PSI Contracts and Business Law 5

Question 1

Under the UCC, what is the 'perfect tender rule' for the sale of goods?

Accepted Answer

The seller must tender goods that exactly conform to the contract or the buyer may reject

Answer

The UCC's perfect tender rule gives the buyer the right to reject goods if they fail to conform to the contract in any respect, though the seller may have a right to cure.

Question 2

A corporation's shareholders are generally not personally liable for corporate debts. Under what circumstances might a court 'pierce the corporate veil' and hold shareholders liable?

Accepted Answer

When shareholders comingle personal and corporate funds and use the corporation as an alter ego

Answer

Courts pierce the corporate veil when shareholders ignore corporate formalities, commingle funds, or use the corporation as a personal alter ego to perpetrate fraud or injustice.

Question 3

What is the 'mailbox rule' in contract law?

Accepted Answer

Acceptance is effective when the offeree deposits it in the mail

Answer

Under the mailbox rule, acceptance of an offer is effective the moment it is properly dispatched (placed in the mail), not when the offeror receives it.

Question 4

A retailer advertises a TV for $50 (clearly a printing error; the actual price is $500). A customer demands the TV at $50. Under contract law, which of the following is most accurate?

Accepted Answer

The advertisement is merely an invitation to deal, not an offer, and no contract is formed

Answer

Advertisements are generally treated as invitations to deal, not offers, so no contract is formed until the seller accepts the customer's offer to purchase.

Question 5

Which of the following best describes 'consequential damages' in a breach of contract case?

Accepted Answer

Damages for losses that result as a natural consequence of the breach and were foreseeable at the time of contracting

Answer

Consequential damages compensate for foreseeable losses flowing indirectly from the breach, such as lost profits, provided the breaching party had reason to know of them at contracting.

PSI - Exams Practice Test

PSI - Exams Practice Test

PSI Contracts and Business Law 5