, mediation and arbitration?
________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

6. In a case that involves diversity jurisdiction, why would one of the parties prefer a state court to a federal court or vice versa?
________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Key Terms Chapter 5 Name___________________________

Separation of Power

Federalism

Checks and Balances

Federal Supremacy and Preemption

Judicial Review

Federal Commerce Power

Federal Fiscal Powers

Eminent Domain

Freedom of Speech

Corporate Speech

Rulemaking

Exercises Chapter 5 Name___________________________

1. Consider a television or a radio advertisement and indicate how commercial speech is protected to a lesser degree than individual speech in our society.
________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

2. What is the difference between substantive and procedural due process?
________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

3. In your opinion, how far should freedom of speech go? Should advertisers be allowed to express opinions that disparage competition? Should satire be protected to the degree where it is crude or obscene in some opinions?
________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

4. Several states have enacted statutes allowing for the medical use of marijuana. The federal government has (thus far) a clear policy against allowing cannabis clubs and the like to distribute the drug. Can the federal government overstep a state initiative? If so, under what authority?
________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

5. What are the reasons that a court can review and set aside an administrative agency decision? Give an example of two ways that an agency decision might be overturned.
________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

6. Why are administrative agencies referred to as the “fourth branch of government.”
________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________


7. Name two federal and one state administrative agency other than those mentioned in the Guide and explain their functions.


Key Terms Chapter 6 Name___________________________

Intentional Torts

Recklessness

Assault 

Battery

False Imprisonment

Defamation of Character

Infliction of Emotional Distress

Invasion of Privacy (elements of)

Real Property Trespass

Nuisance

Personal Property Trespass

Conversion

Deceit (Fraudulent Misrepresentation)

Disparagement

Interference with Contractual Relations

Negligence

Reasonable Person Standard

Superseding Cause

Unforeseen Consequences

Res Ipsa Loquitur

Negligence Per Se

Duties of Landowners

Risk Assumption

Comparative Negligence

Strict Liability/ Abnormally Dangerous Activities



Exercises Chapter 6 Name___________________________

1. Explain the differences between criminal liability and tort liability.
________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

2. Explain the concept of transfer of intent.
________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

3. Why is there a higher defamation standard with public figures than with private individuals?
________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

4. Explain the four areas of invasion of privacy.
________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

5. If you were tutoring a sophomore in high school to take the SAT exam, what would you think would be a reasonable person standard for a tutor such as yourself? What types of things would you have to do to avoid liability for negligence?
________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

6. Many states have strict liability statutes for vicious or potentially vicious dogs like pit bulls. What are reasons for putting such laws into effect? Do you think they are reasonable?
________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

7. Explain how the tort of fraud is committed. What are the essential elements?
________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________





Key Terms Chapter 7 Name___________________________

Contract

Uniform Commercial Code

Mutual Assent

Consideration

Legality 

Capacity

Bilateral Contracts

Unilateral Contracts

Express Contracts

Implied Contracts

Valid Contracts

Void Agreements

Voidable Contracts

Unenforceable Contracts

Quasi-Contract

Promissory Estoppel

Charitable Subscriptions

Exercises Chapter 7 Name___________________________

1. What type of contract law would a sale of stereo equipment and a real estate lease fall under? What is the difference between the subject matter of both contracts?

________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

2. Explain how contract law has changed in American society. What are the reasons for the change?

________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

3. Identify the essential elements of a contract and explain each.

________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

4. How are quasi-contract, promissory estoppel and charitable subscriptions related?

________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

5. The Delta Party DeAnza Fraternity House has offered a $150 award to the first person to swim naked in the college pool between the hours of midnight and 5AM when the pool is closed. Chic N. Haus does the nude swim on November 1, and Sue Baroo does the nude swim on November 3. Sue comes to the frat house on November 4 to show the video, the frat says they will let her know when payment will be made. Chic comes and shows his video on November 6. The frat says they will let him know when payment will be made. Neither party is paid by November 30. Who should be paid and why?

________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

6. The ability to drop a college course before the end of the term and receive a non-punitive ‘W’ grade has been described as a voidable contract. Do you agree? Why or why not?


Key Terms Chapter 8 Name___________________________

Essentials of an Offer

Offer Revocation

Option Contract

Firm Offer 

Rejection

Counteroffer

Destruction of Subject Matter

Time Lapse

Subsequent Illegality

Battle of the Forms

Authorized Means

Rules of Acceptance

Fraud in the Inducement

Fraud in the Execution

Mental Duress

Physical Duress

Undue Influence

Unilateral Mistake 

Mutual Mistake

Exercises Chapter 8 Name___________________________

1. List and explain the requisites of a valid offer.

________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

2. List and explain the ways an offer can be terminated.

________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

3. What are the exceptions to offeror revocation?

________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

4. Chip Monk has been in the business of supplying paint to commercial companies for years. On 2/1 Polly Ester’s Painting calls to purchase 100 gallons of Super Dry, Atrium White paint. Chip offers the 100 gallons at a price of $19 per gallon. Polly accepts. On 2/3 Polly sends the following letter confirming the deal. “As discussed and agreed, we hereby accept your offer of 100 gallons of Super Dry, Atrium White paint at a price of $19 per gallon. We also reserve the right to purchase up to 1000 gallons more at the same price for twelve months from this date” (signed) Polly Ester. Is there a contract? If so why, if not why not?

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Chapter 8 Continued Name___________________________

5. Lilac A. Rugg is auctioning without reserve several valuable art pieces from her gallery. The last item, a painting by Yanni entitled “Waxing the Car” receives no offers for ten minutes. Lilac pulls the painting off and the following week one of the patrons who attended the auction is threatening to sue Lilac for not selling the painting. Will Lilac be liable? Why or why not?

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6. J.L. Breaker and Sons owned a building and land on First Street in San Jose, CA. It decided to sell the property by using a sealed, written bidding process. All potential bidders met the minimum qualifications for bidding. ABC submitted a bid for $1.2 million and XYZ submitted an alternative bid for $900,000 and/or $1 higher than the highest bid received. J.L. decided to sell the property to ABC after consulting with its attorneys. XYZ sued J.L. in a specific performance lawsuit arguing that the property should have been sold to them. Who should prevail here and why? Make sure you advance both sides of the argument.

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Key Terms Chapter 9 Name___________________________

Legal Detriment

Legal Benefit

Illusory Promise

Output Contracts

Requirement Contracts

Preexisting Public Obligation

Preexisting Contractual Obligation

Undisputed Debts

Disputed Debts

Accord and Satisfaction

Composition Agreements

Past Consideration

Moral Obligations

Promissory Estoppel


Exercises Chapter 9 Name___________________________

1. Explain the difference between modification of a contract at common law and modification under the code.

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2. Explain the differences between a disputed and an undisputed debt.

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3. Would an off-duty police officer who catches a criminal suspect in the city where he works be eligible for a reward offered for the criminal’s capture? Why or why not?

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4. Explain how a composition agreement works. Why would a creditor be willing to agree to one?

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5. Explain how in the concept of quasi-contract that the requirement for consideration can be seen as being met.

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6. Why should small business owners understand the concept of contract modification and settlement of disputed and undisputed debts?

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7. Give an example of an accord and satisfaction other than that provided in the Guide.



Chapter 10 Legality and Capacity Name________________________

Key Terms

Licensing Statutes

Insurable Interest

Public Policy

Exculpatory Clause

In Pari Delicto

Majority Age

Minors

Disaffirmance

Ratification

Incompetency

Intoxication

Chapter 10 Exercises


1. Why are illegal bargains not called contracts?
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2. Explain the difference between assumption of risk and an exculpatory clause.
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3. What are the exceptions to the in pari delicto rule where courts will not help a party who is involved in an illegal agreement?
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Key Terms Chapter 11 Name___________________________

Assignment

Delegation

Obligor

Implied Warranties

Express Warranties

Novation

Creditor Beneficiary

Donee Beneficiary

Intended Beneficiary

Incidental Beneficiary

Statute of Frauds

Real Property

Suretyship

Leading Object Rule, Main Purpose Doctrine

Statute of Frauds - Sale of Goods

Parol Evidence Rule

Integrated Contract 

Course of Dealing

Usage of Trade

Exercises Chapter 11 Name___________________________

1. Explain the concept of an assignment of rights in a contract. Give an example outside of those given in the Guide and the text.
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2. Explain how a novation works. How does it differ from a delegation of duties?
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3. Lillie is a tuba player. Jonathan is a conductor who badly needs a tuba player to complete his orchestra and perform for a group he contracted with earlier in the year. He persuades Lillie to become a part of the orchestra, but her tuba is at a pawn shop and she needs to sign a note payable stating she will pay $600 on or before July of the current year. The owner of the pawnshop tells Lillie that she must get someone to guarantee her payment. Jonathan agrees to become secondarily liable. Will the contract fall within the statute of frauds? If so why, if not why not?

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4. ABC Manufacturing orally agreed to sell 200 metal boxes at a price of $2 each to XYZ Retailers. XYZ decided it could sell another 150 boxes more and called ABC orally requesting an increase in the contract to 350 boxes at a price of $2 each. ABC orally agreed but sent only 200 boxes. XYZ sues to force ABC to perform. Explain who will prevail and why.

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5. Explain the possibility test in the statute of frauds.

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6. John Brown signs a lease agreeing to rent a commercial space from XYZ Properties for a period of two years at a price of $24,000 total. The lease was a preprinted form and it stated that there are no pets allowed on the premises, in handwriting and initialed by both parties it was stated “one small dog okay.” Three months into the lease XYZ discovered Brown was bringing his 20 pound shitzu dog to work and informed him that the lease was terminated because Brown violated the ban on pets. Will XYZ be successful in evicting Brown? Why or why not?

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Key Terms Chapter 12 Name___________________________

Discharge

Complete Performance

Substantial Performance

Material Breach

Express Condition

Implied Condition

Condition Precedent 

Condition Subsequent

Concurrent Conditions

Substituted Contract

Accord and Satisfaction

Novation

Objective Impossibility

Subjective Impossibility

Frustration of Purpose

Commercial Impracticability

Bankruptcy

Compensatory Damages

Incidental Damages

Consequential Damages

Nominal Damages

Liquidated Damages

Reliance Damages

Restitution

Punitive Damages


Chapter 12 Continued Name___________________________

Mitigation of Damages

Injunction

Specific Performance



Exercises Chapter 12

1. Explain the different types of conditions that can be found in a contract and give an example not given in the Guide or the book

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2. Explain the differences between a material breach and a minor breach and how parties to a contract can disagree on the severity of a breach.

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3. Explain the difference between objective and subjective impossibility.

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Chapter 12 Continued Name___________________________
4. What are liquidated damages, and why have them in a contract?

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5. Explain the differences between compensatory and consequential damages.

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6. When would a party to a contract ask for restitution and why?

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Key Terms Chapter 13 Name___________________________

Goods

Lease 

Sales Contracts

Merchant

Open Terms

Mirror Image

Non-merchants

Unconscionability

Rules of Construction


Exercises Chapter 13

1. Explain the difference between a merchant and a non-merchant.

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2. Explain the term “good faith and fair dealing” as it applies to merchants under the code.
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3. Explain the difference between a lease and a purchase under the code.

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Key Terms Chapter 14 Name___________________________

Principal

Agent

Third Party

Independent Contractor

Employer/Employee

Express Authority

Implied Authority

Apparent Authority

Fiduciary

Disclosed Principal

Partially Disclosed Principal

Undisclosed Principal


Exercises Chapter 14 Name___________________________

1. How does one create an agency?

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2. Identify and the roles of the three parties are in an agency relationship.

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3. Explain the difference between the employer/employee relationship and an independent contractor relationship in agency.

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4. How can an agency be terminated?

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5. What are the duties of an agent toward a principal?

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6. What are the duties of a principal toward an agent?

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7. Explain the difference between actual authority and apparent authority.

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8. Explain how the doctrine of “respondeat superior” works.

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9. What does “at will” employment mean? Explain the advantages and disadvantages from the employer and employee perspective.

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Guide MC Answers
Ch 1
1 C
2 D
3 D
4A
5 C

Ch 2
1 C
2.A
3 D
4 B
5 C

Ch 3
1 B
2.A
3 B
4.A
5 C
6 C
7 D
8 B
9 C
10 B
11 C
12 D
13 C
14 B


Ch 4
1 D
2 C
3 C
4 D
5 C
6 B
7 C
8 D
9.A
10.A
11 E


Ch 5
1 E
2 B
3 D
4 D
5 C
6 B
7 C
8 B
9 E
10.A
11 D


Ch 6
1 B
2.A
3 D
4 C
5 B
6 C
7 B
8 B
9 E
10 C
11 B


Ch 7
1 C
2.A
3 B
4 D
5 B
6.A
7 B
8 B
9 C
10 B

Ch 8 1 B
2 D
3 B
4 A
5 C
6 D
7 B
8 C
9 D
10 A
11 D
12 D

CH 9
1 B
2 C
3 A
4 C
5 B
6 C


Ch 10
1 B
2 C
3 A
4 C
5 D
6 B
7 A
8 B
9 C


CH 11
1 B
2 C
3 C
4 A
5 D
6 B


CH 12
1 C
2 B
3 B
4 A
5 C
6 B
7 C
8 C
9 A
10 D
11 B

CH 13
1 B
2 C
3 C
4 C
5 C
6 B
7 C
8 B
9 B
10 B

CH 14
1 B
2 C
3 B
4 A
5 B
6 C
7 C
8 A
9 A
10 D 



Contact
email icon Email: Michael Gough
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Last Updated: 6/26/16