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Final Exam Review
Fundamentals Of Business Law (LAW 1101)
Baruch College CUNY
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FINAL EXAM REVIEW PROBLEMS CHAPTER 4: TORTS/NEGLIGENCE LEGAL RULE • 4 elements needed to prove Negligence: 1. Defendant has duty a of care to the plainLff 2. Defendant breached the duty of care 3. CausaLon = actual causaLon + proximate causaLon (plainLff must be in zone of danger) 4. PlainLff must be injured SAMPLE PROBLEM 1 Denise owns and operates a chiroprac8c office in midtown Manha;an. On December 2nd she no8ced that one of the chairs she uses to give examina8ons on had a crack in one of its legs. She thought that the chair would be fine un8l she could replace it with a cheaper version. Unfortunately, Doug came in later that day for his appointment and sat down on the chair. The chair collapsed and a piece of wood from the cracked chair leg broke off and stabbed Doug in the leg. Doug screamed very loudly because of the intense pain. His screams were so loud that Gigi, who was outside riding her bike 2 blocks away, was startled and crashed into a parked car breaking her ankle. Both Doug and Gigi want to sue Denise to recover for their injuries. (a) In an ac8on by Doug against Denise to recover damages for his injuries, judgment for whom? • Judgement for Doug since all 4 of the elements of negligence have been met and can be proved in a court. (b) In an ac8on by Gigi against Denise to recover damages for her injuries, judgment for whom? • Denise was the actual cause of the injury but not the proximate cause because she was not in the office. While other 3 elements are present, proximate cause is not there since Gigi was 2 blocks away. Thus judgement for Denise CHAPTER 5: PRODUCTS LIABILITY/ STRICT LIABILITY LEGAL RULES • Six requirements for products liability lawsuit based on strict liability (page 122) 1. The product must have been in a defecLve condiLon when defendant sold it 2. Defendant must be normally engaged in the sales or distribuLon of the product 3. Product must be dangerous to the user because of the defecLve condiLon 4. PlainLff must insure physical harm by use or consumpLon of the product 5. The defecLve condiLon must be the cause of the injury or damage 6. Goods must not have been substanLally changed from the Lme the product was sowed to the Lme that the injury was sustained • Who can be sued in a products liability lawsuit based on strict liability? • Any party connected to that product in the manufacturing, supplying, distribuLon or sales SAMPLE PROBLEM 2 Chris8an was visi8ng his cousin Frankie at Frankie’s new apartment. Chris8an, feeling thirsty , asked Frankie if he had anything to drink. Frankie told him yes and got Chris8an a bo;le of Pepsi that he had bought at Rite Aid. Chris8an started to open the the old style glass bo;le and it sha;ered in his hand severely cu\ng him and requiring 25 s8tches to repair his hand. The bo;le had been part of an error at the Pepsi manufacturing plant that caused the glass to be more fragile and likely to break than usual. However, this defect was not visible and neither Pepsi, Rite Aid nor Frankie behaved negligently in causing or not no8cing the defect. Nonetheless, Chris8an is very upset and wants to sue somebody. (a) Does Chris8an have a claim against Pepsi? Explain fully. • Yes (b) Does Chris8an have a claim against Rite Aid? Explain fully. • Yes (c) Does Chris8an have a claim against Frankie? Explain fully. • No CHAPTER 8: CRIMINAL LAW/CORPORATE CRIMINAL LIABILITY; CHAPTER 13: FRAUD, CHAPTER 32: CONSUMER LAW/DECEPTIVE ADVERTISING. (ANSWER COME FROM DIFFERENT CHAPTERS) SAMPLE PROBLEM 3 Jet Zimora is the president and chief execu8ve of JZ Enterprises, Inc. (“JZE”), a corpora8on. JZE heavily adver8sed and promoted the Z-Ray Ionized Bracelet on its website, in magazine ads and in television infomercials. JZE claimed that the bracelet was ionized and provided a “miraculous cure for chronic pain” by balancing the flows of posi8ve and nega8ve energies. The ads stated that the claims of “immediate, significant or complete pain relief” had been proven by tes8ng. In reality, all of these claims were false. The bracelet was not ionized, no tests had been conducted and there was absolutely no evidence that the bracelet had any effect on pain. Jet Zimora was aware that the claims made in the ads had no basis, but approved all of the marke8ng and ads done by JZE. (a) Cora Withers is 70 years old and suffers from severe arthri8s. Cora saw one of JZE’s infomercials and, in reliance on the statements that it would relieve pain, called the number on the screen and ordered a Z-Ray Ionized Bracelet, which cost her $300. Cora wore bracelet for three weeks and found that it had no effect on her pain. Cora wants to sue JZE. (i) What claim can Cora bring against JZE? What will she have to show to be successful on her claim? She can sue them for fraud. In order to do this, she must prove these 3 things: misrepresentaLon of facts, intent to deceive, plainLff jusLfiably relied on these lies to purchase the product (ii) If Cora is successful on her claim, what remedies can she obtain? She she proves the first 3 elements, she can ask for cancelaLon or recession of the contract. If she wants money damages, she most prove the 4th element of money damages (c) What types of ac8ons might an administra8ve agency, such as the Federal Trade Commission (FTC), take against JZE? Explain. • The FTC can send a warning leger, demand that the company stop the decepLve adverLsing, and can request that the company do counter adverLsing (inform the public of the deceit and put out new adverLsing) (d) Assume that JZE’s adver8sing, promo8on and sale of the Z-Ray Ionized Bracelet cons8tuted mail and wire fraud, which are viola8ons of federal criminal statutes. (i) Can JZE, as a corpora8on, be charged with and found guilty of those crimes? Yes the corporaLon can be charged because any corporaLon that commits crimes can be held criminally liable and charged for the crimes (ii) Can Jet Zimora be charged with and found guilty of those crimes? Yes because if of the Responsible Corporate Officer Doctrine. Whether or not he knew about them or took part in them, he can be hold criminally liable CHAPTER 10: CONTRACTS/NATURE & CLASSIFICATION open. Julia received the le;er on March 27. Aner reading the le;er, Julia was furious. Later that day, on March 27, Julia sent a le;er to Erica saying, “I accept your offer of December 1.” Erica received this le;er on April 2. Erica refused to pay for the computers. Julia sued Erica for breach of contract. (a) Judgment for whom? Explain. • Judgement for Erica since Erica made a valid revocaLon of the contract amer the 3rd month. A merchant has the ability to revoke an offer amer 3 months if it is an offer for more than 3 months. (b) Assume that Erica and Julia are both soccer players by profession and not computer salespersons (not merchants). Judgment for whom? Explain. • Judgement for Julia since there is a contract, Erica was not supposed to revoke the offer for another month since it was only for 2 months. (c) Assume again the facts in (b) (that Erica and Julia are both soccer players) and that Erica had made the offer orally on her cell phone and not in wri8ng. Judgment for whom? Explain. • Judgement for Erica. Using the General RevocaLon Rules, Erica revoked the offer and read the revocaLon leger before Julia sent the leger of acceptance, thus there is no contract that can be enforced. SAMPLE PROBLEM 6 On May 1, Sonia, the owner of a garden supply company sends an offer to Jasmine, the owner of a flower shop, “I will sell you 100 pounds of my new plant food, for a total cost of $1,000. I need to sell this item quickly, so the offer will expire in 10 days from today.” (Signed) Sonia. On May 2, Jasmine receives the le;er from Sonia. On the morning of May 3, Sonia realizes that she can sell the plant food for a higher price to a different buyer so she sends Jasmine a second le;er sta8ng: “Sorry, I withdraw my previous offer of May 1 to sell you plant food” (Signed) Sonia. Due to a delay in the mail, Jasmine does not receive the second le;er un8l May 7. On May 3, aner sending the second le;er to Jasmine, Sonia sells the plant food to a different buyer. Meanwhile on May 6, Jasmine calls Sonia and accepts her original offer. Sonia informs Jasmine that she cannot sell her the plant food since she already sold it to another buyer. Jasmine sues Sonia to recover damages for breach of contract. Judgment for whom? • Judgement for Jasmine. When Jasmine called Sonia on May 6 to accept the offer, she had not yet received the revocaLon leger from Sonia (she received it on May 7) so a contract was formed when she made the phone call. SAMPLE PROBLEM 7 Tom asks Ed if he was interested in buying his house. Ed replied that he was interested but that he needed a li;le 8me to discuss it with his wife. Tom stated, “I’ll hold this offer open for 2 weeks if you give me $500.” Ed responded, “Great, let me write you a check for $500.” Ed wrote the check which Tom cashed the next day. 1 week later, Tom sold the house to his sister. Ed found out and sued Tom for breach of contract. Judgment would be for whom? • Judgement for Ed. This is not a firm offer because it is not in wriLng, but it is an OpLon Contract. Ed gave Tom $500 to hold the offer open for 2 weeks, which Tom was obligated to do, but instead he sold the house a week later to his sister, and thus he broke the contract. CHAPTER 12: CONSIDERATION LEGAL RULES • Pre-exis8ng legal obliga8ons/Modifying a preexis8ng legal obliga8on and new considera8on • Se;lement of a Liquidated Debt and excep8ons (posted on BB) • Se;lement of an Unliquidated Debt and excep8ons (posted on BB) • Past Considera8on and Excep8on • Restric8ve Covenants: SAMPLE PROBLEM 8 Steve and Michael entered into a wri;en and signed contract under which Michael agreed to replace the roof on Steve’s house for a total price of $20,000. (a) Michael replaced the roof according to the terms of the contract. While Steve acknowledged that he owed Michael the full $20,000, he informed Michael that because he was short of cash he would be unable to pay the en8re amount. Michael orally agreed to accept $15,000 in full sa8sfac8on of the $20,000 that was owed to him if Steve would also give Michael his brand new large screen television. The television was worth $2500. Steve immediately paid Michael the $15,000 and gave him the television. Michael took the television, deposited the money and then sued Steve for the addi8onal $2,500 he claims is owed to him. Judgment for whom? • Judgement is for Steve. This is a liquidated debt since there is no disagreement from either party as to how much is owed. The creditor accepted a new consideraLon (the television) so the debt was fulfilled Michael cannot sue for the remaining $2500. (b) Instead of the facts in (a), assume that a good faith dispute arose as to whether Michael had replaced the roof according to the terms of the contract. Michael claimed that the full $20,000 was due, but Steve claimed that he owed him only $15,000. Aner several weeks of argument, Steve sent a check to Michael for $17,500 with a note that said that he was making this payment as full payment owed on the contract and a nota8on on the check that said “in full payment of roofing contract.” Michael endorsed the check and, without making any further nota8ons, deposited it. Michael then sued Steve for the remaining $2,500 he claims is due. Judgment for whom? Explain fully. • Judgement is for Steve. This is an unliquidated debt. There is an accord and saLsfacLon since Michael endorsed and signed the check without wriLng “under protest” on it, thus the debt is fulfilled and Michael is not able to sue for the remaining $2,500 SAMPLE PROBLEM 9 Cameron, a building contractor, entered into a wri;en agreement with Octavia, for a new addi8on on her house for $100,000. Aner the work was one-half complete, Cameron complained about the rising cost of materials and stopped work. Octavia said to Cameron: “If you go ahead and finish the job, I’ll pay you a bonus of $25,000.” Cameron agreed and finished the job. Cameron then demanded payment of $125,000, but Octavia refused to pay more than $100,000. (a) Can Cameron enforce the promise for the bonus claim? Explain. • No, he cannot because the promise is not backed up by consideraLon since Cameron already had a pre-exisLng duty to complete job according to the contract. If Cameron had gogen this promise in wriLng, then he could have gogen the bonus. (b) Assume that Cameron did complete building the new addi8on to Octavia’s house and Octavia responded by sta8ng: “You did such an amazing job, so I’m going to give you a bonus of $25,000.” Can Cameron enforce this promise? • No because this is a case of past consideraLon, a promise for an act that has already taken place. This cannot be enforced because there is no consideraLon. (c) Assume that Octavia had said to Cameron: “If you fix the pavement in front of my house as well as the new addi8on to the house, I’ll pay you an extra $25,000.” Cameron fixes the pavement in front of Octavia’s house as well as finishes the addi8on to her house. Can Cameron enforce the promise to pay the extra $25,000? Explain. • Yes because Octavia promised to pay Cameron an extra amount of money for addiLonal work, thus there is new consideraLon. • Unilateral Mistake: only 1 party to the contract makes a mistake, has to be a mistake about a material fact (fact that is important to subject ma;er of the contract) cannot be a mistake of value (textbook page 310), if non-mistaken party knew about the mistake then the contract can be canceled, if there is a mathema8cal mistake it can be canceled • Bilateral Mistake: both par8es to the contract are mistaken about the same material fact, law says either party can cancel the contract SAMPLE PROBLEM 11 On May 1, 2015, Simone accepted an offer for a job as a professor at Hunter College for the 2015-2016 academic semesters. Mee8ng that day in the office of Jasmine, the Assistant Vice- Dean for Hiring, she orally agreed that her employment would begin on August 1, 2015 and would finish on May 31, 2016 and that she would receive a salary of $90,000 for that period. When Simone asked Jasmine to confirm the agreement in wri8ng, Jasmine refused, saying “No need. I am an honest person. You have my oral promise.” On May 15, 2015, Simone came back to New York to look for an apartment. She met with Nicholas, the landlord of a building on East 67th Street and orally agreed to rent a studio apartment for $2000/month from him beginning on August 1, 2015 and ending on May 31, 2016. When Simone asked Nicholas to confirm the lease in wri8ng, Nicholas also refused. On July 15, 2015, Simone received a phone call from Nicholas informing her that Nicholas would not honor the lease agreement they had reached. Also on July 15, 2015, Simone received a call from Jasmine informing her that Hunter College would not honor the oral agreement it had reached with her. (a) Simone sues Hunter College for breach of contract and Hunter College pleads the Statute of Frauds as a defense. Judgment for whom? Explain. • Judgement for (b) Would your answer to (a) be different if, on May 2, 2015, Simone had wri;en and signed a thank you note to Jasmine that read, “Thanks for agreeing to hire me as a professor for $90,000/year. I look forward to working with you. (Signed) Simone.”? Explain. • Judgement for (c) Simone sues Nicholas for breach of contract because she s8ll wants to rent the studio, and Nicholas pleads the Statute of Frauds as a defense. Judgment for whom? Explain. • Judgement for Simone since this contract is not within the statute of frauds since this is for a lease of a year or less, it does not need to be in wriLng to be enforceable SAMPLE PROBLEM 12 For each example, explain whether each contract is within the Statute of Frauds and therefore may need a wri8ng to be enforceable: (a) Steven and his brother Ned make an oral agreement for Steven to sublet Ned’s apartment for ten months. • No wriLng is required since leases for 1 year for less do not require wriLng (b) Kendra hires Ariana on May 1st, without a wri;en contract, to work for her star8ng June 1st for fineen months. • Yes since the one year rule applies and the contract cannot be completed within 1 year since this is a 15 month contract (c) David tells his daughter Amaya, on the way to a car dealership so that Amaya can buy herself a car, “If you can’t make your car payments, I promise to make the payments.” • No since this is a primary promise (between father and daughter), this would only be a collateral promise if it was between a 3rd party and a creditor and that is the only Lme this would need to be in wriLng. (d) Don and Tim, two wine merchants, make an oral contract for the sale of 20 cases of wine valued at $20,000. Don sends Tim a le;er confirming the agreement. Tim receives the le;er but ignores it. Three weeks aner Tim received the le;er, Don sends the 20 cases of wine, which Tim rejects. • No since this is the Merchant Memo Rule, a confirmaLon leger was received and he has 10 days to send a wrigen rejecLon leger. Because 10 days passed, the leger Don sent is considered sufficient wriLng and wriLng is not required. This only applied when both parLes are merchants. SAMPLE PROBLEM 13 Nicole offered to sell five dresses to Gia. Nicole told Gia that the dresses were vintage designer dresses valued at $50,000 and that she was offering to sell them to Gia for only $10,000 (Nicole knew that these dresses were fakes). Gia accepted Nicole’s offer and gave her a check for $10,000. One week later, Gia’s mother, who was a fashion expert, informed Gia that the dresses were fakes. Gia sues Nicole on the grounds of fraud. (a) Judgment is for whom? Explain. • Judgement for Gia since she can prove all 4 requirements for fraud (misrepresentaLon of fact, intended to deceive, plainLff unjusLfiably relied on this promise, monetary injury) (b) What remedy or remedies may be available to Gia? • Recision and money damages may be available remedies (c) Would the result of Gia’s lawsuit against Nicole be different if Gia, aner being told the dresses were fakes by her mother, kept the dresses and waited 8 months before filing the lawsuit to sue Nicole based on the grounds of fraud? • If she waits 8 months before filing the lawsuit, she would not be able to cancel the contract since she waited too long. She could possible get money damages. SAMPLE PROBLEM 14 (a) Hugh contracts with Jackson for the purchase of rare coins that both par8es honestly believed to be very valuable. Hugh soon discovered that the coins were not worth very much. Hugh refuses to pay the purchase price. Jackson sues for breach of contract. Judgment is for whom? Explain. • Judgement for Jackson since this is a mistake of value (not fact) so the contract cannot be canceled. Only a mistake of fact can lead to the cancelaLon of a contract. (b) Bobby enters into a contract with Wya; to supply Wya; with custom-made bicycles. At the 8me of the contract, Bobby believed that the materials needed to make the bicycles would cost much less than it actually did cost. Bobby argues that he should be relieved of his contract obliga8ons because of this mistake and Wya; sues for breach of contract. Judgment is for whom? Explain. • Judgement for Wyag since this is a unilateral mistake and thus it cannot be canceled, Bobby is trying to get out of a contract due to a mistake that he made. CHAPTER 14: CONTRACT DISCHARGE, CHAPTER 15: REMEDIES CHAPTER 14 /LEGAL RULES – WAYS TO TERMINATE CONTRACTUAL OBLIGATIONS • Impossibility: you want your contractural obliga8ons terminated, argue that it would be impossible for you or anyone to fulfill your obliga8ons, 3 scenarios: • When party essen8al to obliga8on dies or becomes unable to perform, the estate does not have to fulfill the obliga8ons • The one-of-a-kind subject ma;er of the contract gets destroyed, it is impossible for the subject ma;er to be recreated or replaced (i) obtain a court order of specific performance that requires Georgia to perform at Madison Opera House on January 15 and 16? • No because no court will grant Specific Performance since it breaks the 15th Amendment!! (ii) obtain an order of injunc8on preven8ng Georgia from performing at the Berlin Opera House on January 15th and 16th? • Yes because you can get a court order that prevents her from performing at the opera house on that date with an InjuncLon SAMPLE PROBLEM 17 Abby is crossing the street when she is hit by a drunk driver, seriously injured and knocked unconscious. She is rushed to the hospital where doctors and staff save her life. She comes out of her coma and is sent home from the hospital. One week later she receives a bill from the hospital for its services that Abby’s insurance company did not cover. Abby refuses to pay the bill sta8ng that she neither orally or in wri8ng consented to be liable for any payments to the hospital for services provided. Assuming that all charges were accurate and reasonable, is Abby liable to the hospital? • She does not have a contract with them, but it is not fair that she can get away with not paying the hospital. Based on the Quasi-Contract Doctrine, the court can make Abby liable to sLll pay the hospital for the services even though there is no contract. The hospital would have to prove the 4 requirements for a Quasi-Contract and all of these can be proven. CHAPTER 25: EMPLOYMENT DISCRIMINATION LEGAL RULES • Title 7 of 1964 • Age in Discrimina8on Act • Americans with Disabili8es Act. • Defenses available for claims of discrimina8on: SAMPLE PROBLEM 18 Russ and Jules decided to start a video game company called RJ Videos. They mutually agreed on a list of people they wanted to hire for the company. The first person they hired was Marie, an established neuroscien8st and psychiatrist, to do their research and development, regarding which types of video games are most addic8ng. The next persons they hired were Blue and Greg, excellent programmers, to help them program the video games. One year aner she was hired, Marie informed Russ that she was pregnant. One month aner Marie’s announcement to Russ, Russ and Jules decide to make massive organiza8onal changes, fire some people, and start looking for replacements immediately: (a) Marie was fired and was told that the company needed people “who would be dedicated workers and it was obvious that in her condi8on she would not be a good fit with the company.” Does Marie and have any claims against RJ Videos. Explain. • She would have a claim against RJ Video according to Title 7. It is against federal and state law the discriminate against pregnancy and he brought up her condiLon. (b) Greg was fired because he refused to dress up as Santa Clause for the company’s holiday party, sta8ng that he does not celebrate Christmas, and offering instead to dress up as a Hanukkah candle. Does Greg have any claims against RJ Videos. Explain. • He would have a claim against RJ Video according to Title 7. It is against federal and state law to discriminate against religion. SAMPLE PROBLEM 19 Marissa applied for a job as a greeter at a Big Box store in Brooklyn. Big Box employs over one million people na8onwide and has annual revenues of over $2 billion. A greeter’s responsibili8es are to welcome customers to the store and to return shopping carts to the storage area. Marissa is confined to a motorized wheelchair because of a chronic illness, but would be able to welcome customers. She would be able to return shopping carts, as she did in her previous job, if the ramp to the cart storage area were reconstructed to make it less steep. Reconstruc8ng the ramp would cost about $4000. Ned, the manager of the store, has told Marissa that he will not hire her because he does not want the expense of reconstruc8ng the ramp. Does Marissa have a claim against Big Box for the failure to hire her? Explain, discussing what Marissa must prove and what obliga8ons Big Box has. • Marissa will win the case since Six Box is a huge company that can afford to build the ramp. She must prove that she has a disability and can perform her job if the construcLon is performed. The only way Box Box could get out is if building it would be a financial burden, but this is not the case since they are such a large company.
Final Exam Review
Course: Fundamentals Of Business Law (LAW 1101)
University: Baruch College CUNY
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