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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:
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:
Dino hires Eve to perform at Dino's Club, but Eve later breaches the agreeÂment 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:
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:
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 conÂvince Select to amend the contract. Refined should seek
a. damages.
b. reformation.
c. rescission.
d. specific performance.
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:
List the circumstances that can lead to termination of an agency by impossibility of performance.
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:
If an agency terminates by operation of law, there is no duty to notify third parties about the termination.
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:
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 adÂvances 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:
Home Delivery Corporation and Interstate Transport, Inc., sign an agreeÂment that provides for the payment of "$1,000 by whichever party commits a material breach of the contract that creates damages difficult to estiÂmate 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:
Constructive notices are not valid against strangers who assert claims of apparent 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 conÂtract 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:
Parties with whom the agent has dealt directly must be given direct notice of termination of the agency.
Q:
Drew contracts to sell a residential duplex to Evan. The contract proÂvides 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 beÂcause it is
a. a liquidated damages clause.
b. a mitigation clause.
c. a nominal damages clause.
d. a penalty clause.
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 proÂject 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:
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 CorpoÂration. 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:
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:
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 damÂages.
c. relet the premises to recover damages from Ray.
d. sell the premises to recover damages from Ray.
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 durÂing May but earns only $3,000. Kris files a suit against Little. As compenÂsatory 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) durÂing 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:
If a person employs an architect to design the layout of his or her own home, it constitutes a(n) ________ relationship.
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 damÂages 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:
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:
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:
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 elseÂwhere 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:
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.
Q:
A party seeking to recover in quasi contract must show that he or she has been unjustly enriched.
Q:
How does Section 16(b) of the Securities Exchange Act of 1934 protect the interests of a corporation? Explain with an example.
Q:
What is insider trading? How is it regulated in the United States?
Q:
Quasi contracts allow the courts to act as if a contract exists when there is no contract.
Q:
Insider trading in the purchase and sale of securities in the aftermarkets is prohibited by the ________.
Q:
Reformation allows a court to rewrite a contract to reflect the parties' true intentions.
Q:
________ occurs when a company employee or company advisor uses material nonpublic information to make a profit by trading in the securities of the company.
Q:
Specific performance is the remedy customarily used when one party has breached a contract for personal services.
Q:
Specific performance is the remedy customarily used when one party has breached a contract for a sale of land.
Q:
Blue-sky laws are state laws that regulate the issuance and trading of securities.
Q:
Restitution involves one party's recapture of a benefit through which anÂother party has been unjustly enriched.
Q:
A 10-percent shareholder of an equity security of a reporting company is considered a statutory insider.
Q:
A breach of contract may entitle the innocent party to rescind the contract.
Q:
A tipper cannot be held liable for the profits made by the tippee.
Q:
On rescission of a contract, each party essentially advances to the position he or she would have been in if the contract had been fully executed.
Q:
When a company employee makes a profit by personally purchasing shares of the corporation prior to public release of favorable information, it is not considered illegal.
Q:
Liquidated damages are damages that are certain in amount.
Q:
The ________ coordinates state securities laws with federal securities laws.
A) Insider Trading Sanctions Act
B) Securities Exchange Act of 1934
C) Securities Act of 1933
D) Uniform Securities Act
Q:
Normally, when a nonbreaching party has been damaged by a breach of conÂtract, he or she has a duty to mitigate those damages.
Q:
________ requires that any profits made by a statutory insider on transactions involving short-swing profits belong to the corporation.
A) Section 5 of the Securities Act of 1933
B) Section 12 of the Securities Act of 1933
C) Section 16(b) of the Securities Exchange Act of 1934
D) SEC Rule 10b5-1