unit 4 business law

Unit 4 Examination


The Unit Examination
The Unit Examination contains 25 multiple choice questions, as well as a writing assignment.
Your grade on the examination will be determined by the percentage of correct answers. The University utilizes the following grading system:
A = 90% – 100% correct

B = 80% – 89% correct C = 70% – 79% correct D = 60% – 69% correct

F = 59% and below correct

4 grade points

3 grade points

2 grade points

1 grade point

0 grade points

Completing Unit Four Examination
Before beginning your examination, we recommend that you thoroughly review the textbook chapters and other materials covered in each Unit and follow the suggestions in the “Mastering the Course Content” section of the course Syllabus.
This Unit Examination consists of objective test questions as well as a comprehensive writing assignment selected to reflect the Learning Objectives identified in each chapter covered so far in your textbook.
2 Additional detailed information on completing the examination, writing standards and how to submit your completed examination may be found in the Syllabus for this course.


BAM 317 Business Law

Unit 4 Examination

BAM 317 Business Law

Multiple Choice Questions (Enter your answers on the enclosed answer sheet)

1) When both parties are mistaken as to the subject matter of a contract, which of the following is true?

a. Either party can rescind the contract.

b. Only the party injured by the mistake can rescind the contract.

c. Only the party who first discovers the mistake can rescind the contract. d. Neither party can rescind the contract.

e. Either party can rescind the contract or recover damages from the other party.

2) A plaintiff in a fraud case must prove which of the following?

a. misrepresentation of a material fact b. intent to deceive

c. knowledge of the statement’s falsity

d. justifiable reliance on the false statement e. All of these are correct.

3) Which of the following apply to contracts involving fraud?

a. The innocent party’s assent is not genuine

b. The misrepresentation was of a past or existing material fact.

c. The intent to deceive the innocent party can be inferred from the circumstances d. All of these are correct.

4) Which of the following is true about misrepresentations of law?

a. A misrepresentation of law is usually not a basis to recover because both parties are assumed to know the law.

b. A misrepresentation of law is treated as fraud in the inducement.

c. When an expert in the law makes a misrepresentation of law to a less sophisticated party, the misrepresentation is not actionable because each party is presumed to make its own investigation of the applicable law.

d. A misrepresentation of law is treated as a unilateral mistake.

5) You go to the Cosmic Runners Supply Store in Asheville. The salesperson shows you some shoes and says, “In a race, these shoes pick up the cosmic energy from the runners around you and channel it into your own legs. This causes everyone with these shoes to run twice as fast as in

normal shoes.” In your next race, you do only slightly better than usual and sue for fraud. Which of the following is true?

a. You would lose because the statement did not contain a factual assertion.

b. You would lose because your reliance was not justified.

c. You would win if most runners do not go twice as fast in the cosmic shoes.

d. Proving only that the salesperson intended to deceive you is enough to win your fraud case.

BAM 317 Business Law

Unit 4 Examination

BAM 317 Business Law

Unit 4 Examination


6) Sally is thinking about buying Linda’s car. Linda knows that there is a leak in the brake line, and that after driving the car for a few minutes, the brake fluid will leak out and the car will have no brakes. Sally does not ask about it and Linda does not tell her. Sally buys the car, and while driving home, the brakes fail. Sally has an accident and the car is destroyed. Sally sues Linda for fraud to get her money back. Which is true?

a. This is not fraud, since there was no misrepresentation. b. This is not fraud, since there was no reliance.

c. This is not fraud, since there was no scienter.

d. Silence in this situation is a misrepresentation. e. Silence is never a misrepresentation.

7) Robert is a pastor at United Church. One of the members of his congregation, Mrs. Smith, is a very devout believer. Robert convinces Mrs. Smith to sell him her farm for $5,000. The actual value of the farm is $500,000. Mrs. Smith dies and her estate sues to get her farm back. Which of the following best describes this situation?

a. This is a case of fraud, so the estate can rescind the contract.

b. This is a case of undue influence, so the estate can rescind the contract.

c. Unless Robert can prove that there was no undue influence, the contract can be rescinded.

d. This is not a case of undue influence because there is no fiduciary relationship.

e. Mrs. Smith is a competent adult and may dispose of her property in any way, and for any price she sees fit.

8) An oral contract in which Sally agrees to work for Jane for the rest of Jane’s life is:

a. a guaranty contract

b. enforceable under the Statute of Frauds

c. unenforceable under the Statute of Frauds because it cannot possibly be performed within one year

d. A and C only e. A and B only

9) A contract must be in writing under the Statute of Frauds if:

a. according to its terms, it cannot be performed within 1 year b. its actual performance is not completed within 1 year

c. no one could perform the duties within 1 year

d. it would take no one more than a year to perform

BAM 317 Business Law

Unit 4 Examination

BAM 317 Business Law

Unit 4 Examination

e. in the past, no one has performed a similar contract within 1 year


10) What does the “equal dignity rule” require?

a. That contracts for the sale of goods over a certain dollar amount be in writing. b. Consideration to support a contract.

c. That the writing required by the Statute of Frauds meet certain requirements. d. That an offer and an acceptance be mirror images of each other.

e. That the contract of an agent to sell property covered by the Statute of Frauds must be in writing for the sale of the property to be enforceable.

11) Under the Statute of Frauds:

a. the writing must be contained in a single document b. the writing must be signed by both parties

c. any required signatures must be the complete signature of the person d. incorporation of other documents by reference is permitted

12) Two adults enter into an oral contract for the sale and purchase of some land. All material facts were disclosed by the seller to the buyer. Which is true?

a. This contract is voidable because it is not in writing.

b. This contract is unenforceable because of the Statute of Frauds.

c. Because the parties are adults, it is certain that there is no problem with capacity. d. This is a unilateral contract if only one party transfers land.

13) Buyer and Seller enter into an agreement on April 26 for the sale of a piece of equipment for

$595. This agreement is in writing and calls for delivery and payment on June 1. On May 10, the Buyer and Seller orally agree to reduce the price to $495 because the Buyer has agreed to delay the delivery date to July 1. Which of the following is true?

a. The modified agreement is enforceable even though it was an oral modification to a written contract.

b. The parol evidence rule would prohibit the introduction of evidence of the contract modification.

c. The modified agreement is unenforceable because it is lacking consideration.

d. The modified agreement is enforceable because it was made within one year of the date that the original contract was executed.

14) Joan owes Richard money. Richard assigns his rights of collection to Steve. In this situation, which of the following is true?

a. Joan is the obligee.

b. Richard is the obligor. c. Richard is the assignor. d. A, B, and C are true.

e. A and B only are true.


15) In general, contract rights may be assigned. Which of the following types of contract rights may not be assigned?

a. personal service contracts

b. assignments of future rights

c. contracts for the sale of goods d. A and C only

e. A and B only

16) Duties under a contract:

a. are freely assignable under all circumstances

b. can be delegated, but only if there is a signed writing c. may be delegated without assigning rights

d. may be delegated only if there is a corresponding assignment of rights

17) The bank lends money to Jane to buy a car. After several months, Jane sells the car to Dan. Dan agrees to pay off the loan to the Bank. If Dan fails to pay the loan, then which of the following is true?

a. The bank may recover the amount due on the loan from Jane. b. The bank may recover the amount due on the loan from Dan. c. The bank may recover from either Dan or Jane.

d. The bank can repossess the car, but cannot collect money from anyone.

18) Assume that the players on the Colorado Rockies baseball team beach their contract by refusing to play the remainder of their games in the season. A restaurant located near Coors Field, where the games would have been played, sues the players. As a result, which of the following is true?

a. The restaurant loses due to public policy.

b. The restaurant loses because it is not an intended beneficiary of the players’ contract. c. The restaurant wins as a third-party beneficiary.

d. The restaurant wins under promissory estoppel.

19) A minor breach is most directly associated with:

a. strict performance

b. tender of performance c. complete performance

d. substantial performance e. inferior performance

20) When a court orders specific performance, it:

a. orders monetary damages to be paid by the breaching party to the nonbreaching party b. modifies the contract terms in order to maximize the fairness to both parties

c. orders a party to a contract to do exactly what was called for in the contract d. orders a party to return any and all consideration received

21) What is required in order for a court to issue an injunction?

a. Any breach of contract will justify an injunction.

b. Any breach of contract that causes injury to the other party will justify an injunction. c. Any situation that entitles the award of specific performance will justify an injunction. d. A showing that the party requesting the injunction would suffer irreparable injury without the injunction will justify an injunction.

e. Proof that the party requesting the injunction would win any breach of contract lawsuit will justify an injunction.

22) Alice has a contract with a surgeon to have a medical procedure performed on July 17. The surgeon notifies Alice on July 5 that he is in the Bahamas and will be there until the end of August and will not be able to do the surgery. Which of the following is true at this point?

a. There will be no breach until July 17.

b. Alice must wait until July 17, and if the surgeon does not perform the procedure, then

Alice can contract with another surgeon.

c. If Alice contracts with another surgeon prior to July 17, and this second surgeon is aware of Alice’s original contract, the second surgeon has no obligation to perform.

d. Alice is free to contract with another surgeon.

23) Which of the following was NOT part of the U.S. Supreme Court’s findings or reasoning in its decision declaring parts of the Communications Decency Act of 1996 to be unconstitutional?

a. New technology would soon be available allowing easier parental control over children’s access to online material.

b. If applying proper standards, the government is in the best position to determine the appropriateness of material to be seen by children over the Internet.

c. One of the problems with the law was its vagueness.

d. The criminal sanctions in the statute would make individuals too afraid to make material available even if there were only a possibility that it was illegal.

e. The provisions were lacking in the precision that is needed when a statute regulates the content of speech.


24) Under the Uniform Computer Information Transactions Act, if licnesor tenders a copy that is a material breach of contract, the nonbreaching party to whom tender is made may:

a. increase the tender b. perform the duty

c. refuse the tender d. all of the above

e. none of the above

25) Under the Electronic Signature in Global and National Commerce Act, electronic signatures can be verified by the following methods except:

a. by a secret password known by the signatory

b by a digitally encoded smart card belonging to the signatory

c. by the use of a device that electronically recognizes fingerprints or parts of the eye d. by the use of a notary public to check digital identifying information

e. all of the abore

Written Assignment for Unit Four

• Include your name, student number, course number, course title and unit number on each page

of your written assignment (this is for your protection in case your materials become separated).

• Begin each written assignment by identifying the question number you are answering followed by the actual question itself (in bold type).

• Use a standard essay format for responses to all questions (i.e. an introduction, middle paragraphs and conclusion).

• Responses must be submitted as a MS Word Document only, typed double-spaced, using a standard font (i.e. Times New Roman) and 12 point type size.

Word count is NOT one of the criteria that is used in assigning points to written assignments. However, students who are successful in earning the maximum number of points tend to submit written assignments that fall in the following ranges:

Undergraduate courses: 350 – 500 words or 1 – 2 pages.


All work must be free of any form of plagiarism. Put written answers into your own words. Do not simply cut and paste your answers from the Internet and do not copy your answers from the textbook. Be sure to refer to the course Syllabus for more details on plagiarism and proper citation styles.

Please answer ONE of the following:

1) John was the oldest of three boys. John’s mother was single, elderly, and owned her own home.

Her primary concern was leaving her home to her children and minimizing taxes. John was an attorney and a certified public accountant. John told his mother that he would draw up a trust arrangement whereby she would live in the home as long as she was able to, and at that point (or upon her death if she lived in the home at that point), the home would be transferred to her three children, with John in charge of selling it, either to an outsider or to one of her three children. When his mother moved to an apartment, it was discovered that the trust transferred the house to John only. Discuss this situation.

2) What is the purpose of the parol evidence rule? Would it be better to simply allow all parol

evidence in as evidence and leave it up to the jury how much weight to give to the evidence? Would this be better than not allowing the jury to see the evidence at all? What advantages and disadvan- tages would there be to eliminating the parol evidence rule?

3) Betty has applied to General Motors to obtain a dealership in Smalltown. In order to be granted

a dealership, Betty must have a showroom, so she contracts with Bob to buy a building that would be suitable for a showroom. Bob knows that Betty has applied for a dealership and he knows

that Betty wants this building for an auto showroom. After the contract for the sale of the land and building is signed, but before the transaction is completed, Betty is notified that she will not receive the G.M. dealership. Betty refuses to pay for Bob’s land and building. Bob sues. What results? What is Betty’s best defense for not performing this contract?

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