BMGT 380 FINAL EXAM (SUMMER

2016)

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1. Johann and Barton contract for the sale of goods. Later Johann, who is 15
years old, decided to cancel the contract on grounds of incapacity. Which of the
following is true, assuming that neither Johann nor Barton is a merchant?
a.

The common law capacity rules apply, because Article 2 of the UCC has no rules

on the subject in such a case.

b.

The common law capacity rules supersede the UCC rules in all contracts for sale

of goods, even if neither Johann nor Barton is a merchant.

c.

UCC, Article 2, capacity rules apply, because this is a contract for the sale of

goods and UCC rules applies to all contracts for sale of goods.
d.

The Restatement (Second) of Contract rules apply; the UCC does not apply

because neither Johann nor Barton are merchants, and because the Restatement
(Second) supersedes any common law precedent.

2. Contractor and Owner contracted for Contractor to build a house for Owner for
$150,000 to be completed by December 24. Later, without terminating the first
contract, Contractor and Owner agreed to change their agreement by writing and
signing an addendum to the original contract so that Owner will now pay
$175,000 for the house to be built. In return, Contractor promised to build exactly
the same house, but to complete it 2 weeks earlier - by December 10.
Assuming that all other elements of the contract are lawful and present in this
situation, this second addendum contract:
a.
Is not binding because it does not have a liquidated damages clause.
b.
Is not binding because Contractor is merely promising to perform a preexisting
legal duty to build the house.
c.
Is not binding because Contractor is not giving adequate consideration by
merely promising to complete the house 2 weeks earlier compared to Owners paying

an additional $25,000.
d.
Is a validly modified addendum that is a binding contract.

3. Which of the following is most likely to be considered unconscionable, thus

making the contract invalid on the ground of unconscionability?
a.
All terms that are stated in fine print.
b.
Some moderate disparity in bargaining power between the parties.
c.
High pressure sales tactics.
d.
A penalty clause obligating the buyer to pay 5 times the product's price for failing
to accept the goods when delivered.
4. Office Depot orally agreed with Supplier to buy 475 memo pads at a total price
of $475. Later, Office Depot and Supplier agreed to modify the contract so that
the price of the memo pads would increase to a total of $575. This modification:
a.
Must be in writing and signed by one or both parties.
b.
May be oral because the original contract agreement was oral.
c.
Can be written or oral because the original contract was oral.
d.
Is unenforceable because the terms of the original contract were fully agreed
upon and cannot be modified.
5. Patient went to Clinic to have a chest x-ray. Patient did not sign any written
agreement for the x-ray. Patient and Clinic also did not make an oral agreement
regarding the x-ray. When Clinic billed Patient $325 for the x-ray, Patient refused
to pay. Clinic sued Patient to recover the $325.
Which of the following is true about Clinics lawsuit?
a.
Clinic can recover under the quasi-contract theory of promissory estoppel.
b.
Clinic can recover under an implied contract theory.
c.
Clinic cannot recover because there was no express contract.
d.
Clinic cannot recover because Patient did not give consideration for the bargain.

6.
Lena owns and operates a van transportation service. Aunt promised to
buy Lena a new van so Lena sold her old van. Aunt then refused to buy Lena a
new van. Lena cannot work without a van. If Lena sues Aunt to enforce the
promise, the likely result is that the promise will:
a.
Be enforced under promissory estoppel because Lena relied on Aunts promise.
b.
Not be enforced as Lena was not unjustly enriched because she did not receive
the van.

c.
Be enforced because the van is a necessity for Lena and all contracts for
necessities are binding and enforceable for all parties.
d.
Not be enforced as Aunts promise was merely a gift to Lena.
7. Parker went to a golf practice putting green. He picked up a bucket of golf
balls from the attendant at the entrance to the practice greens. After practicing
for an hour, Parker returned the golf balls and started to leave. A posted sign
stated the cost of each practice session, up to 1 hour, was $15.00. Customers are
expected to pay after completing practice.
Parker refused to pay for the practice time. A court would most likely conclude
that:
a.
Applying the subjective intent test, Parker is not bound to pay for the practice
because there was no verbal agreement about the cost of the practice.
b.
Applying the objective test, there was no clearly communicated offer and
acceptance, thus no enforceable contract; Parker is not bound to pay for the practice.
c.
Parkers actions implied he intended to pay for the practice; he is legally bound
to pay for the practice.
d.
Parkers actions implied that he intended to pay for the practice, but he is not
legally bound to pay for the practice because there was no written agreement.
8.
Fruits, Inc. ordered 200 cases of Indian River Orchard navel oranges from
Producer, and requested prompt shipment. Producer promptly shipped to Fruits
200 cases of Clearwater Lake navel oranges. Prior to shipment, Producer did not
notify Fruits that it was shipping nonconforming oranges as an accommodation.
Assuming both Fruits and Producer are merchants, under UCC rules, in this case: