Q&A Hero

Q: Quicksilver Delivery Service contracts to deliver Pete's Pizza Parlor's prod­ucts to its customers for $5,000, payable in ad­vance. Pete's pays the money, but Quicksilver fails to perform. Can Pete's rescind the contract? Can Pete's also ob­tain restitution? What does it mean to "rescind" a contract? How is a contract rescinded? What is restitution? How is restitution accom­plished? Explain.

Q: A(n) ________ is a relationship formed when an employer hires an employee and gives that employee authority to act and enter into contracts on his or her behalf. A) agent-independent contractor relationship B) principal-agent relationship C) agent-agent relationship D) employer-employee relationship

Q: The law passed by Congress in 1914 that was designed to sharpen or define further the vagueness of the Sherman Act is calledA) the Robinson-Patman Act. B) the Wheeler-Lea Act.C) the Clayton Act. D) the Federal Trade Commission Act.

Q: Which of the following is true of a principal-independent contractor relationship? A) Principals are bound by the authorized contracts of their independent contractors. B) Independent contractors cannot be authorized by principals. C) Independent contractors are employees of the principals. D) Principals cannot directly employ independent contractors.

Q: National Drilling Company ships its only pump to American Hydraulics Corporation, the manufacturer, for repair. National hires Overland Transport, Inc., to take the pump to American Hydraulics and to return it to National as soon as the repair is complete. National is forced to sus­pend operations without a pump, but Overland does not know this. National ex­pects to be without the pump for five days and to lose profits of $5,000. When the pump is not returned by the end of the fifth day, National rents a pump at a cost of $100 per day. Overland delays five more days before re­turning the pump. National files a suit against Overland, asking for com­pensatory, consequential, and punitive damages. Will National recover?

Q: To avoid liability for intentional injuries, Vermont Power Corporation in­cludes in its contracts an exculpatory clause. This is a. enforceable if the other parties are protected from liability. b. enforceable if the other parties consent to it. c. enforceable if the other parties have equal bargaining power. d. not enforceable.

Q: Martin, who wants to sell his house, authorizes his concierge, William, to find a potential buyer and finalize a deal above a stipulated price. William contracts Chris, a real estate broker, and intends him to only find a potential buyer and send him or her over to William for the sale. Martin then contracts ReNowait Goodhouses, a home improvement company, to renovate the house. ReNowait completes its work and Martin pays the company. Chris then searches for a suitable buyer and finds one in George. George buys the house and Chris is paid for his services. In this scenario, what type of commercial relationship exists between Martin and William? A) an employer-employee relationship B) an agent-agent relationship C) an agent-independent contractor relationship D) a principal-agent relationship

Q: Creekside Property Corporation enters into a contract with Downstream Management Associates to manage and maintain Creekside's apartment complex. Their contract provides that neither party can recover damages for a non-fraudulent or unintentional breach. This is a. a limitation-of-liability clause. b. an exculpatory clause. c. an illegal clause. d. a quasi contract.

Q: Martin, who wants to sell his house, authorizes his concierge, William, to find a potential buyer and finalize a deal above a stipulated price. William contracts Chris, a real estate broker, and intends him to only find a potential buyer and send him or her over to William for the sale. Martin then contracts ReNowait Goodhouses, a home improvement company, to renovate the house. ReNowait completes its work and Martin pays the company. Chris then searches for a suitable buyer and finds one in George. George buys the house and Chris is paid for his services. In this scenario, who is the principal during the land sale transaction? A) ReNowait Goodhouses B) George C) Martin D) William

Q: Vacation Vistas, Inc., agrees to sell certain acreage to Umiko, who intends to develop a destination resort. Vacation Vistas repudiates the deal. Umiko sues Vacation Vistas and recovers dam­ages. She can now obtain a. an amount in a quasi-contractual recovery. b. damages representing restitution. c. specific performance of the deal. d. nothing more.

Q: Which of the following federal agencies is NOT engaged in social regulation?A) Environmental Protection Agency B) Federal Trade CommissionC) Food and Drug Administration D) Federal Deposit Insurance Corporation

Q: Martin, who wants to sell his house, authorizes his concierge, William, to find a potential buyer and finalize a deal above a stipulated price. William contracts Chris, a real estate broker, and intends him to only find a potential buyer and send him or her over to William for the sale. Martin then contracts ReNowait Goodhouses, a home improvement company, to renovate the house. ReNowait completes its work and Martin pays the company. Chris then searches for a suitable buyer and finds one in George. George buys the house and Chris is paid for his services. Who performs the role of the agent in this land sale transaction? A) William B) Martin C) Chris D) George

Q: Karson orally agrees to pay Jaime to plant and harvest a quarter of Karson's farm acreage for four corn-planting seasons. After Jaime prepares the land and plants the first crop, Karson says that their deal is off. Jaime can most likely recover a. in quasi contract. b. in reformation. c. in restitution. d. on the parties' existing contract.

Q: A(n) ________ is a fiduciary relationship which results from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other so to act. A) assignment B) garnishment C) accommodation D) agency

Q: Dino hires Eve to perform at Dino's Club, but Eve later breaches the agree­ment to accept a higher-paying job at First Star Arena. Dino files a suit against Eve. The court will most likely a. award damages to Dino. b. cancel Dino and Eve's contract. c. order Eve to perform the contract. d. reform Dino and Eve's contract.

Q: Which of the following constitutes an agency? A) a principal-agent relationship B) an agent-agent relationship C) a principal-principal relationship D) an agent-independent contractor relationship

Q: Refined Commodities, Inc., agrees to deliver ten tons of sheet metal to Select Builders Corporation. The agreement states that delivery is to be within "3" days, although the parties intend "30" days. Refined cannot con­vince Select to amend the contract. Refined should seek a. damages. b. reformation. c. rescission. d. specific performance.

Q: The ________ is the party who employs another person to act on his or her behalf. A) agent B) principal C) independent contractor D) employee

Q: In a 50-firm industry, two of the smallest firms merge. Yet the 4 -firm concentration ratio and the 8-firm concentration ratio did not change. All things considered, we can say that the industry hasA) moved closer to pure competition because the number of firms decreased.B) moved farther away from competition because the number of firms decreased.C) experienced no change in competition even though the number of firms decreased. D) to be identified first; otherwise there is no way to tell.

Q: Grady enters into a contract to buy 440 acres from Hollis to expand Grady's ranch. If Hollis breaches the contract, Grady's normal remedy would be a. damages. b. quasi contract. c. reformation. d. specific performance.

Q: Who is an agent? A) a party who agrees to act on behalf of another B) a party who employs another person to act on his or her behalf C) a party who directs a worker under an express or implied contract of employment D) a party who receives the services of another for remuneration

Q: Ira orally agrees to buy a unique collection of sports memorabilia for $1,000 from Jane and sends her $250 as a down payment. When Ira sends her the rest of the price, Jane refuses to ship Ira the collection. Ira should seek a. damages. b. reformation. c. rescission. d. specific performance.

Q: List the circumstances that can lead to termination of an agency by impossibility of performance.

Q: Lou and Mira want to rescind their contract under which Lou sold an MP3 player to Mira for $50. To rescind the contract a. Lou must return the $50 and Mira must return the player. b. Lou must return the $50 only. c. Mira must return the player only. d. the parties can keep the "benefits" of their bargain.

Q: If an agency terminates by operation of law, there is no duty to notify third parties about the termination.

Q: Rural Utility, Inc., enters into a contract with Shovel Excavation Service to dig up, replace, and rebury Rural's cables in a certain location. Rural ad­vances Shovel 10 percent of its cost. If the parties rescind the contract, Shovel's refund of the payment would be a. a penalty. b. liquidated damages. c. restitution. d. specific performance.

Q: The bankruptcy of the principal is not a valid reason to terminate an agency.

Q: If firms in a monopolistically competitive industry experience short-run losses, A) some firms would like to exit the industry but find they cannot.B) firms increase prices further, until they make at least a normal return.C) firms increase advertising spending to increase demand, until they make at least a normal return.D) some firms exit the industry, causing the demand curves for the remaining firms to shift to the right until they earn a normal profit.

Q: Home Delivery Corporation and Interstate Transport, Inc., sign an agree­ment that provides for the payment of "$1,000 by whichever party commits a material breach of the contract that creates damages difficult to esti­mate but approximately $1,000." This is a. a liquidated damages clause. b. a mitigation of damages clause. c. a nominal damages clause. d. a penalty clause.

Q: The outbreak of a war between the principal's country and the agent's country is grounds for terminating an agency.

Q: Mikayla enters into a contract with Logan to provide surface material for Mikayla's tennis courts by April 1 for a tournament to begin May 1. The con­tract specifies an amount to be paid if the contract is breached. This is a liquidated damages clause if the amount is a. an excessive estimate of the loss on a breach. b. a reasonable estimate of the loss on a breach. c. designed to penalize the breaching party. d. intended to quickly provide cash to the nonbreaching party.

Q: Constructive notices are not valid against strangers who assert claims of apparent agency.

Q: Drew contracts to sell a residential duplex to Evan. The contract pro­vides that if Drew does not close the deal by September 15, he must pay Evan one-half of the contract price. This provision is not enforceable be­cause it is a. a liquidated damages clause. b. a mitigation clause. c. a nominal damages clause. d. a penalty clause.

Q: Parties with whom the agent has dealt directly must be given direct notice of termination of the agency.

Q: The termination of an agency contract in violation of the terms of the agency contract is referred to as ________. A) termination by an unusual change in circumstances B) termination by impossibility of performance C) termination by operation of law D) wrongful termination

Q: Rig Heli-Pads, Inc., enters into a contract to employ Scott as an on-site pro­ject manager for two years. If Rig breaches the contract, Scott has a duty to a. do nothing. b. reduce the damages that Scott might otherwise suffer. c. rescind the contract with Rig. d. punish Rig and set an example to deter others from similar acts.

Q: According to the above figure, what are the profits of the firm if it produces 50,000 units?A) -$5,000 per day B) -$10,000 per dayC) -$7,500 per day D) -$17,500 per day

Q: Which of the following leads to the termination of an agency by operation of law? A) loss or destruction of the subject matter of the agency B) death of either the principal or agent C) loss of a required qualification D) a change in the law

Q: Earl holds 1,000 pounds of perishable fruit in storage for Fresh Food Corpo­ration. Fresh Food does not pay for the storage. Earl sells the fruit to Green Grocers, Inc. This sale represents a. a breach of contract. b. a mitigation of damages. c. rescission and restitution. d. specific performance.

Q: Ray breaches his lease with Sunny Properties and vacates the premises six months before the end of the term. In some states, Sunny would have to a. avoid reletting the premises to recover damages from Ray. b. make reasonable efforts to relet the premises to mitigate dam­ages. c. relet the premises to recover damages from Ray. d. sell the premises to recover damages from Ray.

Q: Which of the following circumstances leads to the termination of an agency by impossibility of performance? A) the loss of a required qualification B) the bankruptcy of the principal C) the insanity of either the principal or the agent D) the outbreak of a war between the principal's country and the agent's country

Q: Explain in brief the liability for an independent contractor's torts.

Q: Fashion Retail Center enters into a contract with Great Promotions, Inc., to provide Fashion with a plan to retool its merchandising strategy. If Great Promotions breaches the contract, Fashion has a duty to a. reduce the damages that Fashion might otherwise suffer. b. reduce the loss that Great Promotions might otherwise suffer. c. punish Great Promotions and deter others from similar acts. d. take no action.

Q: Who is an independent contractor?

Q: Kris contracts to work exclusively for Little Manufacturing Company during May for $5,000. On April 30, Little cancels the contract. Kris finds another job dur­ing May but earns only $3,000. Kris files a suit against Little. As compen­satory damages, Kris can recover a. $3,000. b. $2,000. c. $1,000. d. $0.

Q: Bret contracts to work for City Construction Corporation (CCC) dur­ing July for $4,500. On June 30, CCC cancels the contract. Bret declines a similar job with Downtown Builders, Inc., which would have paid $4,000. Bret files a suit against CCC. As compensatory damages, Bret can recover a. $4,500. b. $4,000. c. $500. d. $0.

Q: Describe the operation of a fully disclosed agency.

Q: Which of the following best describes a situation of economic efficiency?A) A firm produces to the point at which P = AVC, with MR < MC. B) A firm produces to the point at which P = ATC, with MC < MR. C) A firm produces to the point at which MR = AFC, with P = AVC. D) A firm produces to the point at which MR = MC, with P = MC.

Q: Medical Centre enters into a contract with Local Motion Fitness Club for discounted memberships for the Centre's employees. If the Club breaches the contract and the Centre enters into a contract with KO Sports for the same service at a lower price, the Centre might be awarded nominal dam­ages to a. establish, as a matter of principle, that the Club acted wrongfully. b. provide the Centre with funds for a foreseeable loss beyond the contract. c. provide the Centre with funds for its loss of the bargain. d. punish the Club and set an example to deter others from similar acts.

Q: If a person employs an architect to design the layout of his or her own home, it constitutes a(n) ________ relationship.

Q: Pure Oil Company enters into a contract with QuikBilt, Inc., to construct an oil pipeline to withstand specific conditions. If QuikBilt fails to meet this standard, which is construed as a breach of contract and a breach of a duty of care, Pure might be awarded punitive damages to a. establish, as a matter of principle, that QuikBilt acted wrongfully. b. provide Pure with funds for a foreseeable loss beyond the contract. c. provide Pure with funds for its loss of the bargain. d. punish QuikBilt and deter others from similar acts.

Q: Lava Excavators, Inc., needs a drill to continue its operations and orders one for $3,000 from Mining Supplies Company. Lava tells Mining that it must receive the drill by Tuesday or it will lose $10,000. Mining ships the drill late. Lava can recover a. $13,000. b. $10,000. c. $3,000. d. $0.

Q: Mona contracts to repair a computer for NuData, Inc. (NDI). Mona knows that without the computer, NDI will lose a sale. Mona does not perform as promised. NDI files a suit against Mona. As consequential damages, NDI can recover a. the cost of a new computer. b. the difference between Mona's price and the actual cost of repair. c. the loss of profit from the lost sale. d. nothing.

Q: A car salesperson is employed to sell the principal's car, and the principal tells the agent that the car was repaired after it was involved in a major accident. If the agent intentionally tells the buyer that the car was never involved in an accident, the agent has committed the tort of ________.

Q: Why should a firm not produce more than the rate of output at which marginal revenue equals marginal cost?

Q: Rite Contractors, Inc., agrees to build a motel for Sleep Inn Corporation. The project proceeds according to plan, but before it is done, Sleep tells Rite to quit. Rite may recover a. the contract price less costs of materials and labor. b. the contract price. c. the costs needed to complete construction. d. profits plus the costs incurred up to the time of the breach.

Q: An employee, motivated by jealousy, intentionally injures someone on the work premises and during work hours who dated her boyfriend. Based on the ________ test, the principal is liable for the injury.

Q: Beachside Pools, Inc., agrees to build a swimming pool for Candy, but fails to build it according to the contract specifications. Candy hires Do-We Fix-It Company to finish the project. Candy may recover from Beachside a. the contract price less costs of materials and labor. b. the contract price. c. the costs needed to complete construction. d. profits plus the costs incurred up to the time of the breach.

Q: Under the ________ test, the principal is liable for any intentional torts committed by an agent during working hours on the principal's premises.

Q: Hybrid Corporation enters into a contract with Insure Service, Inc. (ISI), to obtain health insurance for Hybrid employees. If ISI breaches the contract and Hybrid is awarded compensatory damages, the purpose would be to a. establish, as a matter of principle, that ISI acted wrongfully. b. provide Hybrid with funds for a foreseeable loss beyond the contract. c. provide Hybrid with funds for its loss of the bargain. d. punish ISI and set an example to deter others from similar acts.

Q: Most jurisdictions hold the ________ liable if the agent injures someone while on a dual-purpose mission.

Q: A(n) ________ issued by the Securities and Exchange Commission (SEC) indicates that a defendant agrees not to violate securities laws in the future but does not admit to having violated securities laws in the past.

Q: Quantity of LaborTotal ProductAverage ProductMarginal Product122222225226303812729410025195115231561262111Refer to the above table. At what quantity of labor does the average variable cost curve start to increase?A) After 1 unit B) After 2 units C) After 3 units D) After 6 units

Q: Development Associates (DA) agrees to buy five acres of land from Eastside Properties for $15,000. Eastside sells the acreage to Fealty Realty, and fails to go through with DA's deal on the agreed date, when the market price of the land is $17,000. DA may recover a. $17,000. b. $15,000. c. $2,000. d. $0.

Q: EDGAR is the world's largest electronic securities exchange.

Q: Precision Auto Parts contracts to buy a Quotient-brand computer network set-up from Regal Systems for $5,000, but Regal fails to deliver. Precision buys the network else­where for $6,500. Precision's measure of damages is a. $1,500 only. b. $1,500 plus incidental damages. c. incidental damages only. d. $0.

Q: Handy Hardware Store agrees to hire Ilsa for one year at a salary of $500 per week. When Handy cancels the contract, Ilsa spends $100 to obtain a similar job that pays $450 per week for a year. Ilsa is entitled to recover a. the amount of the wages that Handy promised only. b. the difference between the wages at the two jobs only. c. the difference between the wages at the two jobs plus $100. d. $100 only.

Q: Section 12 of the Securities Act of 1933 provides purchasers who have been injured by securities pursuant to an unwarranted exemption to rescind the securities purchase.

Q: Defendants cannot assert a due diligence defense against liabilities arising from the violation of Section 11 of the Securities Act of

Q: Clarice pays Damien $10,000 to design an ad campaign for her Sweetwater Coffee Stand chain. The next day, Damien tells Clarice that he has accepted a job in New York and cannot design her campaign. She files a suit against Damien. As compensatory damages, she can recover a. $100,000. b. $10,000. c. $1,000. d. $0.

Q: A contract can include a provision stating that no damages can be recovered for certain types of breaches.

Q: The issuer is permitted to assert a due diligence defense against the imposition of Section 11 liability.

Q: Suppose that one worker can produce 15 cookies, two workers can produce 35 cookies together, and three workers can produce 65 cookies together. What is the average product of the first three workers?A) 65 cookies B) 30 cookies C) 17.5 cookies D) 21.67 cookies

Q: A contract may include a clause stating that no damages can be recovered for a certain type of breach.

Q: Civil liability under Section 11 is imposed on those who are negligent in not discovering fraud in their security offerings.

Q: A party who knowingly accepts defective performance of a contract waives the breach.

Q: ________ is a provision of the Securities Act of 1933 that imposes civil liability on a person who intentionally defrauds investors by making a misrepresentation or an omission of a material fact in a registration statement. A) Section 24 of the Securities Act of 1933 B) Section 12 of the Securities Act of 1933 C) Section 11 of the Securities Act of 1933 D) SEC Rule 506

Q: Which of the following is true of Section 24 of the Securities Act of 1933? A) It imposes civil liability on any person who violates Section 5 of the act. B) It imposes criminal liability on any person who willfully violates either the act or the rules and regulations adopted thereunder. C) It imposes civil liability on a person who intentionally defrauds investors by making a misrepresentation of a material fact in a registration statement. D) It exclusively regulates the sale of securities online.

Q: A party seeking to recover in quasi contract must show that he or she acted without reasonably expecting to be paid.

Q: Which of the following is true of Section 11 of the Securities Act of 1933? A) It permits injured private parties to bring criminal actions against issuers who file fraudulent registration statements. B) It imposes liability on those who defraud investors intentionally or are negligent in not discovering the fraud. C) It allows an issuer to assert a due diligence defense against the imposition of Section 11 liability. D) It does not apply to a case involving the negligent omission of a material fact in a registration statement.