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Cara is a bankruptcy trustee. As a bankruptcy trustee, Cara cannot a. cancel fraudulent transactions made by the debtor within two years of the filing of the petition. b. ask the court for a writ of execution. c. avoid preferences. […]

Global Services Corporation engages in trade practices that may violate antitrust law. The Federal Trade Commission has the power to act against unfair trade practices under a. the Clayton Act. b. the Federal Trade Commission Act. c. the Sherman Act. […]

The judicial branch has the power to hold actions of the other branches of government unconstitutional. Downloading software or music into a computer’s random access memory without authorization is copyright infringement. Answer: T A union may threaten an employee with […]

Albert wants to build a new house, but he needs to borrow money to do so. Albert should obtain a. a balloon mortgage. b. an interest-only mortgage. c. a subprime mortgage. d. a construction loan. Nimble Numbers Accounting Corporation, a […]

Philip purchases ten lawnmowers through a sale or return contract. He plans to resell the lawnmowers in his garden supply store. The contract specifies that Philip must return the lawnmowers within six months if he decides that he does not […]

Mary is angry with Julia so she waits outside Julia’s house and hits Julia with a baseball bat as Julia leaves the house. When Julia sues Mary for battery, Mary will be considered a a. victim. b. tortfeasor. c. plaintiff. […]

Corner Convenience Store (CCS) takes out a full-page ad in a local newspaper and runs a thirty-second commercial on a local television station, offering a reward for information leading to the apprehension of a certain criminal. CCS could normally terminate […]

Hu believes that he is a victim of a form of employment discrimination that falls under Title VII of the Civil Rights Act. Compliance with this statute is monitored by a. employees and job applicants, not an administrative agency. b. […]

The Eighth Amendment prohibits excessive bail and fines, as well as cruel and unusual punishment. Predatory pricing involves selling a product at prices substantially above the fair market value. Answer: F A will is a final declaration of how a […]

The payment of John’s debt to Kirsten is guaranteed by John’s personal property. Kirsten is most likely to perfect her interest by a. attaching a bright label to John’s property. b. calculating the precise amount of John’s debt. c. correcting […]

If a seller repudiates a contract, the buyer’s damages do not have to be adjusted to reflect any expenses that were saved as a result of the breach. The identity of one of the parties to a contract is an […]

A contract must be in writing to be enforceable if it makes performance possible only over a period of more than one year. Today, most checks are processed manually. Answer: F A voidable contract is a valid contract that can […]

Discount Mart, Inc., files a suit in a state court against Elements Computer Corporation, alleging that Elements breached a contract to sell 500 notebook computers to Discount. During the course of the suit, Discount files a motion for judgment on […]

Kris contracts to work exclusively for Little Manufacturing Company during May for $5,000. On April 30, Little cancels the contract. Kris finds another job during May but earns only $3,000. Kris files a suit against Little. As compensatory damages, Kris […]

Evermore Corporation and Trendy Goods, Inc., enter into a contract. To be enforceable, the contract must include a. no particular signatures. b. the signatures of all parties to the deal. c. the signature of the party against whom enforcement is […]

In today’s world, many business leaders find it difficult to create an “ethical tone” that deters unethical conduct in their workplaces. A close corporation can operate as an S corporation. Answer: T The test for whether an advertisement is deceptive […]

Only personal contracts can be discharged by agreement of the parties. A notice of sale is usually published in a newspaper. Answer: T The United States Supreme Court has original jurisdiction in some situations. Answer: T A tariff is always […]

Mark is creating a Web site through which he will enter into contracts over the Internet. Important terms to include in his offers include a. provisions specifying the remedies if the contract is breached. b. a detailed history of his […]

Every contract involves at least two parties. An offer made in obvious anger is still an effective offer. Answer: F An online offer should NOT include provisions identifying applicable statutes of limitations. Answer: F The rights that accompany a fee […]

Geoffrey does not qualify for a standard mortgage. He can apply for a. a balloon mortgage. b. an interest-only mortgage. c. a subprime mortgage. d. a construction loan. Klondike and Leola own 10,000 shares of stock in My-T Gro Corporation. […]

In most situations involving sales, rights and liabilities are determined by who has the title to the goods. A course of performance is the conduct that occurs under the terms of a particular agreement. Answer: T Criminal law spells out […]

Riley invents a new deep-sea fishing net, which he names “SeaMaster.” He also writes the operating manual to be included with each net. Riley could obtain copyright protection for a. the net. b. the “newness” of the net. c. the […]

In some states, an otherwise unenforceable oral contract may be enforced under the doctrine of promissory estoppel. Misrepresentation of an opinion is an element of fraud. Answer: F There are no revocable offers. Answer: F Proximate cause exists when the […]

An otherwise valid contract may be unenforceable if it is not in writing. The Americans with Disabilities Act of 1990 defines disabled persons as persons impaired mentally or physically “in any way.” Answer: F The UCC imposes the same rules […]

Sonny agrees to buy a unique collection of Olympics memorabilia for $7,000 from Jana and sends $1,500 as a down payment. When Sonny sends Jana the rest of the price, she refuses to ship the collection. Sonny should seek a. […]

Unconscionable means unethical or unfair. In a bilateral contract, communication of acceptance is necessary. Answer: T An agency relationship may occur by operation of law in a family. Answer: T If it can be shown that a trespass to land […]

Like other manufacturers and sellers, Happy Household Products Company packages its products with labels. Under federal law, such labels must be a. accurate and use easily understood words. b. bright and feature eye-catching colors. c. graphically distinctive and well-designed. d. […]

Fact Pattern 38-1 Nika owns land in Ohio. Her ownership rights include the right to sell or give away the property without restriction, and the right to commit waste, if she chooses. Refer to Fact Pattern 38-1. Nika’s ownership interest […]

Nature’s Products, Inc., sends its standard order form to Interbusiness Distribution Corporation (IDC) to evidence a sale of packing materials. IDC responds with its own standard purchase order form. Additional terms in the purchase order automatically become part of the […]

Torts are considered crimes. It is presumed that a co-tenancy is a tenancy in common unless it is clear that the parties intended to establish a joint tenancy. Answer: T A whistleblower is an employee who reveals confidential information about […]

The Employee Polygraph Protection Act of 1988 prohibits employers from doing all of the following except a. requiring or causing employees or job applicants to take lie-detector tests. b. using, accepting, or referring to, or asking about the results of […]

Larceny relies on fear and force. An order for relief in a bankruptcy proceeding amounts to a discharge of the debts of the party petitioning for bankruptcy protection. Answer: T Sierra borrows $175,000 from Regional Home Finance Corporation to buy […]

Punitive damages are generally available in contract disputes. Adequacy of consideration refers to how much consideration is given. Answer: T Defeasible means capable of being terminated. Answer: T Pam borrows $5,000 from Quality Auto Sales to buy a car. When […]

The Check Clearing in the 21st Century Act (Check 21) applies only in about 75 percent of the states. A law that limits the liberty of all persons may violate substantive due process. Answer: F The basis for an employee’s […]

Jean buys a bike from Mike’s Bike Shop. She wants to make sure that there is a warranty of title. Jean a. does not need to do anything because warranties of title arise automatically in most sales contracts. b. must […]

A corporation has perpetual existence in most states unless the articles of incorporation state otherwise. On request, a consumer may obtain the source of any information being given out by a credit agency. Answer: T A drawer who is induced […]

Jim is an appliance salesperson. To make a sale, he asserts that a certain model of a Kitchen Helper refrigerator is the “best one ever made.” This is a. fraud if the statement is the truth. b. fraud if Jim […]

To establish a prima facie case of discrimination under Title VII, a plaintiff need not show that discriminatory intent motivated an employer’s decision. There are no exceptions to the employment-at-will doctrine. Answer: F Multi Investments, Inc., offers to buy Nano […]

Joy steals a check from Kyle, forges his signature, and transfers the check to Loco Loans, Inc., for value. Unaware that the signature is not Kyle’s, Loco Loans presents the check to Metro Bank, the drawee, which cashes the check. […]

Colleen is intoxicated, but still mentally capable of understanding the consequences of her actions when she signs a contract to sell the rights to her latest novel to Addie. The contract is a. enforceable only if Colleen does not attempt […]

A party who substantially performs his or her duties under a contract can enforce the contract against the other party. An express contract need not be in writing. Answer: T One of the requirements to be a holder in due […]

A quasi contract is not enforceable by a court. If no heirs are found, the property of a decedent is transferred to a charitable organization. Answer: F An arbitration clause requires arbitration of disputes that arise between the insurer and […]

Homestead Insurance Company tells its customer Teresa that she need not respond to questions about her national origin or race on her insurance application. Teresa provides the information anyway. Homestead a. can use the information to avoid its obligations under […]

Under the national taxing power, Congress may NOT a. tax the sale of clothing in all states. b. tax the sale of food in all states. c. enact a graduated income tax. d. exempt certain states from a federal tax. […]

Congress enacts a statute, the Federal Deposit Insurance Corporation (an administrative agency) issues rules, the Southeast Financial Institutions Association (a private organizations) issues instructions, South Valley Bank posts a memo with orders for its employees, and Tina tells her co-worker […]

Ray is a minor who borrows $1,500 from Savings Bank and buys an insurance policy from Tristate Insurance Company. Under some circumstances, Ray can disaffirm the contract for a. the loan only. b. the insurance policy only. c. both the […]

Corporations can be good citizens by promoting goals that society deems worthwhile. The American Law Institute was the only organization involved in developing the Uniform Commercial Code. Answer: T A finder of abandoned property acquires title to it, and the […]

InTown Delivery Service promises to deliver a certain couch to Kurt, who promises to pay for the service. If InTown does not perform, it may be required to a. do nothing. b. make another promise. c. pay money damages. d. […]

Unless a contract provides otherwise, it is assumed to be a shipment contract. A testator cannot revoke a will by burning it. Answer: F Criminal acts are prohibited only by federal government statutes. Answer: F The UETA covers only e-records […]

Kendall executes a separate written instrument to amend her prior will. This separate document is a. a bequest. b. a codicil. c. a devise. d. a holographic will. Kayla puts an item in an auction with reserve. Kayla is the […]

Richard suspects his supervisor of unethical accounting practices. However, he does not want to lose his job if he reports the supervisor and the supervisor finds out who reported him. An important feature of online reporting systems like EthicsPoint is […]

With a sale on approval, goods held on approval are subject to the claims of the buyer’s creditors before acceptance. The President appoints federal judges with the advice and consent of the Senate. Answer: T For an item to be […]

Sarah believes that she was rejected for a position at Trekking Travel Agency due to her race. Sarah files a suit against Trekking Travel Agency under Title VII on the basis of disparate-treatment discrimination. Sarah must show all of the […]

Ada is the maker of a note, on which Bart is secondarily liable. Cash & Credit Company (C&C) is the current holder of the note. Bart will be obligated to pay the note if a. Ada defaults on the note. […]

To determine whether a duty of care has been breached, a judge asks how a reasonable person would have acted in the same circumstances. Employees are entitled to overtime pay only at their employer’s discretion. Answer: F On default, unless […]

Guard Personnel Company is charged with using hiring practices that do not meet requirements set by the Transportation Safety Administration (TSA). The administrative law judge orders Guard to comply with the TSA’s regulations. Guard may a. appeal to the commission […]

A court may rule contrary to a precedent if a. the court decides that the precedent is incorrect. b. the court decides that the precedent is inapplicable. c. the judge does not like the precedent. d. (a) and (b) Ludwig […]

A business that holds itself out as being a corporation may not deny corporate status, even if it makes no attempt to incorporate. Employees who deal with third parties are agents of their employers. Answer: T Hawk Corporation begins making […]

With a bill of lading, Cartage Common Carrier Company acknowledges possession of certain goods and contracts to deliver them. Cartage is a. a bailee. b. a buyer in the ordinary course of business. c. a good faith purchaser for value. […]

Most advertisements”this property for sale”are offers. An intended beneficiary can sue directly to enforce a promisor’s promise. Answer: T A circular letter is NOT evidence of an intent to enter into a contract. Answer: T The government cannot take private […]

The Pure Food and Drug Act of 1906 was Congress’s first attempt to protect consumers against the dangers of cigarette smoking. Monopoly power is a minor amount of market power. Answer: F A contract must be in writing to be […]

A design defect is not the sort of product defect that will support the imposition of liability on a strict product liability basis. An expression of opinion will usually create a warranty. Answer: F The holder of a life estate […]

Patsy possesses twenty-four acres of remote, rugged land. Patsy has the right to use the property, including extracting silver from an existing mine, for life. Patsy also has the right to lease the land for a period not to exceed […]

Shelby offers to make digital copies of Relay Company’s business conference videotapes, CDs, DVDs, and other media for $500. Under the mailbox rule, Relay’s acceptance by e-mail will be considered effective when a. received. b. sent. c. followed up by […]

Consent is a defense to an allegation of both assault and battery. A third party’s right to control the details of performance of a contract indicates that the third party is an intended beneficiary. Answer: T Federal legislation can affect […]

Joli, acting within the scope of her authority for the Cake Bake Shop, contracts with Valley View Berry Farms to buy an assortment of fruit. Cake Bake is liable on the contract, and Joli is not, if Cake Bake is […]

Dividends can be paid only in stock in other corporations. A director does not need to disclose any conflict of interest before voting on a proposal. Answer: F A mechanic’s lien is possessory. Answer: F Tangible property has physical existence. […]

The initial board of directors of a corporation is normally elected at the first annual shareholders’ meeting by a majority vote of the shareholders. Promises of fact made during the bargaining process are express warranties. Answer: T Starting a sole […]

A minor may disaffirm a contract only if the subject matter is illegal. Corporations can be perceived as owing ethical duties to groups other than their shareholders. Answer: T Legal sufficiency of consideration is the same as adequacy of consideration. […]

An agreement is NOT one of the requirements of a valid contract. The main purpose of the Fair Debt Collection Practices Act is to ensure that creditors are always paid by debtors. Answer: F A formal will must be signed […]

Banks may NOT assign their loan contracts to other firms. Bribery of foreign government officials is both an ethical and a legal issue. Answer: T Under the doctrine of respondeat superior, an agent is liable for the principal’s negligence. Answer: […]

Wrugged Woolens, Inc., a U.S. corporation, sets up a specialized marketing organization in Scotland by appointing a foreign agent. This is called a. direct exporting. b. indirect exporting. c. a joint venture. d. piracy. To obtain office supplies for All-Care […]

A copyright owner must place a or an on the work to have the work protected from copyright infringement. Statutes often prescribe the terms of contracts. Answer: T Some companies set up confidential systems for employees to “raise red flags” […]

A court adjudicates Huck mentally incompetent and appoints Inez to be his guardian. Later, without Inez’s knowledge, Huck signs a contract to sell his farm to Kyle for its real market value. The contract is a. enforceable if Huck comprehended […]

Lizzie, a clerk at a Movies Unlimited store, takes a DVD player from the store without permission. Lizzie is liable for a. appropriation. b. benefiting an employee. c. conversion. d. wrongful interference with a business relationship. Boyd is a minor. […]

The President determines the jurisdiction of the federal courts. Diversity of citizenship cases are only those arising between a foreign country and citizens of a state. Answer: F The Consumer Product Safety Commission prohibits manufacturers from marketing products that are […]

The E-Sign Act does NOT preempt the uniform version of the Uniform Electronic Transactions Act (UETA). Kasper, the owner of Lakeview Farm, and Milt, the tenant of the farmhouse on the property, may create a fixed-term tenancy by a. deed. […]

To obtain a business license, Bess writes a check to a certain state agency. Bess is a. the drawee. b. the drawer. c. the indorser. d. the payee. The payment of Eden’s debt to Flem is guaranteed by Eden’s personal […]

Suisse Internationale, a Swiss maker of athletic equipment, enters into a price fixing agreement with Total World Sports, a U.S. wholesaler of Suisse’s products. U.S. courts will apply U.S. antitrust laws if a. the agreement was made in Switzerland. b. […]

As a joke, Jem takes Kyla’s business law textbook and hides it so that Kyla cannot find it during the week before the exam. Jem may have committed a. appropriation. b. conversion. c. disparagement of property. d. trespass to personal […]

Food is one of the things that courts define as a necessary. The maximum rate of interest is same in every state. Answer: F The managers of a limited liability company must be members. Answer: F State or local law […]

James and Will enter into an oral contract on May 1 under which James agrees to deliver a collection of exotic wines by April 30 of the following year. This contract is enforceable by a. James only. b. Will only. […]

A contract between Lou and Mike requires a transfer of stolen goods for counterfeit currency. This contract is a. enforceable. b. void. c. voidable at the option of either party. d. voidable at the option of the party having less […]

A writ of execution is a writ that puts in force a court decree or judgment. An offer to form a bilateral contract is accepted only by promising to perform the contract performance. Answer: T A partner owes a partnership […]

For a will to be valid, the testator must remember the names of family and friends included in the will. A transfer of the premises for a period shorter than a lease term by either the landlord or the tenant […]

It is estimated that over 25 percent of the goods imported to the United States are counterfeit. All states require physicians to be licensed. Answer: T Norwest Trucking Corporation files a suit in a state court against Bob’s Service Company […]

When a statute protects a certain class of people, a member of that class cannot enforce an illegal contract. The term cure refers to the right of the buyer to reject, adjust, or replace nonconforming goods. Answer: F In general, […]

Draco agrees to assume Mira’s debt to NuSales Corporation. Draco does not get any personal benefit for the agreement. To be enforceable, the promise must be in writing if the debt is for a. $50. b. $500. c. $5,000. d. […]

Defense of others is a defense to an allegation of battery, but not assault. If no time for acceptance is specified in an offer, the offer terminates after a reasonable length of time. Answer: T The federal government and the […]