Two universities located within 30 miles of each other agree to divide their market so as
to help them both. The two schools draw a line down a map and each university agrees
to accept students only on their side of the line.
John D. Rockefellers oil business was the main reason which legislation was enacted?
a. Sherman Act.
b. Robinson-Patman Act.
c. Clayton Act.
d. NLRA.
John purchased $600 worth of clothes from Clothing Mart. He paid for the clothes with
a credit card. When he received his statement, he sent the credit card company a check
for $600. The credit card company mistakenly recorded his payment as $60. When John
received his next statement, he noticed the $540 error and contacted the credit card
company.
A few days later when he attempted to use his card to buy gasoline, he was told by the
cashier that the card had been canceled and she was instructed to take his card. John
was shocked, embarrassed, and angry. When he contacted the credit card company, it
pointed out a provision in his initial contract for the card that stated the company could
revoke his card privileges at any time with or without cause.
What federal law applies to this particular situation?
a. Truth in Lending Act.
b. Fair Credit Billing Act.
c. Fair Credit Reporting Act.
d. Equal Credit Opportunity Act.
Miguel reprogrammed a cellular telephone so that it intercepted electronic funds
transfers and rerouted them to Miguels bank account. What crime has he committed?
a. Insurance fraud, since the banks insurance will have to cover the misdirected funds.
b. Wire fraud.
c. Mail fraud.
d. Embezzlement
Sea Rovers, Inc. contracted to sell 1,000 pounds of shrimp to the Seafood Shack with
delivery on June 1. On May 1 Sea Rovers advised the Seafood Shack that it would not
be able to deliver the shrimp. The Seafood Shack:
a. can sue Sea Rovers immediately for breach of contract.
b. must wait until June 1 to see if Sea Rovers will perform before suing for breach of
contract.
c. cannot sue Sea Rovers because Sea Rovers gave adequate notice.
d. must wait until actual damages are determined before it can sue.
Tim buys a high-powered tool from Binford Tools to use on the construction of his own
garage. Binford Tools provides a full warranty on the tool for the first six months. To
pay for the tool, Tim signs a negotiable promissory note which contains the FTC
Notice. Binford properly negotiates the note to First Finance. Within three weeks, the
tool stops working and Binford refuses to repair or replace it. In the meantime, First
Finance demands payment from Tim. Under the Federal Trade Commission rules, this
consumer credit situation means First Finance can:
a. collect if it is a holder in due course.
b. collect if it is not a holder in due course.
c. collect whether or not it is a holder in due course.
d. not collect.
Harriett raises and sells hippos. In order to keep her hippos happy and healthy, she feeds
them Hippo Chow, which she buys from the local pet store. Under the UCC, Harriett is:
a. a merchant of both hippos and Hippo Chow.
b. a merchant of hippos, but not of Hippo Chow.
c. a merchant of Hippo Chow, but not of hippos.
d. not a merchant of either hippos or Hippo Chow.
Larry was working at his job at the landfill when he got off his tractor to take a break.
He noticed some papers on the ground and went to throw them on a trashpile. As he
held the papers he saw a confidential report from MegaCorp stating it would be
announcing the development of a new super computer in two weeks. Larry has no
relationship with MegaCorp. Larry mortgaged his house and borrowed all the money he
could to purchase $200,000 worth of MegaCorp stock. Larry bought the stock for $32 a
share. When the announcement was made public, MegaCorp’s stock skyrocketed. Larry
sold his stock a few weeks later and made a huge profit. Larry has:
a. committed a criminal act.
b. violated SEC regulations but not the criminal law.
c. committed an act of improper insider trading.
d. done nothing legally wrong.
If each partys promises are listed separately in the contract, the are probably:
a. covenantal promises.
b. conditional promises.
c. reciprocal promises.
d. material promises.
Unless the form provides for a longer period, a proxy is valid for how long under the
Model Act?
a. 90 days.
b. six months.
c. 11 months.
d. one year.
Under the federal Bankruptcy Code, the exemption amount for the debtor’s personal
residence is:
a. $20,200.
b. $37,100.
c. unlimited.
d. $50,000.
Donna defaulted on her loan owed to Second State Savings and Loan. The loan was
secured with Donna’s car. Donna used the car for personal and family reasons. Which
statement is correct?
a. Second State may take Donna’s car without a court order if this can be done without a
breach of the peace.
b. Second State may take Donna’s car without a court order even if it means a breach of
the peace.
c. Second State may not take Donna’s car because it is a consumer good.
d. Second State may not take Donna’s car because perfection was automatic.
Larry goes to his barber who has cut his hair for the past several years. The barber
proceeds to cut his hair as they talk about the most recent snow storm to hit the area.
This is an example of a:
a. unilateral, implied contract.
b. bilateral, implied contract.
c. unilateral, express contract.
d. bilateral, express contract.
Two universities located within 30 miles of each other agree to divide their market so as
to help them both. The two schools draw a line down a map and each university agrees
to accept students only on their side of the line.
A monopoly is illegal:
a. under any circumstances, under Section 2 of the Sherman Act.
b. only if it is gained or maintained by using wrongful tactics.
c. if you have greater than 50 percent of market share.
d. any time there are no interchangeable products.
Which of the following are generally considered to be legal offers?
a. Placing an item up for auction.
b. Catalog advertisements.
c. Price lists.
d. A note scribbled on a restaurant napkin that includes the details of the offer.
Rich and Archie sign an agreement in which Archie agrees to deliver ten cases of
champagne in 5 days. The parties negotiated and meant to say in the written agreement,
delivery in 50 days. If the two cannot settle this dispute, and Archie still wants to
deliver the champagne, then Archie should sue for the remedy of:
a. reformation.
b. rescission.
c. restitution.
d. reliance.
Yi conveyed a piece of land by general warranty deed. The deed included a covenant of
seisin. With this covenant, Yi promised that:
a. she has the power to make the conveyance.
b. the land is free from any easement, profit, mortgage, etc.
c. no other person can lawfully claim the land.
d. she owns whatever estate she is conveying.
Seventy farmers in Morgan County joined together to gain the advantages of purchasing
seed and fertilizer in bulk and of obtaining better prices when distributing and selling
their crops. These farmers have formed a:
a. business trust.
b. cooperative.
c. franchise.
d. joint venture.
Whether or not the zoning board will grant a request for a variance depends upon:
a. the type of the proposed building.
b. the reaction of the neighbors.
c. the reason the owner claims she is harmed by the zoning ordinance.
d. All of the above.
Tina wishes to learn what records the IRS has about her. Under the Freedom of
Information Act (FOIA),
a. Tina can only obtain copies of declassified information.
b. Tina is entitled to all information the IRS has about her.
c. Tina can only obtain information about the IRS, not records concerning herself.
d. Tina cannot obtain any information since the IRS is exempt from the FOIA.
Coastal City Power Plant received its annual sulfur dioxide emission allowance.
Because it is using a low-sulfur fuel which burns cleaner than some fuels, it does not
need its entire allowance this year. Coastal:
a. loses whatever unused allowance it has for the year.
b. may sell its leftover allowance to another company.
c. will not be regulated by an allowance next year since it was within its allowance for
this year.
d. will only avoid future regulation if it signs an agreement to continue using either
low-sulfur coal or natural gas in the future.
The Chicago School’s position on antitrust legislation would be to ask:
a. “Has a competitor been harmed?”
b. “Has competition been harmed?”
c. “Will competitors be allowed to freely enter the market?”
d. “Will interstate commerce be affected?”
Lois receives an e-mail asking her to update her personal information on a website that
is an illegal imitation of a legitimate site. This practice:
a. is a crime called phishing.
b. is a tort called information theft.
c. is a breach of contract action known as shilling.
d. may be prosecuted under the GLB Privacy Act.
An S Corporation cannot have more than ____ shareholders.
a. 100
b. 75
c. 50
d. 25
MegaCorp purchased 10,000 shares of its own stock that had previously been owned by
private investors. The stock MegaCorp repurchased is called:
a. authorized and unissued.
b. authorized and issued.
c. treasury stock.
d. repurchased stock.
John is auditing MegaCorp. He finds an accounts payable for 1,000 reams of photocopy
paper. He checks to make sure the paper actually arrived and that the receiving
department had signed and dated the invoice. He also checks the original purchase
order to make sure the purchase was properly authorized. This illustrates:
a. tracing.
b. vouching.
c. following.
d. monitoring.
Mitch takes his two best suits to Quality Cleaners and receives a ticket as a receipt.
Quality tells Mitch his suits will be cleaned and will be ready to be picked up on
Monday. Another customer overhears the exchange and early on Monday goes to
Quality, convinces the worker he is Mitch but that he has lost his receipt. He identifies
and retrieves the suits, which happen to fit him perfectly, too. Quality Cleaners:
a. is strictly liable to Mitch for the suits.
b. is liable to Mitch only if Mitch can prove Quality was grossly negligent.
c. has no liability unless Mitch proves Quality did not use ordinary care.
d. will avoid liability if the receipt contained an exculpatory clause excluding gross
negligence.
The term “corporate manager” refers to:
a. directors.
b. corporate officers.
c. Both of the above.
d. None of the above.
Ron is the business agent for Kansas Sunshine, a rock band. He is also the agent for
another popular Midwestern rock group, City Sand. Ron negotiates a deal with a
Kansas City promoter to have City Sand play after a professional football game. The
promoter was willing to pay $250,000 for both groups to play after the game; however,
Ron talked her into booking just City Sand for $175,000. Given his contract with City
Sand, Ron made more money under this arrangement. Has Ron violated his fiduciary
duty to Kansas Sunshine?
a. Yes. It appears that Ron put his own interests ahead of his principal’s interests.
b. Yes. Ron cannot, under any circumstances, act as an agent for both groups.
c. Both a and b are correct.
d. Neither a nor b is correct since it is very common for rock band agents to represent
several groups at the same time.
Under the UCC, if a seller of goods breaches the contract, the buyer:
a. must “cover.
b. may receive only the current market value of the goods.
c. may “cover and then receive the difference between the original contract price and
the “cover price.
d. will be awarded the difference between the original contract price and the market
value of the goods if the buyer chooses to “cover.
Bob signed an agreement with Joe under which Bob agreed to purchase all the hay that
Joe grew during the coming growing season. This contract will be:
a. unenforceable due to its vagueness.
b. unenforceable due to the difficulty of devising an appropriate remedy for a breach.
c. enforceable as long as both parties act in good faith and Bob doesn’t suddenly
demand more hay than what was reasonably estimated.
d. unenforceable unless state real estate law makes an exception.
When an appellate court hears a case, it may:
a. affirm the decision.
b. reverse the decision.
c. modify the decision.
d. All the above are correct.
Wilfred was driving too fast for the icy road conditions and hit Sally’s car. Sally can sue
Wilfred in criminal court.
A buyer has an insurable interest in goods when they are identified.
Hammer bought a tool set from Weekend Projects, Inc. and signed a consumer credit
contract promising to pay for the tool set in 12 monthly installments. Weekend
promptly negotiated the instrument to its affiliate Easy Finance Co. in exchange for a
discounted payment. Easy Finance gave value for the instrument, in good faith, and
without knowledge of any defects or claims against the instrument. The tool set was
defective and therefore Hammer stopped making the monthly payments. Easy Finance
sues Hammer for the balance due on the instrument. Can Hammer raise this personal
defense (breach of implied warranty of merchantability) against Easy Finance? Discuss.
The Consumer Trade Commission focuses mainly on protection of consumers in the
area of antitrust law.
The Sixth Amendment declares that a person cannot be tried twice for the same
criminal offense.
Jenna works for Mega Corp as a production employee. She is paid an hourly wage. She
wishes to negotiate her own employment contract with management since she does not
agree with the terms of her union’s collective bargaining agreement. Can Jenna
negotiate her own contract? Explain.
An illusory promise is valid consideration.
Society is hurt when business managers behave ethically.
Assume that the state of Ohio passed a hazardous waste statute, seeking to protect the
general public and workers. The state statute did not violate the Commerce Clause
because it imposed no restriction on interstate commerce. Both the state statute and the
federal Occupational Safety and Health Act established job safety standards and
specified worker training and employer licensing, but the requirements differed.
Discuss which statute(s) Ohio corporations had to obey, and identify the source of the
answer.
If Terrill steals a digital camera and sells it to Samuel, Samuel will get a valid title as
long as he can prove he gave value for the camera and acted in good faith.
April put an advertisement in the newspaper advertising the sale of her computer for
$500. Simultaneously, six people responded to the ad by mail with formal written
acceptances. April is bound on all six contracts to sell her computer for $500.
Discuss a bailors liability for defects in the bailed property.
A court may, at times, discharge a party who has not performed.
If a contract is made with a person required by law to hold a license, and the purpose of
the license is protection of the public, the contract made by an unlicensed person will
generally be unenforceable.
What two exceptions did the UCC create for accord and satisfaction check cases?