BUSFIN 3500 FINAL EXAM PRACTICE PAPER
2026 COMPLETE SOLUTIONS
◉ When can extrinsic evidence be admitted under the parol
evidence rule? Answer: When there is ambiguity, fraud, or mistake in
the written instrument.
◉ What is an example of ambiguity in a contract? Answer:
Disagreement over which specific car is referred to as 'new' in a
sales contract.
◉ What is the 'four corners' approach to the parol evidence rule?
Answer: A rigid approach that seeks to find no ambiguity in the
written instrument, associated with New York.
◉ What is the California approach to the parol evidence rule?
Answer: A more lax approach that admits extrinsic evidence more
easily.
◉ What is unconscionability in contract law? Answer: A situation
where a contract term is manifestly unfair and oppressive to one
party.
,◉ What is procedural unconscionability? Answer: Circumstances
favoring one party over another during contract formation.
◉ What is substantive unconscionability? Answer: The actual terms
of the contract being manifestly unfair to one party.
◉ What is required to declare a contract unconscionable? Answer:
Both procedural and substantive unconscionability are needed.
◉ What might a court do if a contract term is found to be
unconscionable? Answer: Strike the term, reform it, or rescind the
entire contract.
◉ What is the general stance on the ability to contract? Answer: It
includes the ability to contract poorly or make bad decisions.
◉ Why are contracts between substantial business interests unlikely
to be unconscionable? Answer: Both parties typically have
substantial legal resources, reducing procedural unconscionability.
◉ In what type of contracts is unconscionability more likely to be
found? Answer: Contracts between ordinary consumers and large,
well-resourced companies.
, ◉ What case is associated with the concept of unconscionability?
Answer: Williams v. Walker Thomas (1965).
◉ What was the nature of the contract in Williams v. Walker
Thomas? Answer: The contract secured loans to the buyer by all
previously purchased furniture.
◉ What happened to Williams after she purchased a stereo system?
Answer: She defaulted on her payments, leading to litigation.
◉ What is the significance of ambiguity in contract disputes?
Answer: It allows for the admission of extrinsic evidence to clarify
the contract.
◉ What does it mean if a contract term is 'manifestly unfair'?
Answer: It indicates that the term disproportionately benefits one
party over another.
◉ What is the role of legal resources in determining procedural
unconscionability? Answer: A significant imbalance in legal
knowledge can indicate procedural unconscionability.
◉ How does the presence of ambiguity affect the parol evidence
rule? Answer: Ambiguity can permit the introduction of extrinsic
evidence to clarify the contract.
2026 COMPLETE SOLUTIONS
◉ When can extrinsic evidence be admitted under the parol
evidence rule? Answer: When there is ambiguity, fraud, or mistake in
the written instrument.
◉ What is an example of ambiguity in a contract? Answer:
Disagreement over which specific car is referred to as 'new' in a
sales contract.
◉ What is the 'four corners' approach to the parol evidence rule?
Answer: A rigid approach that seeks to find no ambiguity in the
written instrument, associated with New York.
◉ What is the California approach to the parol evidence rule?
Answer: A more lax approach that admits extrinsic evidence more
easily.
◉ What is unconscionability in contract law? Answer: A situation
where a contract term is manifestly unfair and oppressive to one
party.
,◉ What is procedural unconscionability? Answer: Circumstances
favoring one party over another during contract formation.
◉ What is substantive unconscionability? Answer: The actual terms
of the contract being manifestly unfair to one party.
◉ What is required to declare a contract unconscionable? Answer:
Both procedural and substantive unconscionability are needed.
◉ What might a court do if a contract term is found to be
unconscionable? Answer: Strike the term, reform it, or rescind the
entire contract.
◉ What is the general stance on the ability to contract? Answer: It
includes the ability to contract poorly or make bad decisions.
◉ Why are contracts between substantial business interests unlikely
to be unconscionable? Answer: Both parties typically have
substantial legal resources, reducing procedural unconscionability.
◉ In what type of contracts is unconscionability more likely to be
found? Answer: Contracts between ordinary consumers and large,
well-resourced companies.
, ◉ What case is associated with the concept of unconscionability?
Answer: Williams v. Walker Thomas (1965).
◉ What was the nature of the contract in Williams v. Walker
Thomas? Answer: The contract secured loans to the buyer by all
previously purchased furniture.
◉ What happened to Williams after she purchased a stereo system?
Answer: She defaulted on her payments, leading to litigation.
◉ What is the significance of ambiguity in contract disputes?
Answer: It allows for the admission of extrinsic evidence to clarify
the contract.
◉ What does it mean if a contract term is 'manifestly unfair'?
Answer: It indicates that the term disproportionately benefits one
party over another.
◉ What is the role of legal resources in determining procedural
unconscionability? Answer: A significant imbalance in legal
knowledge can indicate procedural unconscionability.
◉ How does the presence of ambiguity affect the parol evidence
rule? Answer: Ambiguity can permit the introduction of extrinsic
evidence to clarify the contract.
