Jane and Phil enter into a contract, but make a bilateral mistake. For the contract to be
rescinded by either party, the bilateral mistake must be about
a. a material fact.
b. value.
c. an opinion.
d. a prediction.
Jack’s Pet Houses, Inc. sells shelters for animals under “limited” warranties. Under the
Magnuson-Moss Warranty Act, this means that the warranties on shelters from Jack’s
Pet Houses
a. do not meet one of the requirements of a full warranty.
b. are only good for one year.
c. are illegal.
d. are oral.
Jessica’s Jumpin Jelly Beans, LLC, is a limited liability company. Unless indicated
otherwise on Jessica’s federal tax form, the firm will be taxed as
a. a cooperative.
b. a corporation.
c. a joint venture.
d. a partnership.
Quin, an accountant, prepares for Reddy, Inc., a financial statement that omits a
material fact. The statement is included in Reddy’s registration statement with the
Securities and Exchange Commission. Timor, who reads the statement, and Ubi, who
does not, each buy Reddy stock. Velma reads the statement but does not buy the stock.
Under Section 11 of the Securities Act of 1933, Quin may be liable to
a. no one.
b. Timor and Ubi.
c. Timor, Ubi, and Velma.
d. Ubi only.
Olive Grove Enterprises, Inc., completes its registration process and issues a
free-writing prospectus. This tells prospective investors
a. about investing freely.
b. how to write their own prospectus.
c. that they can “freely write their own ticket” to buy Olive’s securities.
d. that they may obtain the prospectus at the SEC’s Web site.
Bright Brew Coffee, Inc., processes and sells a variety of coffee products. Bright Brew’s
product packages must include
a. the identity of the company owner.
b. the net quantity of the contents.
c. the restaurants and stores in which the product is sold.
d. the type of consumer most likely interested in the product.
Rafaela Art Gallery and Sequoia Exhibitions form a joint venture. When a dispute
arises, Rafaela files a suit against Sequoia. The court is most likely to apply the same
principles to this joint venture as it applies to
a. business trusts.
b. cooperatives.
c. corporations.
d. partnerships.
Hailey, a lawyer on the staff of International Group, always considers the consequences
of an action rather than the nature of the action itself when making ethical decisions in a
business context. Hailey is applying
a. the utilitarian theory of ethics in business contexts.
b. religious beliefs in business contexts.
c. Kantian ethics in business contexts.
d. the principle of rights theory of ethics in business contexts.
Corbin, a partner in Doctors Medical Clinic, applies for a loan with Evermore Bank
allegedly on Doctor’ behalf but without the authorization of the other partners.
Evermore knows that Corbin is not authorized to take out the loan. Corbin defaults on
the loan. Liability for its unpaid amount is imposed on
a. Corbin and Doctors, jointly.
b. Corbin only.
c. Doctors only.
d. Evermore only.
New Apps Company develops “Browser Lite” software, which speeds the display of
graphics on Web sites. Browser “Lite” has the most copyright protection under
a. the Berne Convention.
b. the Paris Convention
c. the TRIPS Agreement.
d. the Madrid Protocol.
Agnes borrows $110,000 from Bay Harbor Bank to buy a home under a mortgage with
an acceleration clause. After eighteen payments, Agnes stops making payments on the
mortgage. Bay Harbor
a. can foreclose once on the entire amount of the loan.
b. may seek only the amount of the missed payments, not the entire loan.
c. must foreclose on small amounts over time as each payment comes due.
d must notify Agnes to accelerate the steps to cure the default.
Mall Stores Corporation owns 95 percent of the shares of Niche Retail Corporation.
Mall Stores combines with Niche Retail, but only Mall Stores continues to exist. This
transaction was
a. a consolidation.
b. a tender offer.
c. a short-form merger.
d. a termination.
Julie works as an employee for Organic Produce Express, Inc. (OPI). Rowan, who is
unemployed, collects unemployment compensation. This compensation is provided by a
tax on
a. Julie and other employees.
b. Julie, OPI, and other employees and employers.
c. OPI and other employers.
d. not Julie, OPI, or other employees or employers.
Fred’s Paper Shop frequently buys paper from Online Office Supplies, Inc. Online
Office Supplies and Fred’s Paper Shop decide to enter into a partnering agreement. One
of the advantages of entering into a partnering agreement is that
a. the costs of all transactions will be reduced.
b. the likelihood that disputes will arise under their contract is reduced.
c. neither party will be able to file suit for breach of contract.
d. Fred’s Paper Shop will not be able to file suit for breach of contract.
Leonardo contracts to install automatic watering troughs in Kendall’s dairy barn.
Leonardo then becomes seriously ill and contracts with Jake to install the troughs. Jake
is unreliable and never shows up to install the troughs. Kendall can sue
a. no one.
b. Jake only.
c. Leonardo only.
d. Jake or Leonardo.
Tristan hires Stefani to perform at Tristan’s Club, but she breaches the agreement to
accept a higher-paying job at Rock Star Arena. Tristan files a suit against her. The court
will most likely
a. award damages to Tristan.
b. cancel Stefani and Rock Star’s contract.
c. order Stefani to perform the contract.
d. reform Tristan and Stefani’s contract.
The payment of Paul’s debt to Ryan is guaranteed by Paul’s 2002 Honda Civic. Ryan
filed the financing statement on July 1, 2012. If Ryan does nothing else, the financing
statement will be effective until
a. July 1, 2013.
b. July 1, 2014.
c. July 1, 2017.
d. July 1, 2022.
Beth and Celia are involved in an action. The best definition of an action is
a. a criminal prosecution, not a civil proceeding.
b. a failure to perform a legal obligation.
c. a judicial proceeding for the resolution of a dispute.
d. a way to raise capital so that a business can grow.
Fact Pattern 21-1
Mary’s home is in a state that has a $30,000 homestead exemption. Mary defaults on a
$60,000 debt that she owes to Nina. Mary’s home is sold at auction for $80,000.
Refer to Fact Pattern 21-1. If Nina recovers less than she is owed, she can realize the
difference from
a. any property that Mary owns.
b. only exempt property that Mary owns.
c. only nonexempt property that Mary owns.
d. property that any other member of Mary’s family owns.
A court may rule contrary to a precedent if the court decides that the precedent
a. is incorrect or inapplicable.
b. is not in line with the judge’s personal values.
c. would lead to unintended consequences.
d. would not bring about the result the judge prefers.
Julia is a U.S. citizen. She establishes a website that posts threatening messages about
celebrities. Her website is
a. protected by the First Amendment.
b. not protected by the First Amendment.
c. protected by the Fifth Amendment.
d. protected by the Tenth Amendment.
Mae is granted immunity after she agrees to testify about a crime. Mae has an absolute
privilege against self-incrimination and
a. can be prosecuted only for a crime about which she agreed to testify.
b. cannot be prosecuted for any crime.
c. cannot refuse to testify on Fifth Amendment grounds.
d. can refuse to testify on Fifth Amendment grounds.
To drive its competitors out of a certain geographic segment of its market, Fryin
Potatoes, Inc., sets the prices of its products below cost for the buyers in that area. This
is
a. a refusal to deal.
b. business acumen.
c. predatory bidding.
d. price discrimination.
Metallic Metals, Inc., a U.S. firm, files a suit against a Venezuela government agency.
The agency has committed a tort in the United States. Under the Foreign Sovereign
Immunities Act
a. the Venezuelan government agency is not immune from the jurisdiction of the U.S.
courts.
b. the Venezuelan government agency is immune from the jurisdiction of the U.S.
courts.
c. Metallic Metals cannot bring a suit against the Venezuelan agency.
d. Metallic Metals must file suit in Venezuela.
In making decisions for Smartt Investments, Rita uses a cost-benefit analysis. This is a
part of
a. duty-based ethics.
b. Kantian ethics.
c. rights-based ethics.
d. utilitarian ethics.
Manuel is walking past Thomas’s house when he hears a smoke alarm going off. He
also hears a child calling for help and sees smoke coming from a window. Manuel
rushes into Thomas’s house, finds the child and brings it outside. If Thomas sues
Manuel for trespass to land, Manuel’s defense will probably be
a. assisting someone in danger.
b. consent.
c. self-defense.
d. the reasonable person defense.
Etta is a director of Trendy Stuff Corporation. Without informing Trendy, Etta goes into
business with GR8 Things, Inc., in competition with Trendy. Etta is liable for breach of
a. no duty or rule
b. the business judgment rule.
c. the duty of care.
d. the duty of loyalty.
A franchise agreement between Simple Software Company and Total Game, Inc., is
silent on a time for termination of the franchise. Simple may
a. never terminate.
b. terminate at any time.
c. terminate on reasonable notice.
d. terminate on three days notice.
Chloe files a suit against Digital Associates, Inc. (DAI), to enforce a contract. The only
written evidence of the contract is a memo on DAI’s letterhead as signed by a DAI
officer in its files. The contract can be enforced if the memo includes
a. a correct title, such as “Chloe-DAI Contract.”
b. all essential terms.
c. a statement of the consideration.
d. the partie’ addresses.
Marie claims that a Nebraska state statute infringes on her “procedural due process”
rights. This claim focuses on
a. procedures used in making decisions to take life, liberty, or property.
b. the content of the statute.
c. the similarity of the treatment of similarly situated individuals.
d. the steps to be taken to protect Marie’s privacy.
Lee is seventy years old and Mira is gay. Based on this information, members of
protected classes include
a. Lee and Mira.
b. Lee only.
c. Mira only.
d. neither Lee nor Mira.
Market concentration refers to the number of firms in the market.
The amount in controversy in a diversity of citizenship case must be more than $1
million before a federal court can take jurisdiction.
Warranties of title do not arise in most sales contracts.
Under the theory of negligence, the duty of care requires a careless act.
Labels on vegetables and fruits are not required to indicate where the food originated.
Withdrawal from a partnership for a term prematurely does not constitute a breach of
the partnership agreement.
To support the imposition of strict product liability, a product must be substantially
changed from the time it is sold to the time an injury occurs.
A partner is a co-owner of partnership property.
In a bilateral contract, communication of acceptance is necessary.
Damages are never paid in money.
Advertising will not be deemed deceptive so long as it appears to be based on factual
evidence, even if it is not.
Child-support debts will be suspended by a voluntary bankruptcy filing.
Shareholders do not need to approve fundamental changes affecting the corporation
before the changes can be effected.
When a release of hazardous chemicals from a site occurs, potentially responsible
parties can avoid liability through transfer of ownership.
Chris promises Dina $40,000 if she graduates from Eagle College. Dina enrolls in
Eagle, attends full-time for four years, and graduates. When Dina asks Chris for
$40,000, Chris says, “I dont remember promising you $40,000. But if there was a
promise, it’s not enforceable, because we didnt bargain for it. And even if there was a
promise that would otherwise be enforceable, I revoke it now.” Can Dina enforce
Chris’s “promise”? Why or why not?