BMGT 380 Final Examination Question and Answers

3. Racer contracted in writing to drive Owner’s one-of-a-kind, specially designed
championship race car in the Miami 500 Race on July 15 for a fee of $2500. On
July 1, the race car was destroyed in an accidental fire in a storage warehouse
where the race car was being stored prior to the race. Owner owns no other race
cars, so Owner considered the contract discharged. Racer claimed that she is still
entitled to the $2500 fee because she and Owner had a valid enforceable contract.
Compare and contrast the rights and obligations of Racer and Owner under
the contract as of July 1.
4. Compare and contrast the rights and possible liabilities for a merchant selling
goods in “As Is” condition with the rights and possible liabilities for selling goods
with an express warranty stating, “This product is quality Grade A”.
5. Aaron plans to open Aaron’s Pets, a pet shop selling pets and pet supplies, and
plans to hire 2 part-time employees. Aaron will invest only his own money in the
business. He does not expect to make any profit for at least 2 years and to make
very little profit for the next 3 years after the first 2 years. He does expect to make
a profit eventually.
Which form of business organization is most appropriate and easiest for
Aaron to use in opening his pet store – and why? (There is only one correct
answer).
6. There are extensive federal regulations governing airplanes and pilots. Assume
that the state of New York passed a statute containing numerous requirements,
some conflicting with federal regulations, covering operation of airplanes and
licensing of airplane pilots.
If the New York state statue is challenged as being unconstitutional, what is
the likely result? Describe the applicable law and rationale for your
conclusion.
7. Fran, Joe, and Mike formed a general partnership to operate a flower shop called
Fresher Flowers. One of Fran’s jobs is to make deliveries using the partnership
truck. In one such delivery, Fran negligently ran a stop sign, striking a car driven
by Peggy, causing damage to the car and injury to Peggy.
Analyze and describe (1) the personal liability of Fran, Joe, and Mike, (2) the
liability of the partnership, Fresher Flowers.
8. Mark plans to open a barbeque restaurant. He can either open the business as a
sole proprietorship or obtain a franchise for “Smokin’ Hot Bar-B-Q”.
Compare and contrast the advantages and disadvantages of opening the
business as a sole proprietorship and a franchise.
9. 10 points
Leon, a bank vice president, joined Fitness Center, Inc. (FC). He signed a contract