Good Tire Company and Hiway Auto Service enter into a contract for a sale of tires.
Good Tire is a merchant who deals in goods of the kind sold. Under the UCC, an
implied warranty of merchantability arises
a. automatically in sales contracts.
b. only if the buyer asks for it.
c. only if the seller does not expressly disclaim it.
d. only in conjunction with lease contracts, not sales contracts.
A clause in a contract between Timber Corporation, a U.S. business, and Wang, Ltd., a
Japanese business, specifies that disputes over the contract will be adjudicated in the
United States. This is
a. a choice-of-forum clause.
b. a choice-of-law clause.
c. a force majeure clause.
d. an arbitration clause.
Corn Candy Corporation (CCC) has a right of action against Bio Farms, Inc. CCC
merges with Agri Sweeteners, Inc., with Agri absorbing CCC. After the merger, CCCs
right of action against Bio Farms can be exercised by
a. CCC.
b. Agri Sweeteners.
c. Bio Farms.
d. no one.
Fact Pattern 26-3
Dhani, an accountant for Eureka, Inc., learns of undisclosed company plans to market a
new laptop. Dhani buys 1,000 shares of Eureka stock. He reveals the company plans to
Fay, who buys 500 shares. Fay tells Geoff, who tells Hu. Both Geoff and Hu buy 100
shares. They know that Fay got her information from Dhani. When Eureka publicly an-
nounces its new laptop, Dhani, Fay, Geoff, and Hu sell their stock for a profit.
Refer to Fact Pattern 26-3. Under the Securities Exchange Act of 1934, Hu is most
likely
a. liable for insider trading.
b. not liable because Hu is only a tippee, not a tipper.
c. not liable because Hu is too far down the chain of disclosure.
d. not liable because Hu traded on the basis of a true fact.
Leah gains access to government records and alters certain dates and amounts in her
favor. This is
a. embezzlement.
b. forgery.
c. larceny.
d. no crime.
Quotient Financial Corporation is a secured party with a security interest in property
owned by Retail Sales Company. Perfection of this security interest may not protect
Quotient Financial against the claim of
a. a bank.
b. a buyer in the ordinary course of business.
c. a subsequent lien creditor.
d. a trustee in bankruptcy.
Simon signs a check “pay to the order of Tilly drawn on Simons account in United
Bank. Vela forges Tillys indorsement, First Federal Bank cashes the check, and Vela
disappears. United pays First Federal and debits Simons account. Most likely, the
ultimate loss will fall on
a. Simon.
b. Trudy.
c. United Bank.
d. First Federal Bank.
Clu, Dolf, and Elton do business as Fertile Valley Farm. Clus relationship to the firm
ends, but it continues to do business. This is
a. dissociation.
b. dissolution.
c. winding up.
d. wrongful.
Earl holds 1,000 pounds of perishable fruit in storage for Fresh Food Corporation. Fresh
Food does not pay for the storage. Earl sells the fruit to Green Grocers, Inc. This sale
represents
a. a breach of contract.
b. a mitigation of damages.
c. rescission and restitution.
d. specific performance.
Rally Corporation enters into a contract to sell ski gear to SnoSportz Company, which
sells a pair of the skis to Tyra, a consumer, who later sells them to Uli, another
consumer. Article 2 of the UCC applies to the sales transactions between
a. all of the buyers and sellers.
b. Rally and SnoSportz only.
c. SnoSportz and Tyra only.
d. Tyra and Uli only.
Kelly files a suit against Lewis in a state court. The case proceeds to trial, after which
the court renders a verdict. The case is appealed to an appellate court After its review of
Kelly v. Lewis, the appellate court can
a. affirm, reverse, or remand all or part of the lower courts decision.
b. only affirm or reverse all or part of the lower courts decision.
c. only remand all or part of the lower courts decision.
d. only reverse or remand all or part of the lower courts decision.
Sela agrees to act on Thoms behalf, subject to Thoms control, and Thom trusts Sela to
so act. They set out the terms in a written document, which they both sign. This is
a. an agency by agreement.
b. an agency by estoppel.
c. an agency by ratification.
d. not the creation of an agency relationship.
Orlys debts are discharged in a liquidation bankruptcy. Pester & Recover, Inc., buys the
discharged debt obligations. With respect to these debts, Pester
a. can do nothing.
b. can pressure Orly into paying them.
c. must give Orly additional help to rebuild her life after the discharge.
d. must report the debts to credit reporting agencies as “discharged.
Creekside Property Corporation enters into a contract with Downstream Management
Associates to manage and maintain Creeksides apartment complex. Their contract
provides that neither party can recover damages for a non-fraudulent or unintentional
breach. This is
a. a limitation-of-liability clause.
b. an exculpatory clause.
c. an illegal clause.
d. a quasi contract.
Ross e-mails Super Snowboard Companys marketing campaign to Winter Sports
Corporation, Supers competitor, without its permission. This is
a. copyright infringement.
b. patent infringement.
c. trademark infringement.
d. a theft of trade secrets.
New Apps Company develops “Browser Lite, software to speed the display of graphics
on Web sites. Browser Lite has the most copyright protection under
a. the Berne Convention.
b. the Paris Convention
c. the TRIPS Agreement.
d. the Madrid Protocol.
The Idaho Supreme Court rules against Jiffy Mart in a case against Kwik Stop Stores,
Inc. Jiffy Mart files an appeal with the United States Supreme Court. The Court does
not hear the case. This
a. is a decision on the merits with value as a precedent.
b. indicates agreement with the Idaho courts decision.
c. means nothing.
d. means that the Idaho courts decision is the law in Idaho.
Raw Material, Inc., and Sewn Fabric Corporation enter into a contract for a sale of
muslin. The terms do not clearly indicate whether it is a destination or shipment
contract. A court would most likely presume that it is
a. a bailment contract.
b. a destination contract.
c. a shipment contract.
d. a transportation contract.
The term for the legal death of the artificial “person of Skytop Services, Inc., or any
other corporation, is
a. surviving corporation.
b. dissolution.
c. takeover.
d. winding up.
Food Packaging, Inc., agrees to sell 50,000 6-ounce yogurt containers to Golden Dairy
Company. Food can obtain only 20,000 of the 6-ounce containers, but also ships 30,000
more expensive 8-ounce containers for the same price. Under these circumstances,
Golden
a. cannot reject delivery, and Food cannot later replace the containers.
b. cannot reject delivery, but Food can later replace the containers.
c. may reject delivery, and notice to Golden of Foods intent to cure will give Food a
reasonable time to replace the containers.
d. may reject delivery, but Food cannot later replace the containers.
Cielo is fifteen. In most states, Cielo would be considered a minor because she is under
the age of
a. sixteen.
b. eighteen.
c. twenty.
d. twenty-one.
Eton files a suit in a federal district court against Florida, alleging employment
discrimination under the Age Discrimination in Employment Act of 1967. The state
asks the court to dismiss the suit. The court is most likely to rule that
a. the state is immune from the suit.
b. the suit can proceed.
c. Eton is immune from any defense the state might offer.
d. the court is immune from such request.
Used Car Lots salesperson Vic offers to sell Will, who is twenty years of age, a car
about which Vic intentionally misrepresents several material facts. In reliance on the
misrepresentations, Will buys the car. To prove fraud in this transaction, Will would not
have to show that
a. Vic intentionally deceived Will.
b. Vic misrepresented several material facts.
c. Will is under twenty-one years of age.
d. Will justifiably relied on Vics misrepresentations.
The government of Iran violates an international law. Persuasive tactics to remedy the
situation fail. The only recourse of other nations is to
a. approve the European Unions enforcement of the law.
b. ask the International Court of Justice to enforce sanctions.
c. seek enforcement of the law through the United Nations.
d. take coercive actionsever relations, impose boycotts, go to war.
Mold & Dye Corporation is a private employer involved in a Title VII employment
discrimination suit. Punitive damages may be recovered against Mold & Dye only if the
employer
a. acted with malice or reckless indifference.
b. can easily afford to pay the amount.
c. has one hundred or more employees.
d. none of the choices.
Helen owns heavy construction equipment and the tools to service it, as well as office
furniture, including computers. Ilya owns a number of patents, trademarks that identify
the products made under those patents, and stock in the company that sells those
products. Personal property includes the items owned by
a. Helen and Ilya.
b. Helen only.
c. Ilya only.
d. neither Helen nor Ilya.
Phil and Kelsey enter into a contract for a sale of Harmonica, a dog. Phil pays the price,
but Kelsey does not deliver. Phil can use specific performance as a remedy if
a. Kelsey is lawfully withholding delivery of Harmonica.
b. Phil cannot effectively cure the defect.
c. Harmonica is unique.
d. Harmonica has not been identified to the contract.
The abbreviation “P.A. in the name “Painless Dental, P.A. means that this organization
is
a. a private association.
b. a professional association.
c. a public association.
d. a publicly administered corporation.
Federal law requires new car labels to state fuel economy estimates. California state law
proscribes deceptive advertising. Angie buys a new car from Beltline Motors in
California. Later, Angie files a suit against the cars manufacturer, claiming that the car
does not attain the fuel economy estimate and thus its maker engaged in deceptive
advertising in violation of state law. In the opinion of the majority in Paduano v.
American Honda Motor Co., the court should hold that
a. the federal law does not preempt Angies state law claim.
b. the federal law preempts Angies state law claim.
c. Californias state law preempts the federal fuel economy law.
d. the federal and state laws preempt each other.
Clear Day Company, which is based in Delaware, agrees to sell fifty windows,
currently stored in Florida, to Great Vu, Inc., which is based in Hawaii. Absent an
agreement to the contrary, the place of delivery is in
a. California.
b. Delaware.
c. Florida.
d. Hawaii.
As a joke, Jem takes Kylas business law textbook and hides it so that Kyla cannot find
it during the week before the exam. Jem may have committed
a. appropriation.
b. conversion.
c. intentional infliction of emotional distress.
d. trespass to personal property.
Horizon Corporation makes cell phones. Inez files a product liability suit against
Horizon, alleging a design defect. Under the Restatement (Third) of Torts: Products
Liability, in deciding whether to hold Horizon liable, the court may consider
a. neither the effect of an alternative design on the products costs and life nor the range
of consumer choice among products.
b. only the effect of an alternative design.
c. only the range of products.
d. the effect of an alternative design and the range of products.
Ron makes a contract with Stu that indirectly benefits Tim, although neither Ron nor
Stu intended that result. Tim is
a. a delegatee.
b. an assignee.
c. an incidental beneficiary.
d. an intended beneficiary.
An exculpatory clause in an employment contract is not enforceable if the clause is
against public policy.
Offers may not be revoked before they are accepted.
A counterclaim is raised by a plaintiff against a defendants response to a complaint.
Concurrent conditions occur only when the parties to a contract are required to perform
their respective duties simultaneously.
A corporate officer can be an agent for the corporation.
Under the UCC, a contract for a sale of goods that includes open terms is void.
Equity is a branch of unwritten law that seeks to supply remedies of equal measure to
the parties in a legal dispute.
Officers are required to exercise a reasonable amount of supervision over the corporate
directors.
Promises of fact made during the bargaining process are not express warranties.
Confiscation occurs when a government seizes a private property for a proper public
purpose and awards just compensation.
A stale check is one that has been outstanding for longer than one month.
If a life insurance applicant pays a premium but dies before the physical exam, there is
obviously no coverage.
An assignment of an insurance policy can be prohibited.
In contract law, “consideration refers to the courtesy that one party shows another in
negotiating a deal.
Because insurance law follows contract law, bad faith tort actions against insurers are
not allowed.
The crime of bribery occurs when the bribe is offered even if it is not accepted.
A drawer is primarily liable on an instrument.