Rita is a surety for Serenas loan from Title Lenders, Inc. Ritas right to ‘step into the
shoes of Title Lenders, after paying Serenas debt, and exercise any of the Title Lenderss
rights against Serena is the right of
a. contribution.
b. redemption.
c. reimbursement.
d. subrogation.
Diners Corporation, a U.S. firm, signs a contract with Essen, A,G., a German firm, to
give Essen the right to use Diners trademark in restaurants in Germany. This is
a. a distribution agreement.
b. a joint venture.
c. direct exporting.
d. licensing.
Mica, a minor, signs a contract to pay National Fitness Club a monthly fee for
twenty-four months to use its facilities. Six months later, after reaching the age of
majority, Mica continues to use the club. This act is
a. disaffirmance.
b. emancipation.
c. ratification.
d. unconscionable.
Bret is a general partner in Capitol Realty, LLLP, a limited liability limited partnership,
which cannot pay its debts. Bret is personally liable for the debts
a. in proportion to the number of partners in the firm.
b. to no extent.
c. to the extent of his capital contribution.
d. to the full extent.
Omar is Precise Service Companys chief executive officer. On Precises behalf, Omar
solicits business, hires and fires workers, and handles the finances. Precise pays Omar
varying amounts, depending on his “needs. Omar is most likely
a. a principal.
b. an employee.
c. an employer.
d. an independent contractor.
Juli types onto a computer what she intends to be “My Will and prints it out. Juli has
capacity. “My Will is
a. invalid.
b. valid if Juli signs it.
c. valid if Juli signs it and has three witnesses sign it.
d. valid if Juli signs it, has three witnesses sign it, and files it in a certain state office.
Quito and Raul own a condo near San Francisco Bay as joint tenants. Raul sells his
ownership rights in the condo to Timor. Quito and Timor own the condo as
a. community property owners.
b. joint tenants.
c. tenants at sufferance.
d. tenants in common.
Beta Company arranges to have Carrier Corporation, a common carrier, transport fifty
HDTVs from New York to California. Dan is Carriers driver. Carrier will not be liable
to Beta for failing to deliver the TVs on time if
a. authorities are stopping and searching all trucks entering California.
b. Carriers dispatcher mistakenly delays Dans departure.
c. Carriers truck is broken into and the TVs are stolen.
d. Dan has to wait two days in Denver for the truck to be repaired.
In relation to Edies solicitation of investors in a nonexistent business, she is charged
with “mail fraud. This requires, among other things,
a. claiming that an item is “in the mail when it is not.
b. deceiving postal authorities as to the content of an item of mail.
c. depositing items in the postal system without proper postage.
d. mailing or causing someone else to mail a writing.
Fact Pattern 3-A3
Liz files a suit against Moe in a state court. The case proceeds to trial, after which the
court renders a verdict.
If Moe appeals to, and files a brief with, a state appellate court, Lizs attorney may file
within a prescribed period of time
a. an advisory interrogatory.
b. an answering brief.
c. a request for a deposition.
d. a responding motion for judgment on the brief.
Flem, a user of GameCenter.coms Web site, can download gaming software for free if
he first clicks on “I accept after viewing certain terms. This is
a. a contract that does not include the terms.
b. a contract that includes the terms.
c. not a contract but the terms are enforceable.
d. unenforceable.
Cornucopia Farms LLC possesses farmland. Cornucopia has the right to use the
property, including harvesting the crops, for ten years. Cornucopia does not have the
right to extract the coal under the land. This is
a. a fee simple absolute.
b. a leasehold estate.
c. a life estate.
d. an easement.
Nadia is a shareholder of Open Air Productions, Inc. Nadia could normally exercise
appraisal rights if Open Air participated in
a. a share exchange.
b. a dissolution.
c. a takeover.
d. a winding up.
Spencer Hydraulics Corporations ethics committee is asked a business ethics
questionshould the firm bid low to obtain a contract that it knows it can fulfill only at a
higher price? A practical method to investigate and solve this question involves all of
the following steps except
a. absolution.
b. decision.
c. inquiry.
d. justification.
Drew signs a check “pay to the order of Eppie drawn on Drews account in Fidelity
Bank. Greta forges Eppies indorsement. Fidelity pays the check. Most likely
a. Drew will be liable for the amount.
b. Eppie will have to pay Drew for the amount.
c. Fidelity will have to recredit Drews account.
d. the Federal Reserve will reimburse all parties for their costs.
The Sarbanes-Oxley Act of 2002 provided for the establishment and appointment of a
federal Public Company Accounting Oversight Board (PCAOB). Stunned by a costly
set of changes ordered by the PCAOB, a small auditing firm filed a suit in a federal
district court against the board. In Free Enterprise Fund v. Public Company Accounting
Oversight Board, the United States Supreme Court held that
a. the PCAOB had been illegally established.
b. the members of the PCAOB had been illegally appointed.
c. the acts failure to provide for presidential oversight of the PCAOB was
unconstitutional.
d. the plaintiff did not have standing to bring the suit.
The federal government and the state governments constitute the U.S. legal system.
This system is based on the legal system of
a. Ancient Greece.
b. continental European nations.
c. England.
d. predominantly Muslim countries.
Drew contracts to sell a residential duplex to Evan. The contract provides that if Drew
does not close the deal by September 15, he must pay Evan one-half of the contract
price. This provision is not enforceable because it is
a. a liquidated damages clause.
b. a mitigation clause.
c. a nominal damages clause.
d. a penalty clause.
Rich Financial, Inc., files a financing statement regarding a transaction with Supreme
Business Company. To be valid, the financing statement must contain all of the
following except
a. a description of the collateral.
b. a statement of the purpose for the transaction.
c. Richs name.
d. Standards name.
High Pointe LLCs members include Irvin. For purposes of holding title to property,
High Pointe is
a. an aggregate of Irvin and the other members.
b. a natural person in the members “family.
c. a legal entity apart from the owners.
d. a non-participating third party.
Pure Water Company is subject to a decision by the Environmental Protection Agency.
Pure Water appeals the decision, arguing that it is arbitrary and capricious. This could
mean that the decision
a. changed the agencys prior policy without justification.
b. followed a consideration of all relevant factors.
c. was accompanied by a rational explanation.
d. was plainly warranted by the evidence.
Dieter opens an account for $100,000 at East State Bank. The account provides that its
funds, which represent most of Dieters assets, are held in trust for Flo, the bank
employee who opens the account and who retains the card required to access it. Less
than a year later, Dieter dies, and Flo withdraws the funds. These facts indicate
a. a living trust.
b. a nuncupative will.
c. descent by election.
d. undue influence.
During the trial phase of Fuel Corporations suit against Gas Stations, Inc., their
attorneys engage in voir dire. This is
a. the assessment of the arguments on the issues.
b. the determination of the issues to be argued.
c. the litigation of the issues and arguments.
d. the selection of jurors.
Nichel designs a new office-management software program and incorporates Nichels
Niche, Inc., to make and market it. To sell a limited number of shares of stock to the
public, the firm must register the shares with
a. an attorney with securities law expertise.
b. a venture capitalist.
c. the Securities and Exchange Commission.
d. the U.S. Patent and Trademark Office.
Fact Pattern 35-1A
Erasmus applies for a job at Drain-Pro Plumbing & Repair LLC for which he is well
qualified. He passes a test to determine which applicants are eligible for hiring, but the
employer discards the results, and Erasmus is rejected. Drain-Pro continues to seek
applicants.
Refer to Fact Pattern 35-1A. To successfully defend itself against Erasmuss suit,
Drain-Pro must articulate
a. a legitimate, nondiscriminatory reason for its action.
b. a mere fear that it would be sued if it used the test results.
c. a pretext for its action.
d. a discriminatory basis for its action.
Clear Sky Credit Corporation asks Dimension Games Company to agree to a security
agreement that provides for coverage of the proceeds from the sale of after-acquired
property. This is
a. the first-in, first-out rule.
b. a floating lien.
c. a violation of most state laws.
d. a future advance.
Cheesy Pizza Company contracts to sell 1,000 cases of frozen pizzas to Roller Rinks,
Inc., but refuses to deliver. Due to a spice shortage, Roller Rinks cannot obtain pizza
elsewhere. Roller Rinkss right to recover the goods from Cheesy is the right of
a. cover.
b. cure.
c. replevin.
d. specific performance.
Pete, a Quality Company employee, is authorized to use Quality checks to buy supplies.
Pete alters one of the checks to increase its $700 amount by $100, and exchanges it at
Retail Office Supply for $700 worth of supplies and $100 cash. He keeps the cash. On
the check, Retailan HDCmay obtain payment for
a. $0.
b. $100.
c. $700.
d. $800.
Fanny buys clay to throw pottery, which is glazed and fired in a kiln. The finished
products are sold to Gifte Shoppe, which sells these items and others to customers who
often present them as gifts. The most common way to acquire personal property is to
a. buy it.
b. commingle it.
c. produce it.
d. receive it as a gift.
Max, a minor subject to his parents care and control, signs a contract to rent an
apartment from Noel for one year. Before the end of the term, Max moves out. Noel
sues for the rent for the rest of the term. Max can
a. avoid liability for the rent but not disaffirm the contract.
b. disaffirm the contract and avoid liability for the rent.
c. disaffirm the contract but not avoid liability for the rent.
d. not disaffirm the contract nor avoid liability for the rent.
Ray breaches his lease with Sunny Properties and vacates the premises six months
before the end of the term. In some states, Sunny would have to
a. avoid reletting the premises to recover damages from Ray.
b. make reasonable efforts to relet the premises to mitigate damages.
c. relet the premises to recover damages from Ray.
d. sell the premises to recover damages from Ray.
An insureds lack of an insurable interest is an absolute defense against payment.
Different standards for air quality apply to existing sources of pollution and major new
sources.
Oral evidence of otherwise clear terms in a contract can be introduced at a trial to
contradict those terms.
For purposes of diversity of citizenship, a corporation is a citizen only of the state in
which it is incorporated.
Risks ordinarily assumed in business do not constitute consideration for the
modification of a contract.
A customer has two days to discover and notify the bank of any error on the monthly
statement involving an electronic transfer of funds.
In most contracts, promises of performance are expressly qualified.
Alternative dispute resolution refers to any method for resolving a dispute outside the
court system.
Under the doctrine of comparative negligence, both the plaintiffs and the defendants
negligence are taken into consideration.
A misdemeanor is a crime punishable only by a fine.
Automobile liability insurance covers liability for bodily injury and property damage.
According to utilitarianism, an action that affects the majority adversely is morally
wrong.
Assumption of risk can be raised as a defense in a negligence suit.
Misrepresentation of a material fact cannot occur through conduct alone.
A business takes a risk by electronically storing its customers credit account numbers.
Failing to use the word consideration in an agreement means that no consideration has
been given.
A gift is a voluntary transfer of property for which no consideration is given.
A resulting trust is a trust implied in law.
Darren wants to go into the business of direct merchandise sales. What are the legal
problems that Darren might encounter in telemarketing? In selling door-to-door? In
marketing over the Internet? In soliciting sales through the mail?