UARK LAW AND ETHICS OMGT 4313
EXAM QUESTIONS AND ANSWERS
(VERIFIED AND UPDATED)
Article 2 of the Uniform Commercial Code (UCC) Applies to which types of contracts? -
ANS Contracts for sale of goods
Does an international sales contract for the sale of goods exceeding $500 have to be in writing
to be enforceable in court ? - ANS No, because the 1980 U.N Convention on Contracts for the
International Sale of Goods does not include a statute of frauds
What is the standard measure of compensatory damages in a contract lawsuit? - ANS the
difference between the value of the breaching party's contractually promised performance and
the value of the breaching party's actual performance
If a court decides a contract must be rescinded, what follows? - ANS restitution (each side
must return goods, property, or funds previously conveyed under the rescinded contract)
Sometimes courts decide that monetary damages are not an appropriate remedy for a breach
of contract. In such instances, courts may award an equitable remedy. Which of the following is
a type of equitable remedy?
I. Specific performance?
II. Reformation
@2026/2027 ALLRIGHTS RESERVED.
,III. Compensatory damages
IV. rescission of and restitution - ANS I, II, and IV
I. Specific performance
II. reformation
III. Rescission and restitution
May an intended third party to a contract sue if one of the parties breaches the contract? -
ANS Yes
Lara was joking with a friend about selling her car for $2000 and only riding her bike to and from
work. The friend said " I accept your offer" . Is there an enforceable contract between Lara and
her friend? (i.e If Lara refuses to deliver the car to her friend , will the friend succeed in a lawsuit
to compell Lara to deliver the car? - ANS No, because Lara did not objectively intend to be
bound by her offer to sell her car for $2000.
How is a contract different from a promise creating a moral obligation? - ANS a contract is
enforceable in court; a moral obligation is not
How must the offorree accept the offer to form a bilateral contract? - ANS promising to
perform; once there is a promise for a promise, then an enforceable contract is formed.
Generally, employees of a company who deal with third parties are __________ of the
company. - ANS agents
An agent may have express authority (duties specifically stated in writing or orally) and implied
authority. What is implied authority ? - ANS authority to do what is reasonably necessary to
carry out express authority
@2026/2027 ALLRIGHTS RESERVED.
, May a 14-year-old entrepreneur be a principal, contracting with another person to be his agent
? - ANS No, a person must have contractual capacity to be a principal
Taxi Co. Contracts to purchase two limousines from Custom Cars with a delivery to occur on
May 1. Taxi Co. explained to Custom Cars that on time delivery was very important because the
limousines were booked for 4 proms and 8 weddings in May. Custom Cars breached the
contract and never delivered the two limousines. Taxi Co. had to cancel the prom and wedding
contracts. In a lawsuit will Taxi Co be able to recover the profits it lost when it canceled the
prom and wedding contracts? - ANS Yes because these were consequential damages: indirect
losses related to Custom Car's breach, which was foreseeable as Custom Cars knew of the prom
and wedding contracts.
Tour Co. contracts to provide tours of Yellowstone National Park to a group of tourist from
Europe in June. The tourist are scheduled to fly back to Europe on July 1st. Because of a standoff
in Congress, national park funding is cut and Yellow Stone National Park is closed to all tourist
for the month of June. What is the likely outcome of this situation? - ANS The contract is
discharged and Tour Co. is not required to perform because of impossibility of performance.
Under the common law of contracts a party is entitled to payment if the party substantially
performs the contract. The elements of a substantial performance are 1.) The party performed
in good faith, 2.)The performance must not vary greatly from the promised performance, and
3.) - ANS The performance creates substantially the same benefit as the contractually
promised performance
A parties duties under a contract may be discharged (terminated) by the parties performance of
the duties or by - ANS Agreement of the parties
Party A and Party B enter into a contract. Party B seeks to have Party C take the place of Party B.
All three parties agree to this substitution, agreeing to extinguish the original contract, and
create a new contract between Party A and Party C. This is called - ANS novation
@2026/2027 ALLRIGHTS RESERVED.
EXAM QUESTIONS AND ANSWERS
(VERIFIED AND UPDATED)
Article 2 of the Uniform Commercial Code (UCC) Applies to which types of contracts? -
ANS Contracts for sale of goods
Does an international sales contract for the sale of goods exceeding $500 have to be in writing
to be enforceable in court ? - ANS No, because the 1980 U.N Convention on Contracts for the
International Sale of Goods does not include a statute of frauds
What is the standard measure of compensatory damages in a contract lawsuit? - ANS the
difference between the value of the breaching party's contractually promised performance and
the value of the breaching party's actual performance
If a court decides a contract must be rescinded, what follows? - ANS restitution (each side
must return goods, property, or funds previously conveyed under the rescinded contract)
Sometimes courts decide that monetary damages are not an appropriate remedy for a breach
of contract. In such instances, courts may award an equitable remedy. Which of the following is
a type of equitable remedy?
I. Specific performance?
II. Reformation
@2026/2027 ALLRIGHTS RESERVED.
,III. Compensatory damages
IV. rescission of and restitution - ANS I, II, and IV
I. Specific performance
II. reformation
III. Rescission and restitution
May an intended third party to a contract sue if one of the parties breaches the contract? -
ANS Yes
Lara was joking with a friend about selling her car for $2000 and only riding her bike to and from
work. The friend said " I accept your offer" . Is there an enforceable contract between Lara and
her friend? (i.e If Lara refuses to deliver the car to her friend , will the friend succeed in a lawsuit
to compell Lara to deliver the car? - ANS No, because Lara did not objectively intend to be
bound by her offer to sell her car for $2000.
How is a contract different from a promise creating a moral obligation? - ANS a contract is
enforceable in court; a moral obligation is not
How must the offorree accept the offer to form a bilateral contract? - ANS promising to
perform; once there is a promise for a promise, then an enforceable contract is formed.
Generally, employees of a company who deal with third parties are __________ of the
company. - ANS agents
An agent may have express authority (duties specifically stated in writing or orally) and implied
authority. What is implied authority ? - ANS authority to do what is reasonably necessary to
carry out express authority
@2026/2027 ALLRIGHTS RESERVED.
, May a 14-year-old entrepreneur be a principal, contracting with another person to be his agent
? - ANS No, a person must have contractual capacity to be a principal
Taxi Co. Contracts to purchase two limousines from Custom Cars with a delivery to occur on
May 1. Taxi Co. explained to Custom Cars that on time delivery was very important because the
limousines were booked for 4 proms and 8 weddings in May. Custom Cars breached the
contract and never delivered the two limousines. Taxi Co. had to cancel the prom and wedding
contracts. In a lawsuit will Taxi Co be able to recover the profits it lost when it canceled the
prom and wedding contracts? - ANS Yes because these were consequential damages: indirect
losses related to Custom Car's breach, which was foreseeable as Custom Cars knew of the prom
and wedding contracts.
Tour Co. contracts to provide tours of Yellowstone National Park to a group of tourist from
Europe in June. The tourist are scheduled to fly back to Europe on July 1st. Because of a standoff
in Congress, national park funding is cut and Yellow Stone National Park is closed to all tourist
for the month of June. What is the likely outcome of this situation? - ANS The contract is
discharged and Tour Co. is not required to perform because of impossibility of performance.
Under the common law of contracts a party is entitled to payment if the party substantially
performs the contract. The elements of a substantial performance are 1.) The party performed
in good faith, 2.)The performance must not vary greatly from the promised performance, and
3.) - ANS The performance creates substantially the same benefit as the contractually
promised performance
A parties duties under a contract may be discharged (terminated) by the parties performance of
the duties or by - ANS Agreement of the parties
Party A and Party B enter into a contract. Party B seeks to have Party C take the place of Party B.
All three parties agree to this substitution, agreeing to extinguish the original contract, and
create a new contract between Party A and Party C. This is called - ANS novation
@2026/2027 ALLRIGHTS RESERVED.
