53) According to the Uniform Commercial Code, to meet the standard of merchantability, the
goods must pass without objection in the trade under the contract description.
54) Printing claims about products on their packaging creates an implied warranty of fitness for a
particular purpose.
55) The feasible alternatives test, set out in the Restatement (Second) of Torts, is the consumer-
expectations test.
56) The risk-utility test is used to determine whether a product has met the standards that would
be expected by a reasonable consumer.
57) Section 402A of the Restatement (Second) of Torts is generally considered to be the
foundation of modern product liability law.
58) In terms of the strict liability in tort theory of product liability, the focus is on the producer or
seller, not the product.
59) With reference to cosmetics and over-the-counter drugs, what should the plaintiff prove for
the court to conclude that the defendant is guilty of negligent failure to warn?
60) Why did some courts conclude that compliance with the Clean Air Act does not preclude oil
companies from liability?
61) Explain the implied warranty of merchantability.
62) Explain the implied warranty of fitness for a particular purpose.
63) Provide arguments for and against allowing the state-of-the-art defense in strict product
liability actions.
64) How did the 1916 case of MacPherson v. Buick Motor Co. lead to the elimination of the
privity requirement?
65) Discuss the consequences of eliminating the privity requirement.
66) What are the arguments for and against the statutes of repose?
67) With ________ theory, courts attempt to balance the interests of the plaintiffs in recovering
for injuries caused by defective products against the manufacturers’ interests in not being held
liable for injuries caused by a product they did not produce.
A) free market
B) market share
C) strict liability
D) comparative negligence
68) Which court created market share theory in the 1980 case Sindell v. Abbott Laboratories?
A) the U.S. Court of Appeals for the Ninth Circuit
B) the U.S. Supreme Court
C) the North Carolina Court of Appeals
D) the California Supreme Court
69) Which of the following is not a factor generally necessary for applying market share theory?
A) All defendants intended to cause the plaintiff harm.
B) All defendants are tortfeasors.
C) The allegedly harmful products are identical and share the same defective qualities.
D) The plaintiff is unable, through no fault of his or her own, to identify which defendant caused
his or her injury.
70) Market share theory is used by courts when ________.
A) a defendant is not engaged in the business of selling the type of product that caused harm to
the plaintiff
B) a defendant manufactures many different variations of the same type of product
C) many manufacturers produced the same product that caused harm to the plaintiff
D) the entire market share of a product belongs to one manufacturer
71) Market share liability theory attempts to balance the interests of the plaintiffs in recovering
for injuries caused by defective products against the manufacturers’ interests in not being held
liable for injuries caused by a product they did not produce.
72) Attempts to extend the application of market share liability theory to products other than
drugs have not met with much success.
73) Explain the theory of market share liability.
74) Which of the following is an incorrect statement regarding service liability?
A) Strict liability has been frequently applied to services.
B) Most service liability cases involve services provided by professionals, such as doctors and
lawyers.
C) Along with the growth in lawsuits for defective products, there has also been an increase in
the number of lawsuits brought for defective services.
D) Lawsuits for defective services are generally brought when someone or someone’s property is
harmed as a result of an inadequately performed service.
75) Which of the following is not a common legal theory that serves as a basis for a malpractice
suit?
A) negligence
B) breach of contract
C) strict liability
D) fraud
76) Which of the following statements is true about malpractice actions?
A) They are no longer permitted under the Restatement (Third) of Torts.
B) They generally apply the strict liability standard.
C) The number of malpractice actions against professionals is rising at a rapid rate.
D) The number of malpractice actions against manufacturers is rising at a rapid rate.
77) Which of the following statements is true about malpractice suits?
A) They are service liability suits brought against professionals.
B) They are service liability suits brought against manufacturers.
C) Strict liability is usually applied to malpractice suits.
D) Strict liability is generally not applied if the defendant has provided both a good and a
service.
78) According to ________, the accountant owes a duty to the client and any class of persons the
accountant knows is going to be receiving a copy of his or her work.
A) the Ultramares Doctrine
B) Section 552 of the Restatement (Second) of Torts
C) the reasonably foreseeable user rule
D) market share theory
79) According to ________, the accountant is liable only to those in a privity-of-contract
relationship.
A) the Ultramares Doctrine
B) Section 552 of the Restatement (Second) of Torts
C) the reasonably foreseeable user rule
D) market share theory
80) According to ________, only the party who contracted for the accountant’s work may sue.
A) the Ultramares Doctrine
B) Section 552 of the Restatement (Second) of Torts
C) the reasonably foreseeable user rule
D) market share theory
81) According to ________, the accountant is liable to any reasonably foreseeable user of the
statement the accountant prepares.
A) the Ultramares Doctrine
B) Section 552 of the Restatement (Second) of Torts
C) the reasonably foreseeable user rule
D) market share theory
82) Which theory of accountants’ liability is used in the smallest minority of states?
A) the Ultramares Doctrine
B) Section 552 of the Restatement (Second) of Torts
C) the reasonably foreseeable user rule
D) market share theory
83) Which of the following has an issue of disagreement among the states regarding accounting
malpractice?
A) the applicability of Generally Accepted Auditing Standards (GAASs)
B) the applicability of Generally Accepted Accounting Principles (GAAPs)
C) the accountant’s liability to third parties
D) the accountant’s liability to his or her clients
84) Which of the following statements is true about the Ultramares Doctrine?
A) It protects accountants against lawsuits from their clients.
B) It holds accountants liable only to those in a privity-of-contract relationship with the
accountant.
C) It holds accountants liable to a limited class of intended users of the information.
D) It is followed by all the states of the United States.
85) The ________ is a rule making accountants liable only to those in a privity-of-contract
relationship with the accountant.
A) Doctrine of nondelegation
B) Ultramares Doctrine
C) Res ipsa loquitur Doctrine
D) Erie Doctrine
86) Section 552 of the Restatement (Second) of Torts holds accountants liable ________.
A) only to those in a privity-of-contract relationship with the accountant
B) to any reasonably foreseeable user of the statement the accountant prepares
C) to a limited class of intended users of the information
D) only to the accountant’s clients
87) Which of the following statements is true of accountants’ liability?
A) The plaintiff only has to prove breach of duty in malpractice actions against accountants that
are based on negligence.
B) All states follow the same guidelines to determine to whom an accountant can be held liable.
C) The Ultramares Doctrine allows third parties to sue accountants.
D) The smallest minority of states holds the accountant liable to any reasonably foreseeable user
of the statement the accountant prepares.
88) Jim, an accountant, is asked to prepare a statement by Clark. This statement provides details
about property owned by Clark. Jim is aware that Clark intends to use this statement to obtain a
loan from a bank. Which of the following statements is true of this scenario?
A) In the states that follow the Ultramares Doctrine, the bank cannot sue Jim for malpractice.
B) The bank can sue Jim for malpractice in all the states in the United States.
C) The Ultramares Doctrine allows the bank to sue Jim for malpractice.
D) The bank cannot sue Clark because a contractual relationship exists between Jim and the
bank.
89) Strict liability theory has been frequently applied to the provision of services.
90) Most service liability cases involve services provided by non-professionals.
91) The Ultramares Doctrine is the most recent rule that is used to define the parameters of an
accountant’s liability.
92) Section 552 of the Restatement (Second) of Torts holds that an accountant owes a duty to the
client and any class of persons the accountant knows is going to be receiving a copy of his or her
work.
93) The broadest rule to define the parameters of an accountant’s liability to third parties applies
in most of the states in the United States.
94) What are the three rules used to determine the accountant’s liability to third parties?
95) Which of the following statements is true of liability suits that involve a foreign defendant?
A) If the manufacturer is located in another country, the U.S. importer, wholesaler, or distributor
is liable for the injuries caused by the defective imported product.
B) If a foreign corporation produced the defective goods, the long-arm statute always provides a
U.S. court jurisdiction over the corporation.
C) The Hague Convention on the Service of Judicial and Extrajudicial Documents in Civil and
Commercial Matters accepts the means of service used in the United States.
D) If a foreign defendant has no assets in the United States, the U.S. importer, wholesaler, or
distributor has to pay the damages.
96) Which of the following statements is true of liability cases in foreign countries?
A) In New Zealand, most claims for damages due to pain and suffering receive automatic
compensation due to its Accident Compensation Act.
B) U.S. manufacturers facing lawsuits in foreign countries are unlikely to be joined by foreign
importers, retailers, and wholesalers.
C) U.S. courts do not enforce the judgment rendered by a foreign court.
D) U.S. manufacturers who sell their products abroad are not free from product liability
considerations.
97) A plaintiff often sues only the ________ when the manufacturer is located in a foreign
country.
A) retailer and the wholesaler
B) manufacturer in a foreign country
C) retailer in a foreign country
D) manufacturer’s legal representative
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98) The long-arm statute must be satisfied for a U.S. court to have jurisdiction over a foreign
manufacturer.
99) The plaintiff will have to ask a foreign court to execute a judgment against the defendant’s
assets if the foreign defendant refuses to pay damages and has no assets in the United States.
100) New Zealand’s Accident Compensation Act provides for automatic payment of
compensation for claims for pain and suffering.