Faye owns the land on which Golden Spurs Ranch is situated, plus the ranch house,
barn, and other structures permanently attached to the land. Faye’s brother Huey owns
everything else in the ranch’s operationlivestock, feed, and so on. The personal property
is owned by
a. Faye and Huey.
b. Faye only.
c. Golden Spurs Ranch.
d. Huey only.
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.
Joy and Kris enter into a contract for Kris to lay sod in Joy’s yard for which she agrees
to pay Kris. When Kris’s schedule conflicts, she contacts Leza, to whom Kris “assigns
all rights under the contract.” Kris is
a. absolved of any liability under the contract.
b. in breach of the contract with Joy.
c. liable to Joy if Leza does not perform.
d. liable to Leza for inducing a prohibited contract.
May is a stockbroker. Due to May’s statements, Nora believes that the price of OK!,
Inc., a widely traded stock, is going to increase substantially. Nora buys 500 shares of
OK! at $10 per share, but the price soon drops to $ Nora can successfully recover
a. nothing.
b. the amount of the purchase price.
c. the amount of the purchase price plus the expected increase.
d. the amount of the purchase price plus the unexpected decrease.
Lexy, a salesperson for My-T-Fine Corporation, learns that My-T-Fine will increase the
dividend it pays to shareholders. Lexy buys 10,000 shares of My-T-Fine stock. When
the price increases, Lexy sells the shares for a profit. Lexy would not be liable for
insider trading if the information about the dividend was
a. material when she sold the stock.
b. public after she bought the stock.
c. public before she bought the stock.
d. speculative when she bought the stock.
Arkansas enacts pesticide-labeling requirements that are different from federal pesticide
law, but that do not permit anything that federal law prohibits. BugOut Corporation, a
pesticide maker, files a suit against the state to block the new rules. The court is most
likely to rule that
a. the federal law and state regulations are mutually compatible.
b. the federal law and state regulations cancel each other out.
c. the federal law preempts the state regulations.
d. the state regulations preempt the federal law.
Tire Manufacturing Company employs Uri as an agent. To terminate Uri’s authority,
Tire Manufacturing must notify
a. only third parties who are aware of the agency relationship.
b. the public generally.
c. Uri and any third parties who are aware of the agency relationship.
d. Uri only.
Fact Pattern 11-4
Sal contracts with Tasty Pizza Company to deliver its frozen pizza and pasta products to
U-Chuse Market and other grocery stores. Both parties change their minds, however,
and inform each other that they would like to cancel the contract.
Refer to Fact Pattern 11-4. Sal and Tasty
a. may rescind their entire contract.
b. may rescind their contract to the extent that it is executory.
c. must perform their entire contract.
d. must perform the part of their contract that is executory.
Ralph, a van driver for Speedy Delivery Company, causes a multi-vehicle accident on a
city street. Ralph and Speedy are liable to
a. all those who were injured.
b. only those who were uninsured.
c. only those whose injuries could have been reasonably foreseen.
d. only those whose vehicles were closest to Ralph’s van.
Fact Pattern 37-3
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 37-3. 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.
A petition for a discharge in bankruptcy under Chapter 7 may be filed by
a. Employees Credit Union, a corporation.
b. Federal Savings & Loan Association, a corporation.
c. Goodhands Insurance Company, a corporation.
d. Huey, an independent financial adviser.
Summit Credit Corporation lends funds to Toby, a consumer, to apply to the cost of a
sport utility vehicle (SUV), which is the collateral for the loan. An enforceable security
interest also requires
a. a written agreement and Summit’s possession of the SUV.
b. a written agreement or Summit’s possession of the SUV.
c. the vehicle seller’s acknowledgement of the loan in writing.
d. Toby’s possession of the SUV.
David’s family came to the United States from Ukraine in 1895. Eva’s family came to
this country from Vietnam in 1995. Fiona’s family came from Mexico in 2005. Current
immigration laws are based on
a. a national origin quota system proportional to the 1890 census.
b. a racial quota system proportional to numbers updated periodically.
c. a system of sanctions against employers who hire illegal immigrants.
d. excluding convicts and prostitutes.
Cliff dies without a will. His survivors include his spouse Dana and his two children,
Efrem and Fay. Under applicable laws, Dana will probably receive
a. all of Cliff’s estate.
b. none of Cliff’s estate.
c. one-half of Cliff’s estate.
d. one-third of Cliff’s estate.
An antitrust action is brought against Tri-State Transport Company, alleging the offense
of attempted monopolization. To be guilty of this offense, Tri-State’s attempt must have
a. a dangerous probability of success.
b. a deadly guaranty of success.
c. a distant possibility of success.
d. a distinct improbability of success.
General Credit Corporation promises to pay its chief finance officer Hughie and other
employees a year-end bonus “if it seems like a good idea at that time.” This is
a. an enforceable contract.
b. an illusory contract.
c. an unconscionable contract.
d. a unilateral contract.
Beachside Pools, Inc., agrees to build a swimming pool for Candy, but fails to build it
according to the contract specifications. Candy hires Do-We Fix-It Company to finish
the project. Candy may recover from Beachside
a. the contract price less costs of materials and labor.
b. the contract price.
c. the costs needed to complete construction.
d. profits plus the costs incurred up to the time of the breach.
Krystal is a federal judge. Krystal’s judicial decisions are part of case law. This law
includes interpretations of primary sources of law. These sources include
a. administrative regulations.
b. articles in law reviews and other legal journals.
c. compilations summarizing court decisions on particular topics.
d. legal encyclopedias.
Best Construction, Inc., contracts to build a store for Cheesy Pizza Company, with
Cheesy’s payment due on June 1. On June 1, Cheesy’s bank is closed, and for this
reason, Cheesy claims it cannot pay Best on time. In this situation
a. Cheesy’s bank is in breach of contract.
b. Cheesy is in breach of contract.
c. the contract is discharged.
d. the contract is suspended.
Roller Rinks, Inc. (RRI) grants a franchise to Sven to operate an RRI rink. RRI may
require Sven to pay a percentage of his
a. annual sales only.
b. annual sales or annual volume of business.
c. annual volume of business only.
d. neither annual sales nor annual volume of business.
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.
Mikayla enters into a contract with Logan to provide surface material for Mikayla’s
tennis courts by April 1 for a tournament to begin May 1. The contract specifies an
amount to be paid if the contract is breached. This is a liquidated damages clause if the
amount is
a. an excessive estimate of the loss on a breach.
b. a reasonable estimate of the loss on a breach.
c. designed to penalize the breaching party.
d. intended to quickly provide cash to the nonbreaching party.
Kelsy obtains a business liability insurance policy from Luminous Insurance Company
for Kelsy’s Framing & Art Supplies store. When an event occurs that gives rise to a
claim, Luminous has a duty to
a. investigate to determine the facts.
b. file a suit against Kelsy so that a court can settle the claim.
c. find a third party on whom to impose liability.
d. refund any unearned amount of the premium.
Grady and Hedy do business as Island Tours. For federal income tax purposes, Island
Tours would be treated as
a. an aggregate of the individual partners.
b. a natural person.
c. an entity.
d. a non-existent party.
Jon, a law enforcement official, monitors Kelsey’s Internet activitiese-mail and Web site
visitsto gain access to her personal financial data and student information. This may
violate Kelsey’s right to
a. equal protection of the law.
b. privacy.
c. procedural due process.
d. substantive due process.
Fact Pattern 24-1
Excel Vehicles, Inc., makes and sells automobiles to auto dealers, including Fine Auto
Sales. Fine sells the cars to consumers and businesses.
Refer to Fact Pattern 24-1. A car in Fine’s possession is probably
a. a consumer good.
b. an accession.
c. equipment.
d. inventory.
Brad stands in front of Rustler’s Round-Up Café, shouting “fighting words” that are
likely to incite Rustler’s patrons to respond violently. The First Amendment protects
such speech
a. all of the time.
b. none of the time.
c. only if it is noncommercial.
d. only if it is symbolic.
A state statute requires machinery in industrial plants to include automatic shut-off
switches accessible to each employee working on the machine. Steel Company’s (SC’s)
equipment does not have the switches. Trudy, an SC employee, suffers an injury that an
accessible shut-off switch would have prevented. Trudy’s best theory for recovery
against SC is
a. assumption of risk.
b. negligence per se.
c. res ipsa loquitur.
d. strict liability.
Curt, a doctor, renders medical care to Dora, a minor. Happy for a successful outcome,
Dora buys and sends a gift to Curt, and hires the band Elation to perform at her next
birthday celebration. Most likely to be considered a necessary is
a. the medical care.
b. the thank-you gift.
c. the band.
d. none of the choices.
Ethical standards would most likely be considered violated if Retail Mart Corporation
deals with a company in a developing nation that
a. agrees to produce goods at Retail Mart’s desired price.
b. goes unnoticed by “corporate watch” groups.
c. exploits its workers.
d. pays its workers less than the U.S. minimum wage.
Gail is an employee of Home Appliances, Inc., but is unable to perform her job because
of her pregnancy. Gail is
a. entitled to disability leave only if Home treats other temporarily disabled employees
similarly.
b. entitled to disability leave under any circumstances.
c. not entitled to disability leave because she cannot perform her job.
d. not entitled to disability leave under any circumstances.
Opal signs a promissory note payable to the order of Payday Loan Company. The note
states that it is payable “with interest at the legal rate.” This note is
a. negotiable.
b. nonnegotiable, because it does not specify a rate of interest.
c. nonnegotiable, because it is a promissory note.
d. nonnegotiable, because it is payable only with interest.
In considering the scope of an agent’s implied authority, the test is whether the agent
reasonably believed that he or she had the authority.
Under the Statute of Frauds, oral contracts are void.
A transfer by negotiation can make it possible for a holder to receive more rights in the
instrument than its prior possessor had.
A contract does not need to be in writing to be enforceable if its performance is possible
within any definite period of time.
The Foreign Sovereign Immunities Act spells out the particulars of what constitutes a
commercial activity.
An exculpatory clause in a residential property lease is always enforceable.
Any person who buys preferred stock has priority over a holder of common stock to
payment on the corporation’s dissolution.
A delegator is a party who transfers his or her obligation under a contract to another
party.
The possession of land without right is a tenancy at will.
Nominal damages normally establish that the defendant acted wrongly.
A buyer who accepts nonconforming goods cannot revoke the acceptance.
A divestiture is an order to a company to cease, or divest itself of, its anticompetitive
conduct.
An artisan’s lien is effective only if a creditor possesses the property subject to the lien.
Venture capital is capital provided to new business ventures by professional, outside
investors.
Presentment warranties protect the person who presents an instrument for payment.