10. Scott takes $10,000 from his bank account to set up a small donut-shop business. He...

10. Scott takes $10,000 from his bank account to set up a small donut-shop business. He meets with an attorney, and finds out he can set up a sole proprietorship for under $100, but a corporation would cost over $500 ($175 to the state, about $400 to the attorney). He decides on a sole proprietorship. He signs a one-year lease, and starts his business. After six months of operations, he closes the business because of much-lower-than-expected sales. After using the $10,000 from Scott, the business has unpaid expenses of:

$6,000 remaining rent due on the business lease thru end of the lease

$5,000 in wages to employees

$3,000 in payroll taxes

$35,000 in medical bills for a customer injured when a donut rack falls over on the customer, breaking several bones in the customer’s legs, and leaving the customer unable to work for several months.

Scott’s personal liability for these unpaid expenses is:

a. limited to the $10,000 already invested

b. limited to the $10,000 already invested, plus the wages and taxes owed

c. complete liability for all debts

d.        no liability at all

11.   An enforceable contract always requires which one of the following:

A) mutual consideration

B) a warranty

C) a written document

D) a statute authorizing the contract

E) a sale

12.   Sandra sued her supervisor, and her employer (the Boeing Co.), claiming that she was sexually harassed on the job, by her supervisor, who was trying to get Sandra to give him sexual favors in return for a promotion. If Sandra wins the case against the supervisor and Boeing, then the supervisor would have to pay her money damages. This is an example of:
a.   a “criminal” lawsuit
b.   a “civil” lawsuit

13. The sporting-goods retailer REI, Inc. sells goods in San Francisco. Although they use United Parcel Service to deliver goods in other cities, they also have a few delivery vans (driven by REI employees) to make deliveries in San Francisco. Rob works as a driver for REI. Last week, Rob was driving his REI delivery van up on Russian Hill when he hit a pedestrian crossing the street (in a pedestrian crosswalk). If the pedestrian decides to sue for her medical care and other damages, who will be responsible, under the law?

a. Rob will be liable for these damages.

b. REI will be liable for these damages.

c. Both Rob and REI will be liable for these damages.

d. Neither Rob nor REI will be liable for these damages.

e. The pedestrian’s insurance company will be liable for these damages.

14. In 1960 the Minnesota Supreme Court ruled in a case that a minor can declare contracts “void” at any time during his/her minority. In 2018, the courts in Minnesota still follow this ruling, this is an example of:


Statutory law.


the bystander rule.


case precedent.


enabling legislation.

e. judicial activism

15. The UCC (Article 2) governs contracts for the sale of goods. True or False

16. Serena signed a contract to perform at a Berkeley night-club, for $5,000. If Serena and the night-club later have a dispute about this contract, the relevant law would be:
a. The UCC (Article 2)
b. The common-law of contracts
c. The common-law of torts

17. A minor has entered into a signed, written agreement with an adult for the purchase of a car, for $5,000. The minor has paid the adult $1,000 as a partial payment, and has had the car for about one week. Now, the minor wants to cancel the contract. The adult refuses to cancel the contract, because he wants the full $5,000, and he no longer wants the car. The minor is able to walk to her high school, and to her part-time job, and does not “need” the car. If this goes to court, the judge should rule that the minor:
A) is bound by the agreement, because it is written and signed.
B) is bound by the agreement, because it is for more than $500.
C) can declare the contract “void,” but cannot get back her $1,000 partial payment.
D) can declare the contract “void,” and will be able to get back her $1,000 partial payment.

18. I am about to buy a bicycle from Oakland Cycling Co., for about $800, so I can get more exercise this summer. This purchase-contract transaction will be:

a.   covered by the UCC (Article 2) because one of the parties is a Merchant.

b.   covered by the UCC (Article 2) because it involves the sale of goods.

c.   covered by the UCC (Article 2) because it is a contract for more than $500.

19. Washington State recently passed a law to de-criminalize the purchase and use of small amounts of marijuana for personal use within the State of Washington, for residents over 21.   However, if a Washington business sets up a store to sell marijuana, they could still be prosecuted by the federal government. This is because in a conflict between state law and federal law, the federal law will prevail, due to which part of the US Constitution?


Due Process Clauses                            c. Supremacy Clause


Equal Protection Clause                      d. Federalism doctrine

20. The City of Oakland arrests a business owner for allegedly violating a health-code law in his cafe. The city prosecutor reads aloud in court a statement from the city as to why the business owner is guilty. The judge declares the business owner guilty before the owner can even tell her side of the case. If she challenges her "conviction" by the judge, by appealing to a higher court, the owner should be able to get her conviction in the lower court over-turned, because of which US Constitutional protection:


Due Process Clauses                        c. Supremacy Clause                  


Equal Protection Clause                   d. Federalism Doctrine

Homework Answers

Answer #2


Reason- As enforceable contract needs acceptance of both parties involved

12) Ans)b)a “civil” lawsuit

Reason- As if one person who has held another person liable for some action and wins then the other person needs to pay for the compensation

13) Ans)c. Both Rob and REI will be liable for these damages.

14) Ans) c)case precedent.

Reason-This is a case where courts of other judicial bodies follow the same rules as deciding factor a current situation

answered by: anonymous
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