The state of Illinois enacts a usury statute. The purpose is to
a. establish a maximum rate of interest that may be charged for loans.
b. establish a minimum rate of interest that may be charged for loans.
c. prevent the misuse of money advanced as loans.
d. prevent the misuse of money paid back on loans.
StartUp Investors, LLC, is a limited liability company without a written operating
agreement. Among the members, a dispute arises concerning the division of profits.
Under most LLC statutes, the profits will be
a. distributed according to the member’ proportionate shares of ownership in the firm.
b. divided equally among the members.
c. forfeited to the state.
d. reinvested in the business until the dispute is resolved.
Ben allows Cody to store his trailer on Ben’s property for $20 a month while Cody is
out of town on a job for Plains States Sales, his employer. The bailor is
a. Ben.
b. Cody.
c. Plains States.
d. no one.
Dreem Land Corporation and EZ Investments Company transfer their property to
Financial Managers, Inc., which manages the property and distributes the profits to
Dreem and EZ. This form of a business organization is
a. a business trust.
b. a joint stock company.
c. a joint venture.
d. a syndicate.
Larry is a shareholder for Custom Colors, Inc. If Custom Colors fails, Larry will
a. be liable for Custom Color’ debts.
b. not be liable for Custom Color’ debts.
c. be able to reclaim his initial investment in Custom Colors.
d. be able to reclaim his initial investment in Custom Colors plus damages.
Ben, who runs a livestock breeding business, owes the Circle C Ranch $40,000. Ben
agrees to pay the Circle C a percentage of his profits each month until the debt is paid.
Because of this agreement, the Circle C is
a. Ben’s creditor and partner.
b. Ben’s creditor only.
c. Ben’s partner only.
d. neither Ben’s creditor nor his partner.
Fact Pattern 27-1
Brad, Carlos, and Dora are general partners in Eastside Physicians, a medical clinic.
Refer to Fact Pattern 27-1. Brad’s dissociation from the firm results in
a. the automatic termination of the firm’s legal existence.
b. the partnership’s buyout of Brad’s interest in the firm.
c. the immediate maturity of all partnership debts.
d. the temporary suspension of the partnership’s business.
In the following situations, two parties claim the same goods. Who is most likely to
prevail in each circumstance? Explain.
(a) Olan steals Phil’s television set and sells it to Quincy, an innocent purchaser, for
value. Phil learns Quincy has the set and demands its return.
(b) Riley takes his television set for repair to Slick, a merchant who sells new and used
television sets. By accident, one of Slick’s employees sells the set to Tuna, an innocent
purchaser-customer, who takes possession. Riley wants his set back from Tuna.
Fact Pattern 26-1
Jumbo Juice Inc. offers entrepreneurs the opportunity to operate a franchise under the
Jumbo Juice trade name as a member of a select group of dealers that engage in retail
juice sales.
Refer to Fact Pattern 26-1. Jumbo Juice makes earnings claims to potential investors.
For those claims, the franchisor must have
a. a hypothetical basis.
b. a reasonable basis.
c. an actual basis.
d. no basis.
Fresh Fast Service, Inc., offers to deliver produce to Grower’ Market’s customers for a
certain price. Fresh’s intent to extend a serious offer to Grower’ Market is determined by
reference to
a. Fresh’s assumptions.
b. Fresh’s beliefs.
c. Fresh’s intentions.
d. what a reasonable person in Grower’ position would conclude Fresh’s words and
actions meant.
The Employee Polygraph Protection Act of 1988 prohibits most private 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 lie-detector tests taken
by employees or applicants.
c. taking or threatening negative employment-related action against employees or
applicants based on results of lie-detector tests.
d. using lie-detector tests to investigate losses due to theft.
Lucille, an accountant, is subject to the accounting conventions, rules, and procedures
that constitute generally accepted accounting principles (GAAP). GAAP are determined
by
a. the International Accounting Standards Board.
b. the American Bar Association.
c. the American Institute of Certified Public Accountants.
d. the Financial Accounting Standards Board.
Solar Power, Inc., files a suit against Thunder Bay Utility Company and seeks to
examine electronic documents in Thunder’s possession. A legitimate reason for this
examination is that the documents contain
a. evidence about the case.
b. private information about Thunder’s operations.
c. public information about energy generation.
d. irrelevant data that can be eliminated from consideration.
Ruff Games, Inc., wishes to acquire a controlling interest in Smart Toy Company by
buying its stock. Smart Toy is
a. an alien corporation.
b. an acquiring corporation.
c. a receiver.
d. a target corporation.
Smalltown, Alabama is incorporated by the government. Smalltown is
a. a foreign corporation.
b. a public corporation.
c. a private corporation.
d. an alien corporation.
Clerical Workers Union represents the employees of Miracle Medical Research
Company. The management of the firm refuses to bargain with the union over the hiring
of unnecessary workers. This violates
a. federal labor law.
b. state right-to-work laws.
c. federal employment discrimination law.
d. no federal or state law.
Myles obtains a property insurance policy from Nova Insurance Company for Myles’s
restored 1957 Chevy. Nova can cancel the policy
a. if Myles increases the risk assumed by the Nova.
b. if Myles files a claim under the policy.
c. if Myles appears as a witness in a case brought against Nova.
d. under no circumstances.
Jon says to Kristy, “I would like to sell you my sports memorabilia collection.” This is
not an offer because it
a. does not describe the subject matter sufficiently.
b. does not include a price term.
c. only expresses an opinion.
d. only invites Kristy to negotiate.
Crater Tools Company is subject to regulations issued by the Occupational Safety and
Health Administration (OSHA). Like other federal administrative agencies, the OSHA
was created by
a. Congress, through enabling legislation.
b. the Federal Trade Commission, through the rulemaking process.
c. the president, through an executive order.
d. the U.S. Department of Labor, through a final order.
Robert uses the Internet to defraud Prairie Valley Credit Union. He is found guilty of
wire fraud. He can be punished by
a. imprisonment for not more than one year.
b. imprisonment for up to thirty years and fines of up to $1 million.
c. fines for not more than $50,000.
d. death.
California enacts a statute to ban advertising in “bad taste.” This statute would likely be
held by a court to be
a. an unconstitutional restriction of speech.
b. constitutional under the First Amendment.
c. justified by the need to protect individual rights.
d. necessary to protect national interests.
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 contract unless
a. the terms materially alter the original contract.
b. the original offer expressly required acceptance of its terms.
c. the offeror objects to the new terms within a reasonable time.
d. any of the choices.
Julia orders twelve violins for her music shop from Notable Notes Instrument
Manufacturers. The sale is made on credit. Julia orders the violins on May 1, Notable
Notes ships the violins on May 2, and Julia receives the violins on May 4. Julia sells all
the violins by June 15. Julia’s credit period most likely began on
a. May 1.
b. May 2.
c. May
d. June 15.
Finn and Glenda want to form and do business as Hobby Crafts Corporation. A
corporation is
a. a natural person.
b. a tangible thing.
c. an artificial legal person.
d. a visible radiance.
Phyllis intentionally injures herself while performing her job for Stone Cutters, Inc.
Phyllis will be entitled to
a. full worker’ compensations.
b. half of the normal worker’ compensation.
c. 10 percent of the normal worker’ compensation.
d. no worker’ compensation.
Leatherbound Stores, Inc., rejects a shipment of goods that does not conform to its
contract with Cowhide Corporation, but is unable to obtain instructions from the seller.
Leatherbound may
a. resell or return the goods only.
b. resell or store the goods only.
c. return or store the goods only.
d. resell, return, or store the goods.
Bren leases an apartment from Cris for one year. After two months, she sublets the
premises for the next six months to Dee, without obtaining Cris’s consent. Dee pays the
rent for only four months. For the last two months of Dee’s six-month term, Bren is
a. liable for the rent, because Dee defaulted.
b. liable for the rent, because the sublease lacked Cris’s consent.
c. not liable for the rent, because Bren does not own the apartment.
d. not liable for the rent, because Bren sublet the premises to Dee.
Glen falsely accuses Hu of stealing from Island Tours, Inc., their employer. Glen’s
statement is NOT defamatory if
a. only Hu hears it.
b. a third party hears it.
c. the statement is published.
d. the statement is a lie.
Wendy works as a weather announcer for a TV station under the character name
Weather Wendy. Wendy can register her name as a
a. a certification mark.
b. a collective mark.
c. a service mark.
d. a trade name.
Nero and Olav each buy certain quantities of oil to sell to Petro Refinery, and agree to
share storage costs until Petro can take delivery. The oil is commingled so that Nero’s
oil cannot be distinguished from Olav’s. This is
a. accession.
b. confusion.
c. conversion.
d. irresolution.
A deficiency judgment requires a borrower to pay the amount of debt remaining after
the collateral is sold.
A financing statement must include a description of the collateral by type or item.
An easement arises when the owner of one piece of land occupies the real property of a
neighbor and eventually acquires title to it.
Generally, stock offerings that are made in a limited manner during any twelve-month
period are exempt from the registration requirement.
A check, like other negotiable instruments, is a formal contract.
Congress creates an administrative agency by enacting enabling legislation.
There are no plans to develop national standards regulating the fuel economy and
emissions for medium- and heavy-duty trucks.
The courts have considerably scaled back the Clean Water Act’s protection of wetlands.
Tender must occur at a reasonable hour and in a reasonable manner.
There is one set of procedural rules for federal courts and one set for state courts.
The simplest way for a U.S. firm to do business in a foreign market is to export its
products directly to that market.
Under the UCC, if a contract does not designate the place of delivery for the goods,
then the goods must be made available at a location halfway between the seller’s and the
buyer’s places of business.
A minor may enter into a contract for the sale of alcoholic beverages if the other
contractual party is an adult.
The purpose of a corporation may be specified in its articles of incorporation.
Primary liability is unconditional.
The majority rule controls decisions on ordinary matters connected with partnership
business.
An employee can usually recover worker’ compensation for injuries occurring on the
commute to and from work.
According to utilitarianism, it matters how many people suffer a negative effect from an
act.