The payment of Johns debt to Kirsten is guaranteed by Johns personal property. Kirsten
is most likely to perfect her interest by
a. attaching a bright label to Johns property.
b. calculating the precise amount of Johns debt.
c. correcting grammatical errors in the parties written agreement.
d. filing a financing statement with the appropriate authority.
Rocco is a director of Spa Lids & Tubs, Inc. Under the standard of due care owed by di-
rectors of a corporation, Roccos decisions must be
a. unwavering and unquestionable.
b. arguable and defensible.
c. informed and reasonable.
d. perfect and unassailable.
Fay is mentally incompetent but has not been so adjudged by a court. Any contract Fay
enters into is
a. voidable if Fay has a lucid interval at the time of contracting.
b. voidable if Fay lacks the capacity to comprehend the consequences.
c. voidable if the other party does not realize that Fay is incompetent.
d. unavoidable.
Thirty-one days before filing a petition in bankruptcy, Frida transfers property and
makes payments that favor one creditor over another. These are
a. affirmation agreements.
b. preferences.
c. secured interests.
d. unsecured debts.
In the facts of the previous questions, a U.S. court might pierce Amigos and Buenos
corporate status to impose liability on their owners, including the government of Chile,
if the firms failed to follow or be involved in
a. business activities.
b. corporate formalities.
c. ethical practices.
d. foreign affairs
Residence Painting Company has a claim against Stuarts property to satisfy a debt that
takes priority over other claims against the same property. This is
a. a lien.
b. a violation of most state laws.
c. a writ of attachment.
d. a garnishment.
Elias repays his debt, incurred to buy consumer goods, to Fidelity Bank and
immediately files a written request for a termination statement. Fidelity
a. must comply within one month of receipt of the letter.
b. must comply within twenty days of receipt of the letter.
c. must refund $513 to Elias.
d. need not comply.
Fact Pattern 24-1
Mountaintop Clearview Corporation authorizes Niles, its employee, to oversee its
timber operation. In the course of his employment, Niles disposes of the operations
waste illegally. Orson is a Mountaintop shareholder.
Refer to Fact Pattern 24-1. Liability for Niless act most likely rests with Orson to
a. no extent.
b. the proportionate extent of the number of shares Orson owns.
c. the amount of Orsons investment in the firm.
d. the full extent.
Over a forty-year period, Ewa worked in a variety of jobs. She was also occasionally
unemployed, briefly hospitalized, and suffered a temporary disability. She retired last
year. The key law on all of these subjects is
a. the Consolidated Omnibus Budget Reconciliation Act.
b. the Employee Retirement Income Security Act.
c. the Federal Insurance Contributions Act.
d. the Social Security Act.
One of the requirements of a valid contract is a fair price.
For purposes of diversity of citizenship, a corporation is a citizen only of the state in
which it is incorporated.
The management of Sport Shoes Corporation, a U.S. firm, wants to expand into foreign
investment and employment markets. They are considering either opening their own
production facility in a foreign country or entering into a licensing agreement with a
foreign firm. What are the advantages and disadvantages of each of these courses of
action?
Nominal damages normally establish that the defendant acted wrongly.
Federal law permits a partnership to be treated as an entity in suits in federal courts.
Contract disputes rarely arise on a promise of future performance.
A voidable contract is a valid contract that can be avoided at the option of at least one
of the parties to it.
Most online dispute resolution services apply general, universal legal principles to
resolve disputes.
A usurious contract involves the purchase and sale of usable goods.
An employer with fewer than fifteen employees is automatically shielded from federal
employment discrimination laws.
Against a charge of a violation of the Securities Act of 1933, only an issuer of stock can
assert the due diligence defense.
A director may not sit on the board of more than one corporation at a time.
“Forward-looking financial forecasts are prohibited under SEC Rule 10b-5.
Normally, a court of law will not question the adequacy of consideration.
An express contract must be in writing.