Free Introductory Business Law CLEP Practice Test

"Stare Decisis" is the doctrine that means that when a point has been settled by decision, it forms a precedent which is not afterwards to be departed from. In other words, if a decision has been made concerning a similar case in the past, the court should follow that decision.

Liquidated damage clauses are supposed to reflect actual cost of damages due to breach of contract--they may not be enforced if they are found to be unreasonable.

In a civil trial, the burden of proof on the plaintiff is merely to convince the decisionmaker in a trial by a preponderance of the evidence--which means that over 50% of the evidence is in the plaintiff's favor. This is different from a criminal trial, where the judge or jury must be convinced beyond a reasonable doubt.

It is not an acceptance, it is an offer. That is because when the buyer made a counteroffer, he rejected the original offer, and that offer is now dead--it is no longer available. By saying he will accept the original offer, he is making a new offer on the original terms--the seller can either accept this new offer or reject it. If the seller says nothing and acts on this new offer, a contract is formed at the time the seller shows acceptance by acting on it; i.e. sending the goods.

Another term for automatic violations are "per se" violations. Whereas in most cases, violation of an antitrust law is tested by applying a "rule of reason" test, "per se" violations are actions that automatically qualify as antitrust violations.

Forbearance is a promise to refrain from doing something you are allowed to do. For example, if an adult promises to give up smoking as his side of the contract, that would be considered forbearance, and would be valid consideration.

Promissory Estoppel is a situation where a promise cannot be withdrawn because the offeree reasonably relied on the offer being held open, and will suffer some kind of detriment if it is withdrawn. The offeree must have reasonably relied--unjustified reliance on a promise does not result in promissory estoppel.

This is known as discharge by anticipatory breach. An anticipatory breach occurs before the due date of performance arrives, and requires the breaching party to clearly state or imply that it cannot or will not perform.

Handling explosives is considered an abnormally dangerous activity for which Blast, Inc. would face strict (absolute) liability. This doctrine applies because: 1) this is a type of activity that can place the public at risk even if reasonable care is taken; and 2) the public needs to be compensated for the resulting injury. It appears that Harvey, and Blast, Inc. exercised all due care in handling and storing the dynamite. They hired only experts trained in handling dynamite. Therefore, they would not be liable for negligence, or for negligent hiring.

Erin and Tim relied on the salesperson. The seller failed to meet the buyer's expressed needs. If the seller knows for what purpose the good is being purchased then by selling them a product, the seller is warranting that the good is fit for the particular use.