Q&A Hero

Q: The Uniform Electronic Transactions Act (UETA) is a federal law.

Q: In a partnering agreement, a seller and a buyer agree in advance on the terms that will apply to all of their later electronic transactions.

Q: Under federal law, an electronic signature is as valid as a signature on paper, without exceptions.

Q: State e-signature laws are uniform.

Q: A contract, to be enforced, may require the signature of the party against whom enforcement is sought.

Q: The terms in a click-on agreement may be enforced if they are construed as parts of a contract.

Q: The terms in a shrink-wrap agreement may be enforced if they are construed as parts of a contract.

Q: A shrink-wrap agreement is normally enforced unless its terms are objectionable on grounds that apply to contracts in general.

Q: A click-on agreement is an agreement whose terms are expressed inside a box in which the goods are packaged.

Q: A license contract involves a passage of title.

Q: To date, most courts have applied traditional contract law principles to contracts formed in the online environment.

Q: Beta Software Company and Gamma Sales Corporation agree to follow a certain security procedure in transacting their business online. Beta fails to follow the procedure, however. Due to this failure, Beta does not detect an error in the deal, which will have a negative impact on Gamma's interest in the deal. Can Gamma avoid the effect of this error? How?

Q: Omega, Inc., sells business application softwareaccounting and bookkeeping programs, blank business forms, inventory control functions, and so onin different combinations, in different packages, at different prices. Each package includes a shrink-wrap agreement that limits warranties and remedies. Precision Engineering Associates (PEA) buys an Omega package and uses the product. Later, PEA files a suit against Omega, claiming that the software is flawed and that the flaws caused PEA to suffer business losses. PEA asks for relief that exceeds the limits in the shrink-wrap agreement. What are shrink-wrap agreements? Are these agreements always enforced? Under what circumstances is a court likely to enforce this agreement?

Q: Gamma Data, Inc., and Omega Research Corporation enter into a licensing transaction for information subject to the UCITA. The UCITA covers the licensing of a. all information in electronic form only. b. all information in print form only. c. all information regardless of form. d. computer information only.

Q: National Shipping Corporation and Office Software Company (OSC) make a deal for OSCs products, communicating entirely online. Under the UETA, an electronic record is considered sent a. only at a midway point between the sender and recipient. b. only on coming into the recipient's control. c. only on leaving the sender's control. d. when it leaves the sender's control or comes into the recipient's control.

Q: Hi-Tech Services, Inc., and Internet Investments Corporation enter into a contract that would otherwise be subject to the UETA but states that the contract is not subject to UETA provisions. The UETA covers a. none of the contract. b. only the part of the contract that concerns computer information. c. only the part of the contract that does not concern computer information. d. the entire contract.

Q: American Food Corporation and Bakers Goods, Inc., transact a deal that the UETA covers. The UETA covers contracts that are also governed by a. laws on wills and trusts only. b. the Uniform Commercial Code only. c. the Uniform Commercial Information Transactions Act only. d. none of the above.

Q: Research Products, Inc., and Scientific Tools Corporation enter into a contract online in a state that has enacted a modified version of the UETA in which a procedure for the use of e-signatures is different from that provided in the E-SIGN Act. The alternative procedure is effective if it is a. consistent with the E-SIGN Act b. inconsistent with the E-SIGN Act. c. significantly different from the E-SIGN Act. d. sufficiently distinctive from the E-SIGN Act.

Q: Financial Services Corporation engages in e-transactions over the Internet. The UETA a. does not support the transactions, but does create rules for them. b. does not support the transactions or create rules for them. c. supports the transactions and creates rules for them. d. supports the transactions, but does not create rules for them.

Q: Kay and Lucy enter into a contract that falls within the provisions of the UETA. Under the UETA, "an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record" is a. an e-document. b. an e-signature. c. an e-transaction. d. a record.

Q: Standard Purchasing Corporation and Total Sales, Inc., enter into a partnering agreement. Under a partnering agreement, parties agree a. in advance to terms that apply to their future e-transactions. b. to become partners. c. to conduct transactions solely in electronic form. d. to resolve all disputes without involving a third party.

Q: Integrity Manufacturing, Inc., and Jiffy Delivery Service make a deal over the Internet that involves e-documents. Under the E-SIGN Act, for an e-document to be enforceable, it must be in a form that can be a. accurately reproduced only. b. retained only. c. accurately reproduced and retained. d. the entire contract.

Q: Ann, a seller, and Bill, a buyer, make a deal over the Internet that involves e-signatures. Under the E-SIGN Act, for the e-signatures to be enforceable a. both parties must have agreed to use e-signatures. b. neither party must have agreed to use e-signatures. c. only Ann must have agreed to use an e-signature. d. only Bill must have agreed to use an e-signature.

Q: Eagle Oil Company and Federated Refining, Inc., attempt to enter into a contract in electronic form. Under the Electronic Signatures in Global and National Commerce (E-SIGN) Act, solely because this contract is in electronic form, it a. may be denied legal effect. b. may not be denied legal effect. c. will be limited to certain terms. d. will not be enforced.

Q: In Case 12, Specht v. Netscape Communications Corp., the court held that because the plaintiffs did not expressly assent to the terms of the contract, the plaintiffs a. were not required to submit to arbitration in California, as the contract stated. b. must stop using the product downloaded from Netscape. c. must pay for the product. d. were required to submit to arbitration in California.

Q: In Case 19.2, Specht v. Netscape Communications Corp., the court held that online agreements to download software for free a. are not contracts. b. are contracts that include all contract terms displayed on the Web site. c. are contracts that include only those terms to which the downloader has agreed by clicking on "I agree" or "I accept" after viewing the terms and before downloading the software. d. are unenforceable.

Q: Leo and Mona enter into a contract. A dispute later arises over a particular term. The law governing contracts requires that for that term to be given effect, both Leo and Mona must have read a. all of the terms. b. at least the term in dispute. c. most of the terms, including the term in dispute. d. none of the terms.

Q: Dina buys from E-Things, Inc., a product that includes a shrink-wrap agreement. A dispute arises, and E-Things files a suit against Dina. The court will enforce the agreement if Dina used the product a. after Dina had an opportunity to read the agreement. b. before Dina had an opportunity to read the agreement. c. only after Dina actually read the agreement. d. whether or not Dina read the agreement.

Q: General Electronics, Inc., uses shrink-wrap agreements. In most cases, a shrink-wrap agreement is between a. any seller and buyer. b. the manufacturer of hardware or software and a retailer. c. the manufacturer of hardware or software and its user. d. none of the above.

Q: Cathy buys software from Digital Products Corporation. When Cathy loads the software, to use the program she is required to click on a button that says, in reference to certain terms, "I agree." This is a. a click-on agreement. b. a default agreement. c. an attribution agreement. d. a shrink-wrap agreement.

Q: Adam contracts for artwork to be created for his office building by Beth, who later refuses to perform. Adam then contracts to sell the building to Carl, but soon finds another buyer willing to pay a higher price and refuses to transfer the property to Carl. In separate suits by Adam against Beth and by Carl against Adam, the plaintiffs seek specific performance. How might the court rule in each case, and why?

Q: AAA Delivery Service contracts to deliver Best Pizza Company's goods to its customers for $5,000, payable in advance. Best pays the money, but AAA fails to perform. Can Best rescind the contract? Can Best also obtain restitution? What does it mean to "rescind" a contract? How is a contract rescinded? What is restitution? How is restitution accomplished? Explain.

Q: A contract between National Supplies Company and Omega Manufacturing Corporation includes a provision excluding liability as a result of fraud. This provision is a. enforceable because the parties are protected from liability. b. enforceable because the parties consented to it. c. enforceable if the parties have equal bargaining power. d. not enforceable.

Q: Edie, who has no business experience, decides to open E.D.'s Storage. Frank, an experienced architect, designs a warehouse for Edie under a contract drafted by Frank that limits his liability "for any mistakes" to his fee. When the warehouse collapses due to a design error, Edie files a suit against Frank. Like the situation in Case 18.3, Lucier v. Williams, this limitation-of-liability clause is most likely a. enforceable because at the time of the contract, mistakes were too difficult to foresee and the limit is reasonable. b. enforceable because both parties agreed to it. c. unenforceable because at the time of the contract, mistakes were too difficult to foresee. d. unenforceable because Frank prepared the contract and the parties had unequal bargaining power.

Q: Chris hires Delta Corporation to inspect a house under a contract drafted by Delta that limits Delta's liability "from any cause" to half of its $400 fee. Delta's inspector passes the house, which Chris buys. Defects soon become apparent, requiring repairs costing $10,000. Chris files a suit against Delta. Under the decision in Case 3, Lucier v. Williams, the limitation-of-liability clause is most likely a. enforceable because at the time of the contract, the amount of liability was difficult to determine and the limit is reasonable. b. enforceable because both parties agreed to it. c. unenforceable because at the time of the contract, the amount of liability was too difficult to determine. d. unenforceable because the clause allows Delta to avoid almost all responsibility for its negligence.

Q: Interstate Purchases, Inc. (IPI), contracts to buy Jiffy Corporation's assets. Jiffy breaches the contract. IPI files a suit against Jiffy, seeking a variety of remedies. The doctrine of election of remedies has been eliminated in contracts involving sales of a. goods. b. intellectual property. c. real property. d. services.

Q: Ann hires Ben to construct fifteen oil storage tanks over a period of five years, with payment for each tank to be made as it is completed, but they do not put their agreement in writing. Ann breaches the contract when she refuses to pay Ben for the first tank. To redress the breach, Ben's best choice is a. damages. b. quasi-contractual recovery. c. rescission. d. specific performance.

Q: A contract for a sale of land from United Properties, Inc., to Commercial Investments Corporation contains an erroneous legal description. The most appropriate remedy for these parties is a. damages. b. reformation. c. rescission. d. specific performance.

Q: Dan hires Eve to perform at Dan's Club, but Eve later breaches the agreement to accept a higher-paying job at First Star Arena. Dan files a suit against Eve. The court will most likely a. award damages to Dan. b. cancel Dan and Eve's contract. c. order Eve to perform the contract. d. reform Dan and Eve's contract.

Q: For Pete to recover the benefit of his bargain from a breached real estate contract with Quality Properties, Inc., the most appropriate remedy is a. damages. b. quasi-contractual recovery. c. rescission. d. specific performance.

Q: Roy contracts to sell his Double-R Ranch to Sam on May 1. On April 20, Roy tells Sam that he will not go through with the deal. Sam files a suit against Roy. Sam can recover a. the cost of any ranch that would suit him. b. the cost of a similar, nearby ranch. c. the Double-R Ranch. d. nothing.

Q: Dina and Elle agree to a contract, which Dina breaches. For this breach, Elle seeks restitution. Restitution is a. the canceling of the contract. b. the recapture of the benefit that Elle conferred on Dina through which Dina has been unjustly enriched. c. the "reinstitution" of the parties' respective benefits under the contract after a punitive assessment against Dina. d. the "resting," or suspension, of contractual duties until Din "re-agrees" to perform.

Q: John owned an apartment and leased it to Steve. The lease agreement was for one year. After ten months, Steve told John that he was moving out of the apartment immediately. When John went to the apartment, he saw that Steve had put holes in the walls, ruined the carpets, and damaged the wiring. John was told that repairs would take at least two months. John sued Steve for damage to the apartment and for the rent payments for the last two months of the lease. Steve argues that the remaining rent owed should be offset by John's duty to find another tenant and mitigate his damages. The court would most likely rule in favor of a. Steve, because John had a duty to mitigate his damages. b. John, because the apartment could not be rented for two months due to the damage caused by Steve. c. Steve, because the John could have rented the apartment "as is." d. John, because Steve argued against his recovery in their dispute.

Q: First Properties, Inc., negotiates with Great Management Corporation to include a liquidated damages clause in their contract. The clause is enforceable if, when the parties enter into the contract, estimating the potential amount of damages on a breach is a. a reasonable possibility. b. difficult. c. nearly impossible. d. not possible.

Q: Amy contracts to sell a residential duplex to Burt. The contract provides that if Amy does not close the deal by September 15, she must pay Burt one-half of the duplex's sale price. This provision is not enforceable because it is a. a liquidated damages clause. b. a mitigation of damages clause. c. a nominal damages clause. d. a penalty clause.

Q: Earl holds 1,000 pounds of perishable fruit in storage for Fresh Food Corporation. Fresh Food does not pay for the storage. Earl sells the fruit to Green Grocery Stores, Inc. This sale represents a. a breach of contract. b. a mitigation of damages. c. rescission and restitution. d. specific performance.

Q: Kris contracts to work exclusively for Local Company during May for $5,000. On April 30, Local cancels the contract. Kris finds another job during May but earns only $3,000. Kris files a suit against Local. As compensatory damages, Kris can recover a. $3,000. b. $2,000. c. $1,000. d. $0.

Q: Bob contracts to work for Central Construction Corporation (CCC) during July for $4,500. On June 30, CCC cancels the contract. Bob declines a similar job with Design Builders, Inc., which would have paid $4,000. Bob files a suit against CCC. As compensatory damages, Bob can recover a. $4,500. b. $4,000. c. $500. d. $0.

Q: Quality Sales Corporation seeks punitive damages in a suit against Regional Distributors, Inc. Generally, punitive damages may be recovered when a contract has been breached a. in almost all cases. b. only if the breach is directly related to the commission of a tort. c. only if the contract involves a sale of goods or a sale of land. d. under no circumstances.

Q: Loyal Engineers, Inc., needs a drill to continue its operations and orders one for $3,000 from Mining Supplies Company. Loyal tells Mining that it must receive the drill by Tuesday or it will lose $10,000. Mining ships the drill late. Loyal can recover a. $13,000. b. $10,000. c. $3,000. d. $0.

Q: Recreational Pools, Inc., agrees to build a swimming pool for Sandy, but fails to build it according to the contract specifications. Sandy hires Total Fix-It Company to finish the project. Sandy may recover from Recreational Pools 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: Great Hardware Store agrees to hire Holly for one year at a salary of $500 per week. When Great cancels the contract, Holly spends $100 to obtain a similar job that pays $450 per week for a year. Holly is entitled to recover a. the amount of the wages that Great 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: The doctrine of election of remedies requires a court to "poll" the parties to a contract to "elect" a remedy.

Q: Courts generally do not grant specific performance of personal service contracts.

Q: Rescission is available in cases involving fraud.

Q: To rescind a contract, each party essentially advances to the position he or she would have been in if the contract had been fully executed.

Q: Liquidated damage clauses typically require a party who breaches a contract to pay a certain amount to the nonbreaching party.

Q: On a tenant's abandonment of leased premises, the landlord's measure of damages is the amount of the unpaid rent with no adjustments.

Q: Normally, when a nonbreaching party has been damaged by a breach of contract, he or she has a duty to mitigate those damages.

Q: Nominal damages normally establish that the defendant acted wrongly.

Q: Nominal damages usually involve very small amounts.

Q: When a party fails to deliver goods contracted for, the nonbreaching party may obtain consequential damages for a loss of profit from a planned resale.

Q: Damages are awarded for whatever injury a nonbreaching party suffers, whether or not the breaching party could have foreseen the injury.

Q: Consequential damages are foreseeable damages that arise from a party's breach of a contract.

Q: In a contract for a sale of land, the usual remedy is specific performance.

Q: The measure of damages for the breach of a contract for a sale of land depends on which party breaches and when.

Q: In a contract for a sale of goods, the usual measure of compensatory damages is the difference between the contract price and the market price.

Q: Expenses that are caused directly by a breach of contractsuch as those incurred to obtain performance from another sourceare incidental damages.

Q: The injury suffered by a nonbreaching party due to the breach of a contract may be remedied by payment of compensatory damages.

Q: The amount of damages on a breach of contract is the difference between the value of what was promised and the value of what was delivered or performed.

Q: Damages compensate a party for harm suffered as a result of another's wrongful act.

Q: A breach of contract entitles the breaching party to sue for damages.

Q: Karla contracts to sell her farm to Leroy, who is to take possession on May 1. Karla delays the transfer until September 15. As a result, Leroy incurs additional expenses in providing for hogs that he bought for the farm. When they made the contract, Karla knew that Leroy would buy the hogs, but Karla says, "Tough luck. September 15 was the earliest I could vacate the property." Is Karla liable for Leroy's extra expenses in providing for the hogs? Why or why not?

Q: National Drilling Company ships its only pump to American Hydraulics Corporation, the manufacturer, for repair. National hires Overland Transport, Inc., to take the pump to American Hydraulics and to return it to National as soon as the repair is complete. National is forced to suspend operations without a pump, but Overland does not know this. National expects to be without the pump for five days and to lose profits of $5,000. When the pump is not returned by the end of the fifth day, National rents a pump at a cost of $100 per day. Overland delays five more days before returning the pump. National files a suit against Overland, asking for compensatory, consequential, and punitive damages. Will National recover?

Q: To avoid liability for intentional injuries, Alaskan Power Corporation includes in its contracts an exculpatory clause. This is a. enforceable if the other parties are protected from liability. b. enforceable if the other parties consent to it. c. enforceable if the other parties have equal bargaining power. d. not enforceable.

Q: Outstate Properties, Inc. (OPI), agrees to sell certain acreage to Pia. OPI repudiates the deal. Pia sues OPI and recovers damages. Pia can now obtain a. an amount in a quasi-contractual recovery. b. damages representing restitution. c. specific performance of the deal. d. nothing more.

Q: Fred files a suit against Gail. To recover from Gail in quasi contract, Fred must show all of the following except a. Fred conferred a benefit on Gail, reasonably expecting to be paid. b. Fred did not act as a volunteer in conferring a benefit on Gail. c. Gail was in a better financial position than Fred. d. Gail would be unjustly enriched if she kept the benefit without paying.

Q: As part of a sale of Ad-Vance, Inc., Britney's product-promotion firm, she signs a covenant not to compete that is unreasonable in its essential terms. To prevent undue hardship, a court will most likely a. convert the unreasonable terms into reasonable ones. b. declare that the entire contract is illegal. c. decree that the sale of the business must be undone. d. do nothing.

Q: Alpha Commodities, Inc., agrees to deliver ten tons of sheet metal to Beta Builders Corporation. The agreement states that delivery is to be within "3" days, although the parties intend "30" days. Alpha cannot convince Beta to amend the contract. Alpha should seek a. damages. b. reformation. c. rescission. d. specific performance.

Q: Alan contracts for the sale of an ancient vase, a Renaissance painting, and a modern mansion to Beth. Alan breaches the contract. Beth files a suit against Alan. The court will most likely award specific performance for a. the mansion only. b. the painting and the vase only. c. the painting or the vase only, but not both. d. the mansion, the painting, and the vase.