Lather Up Soap Products Company grants its agent Kathy an exclusive territory in
which to sell Lather Up products. The firm cannot compete with Kathy in that territory
under the principal’s duty of
a. avoidance.
b. cooperation.
c. indemnification.
d. reimbursement.
Gilbert finds an iPad on the counter at Starbucks. He takes the iPad to the police
station’s lost and found desk. The officer at the desk tells Gilbert that if the iPad is not
claimed in a certain amount of time, Gilbert can obtain title to it. This is an example of
acquiring possession by
a. an estray statute.
b. a bailment.
c. confusion.
d. production.
Khalil holds a security interest in inventory owned by Luc. Khalil protects his claim to
the inventory in the event of Luc’s default by
a. assignment.
b. perfection.
c. redemption.
d. retention.
Over the Internet, Red & White Contractors, Inc., arranges to lease storage space from
Blue Services Company. To complete the deal, Red & White clicks on a button that
says, in reference to certain terms, “I agree.” Most likely, the parties have
a. a binding contract that includes the terms.
b. a binding contract that does not include the terms.
c. an unenforceable contract that includes the terms.
d. an unenforceable contract that does not include the terms.
Xavier owns a duplex that he leases to Yvon and Zack. Xavier may sell
a. the duplex at any time.
b. the duplex, but only after the lease expires and the tenants move out.
c. the duplex, but only with the tenant’ permission.
d. the lease, but not the duplex.
Bobby has fifteen creditors. To force Bobby into bankruptcy proceedings, at least three
creditors must join the petition and their unsecured claims must add up to at least
a. $500.
b. $10,250.
c. $14,425.
d. $50,000.
Bodie’s application to City Bank for a credit card is denied. Bodie can obtain
information on her credit history in a credit agency’s files under
a. no federal law.
b. the Equal Credit Opportunity Act.
c. the Fair Credit Reporting Act.
d. the Fair Debt Collection Practices Act.
Big Beef, Inc. raises calves to sell. Big Beef breeds its cows in April, and the cows
calve in February of the following year. In January Andrea contracts with Big Beef to
buy fifty calves. Identification takes place in
a. January, when the contract is signed.
b. April, when the calves are conceived.
c. February, when the calves are born.
d. a reasonable period of time.
Selena buys a cell phone for $350 and an air hockey table for $1,500, and signs a
one-year employment contract for a $4,000 monthly salary to start at the beginning of
the next month. The Statute of Frauds covers
a. the employment contract, and the game table and phone purchases.
b. the employment contract and the game table purchase only.
c. the employment contract only.
d. the game table and phone purchases only.
Lani is asked to serve as a witness to Mona’s will. To qualify, Lani must be
a. a collateral heir.
b. a lineal descendant.
c. eighteen years of age or older.
d. mentally competent.
Victor leaves his Dodge sport utility vehicle at Gordo’s Auto Service for an oil change.
This is
a. a bailment.
b. a gift.
c. accession.
d. production.
Noah and Orin do business as Personnel Partners. In most states, for purposes of suing
and being sued, Personnel Partners would be treated as
a. an aggregate of the individual partners.
b. a natural person.
c. an entity.
d. a non-existent party.
Robert owns Textbooks Plus, a sole proprietorship that sells textbooks. When Robert
dies, Textbooks Plus will
a. be automatically dissolved.
b. pass directly to his oldest child.
c. pass directly to the state.
d. be evenly divided among all Robert’s heirs.
Quibble Game Company’s liabilities exceed its assets. Quibble hires Roo & Slay, an
accounting firm, to prepare a balance sheet. Through Roo & Slay’s negligent omissions,
the sheet shows a positive net worth. Town Bank relies on the balance sheet to make a
loan to Quibble. When Quibble defaults, Town files a suit against Roo & Slay. Under
the Restatement rule, Roo & Slay is most likely
a. liable because Roo & Slay owed a duty of care to Quibble.
b. liable because Roo & Slay owed a duty to any foreseeable user.
c. liable if Roo & Slay knew that Town would rely on the balance sheet.
d. not liable because Roo & Slay and Town were not in privity.
Rio Business Corporation pays potential clients, including private foreign companies
and the representatives of foreign labor organizations to facilitate business. If Rio
knows that the payments will be passed on to a foreign government, this practice is
a. illegal if the payments violate the Foreign Corrupt Practices Act.
b. legal because a third party acts as a “go-between.”
c. legal because private parties are involved on both sides of the deal.
d. legal because the payments are intended to facilitate business.
In 2013, Congress enacts the Act to Restrict Commercial Speech (ARCS). The ARCS
will be considered valid if it directly advances a substantial government interest
a. but goes no further than necessary to achieve its purpose.
b. without regard to how “far” it goes.
c. and the parties affected by it can elect how “far” to go in applying it.
d. and goes further than necessary to ensure full coverage.
Obie accuses Portia, a broker with QT Financial Services, of fraudulently inducing him
to invest in Risky Development Company, whose stock price declines in value. The
reliance that gives rise to liability for fraud requires
a. a subjective statement.
b. misrepresentation of a fact knowing that it is false.
c. puffery.
d. seller’s talk.
Louise is a director for Icy Ices, Inc. Louise is also a director for Creamy Creams, Inc.
When Icy Ices enters into a contract with Creamy Creams, Louise
a. must resign from one of the boards.
b. must resign from both boards.
c. must make a full disclosure of any conflicts of interest and abstain from voting on the
proposed transaction.
d. need not do anything.
Utility Power Company has the right to run its power lines across Velma’s land. This is
a. a license.
b. an easement.
c. a profit.
d. a tenancy at sufferance.
Cody believes that Delta Corporation has discriminated against him on the basis of
gender. Cody files a suit against Delta under Title VII. To establish a prima facie case of
employment discrimination, Cody must show that
a. Cody is a member of a protected class.
b. Delta has no legal defenses against the claim.
c. discriminatory intent motivated Delta’s act.
d. other firms in Delta’s industry have committed discriminatory acts.
Darwin borrows $200,000 from Evermore Bank to buy a home. Less than six months
into the term, Darwin stops making payments on the loan. To initiate the process to
repossess and auction off the property securing the loan, Evermore must
a. issue a notice of sale to the borrower.
b. offer the property for sale in an auction on the courthouse steps.
c. record a notice of default with the appropriate county office.
d. resort to litigation to establish clear ownership of the property.
William steals a valuable collection of baseball cards from Phillip. William then sells
the cards to Darrel, who does not know that the cards are stolen. Phillip discovers that
Darrel has the cards. Which of the following best describes the rights and liabilities of
the parties involved?
a. Darrel has the right to keep the cards if he compensates Phillip monetarily.
b. Phillip has the right to reclaim the cards from Darrel, but is liable to Darrel for
damages.
c. Phillip has the right to reclaim the cards from Darrel and William is liable to Darrel
for damages.
d. Darrel has the right to keep the cards without compensating William.
Food Packaging, Inc., agrees to sell 50,000 6-ounce yogurt containers to Golden Dairy
Company. Food can obtain only 20,000 of the 6-ounce containers, but also ships 30,000
more expensive 8-ounce containers for the same price. Under these circumstances,
Golden
a. cannot reject delivery, and Food cannot later replace the containers.
b. cannot reject delivery, but Food can later replace the containers.
c. may reject delivery, and notice to Golden of Food’s intent to cure will give Food a
reasonable time to replace the containers.
d. may reject delivery, but Food cannot later replace the containers.
Owen is a federal judge whose judicial decisions are part of case law, which does not
include interpretations of
a. other case law.
b. constitutional provisions.
c. statutes.
d. sound bites in the media.
Mariah takes off her ring and places it on her desk while she works. Without her
knowledge or consent, her coworker Nita picks up the ring, puts it on, and walks away.
Nita has likely committed
a. burglary.
b. forgery.
c. larceny.
d. no crime.
Feder prepares federal corporate income tax returns for Giant Stores, Inc., and other
firms. Under the Internal Revenue Code, with respect to an understatement of a client’s
tax liability, Feder may be liable for
a. negligent or willful misconduct.
b. no misconduct.
c. only negligent misconduct.
d. only willful misconduct.
Which of the following does not necessarily make material obscene?
a. The average person finds that it violates contemporary community standards.
b. The work taken as a whole appeals to a prurient interest in sex.
c. The work shows patently offensive sexual conduct.
d. The work shows animals mating.
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. Other property Mary may own that may be exempt from satisfaction
of judgment debts includes
a. any property that Mary wishes to exempt.
b. investments that Mary has made in her family’s businesses.
c. recreational vehicles that Mary uses on weekends.
d. tools that Mary uses in her trade.
Fact Pattern 31-1
Fresh Cream, Inc., wants to make an initial public offering of securities. Fresh believes
that it qualifies for an exemption under Regulation A from the full registration
requirement of the federal Securities Act of 1933.
Refer to Fact Pattern 31-1. Fresh decides to sell its new securities via the Internet. This
offering
a. will avoid the payment of commissions to brokers or underwriters.
b. is an investment scam.
c. is a Ponzi scheme.
d. constitutes insider trading.
Riley invents a new valve to cap undersea oil spills. He names the valve “Great Catch.”
He also writes the installation manual to be included with each valve. Riley can obtain
copyright protection for
a. the valve.
b. the “newness” of the valve.
c. the name.
d. the installation manual.
Raven is a shareholder of Quantum Mechanix Corporation. Raven could normally exer-
cise appraisal rights if Quantum participated in
a. a consolidation.
b. a dissolution.
c. a liquidation.
d. a winding up.
A purchase-money security interest in consumer goods is perfected automatically at the
time of a credit sale.
An environmental impact statement is required for every major federal action that
significantly affects the quality of the environment.
An installment contract is breached if a seller tenders any nonconforming goods.
A close corporation can operate as an S corporation.
Under federal law, only key employees who take temporary family or medical leave are
entitled to job reinstatement.
Counterfeiting is robbery.
The judicial branch has the power to hold actions of the other branches of government
unconstitutional.
Ordinarily, “ignorance of the law” is a valid defense to criminal liability.
Like a corporation, the ownership of a joint stock company is represented by shares of
stock.
Some states require that a franchisor submit advertising aimed at prospective
franchisees to the state for approval.
A seller does not have to provide a written warranty for consumer goods.
A limited liability partnership allows its partners to avoid personal liability for the
malpractice of other partners.
The states and the federal government provide for the registration of trademarks.
Common law judicial decisions that serve to protect the interests of consumers are not
classified as consumer law.
A profit is the right to make limited use of another person’s real property without taking
anything from the property.
A check is a special type of draft.
In most states, a director cannot be removed from a corporate board for a breach of
duty.
Some promises create moral, but not legal, obligations.
The U.S. Postal Service is a public corporation.