Buddy was hired to play drums for a rock group scheduled to tour the Midwest. Part
way through the tour, Buddy was tragically killed in a plane crash. The tour had to be
discontinued until a new drummer could be found. The band lost money on the tour. Is
Buddy’s estate or agent responsible for the loss to the band?
Garth’s Imports sold a car to Wally on credit for $30,000. Garth assigned to Cassandra
all of his rights to receive money from Wally. Cassandra did not inform Wally of the
assignment. Therefore, Wally continued to make the next three payments directly to
Garth. Shortly thereafter, Garth left the country with the money. If Cassandra sues
Wally for the missing three payments
a. Cassandra will not be able to collect the money from Wally.
b. Wally is not liable for the three payments because an assignment is not valid unless
the obligor is notified.
c. Wally is liable for the three payments because Cassandra paid consideration for the
assignment rights.
d. Wally cannot raise the defense of previous payment.
A customer in a restaurant would be considered ________ to whom the restaurant
owner owes a duty ________.
a. a licensee; to warn of known dangers.
b. an invitee; of reasonable care.
c. a social guest; only to avoid intentionally injuring him.
d. a licensee; of strict liability
Electronic payments via a telephone, computer, or wire transfers are not regulated by
the government.
a. True
b. False
As it applies to landowners, which of the following statements regarding liability to a
licensee is correct?
a. Whether or not the landowner is responsible for injury depends on whether the
licensee is an adult or a child.
b. The landowner is liable to a licensee for injuries caused by hidden dangers only.
c. Since the licensee is a trespasser on the landowner’s property, the landowner is not
responsible for injury.
d. Since a licensee has permission to be on the landowner’s property, the landowner is
responsible for all injury whether hidden or obvious.
Don was standing in a cafeteria line holding a plate. Tim was upset with Don. Tim
turned Don around and grabbed the plate out of Don’s hand. Tim then held the plate up
and threatened to break it over Don’s head. Tim has committed
a. a battery, but not an assault.
b. an assault, but not a battery.
c. both an assault and a battery.
d. neither an assault nor a battery.
An indorser who writes “without recourse” next to her signature on a negotiable
instrument is not liable for payment.
a. True
b. False
Trey, a full-time college student, sold his car to Don, another student. In the
performance of this contract, Trey
a. has a duty of good faith which means honesty in fact and the exercise of good
judgment.
b. has a duty of good faith which means honesty in fact.
c. has a duty of good faith which means honesty in fact and the exercise of reasonable
commercial standards of fair dealing.
d. does not have a duty of good faith.
Which agency establishes rules for treating both hazardous and nonhazardous forms of
solid waste?
a. The National Environmental Policy Act
b. The Toxic Substances Control Act
c. The Safe Drinking Water Act
d. The Resource Conversation and Recovery Act
The money intended to restore a plaintiff to the position he was in before the injury is
referred to as
a. punitive damages.
b. tortious payments.
c. compensatory damages.
d. conversion payments.
Under the UCC, the seller’s right to correct a shipment of non-conforming goods is
called
a. correction.
b. cure.
c. cover.
d. consideration.
Which statute prohibits discrimination on the basis of disability by the federal
government, federal contractors, and all entities that receive federal funds?
a. The Civil Rights Act of 1866
b. The Equal Pay Act of 1963
c. The Rehabilitation Act of 1973
d. The Family and Medical Leave Act of 1993
A contract most likely will be declared unconscionable if
a. it allows for an extremely high rate of interest to be charged.
b. it contains a cancellation clause.
c. it is oppressive and one-sided.
d. it is signed by a minor for an item of luxury.
Which of the following would be a reasonable accommodation under the ADA?
a. modifying a job description and job duties to accommodate the disabled worker
b. assigning a shadow employee to work with the disabled worker
c. providing part-time schedules to accommodate the disabled worker
d. creating a new job that the disabled worker can perform
All oral contracts are quasi-contracts until they are completely executed.
a. True
b. False
A valid contract can legally be voided by either party.
a. True
b. False
A principal must indemnify an agent for any reasonable expenses incurred in carrying
out his or her responsibilities.
a. True
b. False
Emails and their attachments are not subject to pretrial discovery.
a. True
b. False
Hasbro, Inc., the trademark owner of “Candy Land,” sought a court injunction to stop
Internet Entertainment Group, LTD from using the domain name, “candyland.com.”
Internet Entertainment Group had established a sexually explicit site at the domain
name. This injunction would have to be issued by
a. a jury.
b. a judge.
c. an executive order.
d. a lawyer.
The Securities Act of 1933 established the Securities and Exchange Commission.
a. True
b. False
Under JOBS, privately held companies can sell up to $1 million in securities in any
12-month period if they sell the securities through an approved intermediary.
a. True
b. False
Any securities offerings covered by the NSMIA must comply with state securities laws.
a. True
b. False
The states have a severely restricted power to enact laws that affect interstate
commerce. This concept is called
a. federalism.
b. the undue burden concept.
c. constitutional hierarchy.
d. the dormant aspect of the Commerce Clause.
Injunctions are frequently used by courts to force employees to complete their
contractual obligations with their employers.
a. True
b. False
Immanuel Kant was a German philosopher who was a proponent of utilitarian ethics.
a. True
b. False
“I’ll sell you my car if I decide to sell it” is an example of
a. a conditional offer.
b. an unliquidated offer.
c. a unilateral contract.
d. an illusory promise.
In the case of scriveners errors, a court will usually
a. reform the contract if it is clear that the mistake is not what the parties intended.
b. instruct the parties to rewrite the contract without the errors.
c. enforce the contract as written.
d. throw out the contract completely.
As it applies to minors, which of the following is LEAST likely to be regarded as a
necessary?
a. Rent
b. Food
c. Medical expenses
d. Educational expenses
First Federal had a perfected security interest in Vicor’s printing press. Second Credit
had a security interest in the same press, but its interest was not perfected. First Federal
takes priority over Second Credit.
a. True
b. False
While hunting, Roger enters Adeles property without permission and is injured by
falling into a ditch that was obscured by the underbrush. Under the common law, Adele
is liable for Rogers injuries.
a. True
b. False
Cherise contacted her insurance agent and said she was interested in purchasing several
life insurance policies: (a) a policy on her own life for $100,000, naming her son and
daughter as beneficiaries; (b) a policy on her neighbors life for $100,000, since she had
observed him engaging in reckless behavior, naming herself as beneficiary; (c) a $5,000
policy on another neighbor to cover a loan Cherise made to him, naming herself as
beneficiary; and (d) a $250,000 policy on her business partner, naming herself as
beneficiary. Discuss the legality of each of these potential contracts.
The Big Four accounting firms spend about what percentage of their revenue on
litigation, including settlements and insurance?
a. Less than five percent
b. Between 10 and 20 percent
c. Between 25 and 35 percent
d. Over 50 percent
In many states it is illegal to lend money to help someone gamble.
a. True
b. False
List and describe the various rules that apply to fundamental corporate changes
requiring shareholder approval.
Faith owns a copyright in a book she recently wrote. She applies for a $10,000 loan
through Cumberland Bank and wants to use the copyright as collateral. Explain if and
how the bank can perfect a security interest in such collateral.
Fowler Bros. has applied to Gibralter Bank for a $50,000 loan for its business
expansion. If Fowler Bros. plans to use its account at Gibralter Bank as collateral,
discuss what the bank needs to do for a security interest to attach.
Mavrex, Inc. received an application from Larry and, since his written qualifications
seemed to meet a pressing current need, they hired him without checking his references
or prior records. Actually, Larry had been in prison for murder several years earlier.
Tom, a long-time Mavrex employee, angered Larry when Tom tried to tell Larry how to
do his job. Larry attacked and injured Tom. If Tom sues Mavrex, what would his cause
of action be, and what elements would Tom need to prove to win his case?
Discuss the process an issuer follows for either an IPO or a secondary offering.
Identify four circumstances that might persuade a court to pierce the corporate veil.
Explain the ways in which the federal government has tried to change the landscape of
corporate governance and executive compensation.
What provisions is commercial email subjected to under the CAN-SPAM Act?
Discuss the meaning of “material fact” in fraud situations.
Dennis and Claudia were partners who operated a retail store. They agreed to end the
partnership. Dennis agreed to stay at the store and oversee the going-out-of-business
sale. Claudia agreed to deal with the accountants and other related matters not directly
related to the hands-on operation of running the store. Claudia received notice that the
store’s liability policy would expire on July 1. She decided not to renew the policy and
let it lapse. The going-out-of-business sale would not be completed until August 1. In
July, a customer slipped and fell in the store. When Dennis learned that Claudia had
allowed the liability policy to lapse, he was very upset and claimed he should not be
liable for the customer’s injury. Is Dennis liable to the customer? Explain.
Discuss when monopoly power is not a violation of Section 2 of the Sherman Act.
What is consideration and what are the two basic elements of consideration?
On its website, Otrex, Inc. claimed that its pain reliever was more effective than Nelton,
a competing pain reliever. Discuss the elements that Nelton must prove to win a case
against Otrex under the Lanham Act.
Aubry purchased a washing machine, a freezer, and a refrigerator from Gateway
Appliances on credit, giving Gateway a security interest in the appliances. The
appliances were for Aubry’s household use. Gateway did not file a financing statement.
Six months later, Aubry had a garage sale and sold the appliances to Tam. Tam bought
the appliances for her student rental property. Aubry left town owing money on the
appliances. If Gateway can trace the appliances to Tam, can Gateway repossess the
appliances? Explain in detail.
Most of the goods contained in a freight train (a common carrier) were destroyed when
a tornado wrecked the train. The carrier was sued for damages by all the shippers that
had merchandise on the train. Is the carrier strictly liable for the damage done to the
goods by the tornado?
Discuss the purposes of the “business judgment rule.”