PRACTICE MIDTERM – MGMT 108 – Spring 2007
For questions 1-10, indicate whether the statement is TRUE (by marking "a") or FALSE (by marking "b"):
1. The United States Congress passes a law (signed by the President) allowing the sale of assault
weapons. California law prohibits such sales. Assault weapons may now be legally sold in
California, despite the state law prohibiting such sales.
2.
On September 1, 2006, Claus, President of St. Nicholas Industries, verbally agrees to hire Rudolph
as Interim Division Chief of the company's distribution operations, for a period of 9 months,
employment commencing on December 15, 2006. When Claus later tries to back out of the contract,
Rudolph sues for breach of contract. The contract is uneforceable because of the Statute of Frauds
and Claus will successfully defend the lawsuit on that basis.
3. Monique wins her lawsuit against Gene after the jury returns a verdict in her favor. Gene believes
that Monique lied when she testified. When Gene appeals, the appellate court may elect to hear
Monique’s testimony again to determine whether she is credible.
4. Jack enters into a contract with Jill, his neighbor, to sell his car for $ 10,000. Later, they modify the
contract to $ 9,800. Because this debt was liquidated, the modification is unenforceable as both
parties are not receiving new consideration.
5. Leo offers to buy Doris’ ring for $ 1,000. Leo mistakenly believes that the blue-colored glass in the
ring is a sapphire. Doris knows it is glass and is unaware of Leo’s mistaken belief. Doris quickly
agrees to the sale. Leo can avoid the contract based on mistake.
6. Spock files suit against Picard and instructs his process server to serve the Summons and Complaint.
The process server goes to Picard’s house and work, but can never locate him there. The process
server can “substitute serve” by posting the suit on Picard’s door and mailing him a copy
7. On March 1, Guido e-mails an offer to sell Joshua an computer. On March 2, Joshua mails Guido a
rejection. On March 3, Joshua changes his mind and mails Guido an acceptance. Joshua receives
the acceptance on March 4 and the rejection on March 5. A valid contract was formed on March 3.
8. Delaney signed a contract to sell her house at $ 50,000 under its fair market value to the minister of
Delaney’s church. She later sues to rescind her contract, based on undue influence. Unless the
minister can prove he acted properly at all times, Delaney will win her lawsuit and the court will
rescind the contract.\
9. ABC, Inc., a supplier, signs a written contract promising to sell all of the inventory it acquires to
XYZ Company, a retailer. This enforceable contract is known as a “requirements contract.”
10. Johnny offers to sell Charlene 500 pounds of nails for $ 1,000.00, in a written offer mailed to her on
January 20. On January 31, Johnny drops dead. On February 1, unaware of the death, Charlene
mails back an acceptance. In this situation a valid contract was formed between Charlene and the
estate of Johnny.
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For each of the following multiple choice examination questions, please select the one response (a, b,
c or d) which best answers the question or issue presented.
11. A court won't decide a case unless it is justiceable. Which of the following does not present the
court with an issue of justiceability?
a. Ripeness
b. Mootness
c. Standing
d. Stare Decisis
12. Adela, an Arkansas resident, is injured when a motorcycle driven by Rajid, a Kansas resident, strikes
her. She incurs more than $ 110,000 in medical bills, and wants to sue Rajid in Federal Court. Under the
United States Constitution, which legal basis should she rely on in establishing Federal District Court
jurisdiction?
a. Federal Question
b. Subject Matter
c. Diversity
d. Consent
13. George sues Shep for personal injuries George sustained when Shep’s vehicle collided with
George’s car. George files suit alleging that Shep ran the red light and was negligent. After answering the
complaint, Shep discovers that George confessed to the police that he (George) ran the red light! Additionally,
there are three witnesses to the incident, all of whom place exclusive blame for the accident on George. Shep
wishes to avoid a trial by bringing a pre-trial motion that will result in a pre-trial judgment in Shep’s favor. If
he intends to use the confession and witness statement in support of his motion, Shep should file a...
a. Motion for Directed Verdict
b. Motion for Judgment on the Pleadings
c. Demurrer
d. Motion for Summary Judgment
14. The State of California contracts with ABC Contractors to construct an extension of the 10 Freeway
at a price of $ 24 million, calling for a completion deadline two years from the date the contract is signed.
a. In this situation the statute of frauds requires that the contract be in writing.
b. This contract does not fall within the statute of frauds and is enforceable by both
parties.
c. The contract would fail because of lack of consideration.
d. The contract is voidable and could only be enforced by the State of California.
15. Eminem tells Dr. Dre, "I'll pay you $ 600.00 if you repair my piano." Later that day Dr. Dre repairs
Eminem's piano. Whether a contract was formed depends on…
a. Dr. Dre's subjective intent at the time he tuned the piano.
b. Dr. Dre’s objective intent at the time he tuned the piano.
c. Whether the contract was in writing.
c. Whether Dr. Dre first accepted the offer by promising to repair the piano.
16. Ren cleans Stimpy room as a gesture of friendship. When Stimpy returns home, he is so impressed
that he offers Ren $10.00 for doing such a good job. Ren accepts.
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a.
b.
c.
d.
This contract will not be enforceable because it is not in writing.
This contract will not be enforceable for lack of proper consideration.
This contract will not be enforceable because of mistake.
This contract is enforceable.
17. On April 2, Milkum & Goode, CPA’s mailed Anson. a signed proposal to perform accounting
services for Anson for $ 10,000 provided Anson accepts the proposal by April 30. Under the circumstances…
a. If Anson accepts by telephone on April 30, no contract will be formed between the parties.
b. Anson must accept the Milkum & Goode proposal in writing in order to form a contract.
c. A contract will be formed between the parties if Anson mails acceptance to Milkum &
Goode on April 27, even if it is not received by Milkum & Goode until May 3.
d. Milkum & Goode may not withdraw its proposal prior to May 1 because it is a firm offer.
18. Which of the following is most likely to be considered a valid offer?
a. An auctioneer's offer to sell a good with reserve.
b. Vons advertises ground beef at $ 2.49 a pound.
c. An uncle promises his nephew money if the nephew refrains from smoking or gambling.
d. George tells Chi: "I'd sure like to sell my car for $ 10,000.00"
19. Missy is in the business of selling office supplies and Sven is her regular customer. Missy sends a
written proposal to Sven by facsimile (FAX) offering him a 15% discount on all supplies purchased in May and
promises to keep the offer open until May 31. On May 25 she delivers a letter to Sven revoking the offer. On
May 30 Sven mails an order to Missy for $ 3000.00 worth of supplies, but the letter does not arrive at Missy’s
office until June 2. Will the 15% discount apply to Sven’s order?
a.
b.
c.
d.
Yes because the 15% discount offer could not be revoked prior to May 30.
No, because the 15% discount offer was an option contract.
No, because the 15% discount offer was legally revoked on May 25.
No, because the acceptance was received beyond the May 31 deadline.
For the following questions, please write your response in the space or spaces provided.
20. To conduct discovery in Plaintiff's lawsuit against your client, indicate in the blank spaces which
form or item of discovery will be most useful to achieve the following discovery goals:
A. To require Plaintiff to personally at your office
so you can question her under oath:
_____________________________
B. To send Plaintiff general written questions, in
order to obtain sworn written responses:
_____________________________
21. Westwood Corporation (WC), has offered 50 shares of its stock to Rosamelia at a price of $ 16.50
per share. WC tells Rosamelia that it will keep the offer open for 15 days if she pays WC $ 100.00. Rosamelia
pays the $ 100.00. This is a typical example of an enforceable ____________________ contract, because the
offeror is receiving legal consideration from the offeree in exchange for keeping the offer open for a certain
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period of time. If WC is a computer retailer, and offers to sell Rosamelia a computer for $ 1,000.00, their
agreement to “keep the offer open” for 15 days does not require separate consideration because WC is a
merchant under the UCC and they have made a _______________________ offer to Rosamelia (one which
does not require separate consideration to be kept open).
22. On January 15, 1996, Katarina, a student, mailed a letter to Marc offering to sell him a set of used
Business Law books for $ 100.00. She stated she would keep the offer open for 10 days. On January 18, she
mails him a revocation. Please indicate in which of the following situations, if any, a contract exists:
______ On January 19, Marc mails back an acceptance. The revocation arrives January 20
and the acceptance arrives January 21.
______ On January 19, five minutes before receiving the revocation, Marc calls Katarina
and accepts the offer.
______ On January 19, Marc mails back a rejection. He then changes his mind and on
January 20 mails an acceptance. The rejection arrives on January 21, one day
before the letter of acceptance and two days before the revocation.
23. When a debtor does not have the money to pay multiple creditors the full balance owed on
liquidated debts to the various creditors, the parties can agree to a proportional reduction of the amount owed to
each of the creditors (even if there is no separate consideration) and the court will uphold this written
agreement. Name the agreement or document the parties will likely sign in this situation:
______________________
________________________ ________________________
24. Luke contracts to sell his Light Saber to Darth for $ 100,000.00. At the time of the sale, Darth
mistakenly believes the Light Saber will emit a blue light, when it actuality it only emits a red light. Please
indicate in which of the following situations, Darth can avoid the contract.
_____
Prior to signing the contract, Darth said: “By the power of the force, I’ll bet this
will emit a spectacular blue light. Luke (who is aware that the Light Saber only emits
red light) remains silent and does not correct Darth’s mistaken impression.
_____
Luke is unaware of Darth’s mistaken impression when the contract is signed.
_____
Both Luke and Darth mistakenly believe the light saber emits a blue light.
25. In each of the following situations indicate whether the contract is void or voidable:
A. Timothy marries Cindy and then
tells her “if you really love me
you’ll sign this contract”:
____________________________
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B. Orlando bursts into Jackie’s office
threatening to kill her if she doesn’t
sign the contract. As she screams,
he grabs her hand and forcibly signs
her name on the document:
____________________________
C. Terence, a first-year law student,
signs a contract with Donna for
legal services, wherein Terence
will be paid $ 200.00 to draft a will: ____________________________
D. Jerry and McGuire sign a contract
in which McGuire will remodel a small
office building owned by Jerry. In
computing the cost of building materials
McGuire, he makes a computational
mistake (by punching the wrong numbers
on his calculator). As a result, McGuire
underestimates the cost of the job by
$ 2,500.00:
____________________________
For the four questions appearing on the next two pages, provide an answer in essay or narrative form.
26. The Jetsons’ Annual High Technology Auction is being held today. The auctioneer, George, is
preparing to offer the following three items at the auction: (A) A home teleportation machine (B) A diamondstudded dog collar - and - (C) An advanced-robotic maid (ARM 2000)
George starts the auction and offers the first item by declaring: “Am I bid $ 200,000 for this machine, do
I hear $ 200,000, how about $ 200,000?” Judy, a wealthy businesswoman raises her hand and yells “I accept
the offer!” George frowns and tells her: “Sorry, Miss, I just changed my mind - no deal!” Next George holds
up the jeweled collar and exclaims: “For this handsome, diamond-laden collar, am I bid $ 50,000, just
$ 50,000!” Just then, Astro, a member of the audience feels the bite of a flea in his armpit. He raises his right
arm in the air to scratch underneath. George and the other bidders notice Astro’s physical action and George
slams down the hammer, yelling “SOLD! To the Mr. Astro in the back!” Finally, George offers the ARM 2000
for $ 150,000 and Jane raises her right hand to accept. The hammer falls and George says “Sold to the lady with
the red hair”. The next day Jane comes to the auctioneer’s office to pick up her ARM 2000. George tells her
some last minute repairs had to be done to the robot and that the price just went up $ 10,000. Jane reluctantly
agrees to pay the increased price of $ 160,000 and signs a modification to the contract that reflects the higher
price.
Please discuss whether valid contracts were established in each of the 3 auction transactions (ignore any
Statute of Frauds issues as auction contracts need not be in writing). As to Judy, discuss whether George is
legally justified in “changing his mind” or can Judy enforce the contract. As to Astro, assume that everyone in
the room, including George, reasonably believed that Astro was offering to buy the collar. Can Astro
nevertheless back out of the deal? As to Jane, can she legally refuse to pay the $ 10,000 increase despite the fact
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she signed a contract modification. Why or why not? Finally, please indicate in which California court of
original (subject matter) jurisdiction these contract issues would be properly litigated?
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27. On September 3, Toys For Us, Inc., a toy company, sends a written proposal by facsimile (FAX) to
Target Stores, Inc. offering to sell 1,000 units of its G.I. Barbie action figure, indicating that the offer will be
kept open for 10 days. The price is not mentioned in the offer. On September 8, Toys For Us calls Target’s
representative and revokes the offer. On September 10, Target mails back a written acceptance to Toys For Us,
as follows:
“We accept your offer provided you can deliver the goods to
our main warehouse in Compton.”
The acceptance doesn’t arrive at Toys For Us’ headquarters until September 15. Fifteen days later, Toys
For Us refuses to deliver the goods based on four grounds: (1) It revoked the offer prior to its acceptance, (2)
Target changed the terms of the offer in its acceptance, (3) the contract offer failed to mention a price and is
therefore invalid because it is uncertain, and (4) The acceptance was received beyond the 10 day acceptance
period. Please discuss what Target will likely contend to defeat the four arguments set forth by Toys For Us and
state what the likely result will be if Target sues Toys For Us for breach of contract. Finally, discuss whether
Target would have valid grounds to sue for Specific Performance.
28. Clinton Industries, Inc., an Arkansas corporation signed a $ 100,000.00 contract for the sale of
computer equipment with the Jones Modeling Agency, a California company. Jones breached the contract and
Clinton now wishes to sue. The contract was signed in Arkansas, when a Jones representative was in Little
Rock for a business conference. Jones has no other business contacts with Arkansas and has neither employees
nor an office there. Clinton discovers, however, that Jones, sole owner of the agency, will be vacationing in
nearby Texas for a one-month period. Clinton seeks your advice about whether grounds exist to sue Jones in the
Arkansas, Texas, California or federal courts. For each of these four courts, please discuss whether personal (or
federal) jurisdiction over Jones exists. If this case were to be filed California, which California trial court would
have original or subject matter jurisdiction over this matter? Finally, indicate whether Clinton has valid
grounds to sue Jones for specific performance of the contract.
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