Question 26

Joe is shopping for something to put on the floor of his dairy barn. He tells Lorraine, a salesperson for Surge Dairy Products, that his cows have been slipping and falling on the wet floor, and he wants to buy some mats. Lorraine shows him a rubber flooring. Joe buys the floor covering and puts it in his dairy barn. Within days, the rubber floor mats are shredded by the cows' hooves. When Joe purchased the rubber flooring, he signed a contract that states, in large typ and in bold, "FLOORING SOLD WITH NO WARRANTIES OF MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR PURPOSE." What happens when Joe sues Surge Dairy Products?

Question 26 options:

1)	Joe loses because the disclaimer works to avoid warranty protection.

2)	Joe loses because of the concept of Res Ipsa Loquitur

3)	Joe wins because disclaimers of merchantability and fitness for a particular purpose are never allowed.

4)	Joe wins because the disclaimer needed to be in red ink with a box around it.

Question 27

If certain practices are deemed by the court as per se violations, the plaintiff only needs to prove that the prohibited practice occurred in order to win the case (the plaintiff does not need to prove that the practice hurt consumers or was anti-competitive).

Question 27 options:

	1) True
	2) False

Question 28

A tying agreement under antitrust law is when:

Question 28 options:

1)	When a company conditions the sale of its monopoly product on the buyer's agreement to buy another product (e.g. Microsoft makes you buy its MP3 player in order to get its monopoly operating system).

2)	Two companies tie their products through contract (e.g. buy a six pack of Coca-Cola and receive a free admission to a water park).

3)	Two companies tie their corporate boards together (US Corporations prior to antitrust laws and European corporations still share board members)

4)	A company vertically ties its suppliers together (e.g. Ford Motor Company buys a tire manufacturer).

Question 29

Bill sells pens online. Bill believes that individuals will not pay as much as businesses for his pens. He developed a software program to price discriminate. His software is complex, but basically it can identify a business buyer from a consumer buyer through algorithms. He sells the same product for different prices based on his software. Note: the business buyers are using the pens and are not buying wholesale for resale. Select the best legal analysis.

Question 29 options:

1)	Bill's Pens is engaged in illegal predatory pricing.

2)	Bill's Pens is engaged in illegal behavior because some consumers will consider this pricing practice unethical.

3)	Bill's Pens is not in violation of the Robinson Patman Act because Bill's practice is not anti-competitive and because he is selling to consumers rather than retailers

4)	Bill's Pens is engaged in illegal price discrimination under the Robinson Patman Act because he is selling the same quality wholesale goods to distributors at different prices.

Question 30

Which of the following is NOT an example of an express warranty?

Question 30 options:

1)	"This toothpaste gives you a happy smile."

2)	"This jacket is made of leather."

3)	"This water heater holds 50 gallons."

Question 31

Two significant national competitors agree to merge. The merger would give the combined entity a 50% market share. The Department of Justice seeks to stop the merger. What might be a good defense that would allow the merger to be completed?

Question 31 options:

1)	The combined entity would not be able to significantly control prices because other current or future competitors can enter the industry very easily.

2)	It is a horizontal merger, which generally does not have as much anticompetitive effect as a vertical merger.

Question 32

Seven Ivy League colleges and universities conspire to fix tuition prices and financial aid packages. Under the Sherman Act, this is

Question 32 options:

1)	a per se violation.

2)	a violation only if they thereby acquire monopoly power.

3)	a violation only if their competitors also lower prices.

4)	not a violation.

Question 33

BP, Amoco and Super America all operate gas stations within a block from each other. Their price for gas is almost always the same. The government brings a horizontal price fixing antitrust action against them. Select the best argument to defend against the antitrust action.

Question 33 options:

1)	The three never met to discuss price. They each have to match the market leader; however, to remain competitive.

2)	The rule of reason would apply to horizontal price fixing and all charging the same price is good for consumers because it reduces confusion in the marketplace.

3)	The stations actually did meet to agree to fix price; however, each individual destroyed all evidence of the meeting and is willing to lie under oath to protect themselves so there is no way the government can prove an agreement to fix price.

4)	The three agreed to charge the same price to improve the safety and efficiency of driving in the area. It is unsafe to cross the street to get a cheaper price and it hinders the efficient flow of vehicle traffic to have cars crossing streets.

Question 34

Smith wants to buy a used car. He goes to Crane's Used Cars and buys a used car. A week later the police show up at school, inform Smith that the car had been stolen by the person who sold it to Crane's Used Cars. The police take the car away from Smith, and now he sues Crane's Used Cars. Who wins?

Question 34 options:

1)	Smith wins, because Crane's Used Cars breached the warranty of title.

2)	Smith wins only if he can show that Crane's Used Cars was negligent in checking out whether the car had been stolen by the person who sold it to her.

3)	Crane's Used Cars because there is no warranty of title.

4)	Crane's Used Cars wins only if it can prove that it did not know that the car was stolen when it bought the car.

Question 35

East Sanitation Services hired Jon in 1995 as a salesperson for specified routes. In 1999, East started a franchise program and Jon switched to being a franchisee by signing a 25-pages franchise agreement. As a franchisee, Jon performed substantially the same services that he had as an employee. East would like to fire Jon, but is unsure of the consequences. What factors determine if East can fire Jon?

Question 35 options:

1)	East Sanitation can fire franchisees under the same rules as firing employees.

2)	East Sanitation will be subject to franchise laws that generally require "cause" to terminate a franchisee and therefore faces a tougher standard than firing Jon as an employee

Question 36

Dave owns a trash removal and recycling company named Dave's Trash Keep. Assume Dave has only one competitor in the trash removal market, Jim, of Jim's Junkyard Dogs, but he thinks that one competitor is one too many. Dave meets with Jim and they agree to divide the town into two separate districts. Each person agreed only to pick up trash in his own district. There was no procompetitive effect from allocating the town between them. Dave isn't too worried about the Section 1 Sherman Act charge. He knows that he and Jim never formally wrote out an agreement on their various schemes, and he knows that he never told anyone about it. Do you think Dave should be concerned about Sherman Act charges assuming he is in violation?

Question 36 options:

1)	Yes. The government can show the existence of an agreement through circumstantial evidence.

2)	Yes. The government doesn't need to show that there was agreement to prove a Section 1 violation.

3)	No. Without written proof of an agreement the government will not be able to prove its case.