Carly is a minor. Without her parent’ knowledge, she signs a contract to buy an airplane
ticket to Hawaii for spring break. Carly’s parents are
a. liable for the contract.
b. not liable for the contract.
c. liable for up to half the value of the goods in the contract.
d. liable for up to one third of the value of the goods in the contract.
William goes to Saddle Up Stables in the middle of the night when no one is around and
takes five saddles. William’s crime is
a. forgery.
b. larceny.
c. robbery.
d. embezzlement.
Jack buys a Kitchens, Inc., franchise, which the franchisor later terminates. In
determining whether the termination was proper, a court will generally
a. balance the rights of both parties.
b. emphasize the right of Kitchens, Inc., to its business operation.
c. focus on the right of Jack to be dealt with fairly.
d. underscore the interest of consumers in affordability.
Jane is the secured party in a secured transaction with Margaret. Jane could also be
referred to as the
a. debtor.
b. secured creditor.
c. collateral.
d. filing officer.
Ira is declared mentally incompetent. Jay, Ira’s son, is named his guardian. At Jay’s
insistence, Ira transfers his assets to Jay “for safekeeping.” A court might conclude that
this gift is not effective on the ground that there was no
a. acceptance.
b. delivery.
c. donative intent.
d. donor’s acknowledgment.
Marcy goes hunting out of season and shoots an endangered species of deer in a
national park. Marcy’s acquisition of the deer is
a. by production.
b. illegal.
c. by confusion.
d. by possession.
Fact Pattern 14-1
Bella Homes enters into a contract to buy 132 acres from Watershed Holdings to
subdivide and sell in fifth-acre lots for Pristine Meadow, a residential development.
Refer to Fact Pattern 14-1. If Bella breaches the contract, Watershed’s remedy would
most likely be
a. a certain ratio of the amount that Bella has in liquidated funds.
b. a percentage of Bella’s unrealized profit.
c. the difference between the land’s contract and market prices.
d. specific performance.
Erica is sixty-year-old woman with cerebral palsy. Erica is a member of
a. one protected class.
b. two protected classes.
c. three protected classes.
d. no protected classes.
Valerie is a pilot for Wayfarer Airlines. Wayfarer’s policy is to restrict Valerie and its
other pilots from flight responsibilities after a certain age. This is most likely
a. a legitimate bona fide occupational qualification.
b. discrimination on the basis of age.
c. reverse discrimination.
d. discrimination on the basis of disability.
Wilson buys a lottery ticket at his local gas station. Wilson has accepted an offer for a
a. bilateral contract.
b. unilateral contract.
c. void contract.
d. unenforceable contract.
Doyle and Emily are officers of Freshé Bottled Water Corporation. As corporate
officers, their compensation is determined by Freshé’s
a. directors.
b. incorporators.
c. other officers.
d. shareholders.
Rafi, a director of Super Service Station Corporation, does not attend a board meeting
for three years. During that time, Twyla, Super’s president, makes improper loans that
cost the company $100,000. Rafi is most likely
a. liable for negligence or mismanagement.
b. liable for violation of the business judgment rule.
c. not liable because missing meetings is an honest mistake.
d. not liable because missing meetings is only poor judgment.
Fact Pattern 11-1 (Questions 67 apply)
Sally contracts with Tasty Pizza Company to deliver its products. Both parties change
their minds, however, and inform each other that they would like to cancel the contract.
Refer to Fact Pattern 11-1. The next day, Sally changes her mind and again offers to
deliver Tasty’s products. Tasty is willing to deal, but for a new price. Sally and Tasty
a. may agree to a new contract, but it cannot include a new price.
b. may agree to a new contract that includes the new price.
c. must perform their original contract.
d. must perform the part of their original contract that is executory.
May tries to start her new car with no success. She yells that she will sell the car to
anyone for $10. Nick, a passerby who owns Nick’s Pre-owned Autos, hands May $10.
This is
a. a valid acceptance because May is seriously frustrated.
b. a valid acceptance because Nick is a car dealer.
c. not a valid acceptance because May does not seriously intend to sell.
d. not a valid acceptance because Nick is a car dealer.
On Monday, Neil tells Outdoor Landscaping, Inc., that he will pay Outdoor $500 if
various tasks are completed by Friday. On Wednesday, when Outdoor has finished more
than half of the work, Neil says that he has changed his mind. These parties had
a. an expired contract when Neil said that he had changed his mind.
b. a quasi contract when Neil said that he would pay for certain work.
c. a unilateral contract as soon as Outdoor began to perform.
d. no contract.
Rock Mining Company operates a gravel pit next to Siera’s residence. Siera files a suit
against Rock, alleging that the pit is a nuisance and unreasonably interferes with the
enjoyment of her property The court is most likely to award Siera an injunction
a. if letting the pollution continue is equally as harmful as stopping it.
b. if letting the pollution continue is less harmful than stopping it.
c. if letting the pollution continue is more harmful than stopping it.
d. under no circumstances.
According to the terms of Diego’s will, specific gifts are made, and taxes and other es-
tate expenses and debts are paid. The assets of Diego’s estate that remain are most likely
to be distributed
a. by codicil.
b. holographically.
c. per capita.
d. through a residuary clause.
Rita believes that Shady Grove Apartments, Inc., her landlord, has violated the law in a
way that entitles her to withhold the rent. This remedy is generally associated with
a. breach of the covenant of quiet enjoyment.
b. breach of the implied warranty of habitability.
c. discrimination.
d. failure to provide security against crimes in common areas.
Justice For All, a political organization, files a claim to challenge a Colorado statute that
limits the liberty of all persons to broadcast “annoying” radio commercials. This claim
is most likely based on the right to
a. equal protection of the law.
b. indictment.
c. procedural due process.
d. substantive due process.
Fay pays $800 for a new iPad to Global Goods, Inc. Global holds the iPad until Fay
picks it up. Global is
a. a bailee.
b. a consignee.
c. a lessee.
d. a seller.
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 consumer’s 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 consumer’s home.
Opalina asks Paolo, who does not understand English, to sign what Opalina says is an
application to open a bank account. In fact, the “application” is a note. If sued on the
note by an HDC
a. Paolo must pay the note.
b. Paolo’s best defense would be fraud in the execution.
c. Paolo’s best defense would be fraud in the inducement.
d. Paolo’s best defense would be mistake.
Jackson owns an antiques store. He sells a grand piano to Fred for $5,000, a old
jukebox to Sam for $499, an antebellum chest of drawers to Josephine for $659 and a
gold ring to Wendy for $999. Which of Jackson’s sales must be in writing to be
enforceable?
a. The grand piano only
b. The grand piano and the gold ring only
c. The grand piano, the chest of drawers and the gold ring only
d. The grand piano, the chest of drawers, the jukebox and the gold ring
Sela agrees to act on Thom’s behalf, subject to Thom’s control, and Thom trusts Sela to
so act. They set out the terms in a written document, which they both sign. This is
a. an agency by agreement.
b. an agency by estoppel.
c. an agency by ratification.
d. not the creation of an agency relationship.
Lauren owns a 1967 Ford Mustang, which Mike customizes and details to Lauren’s
specifications. The car earns several awards at regional vehicle customizing
competition shows. The result of Mike’s efforts is
a. accession.
b. acquisition.
c. conversion.
d. resolution.
Fact Pattern 36-1
Nika owns land in Ohio. Her ownership rights include the right to sell or give away the
property without restriction, and the right to commit waste, if she chooses.
Refer to Fact Pattern 36-1. Nika deeds some of her land to Polly. The deed states, “To
Polly, for life, then to Quay.” Nika has given Polly
a. a fee simple absolute.
b. a leasehold estate.
c. a life estate.
d. an easement.
Rural Utility, Inc., enters into a contract with Shovel Excavation Service to dig up,
replace, and rebury Rural’s cables in a certain location. Rural advances Shovel 10
percent of its cost. If the parties rescind the contract, Shovel’s refund of the payment
would be
a. a penalty.
b. liquidated damages.
c. restitution.
d. specific performance.
Fact Pattern 31-2
Sid, a director of Tech Software Company, learns that a Tech engineer has developed a
new, exciting video game. Sid buys Tech stock and tells his friend Uri, who also buys
Tech stock. When the new game is released three weeks later, Sid and Uri sell their
stock for a big profit.
Refer to Fact Pattern 31-2. Under SEC Rule l0b-5, Sid would not be liable if he had
waited to buy Tech stock until
a. after Sid told Uri of the new game.
b. after Uri bought Tech stock.
c. after the public release of the game.
d. just before the game was released.
Tracy borrows $30,000 from Secure State Bank. The lender accepts Tracy’s equity in
her home as collateral, which can be seized if the loan is not repaid on time. With
respect to any proceeding that occurs if Tracy fails to make the payments, this loan is
subordinated. This means that it
a. takes a higher priority.
b. takes a lower priority.
c. has the same priority as the primary mortgage.
d. fluctuates with the market value of the property.
Jolie signs a contract with Keaton, an unlicensed physician, to perform a medical
procedure. This contract is enforceable by
a. Jolie.
b. Jolie’s medical insurance company.
c. Keaton.
d. no one.
The doctrine of commercial impracticability only extends to problems that are
unforeseen.
If there is no limited liability company (LLC) agreement covering a topic under dispute,
the state LLC statute will govern the outcome.
A third party cannot sue one of the partners of a partnership without suing all of the
partners of the partnership.
The management of Sport Shoes Corporation, a U.S. firm, wants to expand into foreign
investment and employment markets. They are considering either opening their own
production facility in a foreign country or entering into a licensing agreement with a
foreign firm. What are the advantages and disadvantages of each of these courses of
action?
Java Bean Company imports coffee beans and sells them under two-year contracts to
Mellow Roast, Inc., and other coffeemakers. The contracts require that during the
two-year term a coffeemaker not buy beans from Java Bean’s competitors. The
contracts do not limit the coffeemaker’ purchase of tea or other beverage ingredients
from other suppliers, however. In the second year of the contract, Mellow Roast
protests that this arrangement violates antitrust law. Is Mellow Roast correct? If not,
why not? If so, under which antitrust statute, or statutes, could these contracts be held
illegal?
Patent infringement is a tort.
Territorial and consumer restrictions are per se violations.
Federal courts are superior to state courts.
The Environmental Protection Agency has concluded that greenhouse gases, including
carbon dioxide emissions, do not constitute a public danger.
An oral contract may be enforceable if enforcing the promise is the only way to avoid
injustice.
For federal income tax purposes, a partnership is not a tax-paying entity.
A franchisee may be required to pay for certain of the franchisor’s administrative
expenses.
A law that restricts people of a certain national origin from doing something will be
carefully examined to make sure it promotes a compelling government interest before it
is allowed to stand.
Focusing on a firm’s short-term profits without considering the company’s long-term
needs may be acting unethically.
Instruments that say nothing about when payment is due are payable on demand.
When a U.S. firm wishes to increase its involvement in an international market, it
normally establishes an agency relationship with a foreign firm.
In a dispute between Cosmic Games Corporation and Mythic Engineering Associates,
Inc., the court applies the doctrine of stare decisis. What is this doctrine? What does this
doctrine have to do with the American legal system?
Contract law assures the parties to private agreements that the promises they make will
be enforceable.
Ed, a businessperson, is a friend of Fran, the owner of a Percolated Coffee & Baked
Goods store. Every day, Ed spends five minutes in Fran’s store, looking at the goods
and usually buying one or two cinnamon buns or bagels. One afternoon, Ed goes into
the store, looks at the items, and picks up a $1 chocolate brownie. Ed waves the
brownie at Fran without saying a word and walks out. Is there a contract? If so, how
would it be classified in terms of formation, performance, and enforceability?
A warranty against infringement is a promise by the seller that the product is free from
any patent, trademark, or copyright claims of a third person.