Ruppart Manufacturing has a contract for the sale of 100 cases of teaching supplies to
Teachers Co-op, Inc. Payment of the order is to be made in installments over the next
year. Ruppart Manufacturing keeps a security interest in the cases sold to assure
payment by Teachers Co-op, Inc. When the order is completed, Ruppart ships the order.
Legally:
a. both Ruppart and Teachers have an insurable interest in the supplies.
b. only Ruppart has an insurable interest in the supplies.
c. only Teachers has an insurable interest in the supplies.
d. neither Ruppart nor Teachers has an insurable interest in the supplies.
Which one of the following warranties arises in a sale of goods?
a. Implied warranty of title.
b. Warranty against adverse possession.
c. Implied warranty of quiet enjoyment.
d. All of the above arise in a sale of goods.
An employer may be liable for an employees sexual harassment if
a. The supervisor scheduled the plaintiff and defendant to work together.
b. The defendant showed signs of being distraught over the harassment.
c. The plaintiff suffered a “tangible employment action such as firing or demotion.
d. Any of the above.
Ned sold his refrigerator to his next door neighbor, Ian. Ned fails to tell Ian he has not
finished paying for the refrigerator and Neighborhood Bank has a lien on it.
a. Ned has breached the warranty against infringement.
b. Ned has breached the warranty of title.
c. Ned has breached the warranty of merchantability.
d. Ned has not breached any warranties because he did not guarantee that the
refrigerator was free and clear of security liens.
Which of the following elements is not necessary to apply the doctrine of res ipsa
loquitur?
a. An ultra-hazardous activity is involved.
b. The defendant had exclusive control of the thing that caused the harm.
c. The harm would normally not have occurred without negligence.
d. The plaintiff had no role in causing the harm.
Congress passed a law imposing penalties for displaying “indecent” material online
where children could see it. If the U.S. Supreme Court subsequently rules that the
statute conflicts with the First Amendment of the U.S. Constitution, the statute is void.
a. True
b. False
A marketing representative who is tempted to engage in price-fixing due to heavy
competition and similar prices for competitors’ products should:
a. emphasize factors of her product that do not involve price.
b. emphasize service, reliability, and other factors of her company.
c. understand the serious criminal and civil penalties of engaging in price-fixing.
d. All the above.
The UCC looks solely upon “title” to determine ownership in goods.
a. True
b. False
Renita, a merchant, has received a signed, written confirmation from Merchants, Inc.
referring to goods she had not ordered. Renita should:
a. ignore the confirmation.
b. call the seller and object to the confirmation as soon as she gets back from her
two-week vacation.
c. object to the confirmation in writing within 10 days.
d. return the goods within two weeks of their delivery with a note attached saying she
will not pay for the goods.
Howson won a lawsuit against Hardwick for intentionally inflicting emotional distress.
The jury awarded Howson $500,000 in compensatory damages. It also awarded
Howson $4 million in punitive damages because Hardwick was quite wealthy and the
jury thought a large amount was necessary for Hardwick to feel the punishing effects of
the judgment. How does the jurys award fit into the guidelines offered by the U.S.
Supreme Court?
a. The punitive award is excessive because it exceeds the Supreme Courts suggested
ratio of compensatory damages to punitive damages.
b. The punitive award is excessive because the Supreme Court has stated that the trial
court may not use the defendants wealth as an excuse to award an unreasonably high
award.
c. The punitive award is excessive both because of the ratio of compensatory damages
to punitive damages and because the punitive damage award was based partly on the
defendants wealth.
d. The jury award is not excessive based on the Supreme Courts guidelines.
Which statement is correct concerning judicial review of an administrative agency’s
action?
a. Courts usually accept the facts of the case as determined by the agency and often
defer to the agency’s interpretation of the law.
b. Courts conduct a de novo review of the case.
c. Courts ignore the facts of the case.
d. Courts substitute their opinion for that of the agency.
Grace signed a check in the lower right-hand corner and Hannah signed on the back.
The presumption is that:
a. Grace is the issuer.
b. Grace is the acceptor.
c. Hannah is the drawer.
d. Hannah is the maker and Grace is an indorser.
Even though a car has an obvious dent in the rear quarter panel, the salesperson tells a
potential customer, “This car has never been in an accident. The salespersons statement
creates a valid express warranty.
a. True
b. False
Generally, the assignment of the obligation to perform personal services is valid, as
long as the services are equivalent in value.
a. True
b. False
Which of the following is NOT one of the four focused steps in reading a contract?
a. Pre-reading.
b. The first read.
c. Re-write with a lawyer.
d. The second read.
Larry goes to his barber who has cut his hair for the past several years. The barber
proceeds to cut his hair as they talk about the most recent snow storm to hit the area.
This is an example of a:
a. unilateral, implied contract.
b. bilateral, implied contract.
c. unilateral, express contract.
d. bilateral, express contract.
Turtle World orders 200 small sea turtles from Reptile World. After the sea turtles had
been identified to the contract but before the risk of loss had passed to Turtle World, the
turtles were released into the ocean by a militant animal rights group who broke into
Reptile World to set the animals free. Under this scenario:
a. Turtle World cannot successfully sue because the contract is void.
b. Turtle World can cover, then win a judgment against Reptile World for the difference
between the contract price and the cover price, plus incidental and consequential
damages, minus expenses saved.
c. Turtle World can successfully sue for specific performance because sea turtles are
everywhere.
d. Turtle World is entitled to a judgment for compensatory damages, but not
consequential damages.
One reason you may not need a written contract is:
a. you are dealing with a party you do not know well, so you need to remain flexible.
b. you are buying land from a member of your family.
c. the terms of the agreement are simple and the value of the transaction is small.
d. you have negotiated enough that you both know what the other person intends.
Leonna orders five table settings of china from Elite China. Each set includes a dinner
plate, cup & saucer, bowl, and dessert plate. The china is sold only in sets. When the
delivery arrives, Leonna discovers that Elite China sent the wrong pattern. Leonna
immediately calls Elite China and is instructed to send the shipment back. While
repacking the shipment, Leonna changes her mind and decides to keep the cups and
saucers. She returns everything else. Can she do this?
MoneyMaker Toy Company violated the safety standards set forth by the Consumer
Product Safety Commission when it produced a toy gun that caused injury to hundreds
of children. Because of MoneyMakers actions:
a. the CPSC can impose civil penalties on the company.
b. the CPSC can impose criminal penalties on the company.
c. users can sue for damages, including attorneys fees, if MoneyMaker knew it was
violating a consumer product safety rule when it produced the guns.
d. All of the answers are correct.
If in 1900 the Minnesota Supreme Court ruled that a minor can void a contract at any
time during minority and in 2008 the courts in Minnesota still follow this ruling, this is
an example of:
a. stare decisis.
b. the bystander rule.
c. statutory law.
d. enabling legislation.
Wedney, Inc. has a purchase money security interest in one of Yoro Chicken’s meat
processing machines. Wedney filed a financing statement on the day the machine was
delivered, perfecting its interest. Great State Bank already had a security interest in the
machine. Which party has superior priority rights in the meat processing machine?
a. Wedney. A PMSI in collateral other than inventory takes priority over a conflicting
security interest if the PMSI is perfected at the time the debtor receives the collateral or
within 20 days after he receives it.
b. Great State Bank, since it had an earlier security interest.
c. The party who is first to repossess the collateral.
d. The creditors have equal priority.
Hill Computers is a retailer, which buys its inventory from Acme Co. on credit, giving
Acme a security interest in the inventory. Hubert buys a computer from Hill in the
normal course of business. Hubert’s title in the computer is:
a. a good title.
b. a voidable title.
c. Hubert has no title in the computer. Title does not pass to Hill and therefore to Hubert
until Hill pays its debt in full to Acme.
d. Hubert has good title that is subject to Acme’s security interest.
Wright Company contracted with the city of St. Louis to train and employ
disadvantaged youths. If Wright fails to fulfill the contract and is sued by one of the
disadvantaged youths, the youth would:
a. win, as he is an intended beneficiary.
b. win, as he is a donor beneficiary.
c. lose, as he is a creditor beneficiary.
d. lose, as he is an incidental beneficiary.
In 1992, the North Carolina Supreme Court ruled in a case entitled Goodman v. Wenco
Foods, Inc., that when a substance in food causes injury to a consumer of the food, it is
not a bar to recovery against the seller that the substance was natural to the food. If, in a
2008 case involving a consumers injury caused by a fish bone in a bowl of fish
chowder, the court followed the decision in Goodman v. Wenco Foods, Inc., the court’s
action in the second case is an example of:
a. stare decisis.
b. statutory law.
c. public law.
d. criminal law.
Administrative agencies exist at the federal, state, and local levels.
a. True
b. False
Which of the following would be a breach of the implied warranty of merchantability?
a. A knife that cuts its user when slicing a bagel.
b. A radio that does not pick up FM signals.
c. A match that burns a spot in the carpet when accidentally dropped.
d. A watch that does not keep accurate time after getting wet.
The primary purpose of RICO was:
a. to be a tool against organized crime.
b. to raise revenue.
c. to prosecute non-citizens.
d. to prosecute those engaged in tax fraud.
The UCC deals with unconscionability in a contract by providing that a court may:
a. refuse to enforce the contract.
b. enforce the remainder of the contract without the unconscionable clause.
c. limit the application of any unconscionable clause as to avoid any unconscionable
result.
d. All of the above.
Sid burned his own warehouse in an attempt to collect on a fire insurance policy. Sid
has committed:
a. arson.
b. larceny since he committed an act intended to wrongfully obtain money from his
insurance company.
c. a crime called “burning to defraud insurers” since the crime of arson only applies to
property owned by another person.
d. an intentional tort, but not a crime since a person has a right to destroy his own
property.