MARK 201 Exam 2 – Loyola University Chicago
Quinlan School of Business – 2026/2027 Academic
Year – Questions and Answers for Undergraduate
Marketing Students
SECTION I: MULTIPLE CHOICE
1. Ned is a truck driver for "FastShip Logistics," an LLC. Ned is an employee. One
afternoon, while making a delivery, Ned decides to take a 30-minute detour to
pick up his dry cleaning. On the way to the dry cleaner, Ned runs a red light and
crashes into a pedestrian, Maria. Maria sues FastShip Logistics and Ned. Which
of the following is the MOST legally accurate statement?
• A) FastShip is strictly liable for Ned's actions because Ned was an employee
acting within the scope of employment.
• B) FastShip is not liable because Ned's detour constituted a "frolic and
detour," removing him from the scope of employment.
• C) FastShip is liable under Respondeat Superior only if Maria can prove
FastShip negligently hired Ned.
• D) FastShip may be liable if Maria can prove that Ned's deviation from his
route was not a substantial departure from his employment duties.
Correct Answer: D
Rationale: Under the "frolic and detour" doctrine, an employer is not liable for an
employee's minor detours, but is liable for substantial deviations. The key question
is whether the deviation was substantial. A 30-minute personal errand could be
either—it depends on the facts. Under Respondeat Superior, the employer is
vicariously liable regardless of negligent hiring (C is wrong). Strict liability does not
,apply to employees' negligent driving (A is wrong). B is incomplete because not all
detours remove an employee from scope—only substantial ones.
2. Acme Corp., a Delaware C-Corporation, is grossly undercapitalized. The sole
shareholder, Mr. Burns, routinely pays his personal mortgage and credit card
bills from Acme's corporate checking account. Acme has never held a board of
directors' meeting since its incorporation five years ago. Acme enters a contract
with Supplier Co. and fails to pay the $200,000 invoice. Supplier Co. sues Acme
and seeks to hold Mr. Burns personally liable. Which of the following is the
STRONGEST argument for Supplier Co. to prevail against Mr. Burns personally?
• A) Mr. Burns is personally liable because corporations exist only as a matter
of state law and do not shield shareholders from contractual debts.
• B) The court should pierce the corporate veil because Mr. Burns has
committed fraud by failing to pay Supplier Co.
• C) The court should pierce the corporate veil because Mr. Burns has
commingled personal and corporate assets and failed to observe corporate
formalities, making Acme his "alter ego."
• D) Mr. Burns is personally liable because under the Ultra Vires doctrine, any
corporate act beyond its stated powers renders the shareholders personally
liable.
Correct Answer: C
Rationale: Piercing the corporate veil requires a showing that the corporation is a
"mere instrumentality" or "alter ego" of the shareholder, often proven by
commingling, undercapitalization, and failure to observe formalities. A is false—
corporations do shield shareholders absent veil-piercing. B is false because failure
to pay a debt is not fraud (it's a breach of contract). D is false—Ultra Vires applies
to acts beyond corporate powers, not shareholder liability.
,3. Olivia offers to sell her vintage guitar collection to Paul for $50,000. The offer
states: "This offer will remain open for 10 days." Paul pays Olivia $1,000 to keep
the offer open for those 10 days. On Day 3, Olivia sends Paul a revocation via
email. On Day 5, Paul accepts the original offer via certified mail. Olivia refuses
to sell. Which of the following is the MOST legally accurate outcome?
• A) Paul's acceptance is valid because the Mailbox Rule made his acceptance
effective upon mailing on Day 5.
• B) Olivia's revocation is effective because offers are revocable at any time
before acceptance.
• C) Paul's acceptance is invalid because Olivia's revocation was effective on
Day 3, terminating the offer.
• D) Paul's acceptance is valid because Olivia's revocation was ineffective due
to the existence of an option contract.
Correct Answer: D
Rationale: When an offeree pays consideration to keep an offer open, it creates an
option contract. Under an option contract, the offer is irrevocable for the stated
period. Olivia's revocation was ineffective. The Mailbox Rule (A) is true generally
but irrelevant here because the offer could not be revoked. B and C are false
because they ignore the option contract.
4. A plaintiff is injured in a car accident caused by a defendant who ran a stop
sign. The plaintiff was texting while driving and failed to see the defendant,
contributing 20% to the cause of the accident. The plaintiff's total damages are
$100,000. In a state that follows a "modified comparative negligence" system
with a 50% bar threshold, how much can the plaintiff recover?
• A) $0, because the plaintiff was at fault.
• B) $80,000, because the plaintiff's recovery is reduced by their percentage
of fault.
, • C) $100,000, because the defendant was 80% at fault.
• D) $0, because the plaintiff's fault exceeds the 50% bar threshold.
Correct Answer: B
Rationale: In a 50% modified comparative negligence state, a plaintiff can recover
if their fault is 50% or less. Since the plaintiff is 20% at fault, they recover 80% of
$100,000 = $80,000. D is the rule for 51% bar states. A is contributory negligence
(minority rule). C ignores comparative reduction.
5. Which of the following statements about the "Parol Evidence Rule" is MOST
legally accurate?
• A) The Parol Evidence Rule prohibits the introduction of any oral statements
made before or during a written contract's formation.
• B) The Parol Evidence Rule only applies if the written contract is partially
integrated; if fully integrated, oral evidence is always admissible.
• C) The Parol Evidence Rule bars prior or contemporaneous oral or written
statements that contradict a fully integrated written contract, but does not
bar evidence of fraud, duress, or later modifications.
• D) The Parol Evidence Rule applies only to contracts for the sale of goods
under the UCC.
Correct Answer: C
Rationale: The Parol Evidence Rule bars prior/contemporaneous evidence that
contradicts a fully integrated writing, but exceptions include fraud, duress,
mistake, and subsequent modifications. A is overbroad—not all oral statements
are barred (exceptions exist). B is backwards—fully integrated contracts bar more
evidence, not less. D is false—the rule applies to common law contracts too.
6. A car manufacturer designs a new SUV with a high center of gravity. The SUV
rolls over more easily than comparable vehicles, but the manufacturer did not
Quinlan School of Business – 2026/2027 Academic
Year – Questions and Answers for Undergraduate
Marketing Students
SECTION I: MULTIPLE CHOICE
1. Ned is a truck driver for "FastShip Logistics," an LLC. Ned is an employee. One
afternoon, while making a delivery, Ned decides to take a 30-minute detour to
pick up his dry cleaning. On the way to the dry cleaner, Ned runs a red light and
crashes into a pedestrian, Maria. Maria sues FastShip Logistics and Ned. Which
of the following is the MOST legally accurate statement?
• A) FastShip is strictly liable for Ned's actions because Ned was an employee
acting within the scope of employment.
• B) FastShip is not liable because Ned's detour constituted a "frolic and
detour," removing him from the scope of employment.
• C) FastShip is liable under Respondeat Superior only if Maria can prove
FastShip negligently hired Ned.
• D) FastShip may be liable if Maria can prove that Ned's deviation from his
route was not a substantial departure from his employment duties.
Correct Answer: D
Rationale: Under the "frolic and detour" doctrine, an employer is not liable for an
employee's minor detours, but is liable for substantial deviations. The key question
is whether the deviation was substantial. A 30-minute personal errand could be
either—it depends on the facts. Under Respondeat Superior, the employer is
vicariously liable regardless of negligent hiring (C is wrong). Strict liability does not
,apply to employees' negligent driving (A is wrong). B is incomplete because not all
detours remove an employee from scope—only substantial ones.
2. Acme Corp., a Delaware C-Corporation, is grossly undercapitalized. The sole
shareholder, Mr. Burns, routinely pays his personal mortgage and credit card
bills from Acme's corporate checking account. Acme has never held a board of
directors' meeting since its incorporation five years ago. Acme enters a contract
with Supplier Co. and fails to pay the $200,000 invoice. Supplier Co. sues Acme
and seeks to hold Mr. Burns personally liable. Which of the following is the
STRONGEST argument for Supplier Co. to prevail against Mr. Burns personally?
• A) Mr. Burns is personally liable because corporations exist only as a matter
of state law and do not shield shareholders from contractual debts.
• B) The court should pierce the corporate veil because Mr. Burns has
committed fraud by failing to pay Supplier Co.
• C) The court should pierce the corporate veil because Mr. Burns has
commingled personal and corporate assets and failed to observe corporate
formalities, making Acme his "alter ego."
• D) Mr. Burns is personally liable because under the Ultra Vires doctrine, any
corporate act beyond its stated powers renders the shareholders personally
liable.
Correct Answer: C
Rationale: Piercing the corporate veil requires a showing that the corporation is a
"mere instrumentality" or "alter ego" of the shareholder, often proven by
commingling, undercapitalization, and failure to observe formalities. A is false—
corporations do shield shareholders absent veil-piercing. B is false because failure
to pay a debt is not fraud (it's a breach of contract). D is false—Ultra Vires applies
to acts beyond corporate powers, not shareholder liability.
,3. Olivia offers to sell her vintage guitar collection to Paul for $50,000. The offer
states: "This offer will remain open for 10 days." Paul pays Olivia $1,000 to keep
the offer open for those 10 days. On Day 3, Olivia sends Paul a revocation via
email. On Day 5, Paul accepts the original offer via certified mail. Olivia refuses
to sell. Which of the following is the MOST legally accurate outcome?
• A) Paul's acceptance is valid because the Mailbox Rule made his acceptance
effective upon mailing on Day 5.
• B) Olivia's revocation is effective because offers are revocable at any time
before acceptance.
• C) Paul's acceptance is invalid because Olivia's revocation was effective on
Day 3, terminating the offer.
• D) Paul's acceptance is valid because Olivia's revocation was ineffective due
to the existence of an option contract.
Correct Answer: D
Rationale: When an offeree pays consideration to keep an offer open, it creates an
option contract. Under an option contract, the offer is irrevocable for the stated
period. Olivia's revocation was ineffective. The Mailbox Rule (A) is true generally
but irrelevant here because the offer could not be revoked. B and C are false
because they ignore the option contract.
4. A plaintiff is injured in a car accident caused by a defendant who ran a stop
sign. The plaintiff was texting while driving and failed to see the defendant,
contributing 20% to the cause of the accident. The plaintiff's total damages are
$100,000. In a state that follows a "modified comparative negligence" system
with a 50% bar threshold, how much can the plaintiff recover?
• A) $0, because the plaintiff was at fault.
• B) $80,000, because the plaintiff's recovery is reduced by their percentage
of fault.
, • C) $100,000, because the defendant was 80% at fault.
• D) $0, because the plaintiff's fault exceeds the 50% bar threshold.
Correct Answer: B
Rationale: In a 50% modified comparative negligence state, a plaintiff can recover
if their fault is 50% or less. Since the plaintiff is 20% at fault, they recover 80% of
$100,000 = $80,000. D is the rule for 51% bar states. A is contributory negligence
(minority rule). C ignores comparative reduction.
5. Which of the following statements about the "Parol Evidence Rule" is MOST
legally accurate?
• A) The Parol Evidence Rule prohibits the introduction of any oral statements
made before or during a written contract's formation.
• B) The Parol Evidence Rule only applies if the written contract is partially
integrated; if fully integrated, oral evidence is always admissible.
• C) The Parol Evidence Rule bars prior or contemporaneous oral or written
statements that contradict a fully integrated written contract, but does not
bar evidence of fraud, duress, or later modifications.
• D) The Parol Evidence Rule applies only to contracts for the sale of goods
under the UCC.
Correct Answer: C
Rationale: The Parol Evidence Rule bars prior/contemporaneous evidence that
contradicts a fully integrated writing, but exceptions include fraud, duress,
mistake, and subsequent modifications. A is overbroad—not all oral statements
are barred (exceptions exist). B is backwards—fully integrated contracts bar more
evidence, not less. D is false—the rule applies to common law contracts too.
6. A car manufacturer designs a new SUV with a high center of gravity. The SUV
rolls over more easily than comparable vehicles, but the manufacturer did not
