Energy Resources, LLC, is a limited liability company. Rather than distribute its profits
to its members, Energy wants to reinvest the profits in its business. For this reason,
Energy may prefer to be taxed as
a. a corporation.
b. a partnership.
c. a sole proprietorship.
d. a syndicate.
George has a badly infected right foot. Herb, George’s physician, prescribes amputation.
George agrees. During the operation, Herb amputates the left foot. In George’s suit
against Herb, George’s best theory for recovery is
a. assumption of risk.
b. negligence per se.
c. res ipsa loquitur.
d. strict liability.
Better Sales, Inc., is the offeror and City Goods Corporation is the offeree under a
unilateral sales contract in which Design Products Company is also interested. Better is
not notified of City’s performance within a reasonable time. Better
a. may treat the offer as having lapsed.
b. must assume that City has started to perform.
c. must contact City.
d. must contract with Design.
Fact Pattern 27-1
First State Bank issues a letter of credit in favor of Oboe Company, an American firm,
to facilitate an international sales contract to buy resources from Lapland Mining, Ltd.,
a Finnish company.
Refer to Fact Pattern 27-1. In a letter of credit, the beneficiary is
a. Lapland.
b. Oboe.
c. First State Bank.
d. none of the above.
On behalf of Premier Shipbuilding Corporation (PSC), Rita orders 1,000 cases of
1/4-inch nuts from Steel Parts Company’s 10,000-case lot. Steel Parts separates 1,000
cases from the lot. Title and risk of loss
a. remain with Steel Parts until PSC acknowledges tender of delivery.
b. remain with Steel Parts until PSC accepts 1,000 cases.
c. shift to PSC after it accepts the nuts and inspects them for defects.
d. shift to PSC when Steel Parts separates the cases.
Nori files a suit against Mica to enforce an oral contract for the sale of lakeshore
property that would otherwise be unenforceable under the Statute of Frauds. The court
could enforce the deal if
a. Nori foreseeably and justifiably relied on Mica’s promise to her detriment.
b. Mica denies the existence of any contract.
c. neither party has begun to perform.
d. the deal does not involve customized goods.
Nina is a director of Omega, Inc. Under the standard of due care owed by directors of a
corporation, Nina’s decisions must be
a. ambiguous and questionable.
b. arguable and defensible.
c. informed and reasonable.
d. perfect and unassailable.
Livewire Company and Kitchen Products, Inc., sign a document that states Livewire
agrees to design a Web page for Kitchen Products, which agrees to pay for the service.
Livewire and Kitchen Products have made
a. an express contract.
b. an implied-in-fact contract.
c. an implied-in-law contract.
d. a quasi contract.
Readmore Bookstore Corporation files a registration statement with the Securities and
Exchange Commission and provides a prospectus describing the securities to investors.
These items are intended to provide sufficient information so that the financial risks
involved can be evaluated by
a. market professionals to explain to all investors.
b. government regulators to disclose to the general public.
c. sophisticated investors only.
d. unsophisticated investors.
Open Country, Inc., makes grills, camp ovens, and other outdoor cooking appliances.
Under the Restatement (Third) of Torts: Products Liability, Open Country could be
liable for a warning defect if there is a foreseeable risk of harm posed by one of its
products and
a. the omission of a warning renders the product not reasonably safe.
b. there is a reasonable alternative design.
c. there is a lack of care in making of the product.
d. none of the choices.
Congress enacts air quality legislation that relates to manufacturing plants. To
implement this law, as is typical of other environmental statutes and regulations, the
federal government will most likely rely on
a. all levels of government.
b. local and state governments only.
c. state governments only.
d. the federal government only.
Jill and Karl contract for the sale of Jill’s horse for $1,000. Unknown to either party, the
horse has died. Karl is
a. entitled to another horse of equivalent value.
b. not required to pay due to the mutual mistake.
c. not required to pay due to the unilateral mistake.
d. required to pay because he assumed the risk the horse might die.
Betty, a minor, signs a contract to buy an SUV by misrepresenting her age to be
twenty-one. In most states, Betty may
a. disaffirm the contract.
b. disaffirm the contract only if she first makes full payment.
c. disaffirm the contract only if she returns the SUV in original condition.
d. not disaffirm the contract.
The title of a case appears as “Duck Sales Corp. v. Egret Supply Co.” The party in
whose favor the case was decided
a. could be either party.
b. must be neither party.
c. must be Duck.
d. must be Egret.
First Community Bank agrees to accept a check by setting aside sufficient funds to
cover the amount. This check is considered
a. cashed.
b. certified.
c. deposited.
d. provisionally credited.
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.
DeLouse Plastics Corporation pays its executives an excessive amount relative to other
employees and to what executives at competitive companies are paid. This is most
likely to be challenged as
a. illegal and unethical.
b. illegal only.
c. neither illegal nor unethical.
d. unethical only.
Tanya attempts to free herself from the duties of her contract with Drew by telling Drew
to find someone else to perform them. This is
a. a delegation.
b. an assignment.
c. a third party beneficiary contract.
d. none of the choices.
Nina wants to transfer a check to Opie. The check is not defective if it
a. has an obvious irregularity on its face.
b. has been previously honored.
c. is incomplete so that an element of negotiability is lacking.
d. is overdue.
Dita takes out a student loan from Everloan Bank. When she fails to make the
scheduled payments for six months, Everloan advises her of further action that it will
take. This violates
a. no federal law.
b. the Fair and Accurate Credit Transactions Act.
c. the Fair Debt Collection Practices Act.
d. the Truth-in-Lending Act.
Superior Energy Corporation engages in ethical behavior solely for the purpose of get-
ting good publicity and thereby increasing profits. Superior is
a. acting unethically in its pursuit of publicity.
b. acting unethically in its pursuit of profits.
c. acting unethically in its setting of priorities.
d. not acting unethically.
Rossi uses cyber tools to steal the personal information of unsuspecting consumers
online. Like other cyber thieves, Rossi is most likely to
a. sell the data to other thieves online.
b. use the data to make purchases online.
c. use the data in retail outlets in the “real” world.
d. sell the data on a street corner in the “real” world.
Lacy is an accountant who prepares her clients’ tax returns. Muff is not an accountant,
but he also prepares tax returns for clients. Under the Internal Revenue Code, liability
for preparing a false return may be imposed on
a. Lacy and Muff.
b. Lacy only.
c. Muff only.
d. neither Lacy nor Muff.
After notice-and-comment rulemaking, the U.S. Bureau of Land Management (BLM)
issues a new rule and applies it to Clearcut Timber Company. Clearcut appeals the
application to a federal court. The court will most likely defer to the BLM’s
interpretation of
a. the facts and the law.
b. the agency’s authority.
c. procedural requirements.
d. the Constitution.
Dora leases a house from Evan for a two-year term. To ensure the validity of their lease,
it should include
a. a description of the premises.
b. a due date for the payment of the property taxes.
c. a requirement that Dora perform structural repairs to the house.
d. a requirement that Evan carry liability insurance.
Precision Press Corporation, a disk manufacturer, sells its DVDs in certain quantities to
Quik Shows, a retailer, for $275 but charges Rite Views, a competitive retailer, $350.
This is most likely a violation of
a. the Clayton Act.
b. the Federal Trade Commission Act.
c. the Sherman Act.
d. no antitrust law.
Qang and other foreign citizens allege human rights violations committed overseas by
the government of Burma on behalf of Railway Construction Company, a U.S. firm. To
seek redress for their injuries in a U.S. court, these citizens can
a. allege antitrust injuries under the Sherman Act.
b. bring civil suits under the Alien Tort Claims Act.
c. file criminal complaints under Title VII of the Civil Rights Act.
d. do nothing.
Fact Pattern 30-1
Fay works for General Construction Contractors (GCC) but is the only woman on her
shift. The male workers often play minor pranks on each other. Fay attempts a prank.
Hank, her supervisor, fires her, because “GCC doesn”t hold with pranks.”
Refer to Fact Pattern 30-1. Fay files a suit against GCC under Title VII. To succeed, Fay
must show that Hank’s statement was
a. a legitimate, nondiscriminatory reason for Fay’s discharge.
b. also Fay’s feeling about pranks at GCC.
c. only a pretext for Fay’s discharge.
d. unofficial GCC policy.
Dale files a suit against Eve, alleging that she used fraud to induce him to enter into a
contract with her. Proof of an injury is required
a. to recover damages.
b. to rescind the contract.
c. to undo Eve’s influence.
d. under no circumstances.
Opie offers to sell his guitar to Pinky for $100. Pinky agrees. They complete and sign a
printed form that includes, near the blanks for their signatures, the word ‘seal.” This is
a. a formal contract.
b. an informal contract.
c. a social contract.
d. no contract.
Smitty, driving while intoxicated, causes a car accident that results in the death of
Tiffany. Smitty is arrested and charged with a felony. A felony is a crime punishable by
death or imprisonment for
a. any period of time.
b. more than one year.
c. more than six months.
d. more than ten days.
In 2010, Online Marketing Corporation registers its trademark as provided by federal
law. After the first renewal, this registration
a. is renewable every ten years.
b. is renewable every twenty years.
c. runs for the life of the corporation plus seventy years.
d. runs forever.
Mouth-Waterin” Treats Company wants to sell its candy in a normal-sized package la-
beled “Gigantic Size.” NuFabrics, Inc., wants to advertise its sweaters as having “That
Wool Feel,” but does not want to specify on labels that the sweaters are 100 percent
polyester. Can these firms market their products as they would like? If not, why not?
Aiding or assisting in the preparation of a false tax return is a felony.
Airway International, Inc., is a commercial passenger airline. Airway includes on its
tickets a clause that states the airline is not liable for any injury to, or the death of, any
passenger caused by its, or its employees’, negligence. An Airway flight from Boston to
New York crashes into Long Island sound, resulting in the deaths of all passengers. The
cause of the accident is found to be due to Airway’s negligence. Based on the clause on
its tickets, can Airway avoid liability?
A person who receives an instrument as a gift normally possesses the rights of an HDC.
A mechanic’s lien can be enforced to obtain payment for work that improves personal
property.
A contract to do something that is prohibited by statutory law is void.
Contractual capacity refers to the size or volume of a contract.
An unpaid seller can bring an action to recover the purchase price, on the buyer’s breach
of a contract, only if the goods are first disposed of.
The rights of a third party beneficiary under a contract are subject to any express
reservation of rights in the contract to the original parties.
Impersonating a victim to make provocative comments online is vishing.
Specific performance is the remedy customarily used when one party has breached a
contract for a sale of land.
To create an enforceable security interest, the secured party must give value.
The act of state doctrine provides that only a head of state can make treaties with an-
other nation.
Acting in good faith gives a business firm a better chance of defending its actions in
court.
An employer may hire an illegal immigrant if the employer files a special form.
The basic purpose of antitrust law is to regulate economic competition.
A profit is a right to make a profit from some part of land or some product of the land,
and the right terminates once that profit is made.
Ethics is the branch of philosophy that focuses on what constitutes right and wrong
behavior.
A buyer may reject a seller’s goods under any circumstances.