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Rayco Ski Shop purchased 500 pairs of skis from Skitron. Rayco is located in
Colorado. Skitron's business is in Tennessee. The purchase order included the following
term: "F.O.B. Colorado." The contract makes no mention of risk of loss or title. The
contract can be described as a:
a. shipment contract.
b. destination contract.
c. bulk transfer.
d. sale on approval.
Kaiya is a sales representative of TriColor. Kaiya owes a fiduciary duty to TriColor.
a. True
b. False
Emails and their attachments are not subject to pretrial discovery.
a. True
b. False
Which of the following acts resulting in injury would be negligence per se?
a. Janet driving 40 mph over the posted speed limit.
b. Ted keeping explosives in his private, locked garage without complying with state
law regulating the storage of such materials.
c. A retailer selling glue containing benzene to a 14-year-old boy in violation of state
law.
d. All the above acts are negligence per se.
Chapters 11 and 13 are liquidation chapters.
a. True
b. False
George gave his great-grandfather's pocket watch to Nurse Nadene because he expected
to die soon. This is:
a. a testamentary gift.
b. an inter vivos gift.
c. an executed gift.
d. a gift causa mortis.
In bailment cases, exculpatory clauses:
a. are very rarely used.
b. are somewhat more likely to be enforced than in other types of cases.
c. ordinarily involve an attempt to limit liability for damage to persons rather than
property.
d. None of the above.
The Minnesota legislature passed a law requiring that employers allow each employee
adequate time within each four consecutive hours of work to utilize the nearest
convenient restroom. This law is:
a. an executive order.
b. an ordinance.
c. a statute.
d. an administrative order.
An agency will be terminated in all but which one of the following situations?
a. The principal and agent agree on an agency relationship to sell a boat, and the boat is
sold.
b. A travel agent files for individual bankruptcy under Chapter 13.
c. The agent violates his duty of loyalty.
d. An electrician, an agent of a contractor, has her license revoked.
Trey, a full-time college student, sold his car to Don, another student. In the
performance of this contract, Trey:
a. has a duty of good faith which means honesty in fact and the exercise of good
judgment.
b. has a duty of good faith which means honesty in fact.
c. has a duty of good faith which means honesty in fact and the exercise of reasonable
commercial standards of fair dealing.
d. does not have a duty of good faith.
Costs to store a vehicle for a short period of time after an auto dealer fails to complete
the contract to purchase the vehicle would be:
a. compensatory damages.
b. incidental damages.
c. consequential damages.
d. punitive damages.
Common law is a body of cases decided by legislatures.
a. True
b. False
A buyer may revoke an acceptance of goods if:
a. the nonconformity does not impair the value of the goods.
b. the buyer had a legitimate reason for the initial acceptance.
c. the buyer knew the nonconformity could not be cured.
d. the buyer thought they could easily cover.
Most types of duties may be delegated.
a. True
b. False
A limited liability company, unlike a Subchapter S corporation, can have members that
are corporations, partnerships, or nonresident aliens.
a. True
b. False
When Olga asks Sven if he wishes to sell his Harley motorcycle, he replies that he
would not sell it "for less than $2,000." Olga replies, "I accept," and hands him $2,000.
A contract exists.
a. True
b. False
The Foreign Corrupt Practices Act makes it a crime:
a. for U.S. companies to sell unregistered stock in other countries.
b. for non U.S. companies to sell unregistered securities in the U.S.
c. to "bribe" foreign governments or officials.
d. to conspire to defraud stock purchasers in other countries.
Which of the following events would probably excuse performance of a contract based
on commercial impracticability?
a. The price of a raw material increases slightly so that the contract will not be as
profitable.
b. An unforeseeable trade embargo causes prices to triple.
c. The promisor of personal services dies.
d. The subject matter of the contract is destroyed.
Zero, Inc. agreed to build Millie a storage building for $8,000. After beginning the
project, Zero realized that it could not complete the job and make a profit. Zero
demanded $9,500 to complete the building. Millie agreed to pay the $9,500. When the
project was complete, Millie tendered $8,000 to Zero for the job. If Zero sues Millie for
the remaining $1,500:
a. Zero will win because there was consideration for the additional $1,500.
b. Zero will win because Millie had a pre-existing duty to pay any additional amounts.
c. Zero will lose because there was no legal consideration to support the additional
$1,500.
d. Zero will lose because the UCC does not require consideration to modify an existing
contract.
Because details can always be added later, its better to not overwhelm a contract with
specifics in the beginning.
a. True
b. False
A bailment was created for the parties' mutual benefit. This means that the bailee must
use ordinary care with the property.
a. True
b. False
A crime is a violation of statutory law.
a. True
b. False
Farmer Elvin is holding 200 pounds of potatoes in storage for Chef Noble but Chef
Noble has breached the contract by failing to pay for the potatoes. The potatoes are
beginning to rot. If Farmer Elvin sells the potatoes to a local diner to make potato soup
and salad, then this action would be considered:
a. a reasonable mitigation of damages.
b. an attempt to maximize damages.
c. an attempt to realize an unwarranted profit.
d. conversion.
Cynthia and Brian were friends. Brian was a dare devil. Because of his antics, Cynthia
thought that Brian wasn't long for this life. Cynthia purchased a life insurance policy on
Brian's life. Subsequently, Brian was killed in a car accident. Since Cynthia and Brian
were friends, Cynthia had an insurable interest in his life and will be entitled to the
insurance proceeds.
a. True
b. False
The primary source of federal power to regulate business is the:
a. Supremacy Clause.
b. Commerce Clause.
c. Contract Clause.
d. Privilege and Immunities Clause.
Courts normally require consideration to be approximately equal on both sides of the
bargain.
a. True
b. False
Warren Buffet is quoted as saying, "The five most dangerous words in business may be:
a. 'Everyone else is doing it.''
b. 'Its none of your business.''
c. 'We have always done this.''
d. 'Nobody will ever find out.''
The Good Housekeeping Seal of Approval is an example of a:
a. trademark.
b. service mark.
c. collective mark.
d. certification mark.
Oxtron, Inc. substantially performed its obligations under a service contract. Oxtron is
entitled to receive:
a. the full contract price.
b. substantially nothing.
c. the fair market value of its performance.
d. the full contract price minus the value of the defects.
International comity holds that the courts of one nation lack the jurisdiction to hear suits
against foreign governments.
a. True
b. False
Brandon orally assigned his right to $100 from a lawn mowing contract to Will as a gift.
This assignment is:
a. not valid because it was not in writing.
b. valid even though it was oral and there was no consideration from Will.
c. irrevocable once Brandon has told Will about the gift.
d. not valid because Will gave no consideration for the assignment.
If a contract does not provide for a time for inspection, the UCC allows inspection:
a. in a reasonable time.
b. the same day as delivery.
c. within 3 days of delivery.
d. within 10 days of delivery.
The primary goal of the North American Free Trade Agreement (NAFTA) is to:
a. allow Canada, the United States, and Mexico to compete as a common economic
entity against other countries in the world.
b. allow for the free and unrestricted movement of people from one country to another
to improve the labor market of all three counties.
c. eliminate almost all trade barriers between the three nations.
d. All the above are correct.
When a party to a contract notifies the other party that it will not perform the contract as
agreed, this conduct is referred to as:
a. specific performance.
b. cover.
c. repudiation.
d. assurance.
If a program is on your computer monitors your activities without your permission, you
may be able to get protection through state legislation which makes spyware illegal.
a. True
b. False
