The payment of John’s debt to Kirsten is guaranteed by John’s personal property.
Kirsten is most likely to perfect her interest by
a. attaching a bright label to John’s property.
b. calculating the precise amount of John’s debt.
c. correcting grammatical errors in the parties’ written agreement.
d. filing a financing statement with the appropriate authority.
Petra signs a check payable to Quincy, who indorses the back, gives it to Regional
Credit Union, and receives cash. The transfer of the check from Quincy to the credit
union is
a. an assignment.
b. a negotiation.
c. a payment.
d. a sale.
Brenda is a purchasing agent for Commodities Exchange Corporation. Dennis, a
Commodities corporate officer, gives Brenda written authority to buy for the firm as
many computers and peripheral devices as necessary. The next day, Dennis calls Brenda
and tells her to buy only fifty notebook computers and nothing else. Brenda shows the
written authority to E-Products, Inc., and enters into a contract with E-Products to buy
sixty notebook computers and a selection of printers, scanners, and extra storage media.
E-Products ships the order to Commodities. Is Commodities liable to E-Products under
the contract? Is Brenda liable? In each case, if so, why? If not, why not?
Giant Lift Corporation purchases all of the assets of Heavy Hydraulics Corporation.
With respect to Heavy Hydraulics’s liabilities, Giant Lift is
a. automatically responsible.
b. not responsible under any circumstances.
c. responsible if Heavy Hydraulics is a competitor of Giant Lift.
d. responsible if the sale is in fact a merger or consolidation.
In Financial Investment Co. v. Goodhands Insurance, Inc., there is no precedent on
which the court can base a decision. The court will not consider
a. social customs.
b. public policy.
c. social values.
d. the court will consider public policy or social customs and values.
Stan rents a safe-deposit box at Main Street Bank under a contract that gives Stan
exclusive knowledge and control over its contents. This is
a. a bailment.
b. accession.
c. abandoned property.
d. confusion.
In the ordinary course of business, Xtra Charge Company sells goods to Yvon and other
consumers on credit under installment sales contracts that typically require at least one
year of monthly payments. Xtra does not disclose all of the credit terms to its
customers. This practice is most likely to result in
a. a cease-and-desist order.
b. a fine.
c. no sanctions.
d. rescission of the contracts.
Jake bids on an item in an auction with reserve. Jake is the
a. offeror.
b. offeree.
c. promisee.
d. auctioneer.
Fresh Fast Service, Inc., offers to deliver produce to Growers’ Market’s customers for a
certain price. Fresh’s intent to extend a serious offer to Growers’ Market is determined
by reference to Fresh’s
a. assumptions.
b. beliefs.
c. intentions.
d. words and conduct.
David owns a house worth $100,000. He has an outstanding loan principal of $98,000.
David defaults on his mortgage payments. To avoid foreclosure proceedings, David
conveys his house to his lender in satisfaction of the mortgage. This is
a. a short sale.
b. forbearance.
c. illegal.
d. a deed in lieu of foreclosure.
Will and Jay want to form a general partnership. To form a legal partnership, their
agreement need NOT include
a. a sharing of profits and losses.
b. a joint ownership of the business.
c. an equal right to management in the business.
d. the initials LLC in the name of the business.
Ben and Ivy enter into a contract under which Ben agrees to cater Ivy’s wedding in
exchange for a cash down payment. The contract expressly prohibits any transfer of
rights. A contract right may be transferred, however, if the transfer involves
a. a right to receive payment.
b. a right to Ben’s services.
c. rights under Ivy’s insurance policy against Ben’s failing to perform.
d. a right whose transfer is otherwise expressly prohibited by statute.
Typically, the terms of a mortgage loan require that the
a. borrower maintains the property in such a way that the lender’s investment is
protected.
b. lender pays the property taxes.
c. lender is responsible for purchasing mortgage insurance.
d. borrower makes a down payment of at least 50 percent of the purchase price.
Margaret is the top manager of Pecans, Inc. She sets strict ethical standards for all
employees. Margaret, however, often takes some of the company’s best nuts and sells
them from her house. The ethical tone at Pecans, Inc. is
a. likely to be good because Margaret has set such strict standards for her employees.
b. not likely to be good because although Margaret sets strict ethical standards for the
other employees, she does not follow them.
c. not related to either Margaret’s ethical standards or her own unethical behavior.
d. not likely to be good because employees tend to resent strict ethical standards.
Great Grain Farms offers to sell Hearty Bakeries, Inc., fifty bushels of wheat. Hearty’s
representative Milena responds, “We agree to buy fifty bushels only if the wheat is
Grade A quality.” Between Great Grain and Hearty
a. a contract is formed.
b. a contract is formed only if Great Grain can deliver the wheat fast.
c. Milena’s statement is not an acceptance.
d. Milena’s statement is an acceptance.
Steel Tool Company makes and sells tools. One of the tools is believed to be hazardous.
Steel may be required to
a. export the tool and sell it only abroad.
b. increase the price to cover the cost of any injuries or damage.
c. reduce the price to indicate the hazard to consumers.
d. remove the tool from the market.
Grace purchases three tons of fine merino wool on behalf of Woolen Creations. Woolen
Creations wants the wool to remain in the warehouse where it is being stored until it is
needed. Grace makes an offer for the wool on Monday. The offer is accepted on
Tuesday. The warehouser gives Woolen Creations a warehouse receipt on Wednesday.
Woolen Creations picks up the wool from the warehouse three months after the sale.
Title for the wool passed to Woolen creations
a. on Monday.
b. on Tuesday.
c. on Wednesday.
d. three months after the sale.
In some cases, foreign states are not immune from the jurisdiction of U.S. courts. These
circumstances are governed by the
a. Uniform Commercial Code.
b. Foreign Sovereign Immunities Act.
c. European Union.
d. North American Free Trade Agreement.
Fred starts up, and assumes the financial risk of, Graphic Ads, a new marketing
enterprise. Fred is
a. a member.
b. a limited partner.
c. an agent.
d. a sole proprietor.
National law is
a. law that pertains to a particular nation.
b. law that has an extraterritorial effect.
c. all law that is applied within a nation’s courts, including international law and the law
of another country.
d. federal law, as opposed to state law.
Ruthie, a minor, charges the cost of an expensive leather jacket at a Girl’s Trend store.
Two nights later, Ruthie loses the jacket at Minors Only Club. She disaffirms the
jacket’s purchase. Ruthie owes Girl’s Trend the reasonable value of the jacket
a. if it is deemed a “necessary.”
b. if it is deemed unnecessary.
c. under any circumstances.
d. under no circumstances.
The Food and Drug Administration (FDA) is an executive agency. As an executive
agency, the FDA
a. is not subject to any higher authority.
b. is subject to the authority of the president.
c. is subject to the authority of state legislatures.
d. is subject to the authority of the Attorney General
Gardner deeds a plot of land to Homes for the Homeless, a local charity. The deed
states, “To Homes for the Homeless, as long as it provides shelter for those without.”
Gardner has given the charity
a. a fee simple absolute.
b. a fee simple defeasible.
c. a license.
d. a life estate.
Bubbly Cola features Sparkly Cola’s trademark without its owner’s permission.
Bubbly’s use of the mark is actionable provided
a. consumers are confused.
b. Bubbly’s use is intentional.
c. Bubbly’s use reduces the value of Sparkly’s mark.
d. Sparkly’s mark is registered.
Congress enacts a law that sets out a rigorous medical-device premarket approval
process for the U.S. Food and Drug Administration to follow. The law includes a
preemption provision. Moe is injured by a device that underwent the process and files a
claim under New Hampshire state law to recover for the injury. The court will most
likely rule that
a. Moe’s state law claim preempts the federal law.
b. the federal law and state law claim are concurrent.
c. the federal and state law claim cancel each other out.
d. the federal law preempts Moe’s state law claim.
Marcy goes hunting out of season and shoots an endangered species of deer in a
national park. Marcy’s acquisition of the deer is
a. by production.
b. illegal.
c. by confusion.
d. by possession.
Carlton files a petition in bankruptcy. One of the goals of bankruptcy law with respect
to a debtor is to
a. encourage the continued use of credit to borrow funds.
b. ensure that third parties will continue to guarantee loans.
c. provide a fresh start, free from creditors’ claims.
d. shield assets from creditors’ claims.
Vladimir negotiates a bearer instrument to Wendy by
a. assignment.
b. delivery.
c. presenting it in response to a demand by Wendy.
d. promising to pay.
Roland files for Chapter 7 bankruptcy. After all his assets have been sold and the
proceeds distributed among his creditors, Roland’s remaining debts
a. are discharged.
b. paid by the court.
c. must be paid by Roland.
d. are put on hold until Roland has sufficient means to pay them.
A bank must be able to provide customers with legible copies of checks paid for up to
a. one year.
b. five years.
c. seven years.
d. nine years.
An Iowa state statute requires amusement parks to maintain equipment in specific
condition for the protection of patrons. Jack’s Fun Park fails to maintain its equipment.
Keely, a patron, is injured. Jack’s has committed
a. abuse of process.
b. battery.
c. false imprisonment.
d. negligence.
Dobry Die & Mold, Inc., enters into a contract with Chet’s Refitting Service to fix
Dobry’s precisely engineered molding equipment. If Chet’s delays the repair for five
days, knowing that Dobry will lose a certain percentage of profit for the delay, Dobry
might be awarded consequential damages to
a. establish, as a matter of principle, that Chet’s acted wrongfully.
b. provide Dobry with funds for a foreseeable loss beyond the contract.
c. provide Dobry with funds for its loss of the bargain.
d. punish Chet’s and set an example to deter others from similar acts.
Delite Candy Company hires Elton to sell Delite’s products in a certain area. Delite
agrees to pay Elton a salary, plus commission, for a trial period. They also agree that
Elton can sell using any methods and during any hours that seem appropriate. The key
factor in whether Elton is Delite’s employee is
a. the amount of Elton’s salary.
b. the control Delite has over the details of the work.
c. the length of the trial period.
d. the title that designates Elton’s position.
In a fee simple absolute, the owner has the greatest aggregation of rights, privileges,
and power possible.
Informal contracts require a special form or method of creation.
An option contract is created when an offeror promises to hold an offer open for a
specified period of time in return for a payment given by the offeree.
One of the transfer warranties is that the instrument has not been materially altered.
A unilateral contract is formed when the one receiving the offer completes the requested
act or performance.
According to the Foreign Sovereign Immunities Act, a foreign state that waived its
immunity by implication is subject to the jurisdiction of the U.S. courts.
Under the principle of comity, one nation may defer and give effect to the laws and
judicial decrees of another country.
Commercial Credit Company has in its possession an instrument dated May 1, 2012.
The instrument is payable to the order of Alpha Company “on June 1, 2013,” for
$5,000. In the upper left corner is an address for Beta Corporation10 Corporate Park
Avenue, Chicago, Illinoisand in the lower right corner is the signature of “Delta, Inc.,
By Eve, President.” In the lower left corner is stamped “ACCEPTED: Beta Corporation
by Frank, President, May 5, 2012.” On the back is the signature of “Alpha Company By
Gail, President.” Who, if anyone, is primarily liable on this instrument on May 1? On
May 5? Who, if anyone, is secondarily liable on this instrument?
A defendant is the party against whom a lawsuit is brought.
A surety is released from his or her obligation if the debtor pays it.
Beta Software Company and Gamma Sales Corporation agree to follow a certain
security procedure in transacting their business online. Beta fails to follow the
procedure, however. Due to this failure, Beta does not detect an error in the deal, which
will have a negative impact on Gamma’s interest in the deal. Can Gamma avoid the
effect of this error? How?
A divestiture is an order to a company to cease, or divest itself of, its anticompetitive
conduct.
In a sale on approval, title and risk of loss pass before the buyer accepts the goods.
An e-record is considered received under the UETA only if a person is aware of its
receipt.
Cybersquatting occurs when a person repeatedly visits a business’s website.
Inventory Control Corporation (ICC) hires Jim, a minor, to create customized software
for ICC’s clients. Jim signs a contract that requires him to work for ICC for eighteen
months. Before beginning work, Jim tells ICC that he will not work for ICC but is
going to work for Kwik Kounts, Inc., an ICC competitor. Is ICC’s contract with Jim
enforceable? Why or why not?