Understanding Business and Personal Law

Unit 3: Understanding Consumer Law

Understanding Consumer Law

1.
When a realtor knowingly does not inform you about a major defect in a house you are about to purchase, the realtor can be accused of
A)bait and switch advertising.
B)false advertising.
C)negative option performance.
D)fraudulent misrepresentation.
2.
Bodily liability insurance
A)pays for medical expenses resulting from bodily injuries to anyone occupying the policyholder's car in an accident.
B)provides protection when the insured is injured in an automobile accident that is caused by a driver with no insurance.
C)protects you when another driver has insurance, but not enough to pay for any injuries.
D)protects the insured against claims or lawsuits for injuries or death caused by negligence.
3.
The APR is the
A)cost of the loan in dollars and cents.
B)number and amount of payments you will make on your loan.
C)true interest rate of the loan.
D)interest rate charged by the car dealer.
4.
When you rent a movie at a video store, you are entering into a relationship called a
A)bailment.
B)fair use doctrine.
C)mutuum.
D)bailor.
5.
Lemon laws are designed to protect consumers when they purchase
A)defective vehicles, either new or used.
B)defective new vehicles.
C)defective used vehicles.
D)vehicles in which the odometer has been turned back.
6.
The duty to notify requires that the
A)seller refund the buyer for the purchase price of the goods.
B)buyer refuse to accept the goods.
C)buyer notify the seller within a reasonable time after a defect is discovered.
D)seller notify the buyer within a reasonable time after a defect is discovered.
7.
If you unknowingly purchase stolen property, you would be obliged to return it to the owner.
A)TRUE
B)FALSE
8.
Collision insurance covers damages to your vehicle when it
A)is in an accident.
B)catches on fire.
C)is vandalized.
D)is stolen.
9.
To exclude the warranty of merchantability, the word "merchantability" must be mentioned specifically.
A)TRUE
B)FALSE
10.
The Magnuson-Moss Warranty Act
A)is a law that affects only the sale of goods sold within a particular state.
B)gives added protection to consumers when written express warranties are made.
C)does not provide for limited warranties.
D)was written to provide protection to consumers who purchase automobiles or motorcycles.
11.
No one can have title to future goods.
A)TRUE
B)FALSE
12.
The finance charge is the cost of the loan in dollars and cents.
A)TRUE
B)FALSE
13.
A retailer who agrees to buy all of a shoe manufacturer's shoes is entering into a requirement contract.
A)TRUE
B)FALSE
14.
A hotel keeper is required to
A)provide transportation to and from the local airports.
B)accept all people who are not dangerous and who are able to pay for their lodging.
C)locate an alternative hotel for a guest they don't wish to serve.
D)clean a guest's room by noon of the following day.
15.
The federal odometer law requires that everyone who transfers a vehicle, unless it is more than 25 years old, provide a written mileage disclosure statement.
A)TRUE
B)FALSE
16.
When a buyer examines goods before the sale, an implied warranty exists to cover defects.
A)TRUE
B)FALSE
17.
When you sell a book to a used book store, you are considered a merchant.
A)TRUE
B)FALSE
18.
When you borrow a can of soup from a neighbor and replace it with a new can the next day, a
A)bailment has occurred.
B)fair use doctrine has occurred.
C)a mutuum has occurred.
D)a bailor has occurred.
19.
If you buy a car and then find a serious defect, the UCC may allow you to revoke your acceptance.
A)TRUE
B)FALSE
20.
Every state has a law requiring people to carry automobile insurance if they own or drive a vehicle.
A)TRUE
B)FALSE
21.
Goods shipped under the terms of a destination contract
A)belong to the buyer as soon as the goods are shipped.
B)are the responsibility of the shipping company.
C)are identified as future goods and no one has title during the shipping period.
D)belong to the seller until they have been delivered to the destination.
22.
The FTC requires that a Buyer's Guide be placed in the window of every
A)leased vehicle.
B)used car offered for sale by a dealer.
C)new car offered for sale.
D)automobile dealership.
23.
Tangible personal property is something that
A)has no substance and cannot be touched.
B)is copyrighted under the fair use doctrine.
C)has substance and can be touched.
D)has a trademark which distinguishes it from other property.
24.
A warranty of fitness is created when the buyer relies on the seller's knowledge and advice when making the purchase.
A)TRUE
B)FALSE
25.
There is little you can do to stop unwanted telemarketing calls.
A)TRUE
B)FALSE
26.
Strict liability means that a manufacturer can be held liable for selling a dangerous product even if the manufacturer has not been negligent.
A)TRUE
B)FALSE
27.
A tortious bailee refers to a person who has special obligations like hotel keepers and common carriers.
A)TRUE
B)FALSE
28.
The warranty of merchantability is beneficial because
A)a private party warrants that the goods being sold are merchantable.
B)it applies to every sale that occurs in the United States.
C)it supersedes any other warranty offered.
D)the merchant warrants that the goods being sold are merchantable.
29.
The term "f.o.b." means that the seller must pay the freight charges from the shipping point to the destination.
A)TRUE
B)FALSE
30.
Bait and switch advertising is illegal because
A)it violates the negative option rule.
B)it violates the cooling-off rule.
C)the advertiser is trying to sell you something over the phone that you cannot see.
D)the advertiser is trying to sell you a different product than the one advertised.
31.
A bill of lading is
A)a document given to a customer by the warehouse who is storing his or her goods.
B)a bill for the shipping fees on merchandise sent across state.
C)a receipt for shipment of goods given by a transportation company to a shipper.
D)the passage of risk from the seller to the buyer.
32.
In an auction without reserve, the auctioneer
A)does not have to sell the goods to the highest bidder.
B)must sell the goods to the highest bidder.
C)must have an amount of money in reserve equal to the value of the auctioned item.
D)must offer the item online as well as at a live auction.
33.
Written warranties must be available before you buy a product that costs more than
A)$15
B)$100
C)$500
D)$5,000
34.
The seller may withhold the delivery of goods as a remedy to a breach of contract.
A)TRUE
B)FALSE
35.
A full warranty promises to fix or replace a defective product at no charge to the consumer.
A)TRUE
B)FALSE
36.
The cooling-off rule gives you
A)one month to cancel contracts for most purchases made away from the seller's regular place of business.
B)three business days to cancel contracts for most purchases made away from the seller's regular place of business.
C)protection from abusive telemarketers who try and sell you products over the phone.
D)the ability to cancel a contract for most purchases made in the seller's regular place of business.
37.
The agency that has the power to recall unsafe products and to impose fines on violators is the
A)Food, Drug, and Cosmetic Commission.
B)federal Consumer Product Safety Commission.
C)Better Business Bureau.
D)U.S. Surgeon General.
38.
In a gratuitous bailment, property is transferred to another person without either party giving or asking for payment.
A)TRUE
B)FALSE
39.
If you receive something in the mail that you did not order, you may keep the product without paying anything for it.
A)TRUE
B)FALSE
40.
The Federal Trade Commission promotes free and fair trade in the American economy.
A)TRUE
B)FALSE
41.
A limited warranty promises to fix or replace a defective product at no charge to the consumer within 90 days of purchase.
A)TRUE
B)FALSE
42.
The UCC has abolished the requirement of
A)consequential damages.
B)duty to notify.
C)privity of contract.
D)merchantability.
43.
Consumer protection laws do not protect you if you purchase
A)goods from another consumer.
B)goods from out of state.
C)goods online.
D)a product considered dangerous.
44.
A copyright is a(n)
A)distinctive mark, symbol, or slogan used by a business to identify its goods.
B)exclusive right by an inventor to make, use, or sell an invention.
C)document that must be filed with the U.S. Patent and Trademark Office in order to be considered legal.
D)right granted to an author to exclusively publish and sell a literary work.
45.
A gift of personal property is completed when the donor intends to make the gift and the donee accepts the gift.
A)TRUE
B)FALSE
46.
All used cars must come with a 90-day guarantee if sold by a dealer.
A)TRUE
B)FALSE
47.
Common carriers are not excused from liability for losses because of strikes or fire.
A)TRUE
B)FALSE
48.
Telephone companies are allowed to disconnect phone service to customers who refuse to pay for 900-number phone calls.
A)TRUE
B)FALSE
49.
As long as the price of a product is less than $500,
A)an oral contract for the sale of goods is enforceable.
B)a written contract is necessary in order for the contract to be enforceable.
C)the UCC rules do not apply.
D)any means available to accept the offer is considered reasonable.
50.
The law of sales is now part of the
A)Federal Trade Commission (FTC).
B)dominant element doctrine.
C)Statute of Frauds.
D)Uniform Commercial Code (UCC).
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