MIE 305 Final Exam Questions and Answers
Question 1
restitution
Correct Answer
benefit or item unjustly attained under contract is returned to the previous owner. after rescission, when parties must
return any benefit.
Question 2
holder in due course
Correct Answer
one who has acquired possession of a negotiable instrument through proper negotiation for value, in good faith, and
without notice of any defenses to it, and as such is not subject to personal defenses that would otherwise defeat the
obligation embodied in the instrument. holder at the moment of the negotiations
Page 1 of 65
,Question 3
fiduciary duties
Correct Answer
the highest-order obligations, in which the welfare and interests of the party to whom the duties are owed become the
sole guiding criterion. a position of trust and confidence in relation to a person or his/her property
owed by agent to principal:
-Obedience: follow the principal's instructions scrupulously
-notification: you must notify the principal of material facts
-loyalty: you must act solely for the benefit of principal, and may never use information or resources accessed by the
agency for other benefit
-Accounting: keep and make available records of all receipts/costs
-performance: use your own reasonable diligence and skill in the work
owed by principal to agent:
-Compensation/reimbursement: payment for services, as agreed, and/or for expenses incurred by agent from the agency
-Indemnification: "to save harmless" legal liability that comes from agent's following instructions of the principal and not
the agent's own negligence or fault, the principal will cover agent's losses. one person agreeing to protect another
against loss
-Cooperation: the principal must act reasonably to facilitate the agent's success at the agency
Question 4
power of attorney
Correct Answer
an instrument authorizing another to act as one's agent or attorney in fact
Page 2 of 65
,Question 5
uniform commercial code (UCC)
Correct Answer
-standardize commercial transactions in goods across all states. limited in scope, but does change some important CL
contract rules. Falls back on CL when there isn't an answer to a problem. deals with all phases which may ordinarily arise
in the handling of a commercial transaction from start to finish. rejects the mirror-image rule
-changes tend to reflect a preference toward less formal good faith dealings rather than formality.
-purpose: to harmonize the law of contracts in sales of goods between states so that the interstate market for goods is
stable and predictable. all 50 states have adopted at least part of the UCC. only applies in transactions for goods (not
services, not realty), and only where one or both parties to a K are merchants.
Question 6
special agent
Correct Answer
an agent with a limited amount of authority who usually has instructions to accomplish one specific task
Page 3 of 65
, Question 7
E. there is no contract for lack of a definite offer
Correct Answer
The CEO of Vantage Properties, LLC, Jim, calls his golfing buddy, the owner/sole proprietor of investco Land Holdings,
Shauna, about the 400-acre Somerville Holding that Vantage owns and Investco has always wanted. "Hey, Shauna. Are
you interested in the Somerville tract? I think we should get rid of it now," he says. Shauna immediately says, "are you
drunk? you swore never to get rid of it!" Jim says, "nope, it's just time." Shauna says, "yes, we'll take it off your hands." as
between Vantage and Investco at this moment:
A. there is an express bilateral contract
B. there is an express unilateral contract
C. there is a unilateral offer, which investco can accept by performance
D. there is no contract for shauna's concern over jim's possible incapacitation
E. there is no contract for lack of a definite offer
Question 8
A. $0
Correct Answer
Mookie has just gotten his first job! he's a contract envelope-stuffer for acme envelope stuffers, inc. his indivisible written
contract with acme calls for him to earn $200/day for meeting his daily quota of 500 stuffed envelopes, regardless of how
long it takes him to do it. on day one, he quickly tires of the job after getting through 250 envelopes, decides the job isn't
for him, then marches into the HR office and quits-demanding payment for the work he has completed. on this contract.
acme owes mookie:
A. $0
B. $50
C. $100
D. $200
E. a reasonable amount for the number of hours he worked, as opposed to the # of pieces stuffed.
Page 4 of 65
Question 1
restitution
Correct Answer
benefit or item unjustly attained under contract is returned to the previous owner. after rescission, when parties must
return any benefit.
Question 2
holder in due course
Correct Answer
one who has acquired possession of a negotiable instrument through proper negotiation for value, in good faith, and
without notice of any defenses to it, and as such is not subject to personal defenses that would otherwise defeat the
obligation embodied in the instrument. holder at the moment of the negotiations
Page 1 of 65
,Question 3
fiduciary duties
Correct Answer
the highest-order obligations, in which the welfare and interests of the party to whom the duties are owed become the
sole guiding criterion. a position of trust and confidence in relation to a person or his/her property
owed by agent to principal:
-Obedience: follow the principal's instructions scrupulously
-notification: you must notify the principal of material facts
-loyalty: you must act solely for the benefit of principal, and may never use information or resources accessed by the
agency for other benefit
-Accounting: keep and make available records of all receipts/costs
-performance: use your own reasonable diligence and skill in the work
owed by principal to agent:
-Compensation/reimbursement: payment for services, as agreed, and/or for expenses incurred by agent from the agency
-Indemnification: "to save harmless" legal liability that comes from agent's following instructions of the principal and not
the agent's own negligence or fault, the principal will cover agent's losses. one person agreeing to protect another
against loss
-Cooperation: the principal must act reasonably to facilitate the agent's success at the agency
Question 4
power of attorney
Correct Answer
an instrument authorizing another to act as one's agent or attorney in fact
Page 2 of 65
,Question 5
uniform commercial code (UCC)
Correct Answer
-standardize commercial transactions in goods across all states. limited in scope, but does change some important CL
contract rules. Falls back on CL when there isn't an answer to a problem. deals with all phases which may ordinarily arise
in the handling of a commercial transaction from start to finish. rejects the mirror-image rule
-changes tend to reflect a preference toward less formal good faith dealings rather than formality.
-purpose: to harmonize the law of contracts in sales of goods between states so that the interstate market for goods is
stable and predictable. all 50 states have adopted at least part of the UCC. only applies in transactions for goods (not
services, not realty), and only where one or both parties to a K are merchants.
Question 6
special agent
Correct Answer
an agent with a limited amount of authority who usually has instructions to accomplish one specific task
Page 3 of 65
, Question 7
E. there is no contract for lack of a definite offer
Correct Answer
The CEO of Vantage Properties, LLC, Jim, calls his golfing buddy, the owner/sole proprietor of investco Land Holdings,
Shauna, about the 400-acre Somerville Holding that Vantage owns and Investco has always wanted. "Hey, Shauna. Are
you interested in the Somerville tract? I think we should get rid of it now," he says. Shauna immediately says, "are you
drunk? you swore never to get rid of it!" Jim says, "nope, it's just time." Shauna says, "yes, we'll take it off your hands." as
between Vantage and Investco at this moment:
A. there is an express bilateral contract
B. there is an express unilateral contract
C. there is a unilateral offer, which investco can accept by performance
D. there is no contract for shauna's concern over jim's possible incapacitation
E. there is no contract for lack of a definite offer
Question 8
A. $0
Correct Answer
Mookie has just gotten his first job! he's a contract envelope-stuffer for acme envelope stuffers, inc. his indivisible written
contract with acme calls for him to earn $200/day for meeting his daily quota of 500 stuffed envelopes, regardless of how
long it takes him to do it. on day one, he quickly tires of the job after getting through 250 envelopes, decides the job isn't
for him, then marches into the HR office and quits-demanding payment for the work he has completed. on this contract.
acme owes mookie:
A. $0
B. $50
C. $100
D. $200
E. a reasonable amount for the number of hours he worked, as opposed to the # of pieces stuffed.
Page 4 of 65
