Price and Quint are starting a small machine shopRiverside Boat Repairand are
considering whether to organize the business as a limited liability partnership. This
form
a. does not limit its owners personal liability for business debts.
b. limits its owners personal liability for business obligations.
c. obviates the need to obtain insurance for business liability risks.
d. requires three partners to accept liability for potential risks.
Ben allows Cody to store his trailer on Bens property for $20 a month while Cody is out
of town. Later, Ben notices rainwater collecting in the trailer and covers it with a tarp at
a cost of $40. This cost is most likely borne by
a. Ben and Cody.
b. Ben only.
c. Cody only.
d. neither Ben nor Cody.
Quantum Financial Corporation is a secured party with a security interest in property
owned by Revolving Sales Company. Perfection of this security interest may not protect
Quantum against the claim of
a. a bank.
b. a buyer in the ordinary course of business.
c. a subsequent lien creditor.
d. a trustee in bankruptcy.
Furniture Depot sells Gail a bedroom suite on credit. Gail fails to make the scheduled
payments for six months. Furniture Depot sends her a letter, asking for immediate
payment. This is a violation of
a. no federal law.
b. the Fair and Accurate Credit Transactions Act.
c. the Fair Debt Collection Practices Act.
d. the Truth-in-Lending Act.
Beta Grocers orders by phone twenty cartons of canned beets from Carotene Food
Packers, Inc. After ten cartons are delivered and accepted, Beta repudiates the contract.
Carotene can enforce the contract to
a. any extent because the order was placed orally.
b. no extent because the order was placed orally.
c. the extent of the ten accepted cartons.
d. the extent of the twenty ordered cartons.
Bess runs Creditors Asset Recovery. She recruits clients by misrepresenting the facts
and pretending to be licensed in various occupations in Michigan. Besss conduct most
likely warrants
a. an ethical admonishment but no other sanctions.
b. an injunction plus other sanctions.
c. no sanctions but no praise.
d. praise for her aggression in recovering the assets of “deadbeat debtors.
New Discoveries Corporation, and its officers, directors, and shareholders, buy and sell
securities. Section 10(b) of the Securities Exchange Act of 1934 applies to
a. only the purchase or sale of a security by an investment company.
b. only the purchase or sale of a security involving short-swing profits.
c. only the purchase or sale of a security involving a tipper and tippee.
d. the purchase or sale of any security.
The Securities Exchange Commission is an administrative agency. The chief purpose of
such agencies is to
a. act as liaisons between federal and state governments.
b. impose uniform laws on the states.
c. perform specific government functions.
d. standardize laws for the executive and judicial branches.
Pinpoint Marketing, Inc. (PMI), a credit-reporting agency, sells data about consumers to
merchants and others. Consumers have some recourse if PMI
a. realizes a profit from the sales.
b. sells data about consumers who request to be “blacklisted.
c. does not report the data accurately.
d. does not tell consumers when the data is sold.
Nouri is declared mentally incompetent. Omar, Nouris friend, insists that she transfers
her assets to him “for safekeeping. A court might conclude that this gift is not effective
on the ground that there was no
a. acceptance.
b. delivery.
c. donative intent.
d. relinquishment of control.
Jock makes a will. As a person who makes a will, Jock is
a. an administrator.
b. an executor.
c. a settlor.
d. a testator.
Fact Pattern 39-1A
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 39-1A. With respect to Mountaintop and Niles, liability for this
crime most likely rests with
a. neither Mountaintop nor Niles.
b. Mountaintop and Niles.
c. Mountaintop only.
d. Niles only.
Health Resources Corporation makes and sells Intake, the most prescribed name-brand
cholesterol-lowering medication. Jenerica Company has the potential to make a generic
version of the same drug. Health Resources pays Jenerica not to sell its product. This is
a. a customer restriction.
b. a joint venture.
c. an exclusive-dealing contract.
d. a price-fixing agreement.
Sports Fit Company sponsors the “$100,000 Game in which contestants compete in ten
separate athletic events over a period of weeks. Sports Fit announces that the winner of
each event will be awarded $5,000 with the “Ultimate Championthe winner of the most
eventsawarded $50,000. If the “$100,000 Game is treated as a unilateral contract,
Sports Fit can
a. cancel the contest or alter its terms at any time.
b. not modify the terms of the contest after it begins.
c. reduce the amount of the event prizes but not the grand prize.
d. reduce the amount of the grand prize but not the event prizes.
Fact Pattern 17-B2
Bell Medical Education Service enters into a contract to employ Chris as an instructor
for two years to begin May 1. One month before the term begins, Bell is underbid by a
competitor and loses a major client, Delta Hospital Center. Bell now refuses to hire
Chris.
Under the circumstances, with respect to damages, Chris can
a. bring an action immediately.
b. bring an action only after the contracts two-year term begins.
c. bring an action only after the contracts two-year term ends.
d. do nothing.
Home Development Company employs llya to buy property for a future residential
development. Ilya secretly buys some of the property and sells it to Home Development
at a profit. Ilya has breached
a. no duty.
b. the duty of accounting.
c. the duty of loyalty.
d. the duty of notification.
Lew believes an old comic book he owns has little value, but Murray is convinced it is
a valuable collectors item. Lew sells it to Murray for $10 before learning it is worth
$1,000. Lew can
a. not rescind the contract.
b. rescind the contract on the basis of fraud.
c. rescind the contract on the basis of mistake.
d. rescind the contract on the basis of puffery.
Sea Locate, Inc., makes and sells marine navigation equipment, through independent
salespersons, to retailers for resale to consumers. The Magnuson-Moss Warranty Act
covers
a. implied warranties, oral statements, and written promises.
b. only implied warranties that consumers are aware of.
c. only a salespersons oral statements.
d. only a sellers written promises.
Bette backs out of City Parking Garage, colliding with Dills car. Dill may recover
$7,500 to cover the cost of the repairs if Bette failed to act as
a. a blameless person.
b a faultless person.
c. a reliable person.
d. a reasonable person.
Audio Science Companys agent Bailey is authorized to draw checks on Audio Sciences
account in Citizen Bank. The checks are preprinted with the company name. Bailey
writes a check “pay to the order of Darlene [signed] Bailey. Darlene presents the check
for payment. If Citizen Bank dishonors it, liability extends to
a. no one.
b. Audio Science and Bailey.
c. Audio Science only.
d. Bailey only.
Laurel defaults on a loan owed to Maverick Bank. As a creditor, Maverick may attempt
to place liens on all of Laurels property except
a. motor vehicles used to commute to work.
b. stock in various corporations.
c. items that Laurel selects.
d. vacant commercial property.
Fact Pattern 25-A1
Rollo obtains a check payable to his order from Simone. Rollo signs the back and gives
the check to Trey. Trey writes “Pay to Trey above Rollos signature.
Refer to Fact Pattern 25-1. After Trey writes “Pay to Trey above Rollos signature,
further negotiation of the check
a. requires Rollos re-indorsement and delivery.
b. requires delivery alone.
c. requires Treys indorsement and delivery.
d. is not possible.
Fact Pattern 2-A1
Java Cafes, Inc., and Kaffe Import Corporation dispute a term in their contract. Refer to
Fact Pattern 2- The least expensive method to resolve the dispute between Java and
Kaffe may be
a. arbitration because the case will be heard by a mini-jury.
b. litigation because each party will pay its own legal fees.
c. mediation because the dispute will be resolved by a non-expert.
d. negotiation because no third parties are needed.
From a computer in a distant location, Sergio searches Tias personal computer without
her permission. Sergio is most likely liable for
a. appropriation.
b. conversion.
c. invasion of privacy.
d. no tort.
Rugged Boats, Inc., and Whitewater Rafting enter into a contract for a sale of six
custom-made rubber rafts. Whitewater pays for the goods, but Rugged does not deliver.
Whitewater can use replevin as a remedy if
a. Rugged is lawfully withholding the goods.
b. Whitewater cannot effectively cure the defect.
c. Whitewater is unable to cover for the goods.
d. the goods have not been identified to the contract.
Fact Pattern 14-A3
Flip, an accountant, certifies an audit for Erstwhile Corporation, Flips client, knowing
that Erstwhile will use the audit to obtain a loan from Deepwater Bank. Flip believes
that the audit is true and does not intend to deceive the bank, but does not check the
audit before certifying it.
Under these circumstances, Deepwaters best course of action is most likely to
a. exert economic duress on Flip to retire from accounting.
b. rescind the loan on the ground of unconscionability.
c. recover damages from Flip for any loss on the loan.
d. undercut Flips career with negative puffery.
Ludwig receives from Milo a marimba stolen from Nadine. To be criminally liable,
Ludwig must know
a. Milo.
b. Nadine.
c. the marimba is stolen.
d. what a marimba is.
Kelly, Lars, and Mona agree to be partners in Neighborhood Delivery Service (NDS),
splitting the profits equally. Kelly contributes 67 percent of the capital. When NDS is
dissolved, its liabilities are greater than its assets. The losses are paid by
a. all of the partners in proportion to their capital contributions.
b. all of the partners in proportion to their shares of the profits.
c. Kelly because she contributed most of the capital.
d. Lars and Mona because they contributed the least of the capital.
Fact Pattern 31-1A
24-Hour Credit Corporation issues high-cost and high-fee mortgage products to people,
including Benny, who could not easily obtain credit under other loan programs.
Refer to Fact Pattern 31-1A. 24-Hour Credit assigns Bennys loan to Consolidated
Mortgage Investment Corporation. For most purposes, Consolidated
a. acquires the status of a holder in due course (HDC).
b. has more protection than a mortgage assignee but less than an HDC.
c. is exempt from federal law with respect to mortgages.
d. is subject to claims that Benny could assert against 24-Hour Credit.
Straitedge Toolmakers, Inc., contracts to sell its assets to Trulevel Hardware Corpo-
ration. Before either party has performed, rescission of this contract requires
a. a mutual agreement to rescind.
b. an accord and satisfaction.
c. a novation.
d. commercial impracticability.
Donna makes and distributes copies of Every Good Boy Does Fine, a movie
copyrighted by Great Films Corporation, without Great Films permission. Donna may
be liable for
a. damages, fines, or imprisonment.
b. damages only.
c. fines or imprisonment only.
d. nothing.
Beck draws a check payable to “County Farm Supply to buy a quantity of fertilizer to
deposit in Becks field. This check is
a. a certificate of deposit.
b. a draft.
c. a promise to pay.
d. a promissory note.
If the meaning of a statutes language is unclear and an agency interprets it, a court must
overturn the interpretation.
During a storm on Blue Lake, a boat sinks, but its owner Cappy survives. Cappy plans
to return to the site of wreck to salvage its equipment and his possessions, but he
delays. Meanwhile, Dick, an amateur diver, discovers the wreck and strips it clean of
useful items. Cappy learns of the recovery and files a suit against Dick, claiming that
the items are his. Dick responds that the sunken boat was abandoned and therefore he
has good title to whatever he took possession of. What is the court likely to rule, and
why?
A statement in an instrument that payment can be made only out of a particular fund or
source renders it nonnegotiable.
Most online dispute resolution services apply general, universal legal principles to
resolve disputes.
Competitive behavior is wrongful interference if it results in the breaking of a contract.
The majority rule controls decisions on ordinary matters connected with partnership
business.
Under current law, an employer must adopt an affirmative action plan.
The act of state doctrine provides that only a head of state can make treaties with an-
other nation.
General Equity Corporation enters into a contract with Honi, who agrees to create
artwork for Generals main office building. Honi delays and eventually refuses to
perform. Meanwhile, General contracts to sell the building to Ideal Investments, Inc.,
but before the transaction is complete, Jewel Funds Company offers to pay a higher
price. General refuses to transfer the building to Ideal. In separate suits by General
against Honi and by Ideal against General, each plaintiff seeks specific performance.
How might the court rule in each case, and why?
Law enforcement officials can track the e-mail communications of one party to find out
the identities of other parties.
Labels must use words that are easily understood by the ordinary marketing executive.
When a seller keeps the goods for pickup, if the seller is not a merchant, the risk of loss
passes to a buyer on tender of delivery.
Generally, an attorney is not liable to a nonclient unless the attorney has committed
fraud.
A motion for a directed verdict is also known as a motion for judgment as a matter of
law.
International law attempts to reconcile the authority of each nation over its own affairs
with its desire to benefit from trade and harmonious relations.
Bylaws can conflict with the incorporation statute or the articles of incorporation.
A debtor need not be insolvent to file for bankruptcy relief.
In a general partnership, all partners have equal rights in managing the partnership.