Legal Environment Exam 2

Legal Environment Exam 2 - WCOB 1012, Exam 2, Fall 04 (Ch:...

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1 WCOB 1012, Exam 2, Fall 04 (Ch: 5-10) 1. Allen signed a contract to purchase a house. The contract stated that it would not be enforceable unless Allen was able to qualify for a loan. This provision in the contract is an example of: A. Condition precedent. B. Satisfaction requirement. C. Substantial performance doctrine. D. Liquidated damages. E. Provision which is against public policy and void. 2. Baker, a local builder, worked for four days building a new bathroom for Carter. When it was done Carter refused to pay Baker anything because it was slightly smaller (by ½ of one square foot) than called for in the contract. You may assume that Baker was in good faith. If Baker should sue Carter for the amount of the contract, a court would probably rule for: A. Baker, under the liquidated damages doctrine. B. Baker, under the substantial performance doctrine. C. Carter, since Baker breached the contract. D. Carter, since there was no consideration in the contract. 3. The discharge of a contractual obligation as a result of bankruptcy is an example of a discharge on the basis of: A. Novation. B. Rescission. C. Impossibility. D. Substituted agreement. E. Operation of law. 4. The remedy of specific performance is normally allowed in which of the following kinds of contracts? A. Personal service contracts. B. Contracts for the purchase of office equipment. C. Any contract for the sale of goods. D. A contract for the sale of land. E. An agency contract. 5. Allen and Baker entered into a contract whereby Allen was to build an addition to Baker’s restaurant. The contract was for $150,000. It contained a provision which stated that performance was to be completed by July 1, and that for each day’s delay the amount of damages to be withheld by Baker was $25,000. This was far in excess of the amount of damages that the delay was expected to cause. Due to bad weather Allen was four days late. This did not cause Baker any actual damages, but he withheld $100,000, and payed Allen only $50,000. Does Baker have a legal right to do this? A. Yes, this is a liquidated damages clause, and courts usually enforce these. B. Yes, since these are consequential damages. C. No, since the amount provided for is unreasonable. D. No, since liquidated damages clauses in general are against public policy and void. 6. As a result of a contract breach by the other party, Thomas sustained the following damages: Compensatory: $50,000; Consequential (foreseeable by the other party): $25,000. You may assume that a jury would award punitive damages of $100,000, if allowed by law. In this case the most likely award to Thomas would be: A. $50,000. B. $75,000. C. $125,000. D. $150,000. E. $175,000.
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7. Which of the following is an example of an “equitable” remedy? A.
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This note was uploaded on 04/25/2008 for the course WCOB 1012 taught by Professor Norwood during the Fall '08 term at Arkansas.

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Legal Environment Exam 2 - WCOB 1012, Exam 2, Fall 04 (Ch:...

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