Business Its Legal, Ethical, and Global Environment: Chapter 13. All Answers

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1. A contract with a minor is voidable at the minor's option. a. b. : 1 Easy : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Capac... ity : Bloom's: Knowledge 2. A contract with a party who has been declared incompetent is voidable. a. b. : 1 Easy : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Capacity : Bloom's: Knowledge 3. The contracts of a person who has been declared legally incompetent are void. a. b. : 1 Easy : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Capacity : Bloom's: Knowledge 4. Minors are liable for the reasonable value of necessaries. a. b. : 1 Easy : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Capacity : Bloom's: Knowledge 5. Material information is something that would affect the decision to buy or sell. a. b. : 1 Easy : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Misrepresentation : Bloom's: Knowledge 6. Misrepresentation must be fraudulent before rescission can be permitted. a. b. : 1 Easy : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Misrepresentation : Bloom's: Knowledge 7. Puffing is sufficient grounds for setting aside a contract on the basis of misrepresentation. a. b. : 1 Easy : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Misrepresentation : Bloom's: Knowledge 8. "This shirt is 100% cotton" is a statement that is puffing. a. b. : 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Misrepresentation : Bloom's: Application 9. Fraud is misrepresentation with intent to mislead or deceive. a. b. : 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Fraud or Fraudulent Misrepresentation : Bloom's: Comprehension 10. Duress requires proof of physical force. a. b. : 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Duress : Bloom's: Knowledge 11. Contracts by minors to enter the military are generally viewed as unenforceable. a. b. : 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Capacity : Bloom's: Application 12. Undue influence requires proof of a confidential relationship. a. b. : 1 Easy : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Undue Influence : Bloom's: Knowledge 13. Competency licensing statutes do not prevent enforcement of contracts by unlicensed parties. a. b. : 1 Easy : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Illegality and Public Policy : Bloom's: Application 14. Contracts with illegal subject matter are voidable. a. b. : 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Illegality and Public Policy : Bloom's: Comprehension 15. Unconscionability is an illegality defense. a. b. : 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Illegality and Public Policy : Bloom's: Comprehension 16. Covenants not to compete are valid only in sales of a business. a. b. : 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Illegality and Public Policy : Bloom's: Comprehension 17. Conditions precedent are events that must happen before contract performance is required. a. b. : 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal When Performance is Due : Bloom's: Knowledge 18. Substantial performance is available for all types of contracts. a. b. : 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Standards for Performance : Bloom's: Knowledge 19. A force majeure clause is one that provides excuses for nonperformance. a. b. : 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal When Performance is Excused : Bloom's: Knowledge 20. Liquidated damages are void as penalties. a. b. : 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Contract Remedies for Nonperformance : Bloom's: Comprehension 21. Incidental damages are the costs of being compensated and are nonrecoverable. a. b. : 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Contract Remedies for Nonperformance : Bloom's: Comprehension 22. Exculpatory clauses are generally considered void as against public policy. a. b. : 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Illegality and Public Policy : Bloom's: Application 23. Covenants not to compete are generally considered void as against public policy. a. b. : 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Illegality and Public Policy : Bloom's: Application 24. A force majeure clause is a clause that prevents additional terms in acceptances from becoming part of the contract. a. b. : 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal When Performance is Excused : Bloom's: Comprehension 25. Incidental and consequential damages are the same types of damages. a. b. : 1 Easy : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Contract Remedies for Nonperformance : Bloom's: Knowledge 26. A liability limitation clause is the same as an exculpatory clause. a. b. : 1 Easy : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Illegality and Public Policy : Bloom's: Knowledge 27. A television rent-to-own contract that requires 24 payments of $30 each before the renter owns the $199 television set is unconscionable. a. b. : 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Illegality and Public Policy : Bloom's: Knowledge 28. An architect who fails to pay her annual license renewal fee will be unable to collect fees for work done until the renewal fee is paid. a. b. : 1 Easy : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Illegality and Public Policy : Bloom's: Knowledge 29. “Only those on the cutting edge of technology have this product,” is an example of puffing. a. b. : 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Misrepresentation : Bloom's: Application 30. An accord and satisfaction is a void contract. a. b. : 1 Easy : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Finding Someone Else to Take Over the Contract : Bloom's: Knowledge 31. The types of statements that qualify for express warranties also qualify as a basis for misrepresentation. a. b. : 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Misrepresentation : Bloom's: Comprehension 32. The difference between fraud and misrepresentation is knowledge. a. b. : 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Misrepresentation Fraud or Fraudulent Misrepresentation : Bloom's: Comprehension 33. Silence, or the failure to disclose information, is not misrepresentation. a. b. : 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Misrepresentation : Bloom's: Comprehension 34. All contracts have conditions for performance. a. b. : 1 Easy : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Contract Performance : Bloom's: Knowledge 35. The seller's cost of running another ad in order to sell the car that a buyer breached a contract on is an example of consequential damages. a. b. : 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Contract Remedies for Nonperformance : Bloom's: Application 36. The difference between fraud and misrepresentation is proof of intent. a. b. : 1 Easy : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Misrepresentation Fraud or Fraudulent Misrepresentation : Bloom's: Knowledge 37. Compensatory damages can be awarded in addition to liquidated damages. a. b. : 1 Easy : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Contract Remedies for Nonperformance : Bloom's: Knowledge 38. Covenants not to compete are void only in sale-of-business contracts. a. b. : 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Illegality and Public Policy : Bloom's: Comprehension 39. Attorneys' fees are an example of liquidated damages. a. b. : 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Contract Remedies for Nonperformance : Bloom's: Knowledge 40. Compensatory damage formulas are provided under the UCC. a. b. : 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Contract Remedies for Nonperformance : Bloom's: Knowledge 41. In a relationship of dependence, the failure to deal fairly can result in liability for the party controlling the contract term. a. b. : 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Undue Influence : Bloom's: Knowledge 42. There is no difference between assignments and delegation. a. b. : 1 Easy : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Third-Party Rights in Contracts : Bloom's: Knowledge 43. A bill of lading is a receipt for shipment issued by the seller. a. b. : 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal International Issues in Contract Performance : Bloom's: Knowledge 44. Goods can be transferred physically or by transfer of the bill of lading. a. b. : 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal International Issues in Contract Performance : Bloom's: Knowledge 45. A letter of credit is issued by the buyer’s bank. a. b. : 1 Easy : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal International Issues in Contract Performance : Bloom's: Knowledge 46. A lawyer/client relationship is an example of a confidential relationship. a. b. : 1 Easy : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Undue Influence : Bloom's: Knowledge 47. An example of a condition precedent in a home purchase contract is that the buyer must qualify for financing first. a. b. : 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal When Performance is Due : Bloom's: Application 48. An example of a condition precedent in an audit contract is access by the auditor to financial information. a. b. : 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal When Performance is Due : Bloom's: Application 49. Parents of minors can be held liable for the reasonable value of necessaries that their minor children contracted for. a. b. : 1 Easy : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Capacity : Bloom's: Knowledge 50. A multi-million dollar contract between a manufacturer and a parts supplier provides for damages of $300 per day for late delivery is void as a penalty contract. a. b. : 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Contract Remedies for Nonperformance : Bloom's: Application 51. A mortgage broker who sells mortgage contracts to mortgage companies has created a third party beneficiary contract. a. b. : 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Third-Party Rights in Contracts : Bloom's: Application 52. An assignment is the transfer of benefits under a contract. a. b. : 1 Easy : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Third-Party Rights in Contracts : Bloom's: Knowledge 53. A minor who has received medical care can never be responsible for payment for those services. a. b. : 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Capacity : Bloom's: Application 54. In the iParadigms case (Turnitin case), the court ruled that the students who submitted papers to Turnitin who did not want to submit their papers were victims of duress. a. b. : 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Illegality and Public Policy : Bloom's: Comprehension 55. Bob, age 17, has entered into a contract to buy a car. The contract is: a. voidable. b. void. c. voidable only if Bob can return the car. d. enforceable since it is for a necessary. e. none of the above : a 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Capacity : Bloom's: Application 56. Which of the following statements would not be a basis for misrepresentation? a. "This toothpaste is the best tasting around." b. "This house is built the way they used to build houses." c. "There is no merger pending for the company." d. All of the above are sufficient bases for misrepresentation. : c 1 Challenging : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Misrepresentation : Bloom's: Application 57. Duress requires proof of: a. physical force. b. threat of physical force. c. deprivation of a meaningful choice. d. none of the above : c 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Duress : Bloom's: Knowledge 58. Contracts with illegal subject matter are: a. void. b. voidable. c. neither a nor b : a 1 Easy : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Illegality and Public Policy : Bloom's: Knowledge 59. A provision in a contract requiring that a buyer obtain financing before a deal can go through is an example of: a. a contract with no consideration. b. economic duress. c. a condition precedent. d. none of the above : c 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal When Performance is Due : Bloom's: Knowledge 60. Force majeure clauses: a. are liquidated damages clauses. b. are void. c. serve to shift the risk of unforeseen events. d. none of the above : c 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal When Performance is Excused : Bloom's: Application 61. A seller recovering the difference between his resale price and the buyer's original contract price is an example of: a. compensatory damages. b. incidental damages. c. liquidated damages. d. none of the above : a 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Contract Remedies for Nonperformance : Bloom's: Knowledge 62. James Krieg has finished law school but has unsuccessfully taken the bar exam twice. Krieg is running low on patience and cash. He has begun writing wills to see him through this time of crisis and is charging $200 per will. Some of his will clients have refused to pay Krieg and he wishes to take them to a small claims court. Which of the following statements is ? a. Krieg could recover the fees on a quasi-contract theory. b. Krieg could recover the fees since the licensing after the bar exam is simply to raise funds. c. Krieg agreements are voidable. d. Krieg agreements are void. : d 1 Challenging : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Illegality and Public Policy : Bloom's: Application 63. Which of the following contracts would be void? a. A contract with a person declared mentally incompetent. b. A contract with a minor. c. A contract with a force majeure clause. d. All of the above are void. : a 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Capacity : Bloom's: Application 64. The seller of a dry cleaning business has agreed not to open another dry cleaning business for two years within a one-mile radius of the sold business. Such an agreement: a. is void as against public policy. b. is void as unconscionable. c. is void as usurious. d. is valid and enforceable. : d 1 Challenging : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Illegality and Public Policy : Bloom's: Application 65. Clothing For Accountants is a popular retail store owned by I.M. Material. Material has just sold the business to Phil Forma. Phil has asked that a covenant not to compete be inserted into the agreement. Such covenants are: a. void as against public policy. b. only valid in employment contracts. c. valid if reasonable in time and geographic scope. d. none of the above : c 1 Challenging : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Illegality and Public Policy : Bloom's: Application 66. Undue influence requires the presence of: a. a fiduciary relationship. b. some threat or force. c. a lack of capacity in the contracting party. d. none of the above : d 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Undue Influence : Bloom's: Knowledge 67. A minor's right to disaffirm a contract is conditioned on: a. the ability to return the contract consideration. b. whether the minor misrepresented his/her age. c. a time limit of six months. d. none of the above : d 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Capacity : Bloom's: Comprehension 68. Which of the following statements (if later established as un) would constitute a misrepresentation defense to contract formation? a. "You are going to love this house as we have." b. "This farm's well is adequate for household, ranch, and crop needs." c. "The school system here is very fine." d. "Our buyers are the happiest customers around." : b 1 Challenging : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Misrepresentation : Bloom's: Application 69. If entered into by a minor, which of the following contractual situations may be enforceable against the minor? a. Student loan agreements b. Military obligations c. Payment for reasonable value for necessities d. All of the above : d 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Capacity : Bloom's: Application 70. Paddock Pools constructed a swimming pool and deck for the Jensens' home. Paddock installed the wrong trim on the pool. It would cost $2800 to change the trim - one-fifth the total cost of the pool. The Jensens refuse to pay anything for the pool. Paddock's best defense is: a. duress. b. substantial performance. c. mistake. d. failure of conditions. : b 1 Challenging : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Standards for Performance : Bloom's: Application 71. Dana Riley purchased a home in the Brentwood area of Los Angeles. After she purchased the home, she learned that the home had been the residence of a long-time drug dealer. She experienced many late-night visitors and often noticed cars parked outside near the street curb with the drivers and passengers studying the home. The former owner has been convicted of drug charges. Dana has become uncomfortable with the visitors and the surveillance. She just wants out of the house. Which of the following statements is ? a. Dana has no grounds for rescinding her agreement. b. The information about the drug dealer was material and should have been disclosed to her. c. Withholding information about the former drug-dealer owner is not misrepresentation. d. none of the above : b 1 Challenging : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Fraud or Fraudulent Misrepresentation : Bloom's: Application 72. Dana Riley purchased a home in the Brentwood area of Los Angeles. After she purchased the home, she learned that the home had been the residence of a long-time drug dealer. She experienced many late-night visitors and often noticed cars parked outside near the street curb with the drivers and passengers studying the home. The former owner has been convicted of drug charges. Dana has become uncomfortable with the visitors and the surveillance. She just wants out of the house. Suppose that the listing agent was aware of the home's history and the drug dealer's arrest and conviction. The agent told the neighbors to cooperate by not disclosing any information to Dana. "Look," the agent told them, "you can get the house sold and keep your values up or let it sit there and have the old druggies come by and destroy it." Which of the following statements is ? a. The real estate agent has committed fraud. b. The real estate agent is under no obligation to disclose the information. c. The most the real estate agent has committed is misrepresentation. d. none of the above : a 1 Challenging : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Fraud or Fraudulent Misrepresentation : Bloom's: Application 73. Alice, age 17, purchased a 2005 Kia auto at the Tempe Autoplex. After driving the vehicle for three months, Alice returned to the Autoplex for her money. She did not, however, have the Kia. "It was stolen at school last week." Which of the following statements is ? a. Alice may not rescind the agreement. b. Alice may rescind the agreement only if the stolen Kia is found. c. Alice may rescind the agreement regardless of whether she has the car. d. none of the above : c 1 Challenging : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Capacity : Bloom's: Application 74. The Hoffmans were having their home remodeled by All-Right Contractors. The roof had to be removed in order to build the second story the Hoffmans had contracted and designed to build. After All-Right had removed the roof, but before a covering was placed over the exposed half of the home, All-Right's foreman said the job would cost an additional $12,500. The Hoffmans refused to agree to the additional fees and All-Right's foreman said, "Suit yourselves. Looks like rain for the next day or two," and left. The Hoffmans called All-Right and agreed to pay the $12,500 extra and went in to sign the paperwork. Which of the following statements is ? a. The contract for the additional $12,500 is valid and binding. b. The contract for the additional $12,500 is invalid because of duress. c. The contract was not valid because of duress, but the Hoffmans signed anyway - so there is a valid and enforceable agreement. d. none of the above : b 1 Challenging : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Duress : Bloom's: Application 75. The court in the case involving Turnitin (iParadigms) held that: a. duress was clearly involved. b. the Clickwrap acceptance was valid. c. the owners of Turnitin have unlimited liability to the students submitting papers. d. the plaintiffs’ infancy defense was successful. : b 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Illegality and Public Policy : Bloom's: Knowledge 76. Which of the following statements would be a basis for claiming misrepresentation? a. This car is a real honey. b. This car has the finest road performance going. c. This car has the fastest zero to 60 acceleration on the planet. d. This car represents status. e. All of the above could be a basis for misrepresentation. : c 1 Challenging : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Misrepresentation : Bloom's: Application 77. Andy Seagroves purchased a computer from Best Buy. Best Buy did not disclose to him that the computer was a return item. There was no indication of any price difference between the computer Andy bought and the unopened computers. Andy experiences significant difficulties with the computer and returns it to Best Buy. Andy indicates that he would like to have a new computer and that the price is now $150 more. Best Buy indicates that it is happy to take the return on the computer and credit Andy's account, but that it has no further liability. a. Best Buy's position is correct. b. Andy has no damages since Best Buy took back the computer. c. Andy is entitled to recover the price difference so that he can replace the computer. d. Andy is entitled to the return, but no additional damages. e. none of the above : c 1 Challenging : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Contract Remedies for Nonperformance : Bloom's: Application Angela, age 17, is injured in a car accident and receives $5,200 in medical treatment at the emergency room. The hospital sends a bill to Angela, who signed the admitting form in which she agreed to pay for the treatment. 78. Angela: a. is a minor and need not pay the bills. b. is liable for the bill as a necessity. c. can rescind the agreement. d. none of the above : b 1 Challenging : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Capacity : Bloom's: Application 79. Suppose that Angela turned 18 between the time of the accident and when she received the bill. Angela: a. is a minor and need not pay the bills. b. is liable for the bill as a necessity. c. can rescind the agreement. d. none of the above : b 1 Challenging : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Capacity : Bloom's: Application 80. Which of the following would not be a basis for misrepresentation? a. These shrubs will survive in direct sunlight. b. This lawnmower has a safety turn-off switch. c. This soft water system will add five years to the life of your washing machine. d. All of the above are a basis for misrepresentation. : d 1 Challenging : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Misrepresentation : Bloom's: Application 81. Ralph Deuschle owned an ice sculpture company. Ralph provides ice sculptures for private weddings, parties, and receptions. The Canasta Resort was a large hotel located near Ralph that was not satisfied with its current catering company’s ice sculptures and its events manager liked Ralph’s work. The events manager approached Ralph and indicated the Canasta would like to have an ongoing supply contract but that its needs would require Ralph to expand his business, both with additional space and 3 new employees. Ralph entered into a supply contract with the Canasta and the events manager told a lending officer at the bank where Ralph got his construction mortgage for the business expansion that the Canasta would be sending all of its business to Ralph. The Canasta then began to rethink its events focus and marketing and decided to cut back on ice sculptures. Ralph could not use the additional space and the three employees had to be laid off. The Canasta: a. has no liability to Ralph for the downturn in amount of ice sculptures ordered if it did not guarantee a minimum amount to be purchased. b. may be liable to Ralph under a theory of a lack of good faith. c. is entitled to refocus its business and has not breached its contract. d. none of the above : b 1 Challenging : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking When Performance is Excused : Bloom's: Application 82. Sue and Kevin Kellman signed a contract for the construction of a cabin near Pinetop. In building the $562,000 cabin, the builder discovered that it had to put the vent for the heating system in the area where the hall closet is located. The result was that the Kellman’s had a half-closet there instead of a full-length closet that was open to the floor. The Kellmans: a. need not pay for the cabin because of this material breach. b. can be compensated under the doctrine of force majeure. c. can be compensated under the doctrine of commercial impracticability. d. can be compensated under the doctrine of substantial performance. : d 1 Challenging : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Standards for Performance : Bloom's: Application 83. RaeAnn and Rick Telford purchased an existing home in a neighborhood of multi-million-dollar homes. After moving in, the Telfords learned that the home had been owned formerly by a couple that was indicted for drug trafficking. The home had been raided by DEA agents, and there had been a shoot-out before the couple was taken into custody. The couple’s youngest child was killed in the house during the shoot-out. RaeAnn and Rick: a. have no recourse if there is nothing physically wrong with the house. b. have a remedy of damages or rescission if this information was withheld from them. c. have no remedy because neither sellers nor brokers are required to disclose psychological issues with properties. d. none of the above : b 1 Challenging : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Misrepresentation : Bloom's: Application 84. Costco, Inc. had a contract to purchase 300,000 electric mini-Mercedes from HUMBENZ Toy Co. The toy cars were to be delivered by November 1. On October 23, the Consumer Product Safety Commission announced a recall of the toy cars as well as a ban on their sales because of electrical shorts and a high risk of fire in the cars. HUMBENZ has not delivered the cars to Costco. HUMBENZ: a. has breached its contract with Costco. b. has a void contract with Costco because the subject matter is now illegal. c. must still deliver the cars because its contract predated the recall and ban. d. none of the above : b 1 Challenging : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Illegality and Public Policy : Bloom's: Application 85. The Jameses were negotiating the purchase of the Smith's home but requested a termite inspection. The inspection came back clear from ABC Bug, Inc. The Jameses bought the house and immediately began to notice signs of termite infestation. They called Goodbye Bug, Inc., and their technician confirmed significant termite infestation and damage. The technician said he had inspected the home for the Smiths just a few weeks earlier, but was never asked to repair and exterminate. The Jameses want out of the house and the contract. Do they have a basis? : Yes, the case appears to be one of fraudulent misrepresentation. The Smiths knew of the damage and failed to disclose it. The Jameses can rescind the contract. 1 Challenging : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Misrepresentation Fraud or Fraudulent Misrepresentation : Bloom's: Application 86. Weldon Newfield was having a custom home built. He had a list of certain materials the contractor was to use in building the $270,000 home. Newfield was in Europe and the contractor could not find "Reading Copper Pipe" - one of the required materials. Since Newfield could not be reached and the contractor was under a time schedule, the decision was made to use another brand of copper pipe. When Newfield returned and learned of the problem, he refused to pay any remaining amounts due on the contract ($235,000). Can Newfield do that? : No, doctrine of substantial performance. 1 Challenging : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Standards for Performance : Bloom's: Application 87. Ann wrote a $500 check to Art as a deposit on Art's 240Z car. The memo section of the check read: "Deposit on 1978 240Z car of Art Mole. Sale price $4500." Art initialed the memo section. When Ann returned the next day with the remaining $4000, Art said, "Sorry, I sold the car for $4,000 cash yesterday and sent your check back." The cheapest 240Z Ann can find is $5200. What are Ann's rights? Discuss the following: a. Was a contract formed? b. Are there statute of frauds problems? c. Could Ann collect damages? If so, what? : a. There was a contract. b. The check and memo satisfy the statute of frauds. c. Art did Ann a big favor by returning the check. Ann's damages: $5200 -4500 $ 700 plus incidental damages 1 Challenging : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Contract Remedies for Nonperformance : Bloom's: Application 88. A weight-loss ad claims, "Lose up to five pounds per week." Is this statement a basis for misrepresentation? : Yes, the statement could be a basis for misrepresentation, but it is open-ended enough that there may not be any action against the company for making it. The statement does not guarantee five pounds per week - it is only "up to." If anything, the statement is only placing a maximum on weight loss. 1 Challenging : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Misrepresentation : Bloom's: Application 89. Dee's Caterers contracted with Glen Allen Peanut Farms for the purchase of a one year's supply of peanuts for Dee's business. The price was $1.21 per pound. The Glen Allen Peanut Farms was hit by a frost that damaged most of its crops and left what remained with an odd taste. Because other peanut farms also fell victim to the frost, the price of peanuts rose to $3.37 per pound. Dee's demanded delivery. Glen Allen said it would cost too much to perform. Must Glen Allen perform? What damages would Dee's have? : Glen Allen has tried the defense of commercial impracticability. But, expense alone is not sufficient grounds for the use of this excuse. Dee's damages would be the difference between $3.37 per pound and $1.21 per pound. 1 Challenging : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Contract Remedies for Nonperformance : Bloom's: Application 90. Discuss the students’ use of the infancy defense in the Turnitin (iParadigms) case. : The students’ use of the infancy defense was unsuccessful in this case because the students received a benefit from using Turnitin - a grade in the course - which kept them in school. The court ruled that the students could not receive this benefit while also trying to avoid their contractual obligations of using Turnitin. 1 Challenging : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Illegality and Public Policy : Bloom's: Application 91. Explain the purpose of a force majeure clause. : Its purpose is to excuse performance in circumstances not controlled by the parties such as political unrest, Acts of God (earthquakes, tsunamis, hurricanes), war, etc. 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal When Performance is Excused : Bloom's: Knowledge 92. Regulation Z provides the details of compliance with the Fair Credit Billing Act. a. b. : 1 Easy : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Making Sure the Billing is Accurate : Bloom's: Knowledge 93. The three-day-cooling-off period applies to all credit transactions. a. b. : 1 Easy : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Consumer Credit Contracts and Rescission Rights : Bloom's: Knowledge 94. Home equity loans do not carry a rescission period. a. b. : 1 Easy : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Consumer Credit Contracts and Rescission Rights : Bloom's: Knowledge 95. The Fair Credit Reporting Act regulates creditors. a. b. : 1 Easy : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Is There a Cost to Breaching a Contract: Creditor Reports on Nonpaying Debtors : Bloom's: Knowledge 96. There are no limitations on credit-agency disclosures, if the debtor is applying for a loan of more than $50,000. a. b. : 1 Easy : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Is There a Cost to Breaching a Contract: Creditor Reports on Nonpaying Debtors : Bloom's: Knowledge 97. The FCRA does not give the debtor a right of correction. a. b. : 1 Easy : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Is There a Cost to Breaching a Contract: Creditor Reports on Nonpaying Debtors : Bloom's: Knowledge 98. Under the FCRA, the 100-word statement allows debtors to clarify their past credit experiences. a. b. : 1 Easy : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Is There a Cost to Breaching a Contract: Creditor Reports on Nonpaying Debtors : Bloom's: Knowledge 99. The Fair Debt Collections Practices Act applies to both commercial and consumer debt. a. b. : 1 Easy : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Collection - Fair Standards for Obtaining Payment : Bloom's: Knowledge 100. The FDCPA applies to collection agencies and original creditors. a. b. : 1 Easy : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Collection - Fair Standards for Obtaining Payment : Bloom's: Knowledge 101. Under the FDCPA, collectors identified as such can use postcards to contact debtors. a. b. : 1 Easy : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Collection - Fair Standards for Obtaining Payment : Bloom's: Application 102. The FDCPA places time limits for the placement of calls. a. b. : 1 Easy : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Collection - Fair Standards for Obtaining Payment : Bloom's: Knowledge 103. The maximum wage garnishment for general debts is 50 percent. a. b. : 1 Easy : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Suits for Enforcement of Debts : Bloom's: Knowledge 104. Garnishment is an example of judgment execution. a. b. : 1 Easy : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Suits for Enforcement of Debts : Bloom's: Knowledge 105. The Consumer Credit Protection Act puts limitations on garnishments. a. b. : 1 Easy : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Suits for Enforcement of Debts : Bloom's: Knowledge 106. The FDCPA is not applicable to the collection of judgments. a. b. : 1 Easy : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Collection - Fair Standards for Obtaining Payment : Bloom's: Knowledge 107. The FDCPA does not apply to lawyers who are collecting bills for clients. a. b. : 1 Easy : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Collection - Fair Standards for Obtaining Payment : Bloom's: Knowledge 108. The FCRA prohibits the disclosure of a bankruptcy that occurred eight years ago. a. b. : 1 Easy : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Is There a Cost to Breaching a Contract: Creditor Reports on Nonpaying Debtors : Bloom's: Knowledge 109. The FCRA permits the disclosure of an embezzlement for which probation was completed ten years ago. a. b. : 1 Easy : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Is There a Cost to Breaching a Contract: Creditor Reports on Nonpaying Debtors : Bloom's: Knowledge 110. The failure to make a timely investigation into a consumer's question about his/her credit report is a violation of the FCRA. a. b. : 1 Easy : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Is There a Cost to Breaching a Contract: Creditor Reports on Nonpaying Debtors : Bloom's: Knowledge 111. There is a three-day rescission period on home equity loans. a. b. : 1 Easy : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Consumer Credit Contracts and Rescession Rights : Bloom's: Knowledge 112. Chapter 11 is the liquidation provision in bankruptcy. a. b. : 1 Easy : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal The End of the Line on Enforcement of Debts: Bankruptcy : Bloom's: Knowledge 113. Chapter 13 bankruptcy is only available to consumers. a. b. : 1 Easy : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal The End of the Line on Enforcement of Debts: Bankruptcy : Bloom's: Knowledge 114. A contract signed at home for the installation of a pool under a 90-days-same as cash agreement is not subject to the 3-day rescission period. a. b. : 1 Easy : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Consumer Credit Contracts and Rescission Rights : Bloom's: Knowledge 115. The Fair Debt Collections Practices Act applies to attorneys only if they are doing the collection on a percentage basis. a. b. : 1 Easy : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Collection - Fair Standards for Obtaining Payment : Bloom's: Knowledge 116. The Fair Debt Collections Practices Act applies only to consumer credit collection. a. b. : 1 Easy : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Collection - Fair Standards for Obtaining Payment : Bloom's: Knowledge 117. The Bankruptcy Reform Act of 2005 made it easier for consumers to declare bankruptcy. a. b. : 1 Easy : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal The End of the Line on Enforcement of Debts: Bankruptcy : Bloom's: Knowledge 118. Under the Bankruptcy Reform Act of 2005, consumers can always file for liquidation proceedings without going through Chapter 13. a. b. : 1 Easy : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal The End of the Line on Enforcement of Debts: Bankruptcy : Bloom's: Knowledge 119. Chapter 11 bankruptcy is available to consumers with debts. a. b. : 1 Easy : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal The End of the Line on Enforcement of Debts: Bankruptcy : Bloom's: Knowledge 120. Credit repair organizations are now subject to federal law and disclosure requirements. a. b. : 1 Easy : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal The End of the Line on Enforcement of Debts: Bankruptcy : Bloom's: Knowledge 121. The three-day-cooling-off period applies to: a. credit contracts in which a security interest in the home is given. b. second mortgages on homes. c. both a and b d. none of the above : c 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Consumer Credit Contracts and Rescission Rights : Bloom's: Knowledge 122. In order to recover damages under the Fair Credit Billing Act, the debtor must: a. make a written objection. b. file a complaint with the Federal Reserve Board. c. notify the creditor of the error within 30 days of receiving the bill. d. all of the above : a 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Making Sure the Billing is Accurate : Bloom's: Comprehension 123. The Fair Credit Reporting Act applies: a. only to consumer reporting agencies. b. to all information on consumer debtors. c. to consumer and commercial credit. d. none of the above : a 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Is There a Cost to Breaching a Contract: Creditor Reports on Nonpaying Debtors : Bloom's: Comprehension 124. What rights does a debtor have if he/she discovers inaccuracies in the credit report? a. can ask to have it eliminated b. can sue for libel c. can provide a separate credit report d. all of the above : a 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Is There a Cost to Breaching a Contract: Creditor Reports on Nonpaying Debtors : Bloom's: Comprehension 125. The Fair Debt Collections Practices Act applies to: a. collection agencies. b. all consumer credit businesses. c. the IRS. d. banks. e. all of the above : a 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Collection - Fair Standards for Obtaining Payment : Bloom's: Application 126. Which of the following is prohibited under the FDCPA? a. contacting third parties for current address information on the debtor b. contacting the debtor at his/her place of employment c. contacting the debtor after the debtor requests no further contact d. All of the above are prohibited. : c 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Collection - Fair Standards for Obtaining Payment : Bloom's: Application 127. Garnishments: a. are attachments of funds for executing a judgment. b. are not regulated by federal laws. c. can take up to 75 percent of the debtor's wages. d. all of the above : a 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Suits for Enforcement of Debts : Bloom's: Comprehension 128. If a consumer requests a credit reporting agency to correct his/her credit report: a. the agency must comply. b. the agency need only include a copy of the request in its report. c. any corrections made must be sent to all report recipients over the last two years. d. none of the above : c 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Is There a Cost to Breaching a Contract: Creditor Reports on Nonpaying Debtors : Bloom's: Knowledge 129. Diana and Charles Windsor are considering purchasing a swimming pool. The representatives of Fun-in-the-Sun Pool arrange a meeting at the Windsor's home to discuss the price and draw up plans. The Windsors sign a contract for the pool for a price of $12,000 with payments of $3000 each month for the next four months while the pool is under construction. The Windsors also agree to pay a carrying charge for the payments of $250.00. Two days after signing the contract, the backhoe operator arrives ready to dig the pool, but Charles tells him the contract is off. The Windsors: a. have breached their contract and will be liable to Fun-in-the-Sun for damages. b. are protected by their three-day rescission rights under Regulation Z. c. do not have the three-day rescission rights since there are no monthly installment payments over a period of one year. d. none of the above : b 1 Challenging : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Consumer Credit Contracts and Rescission Rights : Bloom's: Analysis 130. Which of the following statements in a letter from a collector to a debtor would be a violation of FDCPA? a. "We will be contacting your employer to let him know of this problem." b. "We will file suit if payment is not made within 30 days." c. "We will be calling you at your home." d. All of the above are violations. : a 1 Challenging : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Collection - Fair Standards for Obtaining Payment : Bloom's: Application 131. Which of the following acts by a third-party collector would be a violation of the FDCPA? a. sending the debtor a postcard that reads: "Don't let this bill affect your excellent credit rating" b. calling the debtor at home at 8:30 AM to confirm the debt c. referring the account to an attorney for a lawsuit d. filing suit without first contacting the debtor : a 1 Challenging : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Collection - Fair Standards for Obtaining Payment : Bloom's: Application 132. Which of the following is about a line of credit secured by the equity in the debtor's home? a. there is a three-day rescission period b. the same levels of disclosure for other types of credit are not required c. the monthly payments need not be disclosed d. All of the above are . : a 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Consumer Credit Contracts and Rescission Rights : Bloom's: Comprehension 133. Who is covered under the Fair Debt Collections Practices Act? a. an attorney collecting a debt for himself b. Macy's collecting a debt through its own collection subsidiary c. a hospital collecting a debt from a patient d. None of the above is covered under the FDCPA. : d 1 Challenging : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Collection - Fair Standards for Obtaining Payment : Bloom's: Application 134. Which of the following is not covered by the Fair Debt Collections Practices Act? a. an attorney collecting for a client b. a collection agency with one exclusive client c. a hospital using its collection department to collect fees from patients d. an attorney collecting on a contingent fee basis e. All of the above are covered under the FDCPA. : c 1 Challenging : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Collection - Fair Standards for Obtaining Payment : Bloom's: Application 135. Under the Fair Credit Reporting Act, consumers have which of the following rights? a. privacy and no disclosure without permission b. right to dispute information in the report c. right to correction d. right to rebuttal statement e. consumers have all of the above rights : e 1 Challenging : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Is There a Cost to Breaching a Contract: Creditor Reports on Nonpaying Debtors : Bloom's: Application 136. Which of the following cannot be disclosed on a credit report being issued on a job applicant for a $37,000/year job in 2015? a. a bankruptcy in 2010 b. a judgment paid in 2001 c. a criminal conviction for running a meth lab in 2008 d. All of the above can be disclosed. : d 1 Challenging : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Is There a Cost to Breaching a Contract: Creditor Reports on Nonpaying Debtors : Bloom's: Application 137. Paula Sanford has filed a voluntary petition in bankruptcy. Paula has a job but admits that she is in over her head on credit card debt. The bankruptcy court: a. can allow Paula to declare bankruptcy because she has debts. b. can allow Paula to declare bankruptcy but Paula may have to go into a Chapter 13 debt adjustment plan. c. has no remedies for consumers with only credit card debt. d. none of the above : b 1 Challenging : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking The End of the Line on Enforcement of Debts: Bankruptcy : Bloom's: Synthesis 138. Sekelow Enterprises is a debt collection agency. It uses postcards to contact consumer debtors it is attempting to collect from for its clients. The name “Sekelow Enterprises” and the company address appear on the postcards used along with: “VERY IMPORTANT: PLEASE CONTACT US ABOUT YOUR DILLARD’S DEBT.” a. Sekelow has violated the Fair Debt Collections Practices Act. b. Sekelow has not violated the Fair Debt Collections Practices Act if it follows up with a phone call and verification of debt. c. Sekelow cannot collect the debt without registering as a credit repair organization. d. both a and c : a 1 Challenging : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Collection - Fair Standards for Obtaining Payment : Bloom's: Synthesis 139. Which of the following is prohibited in the collection of consumer debt by the Fair Debt Collections Practices Act? a. 7 AM calls at the debtor’s place of employment. b. 7 AM calls at the debtor’s home. c. 7 AM calls at the debtor’s parents’ home. d. all of the above : d 1 Challenging : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Collection - Fair Standards for Obtaining Payment : Bloom's: Synthesis 140. Which of the following sections of the federal bankruptcy laws deals with consumer debt adjustment plans? a. Chapter 7 b. Chapter 11 c. Chapter 13 d. CRO provisions : c 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal The End of the Line on Enforcement of Debts: Bankruptcy : Bloom's: Comprehension 141. Laura Walsh owed $560 to a local department store. The debt was assigned to a collection agency. The agency did the following: (a) used a postcard to contact Laura and summarize her debt, (b) called her at 7 AM to catch her before she left for work, (c) called her in spite of Laura's requests to stop, (d) contacted her employer about the debt, (e) contacted her at the hospital as she visited her ill mother. Are any of the actions improper? : All of them are improper and illegal under the FDCPA. (a) violation of privacy; (b) before 8 AM hour; (c) must stop if debtor asked; (d) privacy problem; (e) harassment. 1 Challenging : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Collection - Fair Standards for Obtaining Payment : Bloom's: Synthesis 142. List the federal laws regulating credit contracts and give a brief description of each. : ECOA - prohibits race, color, sex, and national origin from being used as the basis for a decision. TILA - full disclosure provisions of Consumer Credit Protection Act. Fair Credit Billing Act - regular disclosures; full disclosures of open-end credit. FCRA - disclosure of reports and right to correct. Consumer Leasing Act - disclosure in leasing goods. FDCPA - regulates collection tactics. 1 Moderate : United States - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Legal Nonperformance and Nonpayment - The Collection Remedies : Bloom's: Comprehension 143. List what cannot be disclosed in a credit report for a $2,000 loan. : Bankruptcies longer than 10 years ago; judgments longer than 7 years ago; criminal convictions and arrests finally disposed of more than 7 years ago. 1 Challenging : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Is There a Cost to Breaching a Contract: Creditor Reports on Nonpaying Debtors : Bloom's: Synthesis 144. Akon had an idea for a website called “Fantrace,” a site that would help celebrities connect with their fans. Akon entered into an agreement with Broomfield for his help in building the site and Khalilian to help with marketing. Broomfield had recommended his friend, Khalilian, for the project because of his connections with celebrities. However, Broomfield did not tell Akon that he knew that Khalilian was a liar and that he had also been in prison. When things did not go well in working with the two, Akon sought to set aside the contract on the grounds of misrepresentation. Which of the following is correct? a. Withholding information is not misrepresentation. b. Broomfield had no obligation to make any disclosures about his friend. c. Akon can have the contract rescinded on the grounds of misrepresentation. d. Intent is not present, so there is no case for misrepresentation. : c 1 Challenging : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Misrepresentation : Bloom's: Comprehension 145. Allegheny Energy Supply Co. and Monogahela Power Co., a subsidiary, filed suit against Anker West Virginia Mining Co., later acquired by International Coal Group, for breach of contract. The parties had a contract for Allegheny and Monogahela to buy all of the coal produced from a proposed "Sycamore 2" mine, located in Harrison County, W.Va. The coal promised amounted to about 1.8 million tons per year, not less than 20 million tons total. Anker has never produced the necessary amount of coal, topping out at 480,000 tons per year in total from the mine. Anker had sent a letter to Allegheny in 2006 claiming physical difficulties at the mine and a change in the enforcement of regulations relating to coal mining near gas wells hampered their ability to extract coal from the mine. As a result, Anker said it was unable to deliver the necessary coal. Which defense to performance is Anker relying on? a. Misrepresentation b. Parol evidence c. Failure of conditions d. Force majeure : d 1 Challenging : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking When Performance is Excused : Bloom's: Comprehension People from the United States pledged $3.3 billion to support the rebuilding efforts in Haiti following the 2010 earthquake there. However, after 3 years, half of the money has not been dispersed, and nearly 500,000 people still live in tents. As a result, many who have made pledges have decided not to fulfill the remainder of their pledges because of the inaction on the part of the relief fund in getting the funds dispersed, the buildings rebuilt, and the housing constructed. 146. What would be their grounds for terminating the payment of their pledges? a. Misrepresentation b. Lack of performance c. Fraud d. Undue influence : b 1 Challenging : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Contract Performance : Bloom's: Comprehension 147. What issue is there about whether there is a contractual obligation? a. Whether a pledge to make a gift is supported by consideration. b. Whether there can be a pledge across country borders. c. The inability to enforce international contracts. d. Whether the pledges were in writing. : a 1 Challenging : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Contract Performance : Bloom's: Comprehension [Show More]

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