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. adverse possession.
b. breach of the implied warranty of habitability.
c. discrimination.
d. failure to provide security against crimes in common areas.
Plywood & Particleboard Mill, Inc., does not use proper filters on its stacks, which
consequently pollute the air. Quinn, a Plywood & Particleboard employee, suffers
respiratory illness. To succeed in a suit against the company on the ground of
negligence, Quinn must show that he suffers from
a. a distinct harm separate from that affecting the general public.
b. a lesser harm than an injunction would impose on Plywood & Particleboard.
c. Plywood & Particleboard’s failure to use reasonable care to avert herm to Quinn.
d. the same harm as that affecting the general public.
Quest Outdoor Store orders RiverRun-brand kayaks from Sports Merchandise, Inc.
Sports Merchandise mistakenly ships kayaks of the wrong size, which Quest rejects and
returns via Trans-State Shipping Company. During the return, the kayaks are lost. The
loss is suffered by
a. Quest.
b. Trans-State.
c. RiverRun.
d. Sports Merchandise.
Ridgeline Bank provides Shirley with a mortgage to buy a home. The rate of interest is
fixed for three years and then adjusts annually. This is
a. a fixed-rate mortgage.
b. an adjustable-rate mortgage.
c. a creditor’s composition agreement.
d. a guaranty agreement.
Elsa participates in an investigation into possible violations of the Civil Rights Act of
1964 at Fabrication Foundry, Inc., where she works. As a result, Elsa’s employer
demotes her. Elsa can file a
a. harassment complaint.
b. retaliation claim.
c. constructive discharge claim.
d. disparate-impact discrimination claim.
Savannah and Tim enter into a sales contract for orchids. With respect to the specific
contractual provisions set out in the UCC, Savannah and Tim may
a. agree to different terms only to a reasonable extent.
b. agree to different terms unless they “get caught.”
c. agree to whatever terms they wish.
d. not agree to different terms.
A franchise agreement between Grid Tools Company and Hometown Hardware, Inc., is
silent on a time for termination of the franchise. Grid Tools may
a. never terminate.
b. terminate at any time.
c. terminate on reasonable notice.
d. terminate on three days notice.
Tropic Breeze Residences, Inc., owns apartment buildings. Umberto leases one of
Tropic Breeze’s apartments. Umberto’s transfer of his interest in the lease to Vito for a
period shorter than the lease term is
a. an assignment.
b. a license.
c. adverse possession.
d. a sublease.
Global Outfitters Outlet and Hyacinth, a consumer, enter into a contract for a sale of
ultra-weather camping gear. If the contract includes a clause that is perceived as grossly
unfair to Hyacinth, its enforcement may be challenged under
a. the mirror image rule.
b. the principle of fair trade.
c. the predominant-factor test.
d. the doctrine of unconscionability.
Sweet Treats, Inc., wants to market a new snack food. On the product’s label, standard
nutrition facts are
a. prohibited.
b. required.
c. strictly voluntary.
d. warranted by the nature of the food.
WeatherGuard Roofing Corporation obtains an insurance policy that protects
WeatherGuard against liability in the event of injuries or losses sustained by its
employees during the course of their employment that are not covered under workers’
compensation insurance. This is
a. casualty insurance.
b. employer’s liability insurance.
c. key-person life insurance.
d. term life insurance.
Duke signs a note “payable to the order of Equity Bank.” Unless Duke has a valid
defense against payment, his liability on this note is
a. impaired.
b. primary.
c. secondary.
d. qualified.
During a union election campaign, Auto Body Paint & Repair, Inc., prohibits on-site
solicitations by any party, including Mechanics Union, which is seeking the workers’
unionization. This violates
a. federal labor law.
b. federal elections law.
c. federal employment discrimination law.
d. no federal law.
Chord Guitars, Inc., sells guitars and other stringed instruments to consumers. A Chord
salesperson says to a potential customer, “This Chord is the best guitar you”ll find
anywhere, even online.” This statement is
a. an implied warranty of fitness for a particular purpose.
b. an implied warranty of merchantability.
c. an express warranty.
d. none of the choices.
BioChemical Disposal Corporation operates a hazardous waste storage facility.
ChemCo Inc. buys BioChemical before it is discovered that the firm’s disposal practices
violated CERCLA. With respect to these violations, Superfund imposes on ChemCo
a. strict liability.
b. liability under the nuisance doctrine.
c. liability on a negligence theory.
d. no liability.
Gerald files a petition in bankruptcy. An automatic stay will apply to actions by
creditors seeking to collect Gerald’s debts comprised of
a. alimony.
b. child-support.
c. none of the choices.
d. car payments.
Fact Pattern 2-1B
Bryn, Cornell, and Duke are general partners in Equity Lending, a consumer credit,
mortgage, and investment firm. Their agreement states that it is a breach of the
agreement for any partner to assign his or her interest to a creditor without the consent
of the other partners.
Refer to Fact Pattern 2-1B. Bryn, Cornell, and Duke decide to admit Giselle as a new
partner in Equity Lending. Giselle’s liability for partnership debts incurred before her
admission is
a. limited to her capital contribution to the firm.
b. limited to her personal assets.
c. nothing.
d. unlimited.
Livia takes temporary family leave from her job at Meatpackers Corporation to care for
a new baby. On Livia’s return from the leave, Meatpackers must
a. restore Livia to her original position.
b. reimburse Livia for her expenses while on leave.
c. promote Livia to the status of a key employee.
d. do nothing.
Super Discount Store sells goods to consumers and businesses in several states in the
Midwest. Most of the goods are sold on credit. Super Discount often takes a security
interest with the goods as collateral. The state in which a financing statement should be
filed depends on the location of
a. the debtor.
b. the collateral.
c. the store in which the goods were sold.
d. the place from which Super Discount manages its operations.
Clark hires Dimitri to act as his agent to purchase Expo Sports Arena, Inc. Clark tells
Dimitri to reveal that he is buying the firm and its assets on behalf of a third party and
to tell the seller who that third party is. Clark is
a. a disclosed principal.
b. an apparent principal.
c. an undisclosed principal.
d. a partially disclosed principal.
Jasmine receives an unsolicited credit card in the mail and tosses it on her desk.
Without Jasmine’s permission, her roommate Ilene uses the card to buy a new tablet for
$500. Jasmine is
a. liable for $500.
b. liable for $250.
c. liable for $50.
d. not liable for any amount.
Beatrix defaults on a debt to Credit Loan Corporation (CLC). As a creditor, CLC can
place liens on all of Beatrix’s property except
a. motor vehicles used to commute to work.
b. stock in various corporations.
c. items that the debtor selects.
d. vacant commercial property.
Lena is a salesperson for Musical Instruments, Inc. She tells Nayda, a customer, that an
instrument has a certain quality when, as Lena knows, it does not. In reliance, Nayda
buys the instrument. Liable for this misrepresentation is
a. no one.
b. Lena.
c. Musical Instruments.
d. Nayda.
Ralph is interested in buying a franchise from Sparkle Beverages Inc. For Ralph to
make an informed decision concerning this purchase, Sparkle Beverages must disclose
in writing or online
a. general estimates of costs and sales, but not the basis for them.
b. material facts such as the basis of projected earnings figures.
c. no information.
d. start-up requirements, but not renewal conditions.
Roderick possesses five hundred acres of forested property. Roderick has the right to
use the land, including cutting its timber, for life. Roderick also has the right to lease the
land for a period not to exceed his life. This ownership interest is
a. a fee simple absolute.
b. a leasehold estate.
c. a life estate.
d. an easement.
Delaney is an accountant charged with negligence by Estimation & Valuation Services
Inc., a client. Delaney may successfully defend against the claim if he can show that
a. scienter was lacking.
b. he complied with all International Financial Reporting Standards.
c. the negligence was not the proximate cause of the client’s losses.
d. the negligence was only contributory.
Misty’s debit card, issued by National United Bank, is stolen and used without her
permission. She tells the bank within thirty days. She may be required to pay no more
than
a. $5.
b. $50.
c. $500.
d. $5,000.
Shipping Corporation applies to TransInsurance Company for a fire insurance policy on
Shipping’s warehouse. On the application, Shipping understates the age of the property
to obtain a lower premium. When a fire destroys the warehouse, TransInsurance can
a. deny payment, because a fire destroyed the warehouse.
b. deny payment, because of fraud in the application.
c. not deny payment, because a fire destroyed the warehouse.
d. not deny payment, because the application is not part of the policy.
Freddi buys bike shoes from Get n” Gear Store, telling the clerk that she wants the
shoes to compete in High Pace Triathlon. The shoes break apart during the competition,
causing Freddi to be injured in a fall. Get n” Gear most likely breached
a. an express warranty.
b. an implied warranty of fitness for a particular purpose.
c. an implied warranty of merchantability.
d. a warranty of title.
Grid Tools & Hardware Company is subject to a decision by the Consumer Product
Safety Commission. Opposed to the decision, Grid Tools wants a court to review it.
First, however, the firm must use all of the potential administrative remedies. This is
a. an actual controversy at issue.
b. standing to sue.
c. the exhaustion doctrine.
d. the ripeness doctrine.
Quisa and Reilly are partners in Sport Bikes, which rents and sells bikes, bike
accessories, and related gear. Quisa manages the business. Unless the partnership
agreement states otherwise, Quisa is
a. entitled to compensation in proportion to her effect on the business.
b. entitled to compensation in proportion to her effort.
c. entitled to compensation in proportion to her capital contribution.
d. not entitled to compensation.
Darwin serves in a representative capacity for Ewan. To accomplish the objectives of
this relationship, Darwin’s authority can be implied
a. by contradiction.
b. by custom.
c. by whim.
d. under no circumstances.
Fleet Feet, an online travel company, buys blocks of rooms from Grande Hotel, a hotel
in Harbor City, at a wholesale rate. Fleet Feet resells the rooms to consumers at a retail
rate. One recent effort by cities to collect taxes from e-commerce has focused on
a. hotels that sell blocks of rooms at wholesale rates.
b. non-resident consumers who reserve rooms in in-state hotels.
c. online travel companies.
d. the dire financial straits of the cities during the latest recession.
A holder takes an instrument for value if he or she accepts the instrument in payment of
a preexisting obligation.
Federal administrative agencies can exercise only those powers that a state legislature
has delegated to them in enabling legislation.
Motor Vehicles Body Shops contracts to buy from Paint Supply & Equipment
Headquarters, Inc., twenty-four spray paint guns at $30 each to be delivered by October
Paint Supply knows that Motor Vehicles Body Shops will use the guns to complete a
special job by October 31 for a certain auto dealer. Motor Vehicles Body Shops expects
to make $17,000 profit from the job. Paint Supply fails to deliver on October Motor
Vehicles Body Shops attempts to buy substitute spray guns, but must pay $40.00 for
each and take delivery on October 15, cutting Motor Vehicles Body Shops’ profits when
the dealer arranges for some of the job to be done elsewhere. Motor Vehicles Body
Shops sues Paint Supply. What is the measure of recovery?
The partnership is a pass-through entity and a taxpaying entity.
Insurance companies must spend at least 85 percent of all premium dollars from large
employers on benefits and quality improvements.
A concentrated industry is one in which either a single firm or a small number of firms
carry out the separate functions of the chain of production.
Unless a limited liability company indicates otherwise, the Internal Revenue Service
automatically taxes it as a partnership.
A trust created by a will to come into existence on the settlor’s death is an irrevocable
living trust.
If no fixed duration of the partnership is specified, the partnership is a partnership in
perpetuity, which means that the partnership cannot be dissolved.
When the meaning of a statute’s language is unclear and an agency interprets it, a court
need not follow the interpretation even if it is reasonable.
Puffery constitutes deceptive advertising.
Each director can access the corporation’s facilities and premises.
In some situations, the unauthorized indorsement of a payee’s name can be as effective
as if the real payee had signed.
A debt-collection agency is someone who regularly attempts to collect debts on behalf
of someone else, usually for a percentage of the amount owed.
One who dies after having made a valid will is said to have died intestate.