Backwater Heavy Equipment Corporation currently employs three hundred full-time
workers. Because business has declined, Backwater plans to lay off one hundred
workers. If Backwater does not send advance notice of the layoff to the appropriate
parties, the employer may be subject to
a. fines, employee back-pay awards, attorneys fees, and more.
b. a cease-and-desist order or other injunction but no economic liability.
c. imprisonment but no injunctive or economic sanction.
d. no sanctions.
Hill & Dale Credit Corporation makes mortgage loans to consumers secured by their
principal homes. For a Hill & Dale loan to qualify as a Higher-Priced Mortgage Loan
(HPML), its annual percentage rate must exceed, by a certain amount,
a. the average prime offer rate for a comparable transaction.
b. the consumers income-to-debt ratio.
c. the percentage of income that a consumer can devote to its payment.
d. the projected increase in market value of the consumers home.
Ridgeway Sand & Gravel Corporation and Quick-Set Paving Company combine so that
all that remains after the papers have been signed is Ridgeway. This is
a. a consolidation.
b. a merger.
c. a purchase of assets.
d. a share exchange.
Mona offers Ned, a building inspector, money to overlook the violations in her new
warehouse. Ned accepts the money and overlooks the violations. Mona is charged with
the crime of bribery. The crime occurred when
a. Mona decided to offer the bribe.
b. Mona offered the bribe.
c. Ned accepted the bribe.
d. Ned overlooked the violations.
Farmers National Bank lends money to Greta, taking a security interest in her assets.
Later, Greta files a bankruptcy petition. From Farmerss point of view, once Greta is in
bankruptcy, her assets have
a. decreased value, or no value.
b. increased value.
c. the same value.
d. unique value.
Gladys, the chief executive officer of Home Electrical, Inc., signs an instrument by
using a rubber stamp with her thumbprint on it. This instrument is
a. negotiable.
b. nonnegotiable, because a rubber stamp does not identify the signer.
c. nonnegotiable, because a thumbprint implies a lack of serious intent.
d. nonnegotiable, because a thumbprint is not a signature.
Feta is a partner in the game design firm GR8 Games, Inc., which obtains key-person
life insurance on Feta in the amount of $1 million from Halo Insurance Company. Feta
quits GR8 Games to join Icy Applications, Inc. Feta dies. Under the principle of
insurable interest, Halo must pay the $1 million to
a. Fetas spouse Jo.
b. GR8 Games.
c. Icy Applications.
d. no one.
Tanya contracts with Suite Condos Corporation to buy a unit in Suites Bayview Tower
at a premium for its view of River Bay. Unforeseeably, the town of River Bay changes
its zoning law. Resort Hotels, Inc., constructs River Bay Resort, blocking what would
have been Tanyas view. Tanyas best argument for a change in the Suite contract or its
price is
a. frustration of purpose.
b. objective impossibility of performance.
c. anticipatory repudiation.
d. commercial impracticability.
Fact Pattern 24-1B
Dominion Sales Ltd. in Canada and Eagle Buying Company in the United States enter a
contract for a sale of forestry products. Dominion draws a draft unconditionally
ordering Great Federal Bank, Eagles bank, to pay $60,000 to Dominions order in sixty
days. Eagle signs and dates the draft.
Refer to Fact Pattern 24-1B. With respect to this instrument, Dominion is
a. the banker.
b. the maker.
c. the payee.
d. the trader.
OK Dry-Cleaning advertises so effectively that the regular customers of its competitor
Purity Cleaners patronize OK instead of Purity. This is
a. appropriation.
b. conversion.
c. wrongful interference with a contractual relationship.
d. none of the choices.
The abbreviation “P.A. in the name “Painless Dental, P.A. means that this organization
is
a. a private association.
b. a professional association.
c. a public association.
d. a publicly administered corporation.
Fact Pattern 28-4B
Marys home is in a state that has a $30,000 homestead exemption. Mary defaults on a
$60,000 debt that she owes to Nina. Marys home is sold at auction for $80,000.
Refer to Fact Pattern 28-4B. 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 Marys family owns.
The Federal Trade Commission is a government agency that issues rules, orders, and
decisions. The Georgia state legislature enacts statutes. The Jackson County Board and
the Peach City Council enacts ordinances. Administrative law includes
a. all law that affects a businesss operation.
b. the rules, orders, and decisions of the Federal Trade Commission.
c. statutes enacted by the Georgia state legislature.
d. ordinances created by the Jackson County Board and the city council of Peach City,
Georgia.
Rent-all Trucks & Trailers, Inc. (RT&T), and United Delivery Service enter into a
contract for a lease of trucks. RT&T is a merchant who deals in goods of the kind
leased. Under the UCC, an implied warranty of merchantability arises
a. automatically in lease contracts.
b. only if the lessee asks for it.
c. only if the lessor does not expressly disclaim it.
d. only in conjunction with sales contracts, not lease contracts.
Fact Pattern 33-1B
Eppie hires Franz to do some remodeling work in her office. Eppie does not have the
right to control the details of Franzs performance.
Refer to Fact Pattern 33-1B. The relationship between Eppie and Franz is
a. client and independent contractor.
b. employer and employee.
c. master and servant.
d. principal and agent.
Sweet Styles, Inc., a franchisor of clothing stores, wishes to standardize the pricing
practices of its franchisees that have engaged in price-cutting to increase their
respective shares of the market. The most prudent action might be for Sweet to
a. mandate the prices at which its franchisees sell their products.
b. suggest the prices at which its franchisees sell their products.
c. require its franchisees to buy inventory exclusively from Sweet.
d. threaten its franchisees with a material breach of contract.
Fact Pattern 33-1A
Ulani indicates that she is acting as an agent on behalf of an unidentified
clientThoroughbred Stallions, LLCwhen she enters into a contract with Shana.
Refer to Fact Pattern 33-1A. Thoroughbred Stallions is
a. a disclosed principal.
b. a non-existent principal.
c. an undisclosed principal.
d. a partially disclosed principal.
Gia orally promises Heck that she will buy his fishing trawler. For this promise to be
enforceable under the doctrine of promissory estoppel
a. the trawler must be considered a customized good.
b. Heck must act in reliance on Gias promise to his detriment.
c. Gias promise must be in writing.
d. the parties must stop promising until the deal is transacted.
International Products, Inc. (ICI), has exclusive control over the market for its product.
ICIs market power is most likely
a. a situation that neither restrains trade or harms competition.
b. a legal restraint of trade.
c. a per se violation of antitrust law.
d. subject to further evaluation.
Betty assigns her right to payment of a loan to Cody. Cody is
a. a creditor beneficiary.
b. a debtor beneficiary.
c. a donee beneficiary.
d. a donor beneficiary.
Rolling Transport & Storage Corporation wants to insure its warehouse to obtain the
maximum possible recovery for the lowest possible premium. To obtain the maximum
recovery under a coinsurance clause, the percentage of the value of the property that
should be insured is
a. 80 percent.
b. 90 percent.
c. 100 percent.
d. 120 percent.
Superior Company draws a check payable to Ted. Uri makes a note payable to Vital
Finance Corporation. Primarily liable parties include
a. Superior, Ted, Uri, and Vital.
b. Superior, Ted, and Uri only.
c. Superior and Uri only.
d. Uri only.
Peak & Vale Accountants provides other firms with accounting services. Questions of
what is ethical involve the extent to which Peak & Vale has
a. a legal duty beyond those duties mandated by ethics.
b. an ethical duty beyond those duties mandated by law.
c. any duty beyond those mandated by both ethics and the law.
d. any duty when it is uncertain whether a legal duty exists.
Opie offers to sell his guitar to Pinky for $100. Pinky agrees. They complete and sign a
printed form, and Pinky gives Opie a check for the price. This check is
a. a formal contract.
b. an informal contract.
c. a simple contract.
d. no contract.
Ramon contracts in writing to sell his Little Shop of Bagels to Suni. When Suni
discovers that the kitchen equipment has been removed, she files a suit against Ramon.
The court decides that the written contract includes everything that the parties intended.
An agreement about the kitchen equipment may be admissible if it is
a. a previous agreement.
b. not otherwise contained in the parties contract.
c. a subsequent modification of the parties contract.
d. under no circumstances.
Fact Pattern 33-1B
Eppie hires Franz to do some remodeling work in her office. Eppie does not have the
right to control the details of Franzs performance.
Refer to Fact Pattern 33-1B. While working, Franz drops a tool on Gibby, Eppies
customer, causing an injury. Eppie is
a. liable to Gibby because he was injured on Eppies property.
b. liable to Gibby unless Franzs act is intentional.
c. not liable because Franz is an independent contractor.
d. not liable to Gibby because Franz is Eppies employee.
Lightning Cycles, Inc., makes Lightning-brand motorcycles and accessories, which are
distributed to authorized dealers, including Macho Motors, Inc. Macho operates
dealerships in several locations. Lightning imposes territorial restrictions on Macho to
insulate other dealers from direct competition. This is
a. a situation that neither restrains trade or harms competition.
b. a legal restraint of trade.
c. a per se violation of antitrust law.
d. subject to analysis under the rule of reason.
Cameron enters a coffee shop in which she has an open account, fills a cup of coffee,
holds it so the cashier can see it, acknowledges the cashiers nod, and walks out with the
coffee, knowing that she will be billed for it at the end of the month. Cameron has
formed
a. an express contract.
b. an implied contract.
c. no contract.
d. a quasi contract.
If a provision in the Florida state constitution conflicts with a provision in the U.S.
Constitution
a. neither provision applies.
b. the provisions are balanced to reach a compromise.
c. the state constitution takes precedence.
d. the U.S. Constitution takes precedence.
Omni Corporation is a Pennsylvania-based firm that does business throughout the
United States. With respect to this circumstance, the UCC has been adopted by, and
applies in,
a. a few of the states.
b. all of the states, in whole or in part.
c. half of the states.
d. none of the states, to date.
Dinah contracts to repair a rip in a ventilation duct for Ernies Café for $100. If Dinah
does not perform, Ernie must pay
a. $100.
b. $50.
c. $10.
d. $0.
Fay is admitted to Global Associates, an existing partnership. A partnership debt
incurred before the date of her admission comes due. Fay is
a. not liable for the debt.
b. only liable for the debt up to the amount of her capital contribution.
c. personally liable only to the extent the other partners do not pay.
d. personally liable to the full extent of the debt.
Fiorella and Midwest Agri-Ship, Inc., enter into a contract for Midwest to transport a
silo of corn for which Fiorella agrees to pay Midwest. Due to schedule conflicts,
Midwest contacts Hybrid Crop Transport Company, to which Midwest “assigns all
rights under the contract. This transfer is
a. an assignment and a delegation.
b. an alienation and a negotiation.
c. an obligation and a cancelation.
d. prohibited.
Fruitful Garden Company makes and sells pesticides. For the pesticides to remain on
the market, the acceptable level of risk to people of developing cancer from exposure to
the products is
a. one-in-a-hundred.
b. one-in-a-million.
c. one-in-a-thousand.
d. zero.
3D HD TV Company, a firm in Minnesota, advertises on the Web. A court in North
Dakota would be most likely to exercise jurisdiction over 3D HD if the firm
a. conducted substantial business with North Dakota residents through its Web site.
b. interacted with any North Dakota resident through its Web site.
c. only advertised without interactivity at its Web site.
d. suddenly removed its ad from the Internet.
Territorial and customer restrictions are currently considered per se violations of
antitrust law.
An oral contract that must be in writing to be enforceable is not enforceable even if the
parties admit to its existence in court.
A copy must be exactly the same as the original to infringe a copyright.
A persons intent to return embezzled property is a defense to the crime of
embezzlement.
Computer Electronics Corporation (CEC) discovers a defect in its newly developed,
recently marketed hard drives. CEC decides to recall the product and replace it with
another. CECs insurance policy with Delta Business Insurance Company will cover any
harm to customers that occurs before the drives are returned. Is it likely that the policy
will also pay for the recall and replacement? If so, what type of policy does CEC have?
A state court cannot exercise jurisdiction over property located within the states
boundaries regardless of the property owners location.
An employer generally is required to notify an employee when an absence will be
counted as family or medical leave under federal law.
Any local check deposited must be available for withdrawal by check or as cash within
not more than five business days from the date of deposit.
An act that causes indignity is sufficient to recover for the infliction of emotional
distress.
The rights of a third party beneficiary under a contract vest if the third party brings a
suit on the promise.
One way to raise capital to expand a business is to borrow the funds.
Under rules of professional conduct, committing a criminal act that reflects adversely
on a persons “honesty is professional misconduct.
Normally, corporate shareholders are personally liable for the obligations of the
corporation.
Loan flipping occurs when a lender convinces a homeowner to refinance soon after
obtaining a mortgage.
Eppie gives a check to Fund Investments to buy 100 shares of stock in GR8 Tech
Corporation for Eppie. The price of the shares is constantly fluctuating. Fund
Investments asks Eppie to leave the amount of the check blank and allow it to fill in the
price when making the purchase. Eppie agrees. Fund Investments buys the stock when
the price is $4,000, but fills in the check for $5,000. The check is negotiated as payment
for a $5,000 debt to Hasty Accounting Services, which takes the check in good faith and
without notice of Fund Investmentss act. Hasty later learns that Fund Investments was
not authorized to fill in the check for $1,000 over the price. Is Hasty an HDC? If so, for
how much?
Significant factors to consider when choosing a business form include the titles of its
officers.
When a release of hazardous chemicals from a site occurs, potentially responsible
parties can avoid liability through transfer of ownership.