Issues Concerning Liability – Business Law Study Guide 2017

The plaintiff in a product liability lawsuit has suffered $100,000 worth of damages from an automobile accident.

A defect in manufacture of the plaintiff’s vehicle is found to be 60 percent responsible for the accident, while the plaintiff’s own negligence is 40 percent responsible. Under the doctrine of comparative negligence, how much would the defendant -the manufacturer of the vehicle – have to pay the plaintiff in damages? 


Explanation: Under the doctrine of comparative negligence, the defendant could be responsible for 60,000 of the total damages. This type of decision is usually determined by a judge or jury after weighting the degree of negligence for each party.

Which of the following statements is true of the performance of a contract?

Inferior performance constitutes a minor breach

Explanation: Inferior performance occurs when a party does not fully satisfy obligations in a contract.  For example, a contractor might use low quality nails in home remodel. The work was completed, but the other party might consider the low quality work a minor breach and sue for partial damages.

Which of the following statements is true regarding the liability of the partners in a limited partnership?

The limited partners have limited liability and the general partners have unlimited liability for partnership debts.

Explanation: In a limited partnership, the general partner assumes liability, while the limited partner’s liability is only limited to their initial investment. This is often a good structure for professional businesses the require one of the partners to provide startup capital.

Which of the following is true of monetary damages?

Consequential damages are considered as monetary damages

Explanation: Consequential damages are considered as monetary damages when the breaching party has added additional losses beyond the original contract. For example, if you hire a plumber for $100, but he causes $250 in damages to your sink, you can sue for these consequential damages beyond the original contract.

Lawrence Johnson is a soccer player who has a six-year contract with the Cairo United soccer team.

Two years into the contract, he meets with an accident which results in the complete amputation of his right leg. Lawrence is

discharged from further performance of the contract by impossibility

Explanation: When a party loses the ability to perform certain duties of a contract, it can be discharged by means of impossibility. Playing soccer requires two legs, so this player would have a valid reason for discharge from the contract.

Prado Loyola is a race-car driver who has signed an agreement with the racing team Provolt.

The agreement states that Provolt is not responsible for the dangers involved in racing and that Loyola participates in all car races voluntarily, with full knowledge of the risk of injury or death that might result as a consequence. During the course of a race, a slight drizzle that covers the windshield affects Loyola’s visibility and he misses a turn, resulting in a crash. Which of the following defenses can the Provolt team cite to protect itself from liability in the event that Loyola sues them?

Assumption of the Risk

Explanation: Assumption of the Risk is common when a party is engaging in an activity that may cause injury or death, which is the case with team Provolt Racing. It is this reason that people usually sign waivers of liability when engaging in activities like skydiving, bungee jumping, etc

  • Student: Forest Bayes
  • Textbook: Various Law Textbooks
  • Course: Business Law

Browse More Business Law Resources

Law is one of the most memory-intensive aspects of business school. Learn the most important concepts with our full 2016-17 study guide:

  1. Part 1 - Civil Liability and Contract Law
  2. Part 2 - Employee/Employer Relations and Civil Rights
  3. Part 3 - Federal/State Regulations and Legal Powers
  4. Part 4 - Issues Concerning Liability


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