CHAPTER TEN
True-False
Any element of falsity renders the statement false.
1. The parol evidence rule holds that when persons have signed a contract as their final and complete
expression of intention (integrated contracts), then neither party may introduce in court any
evidence of prior or contemporaneous oral or written material that adds to or modifies that written
contract.
2. A salesperson’s opinion that a vehicle is “the best new vehicle to be introduced in forty years,” if
untrue, would be fraud.
3. A disclaimer is a specific statement indicating a particular warranty does not exist, or limiting the
warranty as to nature or duration.
4. Ownership of personal property can be acquired only by purchase.
5. A warranty of title is generally implied in any and all sales contracts.
6. All attempts by a merchant to disclaim a warranty are unconscionable.
7. The automobile has been responsible for more deaths and injuries of Americans than all the wars
fought by the United States.
8. Legal permission to be licensed to drive a motor vehicle on public highways is a privilege, not a
basic constitutional right.
2 Chapter Ten
9. One is legally required to stop along public highways and to assist persons who appear to have car
trouble or who are apparently victims of an accident.
10. Financial responsibility laws require that drivers involved in accidents either have a prescribed
minimum amount of personal liability and property damage insurance, or prove that they can pay
damages up to a certain amount, if found liable for an accident.
11. The plaintiff who sues a negligent driver is legally limited in his judgment and recovery by the
amount of public liability and property damage insurance that the defendant carries.
12. It is presumptively negligent for anyone to drive within one hour after drinking more than two
liquid ounces of alcohol in any beverage.
13. A law that holds parents liable for the torts of their children committed while they are driving a
motor vehicle is an exception to the rule that parents are not generally liable for the torts of their
children.
14. Most fatal automobile accidents involve excessive drinking of alcoholic beverages or ingestion of
drugs by the responsible party.
15. If you are involved in an automobile accident while driving a rented car, you have no responsibility
to the rental company if the driver of the other automobile caused the accident.
16. A common carrier may not limit its dollar liability for luggage lost through its negligence.
17. A bailment is a sale of real property.
18. It is common for an implied warranty of merchantability to be limited as to its duration by language
included as part of an express warranty in the sale of an automobile.
Test Bank 3
19. The implied warranty of merchantability arises only in the sale of a new automobile.
20. Only a few states have passed automobile lemon laws.
21. Property that is voluntarily left and but forgotten is mislaid property.
22. In a bailment ownership is transferred to the bailee at the end of the term.
23. A promise to make a gift is generally unenforceable.
24. The implied warranty of merchantability arises only in the sale by a merchant..
25. Property discarded by the true owner, who has no intention reclaiming the property, is abandoned
property.
26. Statutes designed to assist the buyer of seriously defective goods to obtain a replacement or full
refund are called nuisance statutes.
27. The purpose of a secured transaction is to provide the creditor a security interest in personal
property that will give that holder a right against the property rather than be a general creditor if the
obligation owed is not paid.
28. A law in some states holds that the owner of a motor vehicle is vicariously responsible whenever a
member of his or her immediate family or household drives and a third party is injured because of
the negligence of the driver.
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29. The name of the type insurance that protects against the risk of loss from damages to one’s own
automobile in a collision regardless of who is at fault is uninsured-motorist insurance.
30. The very essence of a gift is transferring ownership in something to someone else without expecting
anything in return.
Fill-ins
Complete each sentence or statement.
1. The financial responsibility requirement in motor vehicle laws is usually met by purchase of a
minimum amount of __________________.
2. A contract drafted by a dominant party and then presented to the other party—the adhering party—
on a “take it or leave it” basis is called a(n) __________________ contract.
3. The warranty of __________________ is a promise to the buyer that the seller possesses a good
claim to ownership of the motor vehicle and is transferring it to the buyer.
4. The following statement: “This warranty is in lieu of and excludes all other warranties, express or
implied, including the warranty of merchantability,” is an attempted __________________.
5. A(n) __________________ seeks to provide relief for irate buyers who are dissatisfied because of
the unreasonable amount of extensive repairs and replacements required in fruitless efforts by the
sellers to make the subject automobile operate as promised in warranties received at the time of
purchase.
6. __________________ are created when personal property is temporarily delivered into the care of
another without transferring title.
Test Bank 5
7. If a motor vehicle is purchased on credit, the usual certificate of ownership will list two types of
owners: a(n) __________________ owner and a(n) __________________ owner.
8. Bill Kinser, an off-duty physician, was driving along a parish road when he came upon an accident.
A wrecked vehicle had collided with a roadside fence. Inside the automobile was an injured driver
bleeding and semi-conscious. A(n) __________________ would shield Bill from liability for any
ordinary negligence if he provides emergency care to the injured driver.
9. A(n) __________________ agrees to transport, in exchange for payment, anybody applying for
passage, assuming there is available space and no legal justification for refusal (e.g., intoxication).
10. __________________ laws require that each driver involved in an automobile accident, regardless
of fault, provide proof of financial accountability.
11. An automobile is a type of __________________ because, unlike land and buildings, it can be
easily moved.
12. Two basic types of insurance are available to pay for damages to your own automobile. They are
__________________ and __________________ insurance.
13. The warranty of __________________ refers to the quality of the personal property, and is a
promise that the personal property is of usual and customary quality, and as such it is fit for its
ordinary and intended use.
14. The three requirements to make an effective gift, are __________________, __________________,
and __________________.
15. The installation of a GPS (Global Positioning System) in a boats adds value to the boat and becomes
part of it. This addition to personal property is called __________________.
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16. __________________ is the type of automobile insurance where the negligence of the party who
caused the accident is irrelevant for the purpose recovery of the innocent party’s damages.
17. To aid in the return of lost property many states have __________________ requiring finders to
report discovered lost property to a public official but allowing them to become the new owner of the
property if it is unclaimed after a specified time.
18. A bailment arises when one person, called the __________________, delivers temporary
possession of __________________ property to another, called the __________________, who is
obligated to __________________ the property to the person who delivered it to him or her or
dispose of it in the manner which he or she so directed.
Multiple Choice
Select the one best answer.
1. Automobile recalls
a. are administered by the National Highway Traffic Safety Commission.
b. may be mandated.
c. may be voluntary.
d. all of the above
2. The Magnuson-Moss Warranty Act
a. abolishes the application of the UCC in consumer’s sales transactions.
b. applies only to implied warranties.
c. created the term “Lemon Laws.”
d. specifies what must be included in any warranty called a full warranty.
3. A VIN or vehicle identification number is useful because
a. it allows for satellite recovery of stolen vehicles.
b. a private registry allows for access to information such as whether a car was totaled in a
collision or in a immersed flood.
c. It provides the basis of sales tax.
d. It can be used as an easy way to remember your computer password.
Test Bank 7
4. You discover personal property that is not yours. Which legal classification of the discovered
property is most likely to allow you to be the new owner?
a. lost
b. mislaid
c. stolen
d. abandoned
5. What does this sentence mean? “Their fungible goods became confused.”
a. Identical property of two or more persons was mixed together in way that they became
indistinguishable.
b. The trained dog became puzzled.
c. A merchant seller breached a specified duty to a non-merchant buyer.
d. Several warranties that are usually provided in the sale of goods by a merchant are not available
in a specific transaction because the time involved was insufficient to allow for any recovery of
injury proximately caused by a breach of duty.
6. A contract that is pre-prepared and offered to persons on a “sign-it-or-don’t” basis is commonly
known as a(n)
a. usurious contract.
b. illegal restraint of trade.
c. exculpatory clause.
d. adhesion contract.
7. An insured person has a 15-30-5 Personal Liability and Property Damage automobile insurance
policy. How much will the insurance company pay as a combined maximum if the insured has an
automobile accident in which one or more third parties suffer personal injury (or death) and
property damage?
a. $35,000
b. $50,000
c. $20,000
d. $45,000
8. In most states there is a presumption of intoxication if one drives while she or he has a blood
alcohol content of
a. 0.01 to 0.02%.
b. 1.00%.
c. 0.08
d. any amount. (Total blood alcohol content is irrelevant, because a person is deemed to be
driving under the influence if he or she had consumed any intoxicating drink within one hour of
driving.)
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9. The statement, “William’s legal rights will be affected by the parol evidence rule,” could mean that
a. too much time passed between the time the legal right came into existence and the time William
sued.
b. a written contract exists and its terms conflict with oral statements made by the dealer or sales
person before the contract was signed.
c. William did not notify a manufacturer of a defective product before he filed his lawsuit.
d. state law provides that a volunteer who assists another in peril is not liable in tort unless he or
she was grossly negligent.
10. Example(s) of implied warranty is (are)
a. warranty of title.
b. warranty of merchantability.
c. both of the above
d. none of the above
11. Marge Henderson was very unhappy when she took her six-month-old “Puma” automobile back to
Maximum Deal Auto, the dealership where she purchased the auto. It was the sixth time she had
returned the car to get the seller to fix a stalling condition that plagued the vehicle. This time the
engine stalled while she was driving on a freeway and she nearly had an accident. Which of the
following is true?
a. If the state where she purchased the car has a “lemon law,” and she complies with its
requirements, she may be able to receive a full refund of the price she paid for the car.
b. As this will be the sixth time the dealership has repaired the car for the same continuing
problem, her written auto warranty no longer covers the repairs and she will be required to pay
for the labor and any parts replaced.
c. If the stalling of the automobile engine is caused by a defective part from a supplier vendor,
neither the Puma manufacturer nor Maximum Deal Auto is legally responsible.
d. all of the above
12. Although a motor vehicle is personal property, many laws treat it somewhat differently than other
personal property. Which of the following statements is true?
a. Automobiles are not subject to each state’s version of the Uniform Commercial Code law of
sales.
b. Automobiles can be sold, but cannot be bailed (i.e., be the subject of a bailment contract).
c. Any sales contracts involving automobiles, new or used, must be in writing.
d. Automobile ownership must generally be registered with the state.
Test Bank 9
13. Which of the following is a correct statement concerning parents and their minor drivers of
automobiles?
a. In many states a parent must sign a minor’s application to get a driver’s license.
b. Parents are often made liable by statute for the injuries caused by negligence of their minor
children while driving an automobile.
c. both of the above
d. none of the above
14. Guy Yamoto, who was certified in first-aid techniques, observed an accident scene as he was
driving to work. Although no one was offering help at the accident site, it did not appear to Guy
that the accident was very serious and so he drove on. He later learned that a person died who
probably could have been saved easily through proper application of first aid. If the heirs of the
deceased discovered that Guy had passed the scene without offering to help, then they would
a. not have a cause of action, because the law generally does not require that a person not a party
to an accident volunteer to render aid.
b. have a cause of action only if the state had a so-called “Good Samaritan” statute.
c. have a cause of action because Guy was certified in first-aid techniques.
d. none of the above
15. Lisa owned a 2003 Toyota 4-Runner. In which of the following situations would she not be liable
for an accident when someone else is driving her 4-Runner?
a. Lisa asks Carla, her daughter, to go the store. While driving to the store Carla negligently hits
another car.
b. Lisa leaves the key to the 4-Runner in the ignition and a stranger, Mary Lou, steals the truck.
While driving away, Mary Lou is involved in a collision.
c. Lisa allows her 13-year-old niece, Pauline, to drive the truck out of the driveway. Pauline hits
the city recycling collection truck.
d. Lisa allows a friend, Mark, to drive the truck. She forgot about the faulty brakes that she had
intended to have fixed. As a result, Mark failed to stop at the stop sign at the first intersection
on his way from the house and hit another car.
16. A certificate of ownership of an automobile will usually provide spaces for names of a registered
owner and a legal owner. Which of the following statements is true?
a. A registered owner is usually a lender.
b. An equitable owner, who is purchasing the automobile on credit, is also the legal owner.
c. A purchaser-borrower is the registered owner.
d. none of the above
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17. The versions of mandatory no-fault automobile insurance currently in effect in most states with
such laws
a. reduce the number of automobile accidents.
b. reduce the number of claims for damages resulting from automobile accidents.
c. pay damages suffered of specified kinds up to specified limits without regard to fault and
without litigation.
d. pay full damages to both parties regardless of fault and without litigation.
18. In the event a negligent driver is liable for a judgment of $100,000, but has only $25,000 of
coverage under applicable insurance he or she owns, the balance of $75,000 must be paid by the
a. the negligent driver.
b. the state uninsured drivers fund.
c. must be paid by the vehicle’s registered owner if a commercial lender..
d. the drivers insurance company.
19. In a bailment relationship, all of the statements below are true except
a. the bailee has ownership of the bailed personal property.
b. consideration is not necessary to form the relationship.
c. the bailee has a right of temporary possession of the bailed property.
d. property is to be returned to the bailor or one to whom the bailee has been instructed by the
bailor to deliver the property.
20. You are about to drive an automobile in a foreign country. Which of the following is a true
statement?
a. Your automobile insurance may be invalid for driving in that foreign country.
b. If you have valid automobile insurance in the United States it also provides similar protection
in any foreign country.
c. Your driver’s license entitles you to drive legally anywhere in the world.
d. The driving laws applicable in your home state apply to you wherever you drive.
21. The statement, “Faldo is the registered owner of the automobile while Sally is the legal owner”
probably means
a. Faldo bought the vehicle on credit from Sally.
b. Sally bought the vehicle on credit from Faldo.
c. Faldo and Sally are married.
d. Either Faldo or Sally is leasing the automobile.
Test Bank 11
22. Jill and Felicenne were in an automobile collision causing severe damages to each auto and minor
injury to Jill.
a. A financial responsibility law would require that each provide proof of automobile insurance or
a sufficient bond.
b. If Felicenne is found to have an expired driver’s license, she will be determined to be the driver
at fault.
c. Liability is determined by the state “Lemon Law.”
d. If Jill has a full warranty under the Magnum-Mossy Act, then her auto dealer will be required to
fix her car regardless of fault.
23. The subject of product liability (that is, the grounds upon which a manufacturer may be liable to an
ultimate consumer) is essentially made up of
a. statutory liability, common-law liability, and liability imposed by administrative agencies.
b. any theory a trial judge happens to like on a given day.
c. sales law, contract law, and agency law.
d. tort (negligence) liability, warranty liability, and strict liability.
24. When a car is sold on credit, what legal status does the creditor generally have with reference to the
automobile?
a. The creditor retains legal title and thus holds a security interest in the vehicle, until it is paid for
in full.
b. The creditor is secondarily responsible to third parties injured by the driver of the vehicle.
c. The creditor is obliged to carry collision and comprehensive automobile insurance on the
vehicle to protect the security interest.
d. all of the above
25. Which of the following elements is not required to prove the liability of a driver for negligence in
an automobile accident?
a. a legal duty to exercise reasonable care under the circumstances
b. circumstances in which a hazard is enhanced by foul weather, high speed, or other conditions
c. breach of the specified duty
d. injury proximately caused by the breach of duty
26. An example of a bailment contract is
a. personal service contract between a consumer and a merchant to drive a car.
b. contract to buy a computer server for a large company or Univesitry,
c. storage of grain in a common storage facility.
d. contract to install a roof on an existing home to replace a worn out roof..
12 Chapter Ten
27. If legal rule creates a presumption then it is a(n):
a. assumption that is made in the law that will stand as a fact unless someone comes forward to
contest it and prove otherwise.
b. method of questioning by attorneys for each side and/or the trial judge about a prospective
juror’s background, life experiences, and opinions to determine whether they can weigh the
evidence to be produced in a trial fairly and objectively
c. written order requiring a person to appear in court at a specific date to give testimony
d. Plaintiff’s argument about the quality of evidence, usually exaggerated; but not considered
fraud.
28. A gift is different from a bailment because:
a. a gift requires delivery, but a bailment does not.
b. in a gift, both possession and ownership is transferred whereas in a bailment only possession is
transferred
c. a gift is always a contract, but a bailment is generally not a contract.
d. a gift requires consideration, but a bailment does not.
29. Which statement about bailment is false?
a. valet parking is usually a bailment.
b. self parking is usually not a bailment.
c. a bailment contract must be an expressed contract.
d. a bailment must involve personal property.
Test Bank 13
30. In order to establish an implied warranty of merchantability Leavitt must prove.
a.
He told the Monaco Coach Corporation about his intended use.
b.
Monaco Coach Corporation is a merchant.
c.
The Motor Coach he purchased cannot maintain 50 miles an hour at elevations of 10,000 feet
above sea level.
d.
The Motor Coach purchased was new not used.
31. In order to establish an implied warranty of fitness for particular purpose Leavitt must prove.
a.
He told the Monaco Coach Corporation about his intended use.
b.
Monaco Coach Corporation is a merchant.
c. The Motor Coach he purchased cannot maintain 50 miles an hour at elevations of 10,000 feet
above sea level.
d.
The Motor Coach purchased was new not used.
32 Based on the facts above and assuming it can be proven, the best theory for the plaintiff and thus
the most damaging for the defendant in this lawsuit would probably be:
a. negligence
b.
implied warranty of merchantability
c. strict liability
d. implied warranty of fitness for particular purpose.
33 Of the choices below the best preventive law strategy for the dealer in selling new Motor Homes
would be;
a. An express warranty in small print that clearly states it is limited to guarantees provided within
the four corners of the warranty,
b. Trained personnel who would accommodate the needs of the customer with the proper products
at the dealership.
c. A contract with a service company that delegates responsibility for warranty work to another.
d. To sell the goods as is.
34 Knowing only that his brakes had failed in town instead of over heating in the mountains would
change Leavitt’s claim
a. from strict liability in tort to negligence.
b. from a claim on implied warranty of merchantability to implied warranty of fitness for
particular purpose.
c. negligence to strict liability in tort.
d. from a claim on implied warranty of fitness for particular purpose to one of implied warranty of
merchantability.
14 Chapter Ten
Short Answer Essays
1. After a long, hard day at the office, Dell Peltz was happily heading his 300ZX sports coupe home in
a light drizzle. Moving effortlessly onto the freeway, he smoothly moved back and forth across the
lanes and passed slower-moving vehicles. Suddenly the drizzle became a cloudburst, reducing
visibility. Dell turned his windshield wipers on high and reduced his speed to 50 mph. Again, he
thought he was in complete control, and so he changed lanes to pass a car but suddenly slammed
into the rear of a slower-moving truck driven by Bart. When cited by a patrol officer, Dell argued
that he was innocent of any wrongdoing because he was traveling under the posted speed limit. Bart
sued him for damages.
a. Does Dell have a valid defense to the traffic citation?
b. Discuss any civil action by Bart against Dell.
2. Victoria Ziff drove her large station wagon to work five days a week, giving seven co-employees a
round-trip ride and charging each $40 per month. Victoria’s state had a “guest” statute and also had
a mandatory seat-belt law.
a. In the event of an accident caused by Victoria’s negligence, could her riders successfully sue
her?
b. Would it make any difference if such a plaintiff was not wearing a seatbelt?
3. Dawn Colossi, daydreaming while slowly backing out from her driveway, failed to look both ways.
Archie Monk, racing down the street in his hot Corvette, slammed into Dawn’s right rear quarter
panel. Archie was looking at his tachometer just before the crash. Archie’s shoulder harness was
fastened, so he suffered no injury, but his Corvette was smashed. Dawn, her seatbelt lying on the
seat beside her, was seriously injured. Is Monk liable to Colossi for damages suffered?
Test Bank 15
4. Define what is meant by no-fault automobile insurance. Discuss the pros and cons of these types of
policies.
16 Chapter Ten
5. While driving his new automobile home, Mickey Douglas had a flat tire. Disgusted, he called the
automobile dealership and demanded that they pick him up and substitute another new car for the
“defective one” he had received. Discuss Mickey’s probable rights against the dealership in this
situation.
6. The following are excerpts from advertisements printed in various magazines. Which, if any, are
warranties?
a. Chrysler “Town and Country” Minivan — The advertisement says “One test drive and even the
most discerning luxury car owners realize they don’t have to compromise anything to own a
vehicle that’s startlingly practical. Least of all, their standards.” The advertisement mentions
that “BMW’s, Mercedes, Acura’s, Jaguar’s, Lincoln’s, Cadillac’s…are being traded in for the
Chrysler…Minivan.” (National Geographic Magazine, March 1994)
b. General Motors “Sonoma Highrider” truck — “The new Highrider package is designed to
handle the kind of trouble you’ll find off-road… You sit high. Look good. Ride smooth.”
(National Geographic Magazine, March 1994)
c. Ford “Escort” — “You can explain Escort’s popularity in one word… Value… (also)…
Because your security is our priority.” (National Geographic Magazine, March 1994)
d. Toyota “Sienna” — “Now you can sleep at night. With its five-star rating in government crash
tests and a “Best Pick” by the Insurance Institute for Highway Safety, the Toyota Sienna gives
you one less thing to worry about. So now you are down to only 999,999.” (People Magazine,
May 1999)
Test Bank 17
7. Scofflaws are persons who violate laws that govern the use of motor vehicles, for example, in
driving:
a. without a valid current license for the driver;
b. without a valid current license for the vehicle; and
c. without insurance to compensate others who are injured or killed, or whose property is damages
due to the driver’s carelessness.
Can you identify a possible legal response to such common transgressions?
8. Drexhage, speeding illegally, passed a car being driven safely by Dan Riley, and then swerved too
closely in front of him. Riley reacted to avoid the collision he sensed by slamming on his brakes.
His car skidded off the highway, spun around, and struck a heavy guardrail and post. He was
injured and his car was badly damaged. Is Drexhage liable?
9. Selamwit went to Rivercity Book Store to buy her college textbooks. She became absorbed in glancing
at some bestsellers and lost track of the time. Suddenly, she realized she had to leave quickly in order
to meet her date for dinner. She hastily departed from the store, inadvertently leaving her backpack on
a sales counter. Melissa, a sales clerk, noticed the backpack on the counter but left it there, expecting
Selamwit to return for it. Later, when Selamwit returned to retrieve the backpack, it was gone.
Selamwit sued Rivercity Book Store for the loss of her backpack. Will she be able to recover?
18 Chapter Ten
10. Buddy, in a benevolent mood, wants to give his car to his daughter, Claire, but he needed it for a trip
first. He said to Claire, “I want you to have this car as a gift from me when I get back from my trip.”
Buddy had a second daughter, Brenda to whom he wanted to give his checking account. He wrote out a
check to Brenda’s order for the amount in the account and handed it to Brenda. To a third daughter,
Maggie, Buddy told her to keep the carpet cleaner he loaned her a week ago as a gift. Has Buddy made
any effective gifts? Discuss.