Question 1

Which of the following has an issue of disagreement among the states regarding accounting malpractice?

Accepted Answer

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 
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

Question 2

Privity means that one is a party to a contract.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is true about the standard adopted by the Restatement (Third) of Torts for design defects?

Accepted Answer

A)  It is based on strict liability. 
B)  It is based on reasonableness. 
C)  It is a negligence-based test on the duty to warn. 
D)  It is based on the defendant's intent. 
A)  It is based on strict liability. 
B)  It is based on reasonableness. 
C)  It is a negligence-based test on the duty to warn. 
D)  It is based on the defendant's intent.

Question 4

Most service liability cases involve services provided by non-professionals.

Accepted Answer

A) True 
 B)False

Question 5

Katherine purchased a pair of earphones from Simon. She realizes that they are defective and brings a strict liability action against Simon. Which of the following statements is true of this scenario?

Accepted Answer

A)  Simon is not liable as he has not entered into any contractual relation with Katherine. 
B)  If Simon has exercised all possible care in sale of the product, he is not liable. 
C)  If Simon is not engaged in the business of selling electronic goods, he is not liable. 
D)  Simon is not liable as he is not the manufacturer of the product. 
A)  Simon is not liable as he has not entered into any contractual relation with Katherine. 
B)  If Simon has exercised all possible care in sale of the product, he is not liable. 
C)  If Simon is not engaged in the business of selling electronic goods, he is not liable. 
D)  Simon is not liable as he is not the manufacturer of the product.

Question 6

Which of the following statements is true of liability cases in foreign countries?

Accepted Answer

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. 
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.

Question 7

According to , the accountant is liable to any reasonably foreseeable user of the statement the accountant prepares.

Accepted Answer

A)  the Ultramares Doctrine 
B)  Section 552 of the Restatement (Second) of Torts 
C)  the reasonably foreseeable user rule 
D)  market share theory 
A)  the Ultramares Doctrine 
B)  Section 552 of the Restatement (Second) of Torts 
C)  the reasonably foreseeable user rule 
D)  market share theory

Question 8

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.

Accepted Answer

A) True 
 B)False

Question 9

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?

Accepted Answer

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. 
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.

Question 10

Which of the following refers to unconscionability under the Uniform Commercial Code?

Accepted Answer

A)  The seller was not aware of the defect at the time of purchase. 
B)  The plaintiff is a minor. 
C)  The contract clause is grossly unfair. 
D)  The lawsuit was brought after the expiration date of the statute of repose. 
A)  The seller was not aware of the defect at the time of purchase. 
B)  The plaintiff is a minor. 
C)  The contract clause is grossly unfair. 
D)  The lawsuit was brought after the expiration date of the statute of repose.

Question 11

Which of the following best describes a statute of repose?

Accepted Answer

A)  It is a statute that bars actions arising more than a specified number of years after the cause of the action arises. 
B)  It is a statute that limits recoverable damages based on the percentage of harm caused by the defendant. 
C)  It is a statute that limits recoverable damages to less than $1,000,000. 
D)  It is a statute that bars actions arising more than a specified number of years after the product was purchased. 
A)  It is a statute that bars actions arising more than a specified number of years after the cause of the action arises. 
B)  It is a statute that limits recoverable damages based on the percentage of harm caused by the defendant. 
C)  It is a statute that limits recoverable damages to less than $1,000,000. 
D)  It is a statute that bars actions arising more than a specified number of years after the product was purchased.

Question 12

Discuss the consequences of eliminating the privity requirement.

Accepted Answer

Eradication of the privity requirement a

Question 13

Which of the following statements is true of defenses to a strict product liability action?

Accepted Answer

A)  Product misuse is available as a defense to a strict product liability action. 
B)  Assumption of the risk is not permitted as a defense to a strict product liability action. 
C)  The state-of-the-art defense is generally allowed in a strict product liability action. 
D)  The state-of-the-art defense in a strict liability action requires testimony from an expert witness. 
A)  Product misuse is available as a defense to a strict product liability action. 
B)  Assumption of the risk is not permitted as a defense to a strict product liability action. 
C)  The state-of-the-art defense is generally allowed in a strict product liability action. 
D)  The state-of-the-art defense in a strict liability action requires testimony from an expert witness.

Question 14

Which of the following statements is true of defenses to a negligence-based product liability action?

Accepted Answer

A)  For misuse of a product to constitute a valid defense, the misuse must be unreasonable or unforeseeable. 
B)  An employee using an unsafe machine at work is presumed to have assumed the risk. 
C)  If contributory negligence is proved, the plaintiff can recover for only that portion of the harm attributable to the defendant's negligence. 
D)  If pure comparative negligence is proved, the plaintiff is barred from recovery. 
A)  For misuse of a product to constitute a valid defense, the misuse must be unreasonable or unforeseeable. 
B)  An employee using an unsafe machine at work is presumed to have assumed the risk. 
C)  If contributory negligence is proved, the plaintiff can recover for only that portion of the harm attributable to the defendant's negligence. 
D)  If pure comparative negligence is proved, the plaintiff is barred from recovery.

Question 15

Which of the following statements is true of implied warranty of merchantability?

Accepted Answer

A)  It states that the product being sold is the safest one that can be produced with the scientific knowledge available. 
B)  To meet the standard of merchantability, the product must be adequately contained, packaged, and labeled as the agreement may require. 
C)  This warranty is made even if the seller does not regularly sell that type of good. 
D)  The Uniform Commercial Code considers contracts related to consumer goods that limit damages for injuries to a person as valid. 
A)  It states that the product being sold is the safest one that can be produced with the scientific knowledge available. 
B)  To meet the standard of merchantability, the product must be adequately contained, packaged, and labeled as the agreement may require. 
C)  This warranty is made even if the seller does not regularly sell that type of good. 
D)  The Uniform Commercial Code considers contracts related to consumer goods that limit damages for injuries to a person as valid.

Question 16

Section 552 of the Restatement (Second) of Torts holds accountants liable .

Accepted Answer

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 
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

Question 17

According to , the accountant is liable only to those in a privity-of-contract relationship.

Accepted Answer

A)  the Ultramares Doctrine 
B)  Section 552 of the Restatement (Second) of Torts 
C)  the reasonably foreseeable user rule 
D)  market share theory 
A)  the Ultramares Doctrine 
B)  Section 552 of the Restatement (Second) of Torts 
C)  the reasonably foreseeable user rule 
D)  market share theory

Question 18

Explain the implied warranty of fitness for a particular purpose.

Accepted Answer

The implied warranty of fitness for a pa

Question 19

Which of the following is true of adopting the Restatement (Third) of Torts: Product Liability?

Accepted Answer

A)  The seller's liability differed depending on whether the defect was a manufacturing defect, a design defect, or a defective warning. 
B)  The seller's liability differed depending on whether the plaintiff was a merchant, a consumer, or a minor. 
C)  The privity limitation was reinstated as a defense to product liability lawsuits. 
D)  The state-of-the-art defense is permitted by courts in most strict liability cases. 
A)  The seller's liability differed depending on whether the defect was a manufacturing defect, a design defect, or a defective warning. 
B)  The seller's liability differed depending on whether the plaintiff was a merchant, a consumer, or a minor. 
C)  The privity limitation was reinstated as a defense to product liability lawsuits. 
D)  The state-of-the-art defense is permitted by courts in most strict liability cases.

Question 20

Which of the following is not a common negligent action leading to product liability case?

Accepted Answer

A)  negligent manufacture 
B)  negligent testing or failure to test 
C)  negligent advertising 
D)  negligent infliction of emotional distress 
A)  negligent manufacture 
B)  negligent testing or failure to test 
C)  negligent advertising 
D)  negligent infliction of emotional distress

Exam 12: Product and Service Liability Law

Which of the following has an issue of disagreement among the states regarding accounting malpractice?

Privity means that one is a party to a contract.

Which of the following is true about the standard adopted by the Restatement (Third) of Torts for design defects?

Most service liability cases involve services provided by non-professionals.

Katherine purchased a pair of earphones from Simon. She realizes that they are defective and brings a strict liability action against Simon. Which of the following statements is true of this scenario?

Which of the following statements is true of liability cases in foreign countries?

According to , the accountant is liable to any reasonably foreseeable user of the statement the accountant prepares.

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.

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?

Which of the following refers to unconscionability under the Uniform Commercial Code?

Which of the following best describes a statute of repose?

Discuss the consequences of eliminating the privity requirement.

Which of the following statements is true of defenses to a strict product liability action?

Which of the following statements is true of defenses to a negligence-based product liability action?

Which of the following statements is true of implied warranty of merchantability?

Section 552 of the Restatement (Second) of Torts holds accountants liable .

According to , the accountant is liable only to those in a privity-of-contract relationship.

Explain the implied warranty of fitness for a particular purpose.

Which of the following is true of adopting the Restatement (Third) of Torts: Product Liability?

Which of the following is not a common negligent action leading to product liability case?

Critical Thinking and Legal Reasoning

Introduction to Law and the Legal Environment of Business

The American Legal System

Alternative Tools of Dispute Resolution

Constitutional Principles

White-Collar Crime and the Business Community

Ethics, Social Responsibility, and the Business Manager

The International Legal Environment of Business

The Law of Contracts and Sales I

The Law of Contracts and Sales Ii

The Law of Torts

Law of Property: Real and Personal

Intellectual Property

Agency Law

Law and Business Associations I

Law and Business Associations II

The Law of Administrative Agencies

The Employment Relationship and Immigration Laws

Laws Governing Labor-Management Relations

Employment Discrimination

Environmental Law

Rules Governing the Issuance and Trading of Securities

Antitrust Laws

Laws of Debtor-Creditor Relations and Consumer Protection

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