Compare and contrast the rights and obligations of Racer and Owner under the contract as of July 1.

Jones, a resident of Arizona, booked reservations for a vacation at Windell Hotels, Inc. in Cabo Mar, Mexico. Windell Hotels is an international hotel chain incorporated in Delaware with hotels in North and South America; Windell Hotels has no hotels in Arizona but does advertise and book reservations for all its hotels over the internet.

While a guest in the hotel in Cabo Mar, Jones was walking across the hotel lobby, and slipped and fell on the wet marble floor that had been just washed by the maintenance staff. The staff had placed a “wet floor” sign on the lobby floor on the side wall of the lobby.

Jones was taken to the nearest Mexican hospital where surgery was necessary to place a pin in his broken leg. Anxious to return home and see his regular doctor, Jones flew out of Mexico shortly after the surgery. He required two plane seats and an ambulance to meet him at various airports. His health insurance would not cover his hospital stay in Mexico as it was located outside the U.S. When back in Arizona, Jones was unable to work for 8 weeks and required another surgery to remove the pin. He also required several weeks of physical therapy.


24. Jones wants to sue Windell Hotels, Inc. in federal court for $450,000 to recover all his medical expenses in Mexico and the US; for $50,000 for the cost of the plane trip from Mexico to Arizona, the 2 plane seats and ambulance costs in various airports; $10,000 for 8 weeks of lost wages; and $50,000 for pain and suffering resulting from the injury.   Can he sue in federal court?

a) Yes, because Federal Court always has jurisdiction over citizens of different states.

b) No, because Federal Court does not have jurisdiction in cases that do not involve federal laws.

c) Yes, because the Federal Court may have jurisdiction over citizens of different states and the lawsuit involves damages greater than $75,000.

d) No, because the Federal Court has no jurisdiction over an accident that occurred in Mexico.


25.   It would be easier for Jones to bring the lawsuit in Arizona state court, but he wonders if the court can get Windell Hotels to come to Arizona. Can the Arizona state court impose jurisdiction over Windell Hotels to bring the company to court in Arizona?

a) No, because the subject of the lawsuit took place in a foreign country.

b) No, because the corporation does not have sufficient minimum contact with Arizona to allow the Arizona court to use the long arm statute to establish jurisdiction in Arizona.

c) Yes, because the Jones is a resident of Arizona and he is the plaintiff in the lawsuit.

d) Yes, because Windell Hotels has sufficient minimum contact with Arizona the state to justify the court’s use of the long arm statute.


Scroll down, please to begin the essay portion of the exam.


Use the answer sheet at the end of the exam. Number each answer. DO NOT recopy questions.

Answer each question in complete paragraphs; do not list or answer in phrases (points will be deducted for doing so).

None of these questions can be adequately/comprehensively answered in just a paragraph, so be comprehensive, in depth in your answers, but be careful to not include irrelevant information.

Points will be deducted for answers that are not well justified, not sufficiently comprehensive.

Use APA in text citations, as appropriate but please do not use direct quotes. Use only classroom notes/comment and assigned reading or watching materials as resources, which is all you need to complete the exam.


Refer to the scenario for Multiple Choice questions above to answer the following essay question #1 only:

1. Jones sued Windell Hotels, Inc. for negligence to recover damages for his injuries resulting from the fall in the Cabo Mar hotel.

Will Jones likely be successful in the negligence lawsuit against Windell Hotels? Explain fully why or why not.


2. Clarkson and Lee did not have a contract, but Clarkson completed extensive landscaping in Lee’s yard by mistake while Lee was away on vacation. Clarkson sent Lee a bill for the landscaping service but Lee refused to pay.

Determine the likely result if Clark sues Li to recover the costs of the landscaping.


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 Pet Supplies, a pet supplies outlet, 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.



Leon, a bank vice president, joined Fitness Center, Inc. (FC). He signed a contract for the membership. The contract stated, among other things, an exculpatory clause that FC…

“shall not be liable for any claim, demand, cause of action of any kind whatsoever for, or on account of death, personal injury, property damage or loss of any kind resulting from or related to Member’s use of facilities or participation in any sport, exercise or activity within the club premises…”

While working out at FC, Leon sustained back injuries when a treadmill on which he was walking suddenly collapsed at FC. Leon sued FC for his injuries.


a. Is the exculpatory clause in the contract valid or invalid in Leon’s case and why?

b. Possible product liability claim(s) for which Leon could sue FC and why product liability claims might be applicable to this case

c. Possible ordinary (non-product liability) negligence claim for which Leon could sue FC and why a negligence claim might be applicable to this case

d. The likely outcome if Leon sues FC under product liability

e. The likely outcome if Leon sues FC under ordinary negligence

















9.         a.








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