Fact Pattern 28-1
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 28-1. Nikas ownership interest is
a. a fee simple absolute.
b. a leasehold estate.
c. a life estate.
d. an easement.
Optima Medico Corporation, a U.S. firm, signs a contract with Pharma Beneficial, Ltd.,
a Canadian firm, to give Pharma the right to sell Optimas products in Canada. This is
a. a distribution agreement.
b. a joint venture.
c. direct exporting.
d. licensing.
Edna and Flavia buy a boat that they dock in a marina near Gulfport, Mississippi. On
the death of either owner, that owners interest in the boat passes to her heirs. This is
a. a joint tenancy.
b. a tenancy by the entirety.
c. a tenancy in common.
d. ownership in fee simple absolute.
Eager Beaver Corporation fails to hold a meeting to adopt bylaws. Under this
circumstance, Eager Beaver will still be treated as a legal corporation in those states
that recognize the common law doctrine of
a. corporation by estoppel.
b. de facto corporation.
c. de jure corporation.
d. ultra vires.
Office Company and Keen Company wish to combine all assets, stock, and personnel
into a new firm to be called OK Corporation. This is
a. a consolidation.
b. a merger.
c. a share exchange.
d. a takeover.
In the facts of the first question, according to the reasoning of the dissent in the Central
case, the prevailing party would be
a. both Vance and WSU.
b. neither Vance nor WSU.
c. Vance.
d. WSU.
First Editions, Inc., a book dealer based in Texas, does business in all fifty states
exclusively online. According to a decision of the United States Supreme Court, for an
individual state to compel an out-of-state business to collect and remit state taxes, the
business must have in that state
a. a substantial physical presence.
b. a potential marketing base.
c. an accessible Web site.
d. a party paid to solicit business for its products.
Molly files a suit against Naomi. They meet, and each partys attorney argues the partys
case before a judge and jury. The jury presents an advisory verdict, after which the
judge meets with the parties to encourage them to settle their dispute. This is
a. court-ordered arbitration.
b. early neutral case evaluation.
c. a mini-trial.
d. a summary jury trial.
Frank and AgriShip, Inc., enter into a contract for AgriShip to transport a silo of
soybeans for which Frank agrees to pay. When AgriShips schedule conflicts, the firm
contacts Hybrid Transport Company, to which AgriShip “assigns all rights under the
contract. This transfer is
a. an assignment and a delegation.
b. an assignment only.
c. a delegation only.
d. neither an assignment nor a delegation.
Khalil holds a security interest in inventory owned by Luc. Khalil assigns his interest in
the inventory to Mal. Mal becomes the secured party of record
a. automatically.
b. if Khalil advises Luc of the assignment.
c. if Mal advises Luc of the assignment.
d. if Mal files a uniform amendment form.
Kelly transfers shares of stock that she owns in Lone Starz Company to Max. A
shareholders meeting takes place before Maxs ownership is entered in Lone Starzs
stock book. A vote at the meeting can be cast by
a. Kelly and Max.
b. Kelly only.
c. Max only.
d. neither Kelly nor Max.
A court adjudicates Huck mentally incompetent and appoints Inez to be his guardian.
Later, without Inezs knowledge, Huck signs a contract to sell his farm to Kyle for its
real market value. The contract is
a. enforceable if Huck comprehended the consequences.
b. enforceable if Huck knew the market value of the farm.
c. enforceable if Huck was the record owner of the farm.
d. void.
Ivy and Justin want to form and do business as Kayak Adventures Corporation. A
corporation can be owned by
a. natural persons only.
b. artificial persons only.
c. artificial or natural persons.
d. neither “artificial nor “natural persons.
John writes a check to Kay as payment for a DVD player but soon discovers the player
is broken. He goes to the drawee bank and orally authorizes Larry, a bank officer, to
stop payment on the check. This order is valid for
a. fourteen days.
b. fourteen months.
c. thirty days.
d. six months.
Olly applies for a job with Petro Company. Petro does not hire Olly because of his
ethnicity, or national origin. This is
a. desperate-measure discrimination.
b. disparate-impact discrimination.
c. disparate-treatment discrimination.
d. not discrimination.
Checkerboard Pizza, Inc. (CPI), files a petition in bankruptcy for relief through a
reorganization. CPIs reorganization plan must contain
a. a plan to turn over its future income to the trustee.
b. a certificate proving attendance at a credit-counseling briefing.
c. a provision of adequate means for the plans execution.
d a statement of preference for one creditor over another.
AgriEquip Service & Supply, Inc., sends Merilyn an e-mail in which AgriEquip offers
to employ her for certain hours and a specific amount of money over a limited period of
time. She responds with a counteroffer that reduces the hours and increases the money.
AgriEquip e-mails an acceptance. Merilyn performs, but AgriEquip refuses to pay. She
files a suit against AgriEquip for breach of contract. The court is most likely to rule that
the e-mail
a. showed only an agreement to agree.
b. was an agreement to the essential terms of an employment contract.
c. constituted an unenforceable, non-existent contract.
d. contained a contract but is unenforceable because it is electronic.
A common ethical dilemma faced by the management of General Holdings Corporation
involves the effect that its decision will have on
a. one group as opposed to another.
b. the firm’s competitors.
c. the government.
d. the U.S. Chamber of Commerce.
Joy induces Kelly to enter into a contract for the purchase of a condominium about
which Joy knowingly misrepresents a number of material features. When Kelly
discovers the truth, Kelly can
a. enforce the contract and seek damages.
b. enforce the contract but not seek damages.
c. neither enforce the contract nor seek damages.
d. seek damages but not enforce the contract.
Edy obtains a homeowners insurance policy with First Source Insurance Company.
First Source can cancel the policy
a. if Edy appears as a witness in a case against First Source.
b. if Edy fails to pay the premiums.
c. if Edy makes changes that add to the homes value.
d. under no circumstances.
Elle is an agent for Fine Cosmetics, Inc. Elle owes Fine Cosmetics the duty of
a. avoidance.
b. compensation.
c. indemnification.
d. performance.
Select Furniture Store sells household consumer goods. To create a purchase-money
security interest, Select Furniture must
a. assign, to a collecting agent, a portion of its accounts payable.
b. assign, to a collecting agent, a portion of its accounts receivable.
c. extend credit for part or all of the purchase price of the goods.
d. refer purchasers to a third-party lender.
A state statute requires machinery in industrial plants to include automatic shut-off
switches accessible to each employee working on the machine. Steel Companys (SCs)
equipment does not have the switches. Trudy, an SC employee, suffers an injury that an
accessible shut-off switch would have prevented. Trudys best theory for recovery
against SC is
a. assumption of risk.
b. negligence per se.
c. res ipsa loquitur.
d. strict liability.
In Sales Distribution Corp. v. Consumer Products Co., the court decides that a
precedent is incorrect or inapplicable. The court
a. may rule contrary to the precedent.
b. must apply the precedent.
c. must ask a higher court to rule on the case.
d. must refuse to decide the case.
On Monday, Eve deposits in her account at Fiscal Bank a local check for $500. After
5:00 p.m. on Friday, from these funds, Eve can withdraw no more than
a. $100.
b. $400.
c. $500.
d. $600.
Senator Wyden and other politicians want to restrict the flow of technologically
advanced products and data from the United States to other countries. To restrict or
encourage exports, Congress can
a. do nothing.
b. assess antidumping duties.
c. impose export taxes.
d. set export quotas.
A Minnesota state statute restricts certain kinds of advertising to protect consumers
from being misled. A court would likely hold this statute to be
a. an unconstitutional restriction of speech.
b. constitutional under the First Amendment.
c. justified by the need to protect individual rights.
d. necessary to protect national interests.
Ken relinquishes the right to his son Lees control, care, custody, and earnings. This act
is
a. a disaffirmance.
b. an emancipation.
c. a ratification.
d. restitution.
Ridgeline Bank provides Stanley 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. an interest-only mortgage.
d. a violation of the law.
Jaqy distributes a handbill among her neighbors accusing one of themKedof being a
convicted sex offender. The statement is defamatory only if
a. a neighbor repeats it.
b. Ked suffers emotional distress.
c. the statement is true.
d. the statement is false.
Fact Pattern 31-1
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 31-1. First State Bank must pay Lapland when Lapland
a. enters into the contract with Oboe.
b. verifies that Oboe has the money to pay for the purchase.
c. complies with the terms and conditions of the letter of credit.
d. none of the above.
Outbound Travel Agency agrees to hire Petra for one year at a salary of $1,000 per
week. When Outbound cancels the contract, Petra spends $2,000 to obtain a similar job
that pays $750 per week for a year. Petra is entitled to recover
a. the amount of the wages that Outbound promised only.
b. the difference between the wages at the two jobs only.
c. the difference between the wages at the two jobs plus $2,000.
d. $2,000 only.
If a seller is a merchant, and the seller holds the goods, the risk of loss passes to a buyer
when the buyer takes physical possession of the goods.
A marketing technique can be a trade secret.
Bowie, a certified public accountant, prepares and certifies Candy Products
Corporations financial statements. These statements are included in Candys registration
statement filed with the Securities and Exchange Commission before Candys offering
of securities. Dona buys a security covered by the registration statement. Based on this
transaction, Dona files a suit against Bowie under Section 11 of the Securities Act of
1933 and Section 10(b) of the Securities Exchange Act of 1934. To succeed in the suit,
what must Dona prove? Bowie responds that Dona was not in privity with him and that
even if she had been in privity, she cannot prove his lack of due diligence. Can Bowie
prevail on these grounds? Why or why not?
An express warranty cannot be limited.
The most common way to acquire personal property is to produce it.
Liquidated damages are damages that are certain in amount.
A generic term is not protected under trademark law unless it acquires a secondary
meaning.
A payee whose name is misspelled on an instrument cannot indorse the instrument.
A delegatee is a party who transfers his or her obligation under a contract to another
party.
A security agreement must be filed in person to be valid and enforceable.
State securities laws apply mainly to interstate transactions.
For a creditor to have an enforceable security interest, the debtor must have title to the
collateral.
Only state law governs drug tests of private-sector employees.
The consideration paid to an insurer to obtain an insurance policy is the premium.
When a check “bounces, its holder can resubmit the check later, hoping that sufficient
funds will be available.
A contract involving a sale is the only contract relating to an interest in land that must
be in writing to be enforceable.
Tariffs are imposed only on exports.