Quest Holdings, Inc., orally contracts for a lease of its facilities to Ray to use for his
Swamp & Bayou Fishing Camp. Ray pays part of the rent, takes possession, and
improves the property for use by his enterprise. The contract is most likely enforceable
by
a. Quest Holdings and Ray.
b. Quest Holdings but not Ray.
c. any interested third party, such as a Swamp & Bayou client.
d. no one.
Opalina asks Paolo, who does not understand English, to sign what Opalina says is an
application to open a bank account. In fact, the “application” is a note. If sued on the
note by an HDC
a. Paolo must pay the note.
b. Paolo’s best defense would be fraud in the execution.
c. Paolo’s best defense would be fraud in the inducement.
d. Paolo’s best defense would be mistake.
Which of the following is considered personal property?
a. Stocks and bonds
b. Land
c. A garage
d. A boundary fence
Perfect Potato Chip Company makes an offer that Snack Foods Corporation would like
to accept. Under the “mirror image rule” relating to offer and acceptance, an acceptance
a. may include additional terms not contained in the offer so long as they do not
materially alter the agreement.
b. may include additional terms not contained in the offer that will become part of the
agreement if the offeror does not object within a reasonable period of time.
c. must include only those terms and conditions contained in the offer.
d. may contain additional terms as long as all parties agree to the additional terms.
Carol files a suit against Andy in a state trial court and loses. Carol
a. cannot take her case any higher in the court system.
b. can insist that the United States Supreme Court hear her case.
c. can plead her case before an appellate court.
d. can plead her case before a small claims court.
Jacob writes Phillip an uncertified check for $500 on January 1. Seven months later,
Phillip presents the check at the bank. The bank pays the check in good faith without
consulting Jacob. The bank
a. does not have the right to charge Jacob’s account for $500.
b. only has the right to charge Jacob’s account for $250.
c. has the right to charge Jacob’s account for $500.
d. can be held liable for breach of contract.
The credit department of Metro-Mart calls Nikki at work about an overdue bill. Nikki’s
employer objects. Metro-Mart continues to call Nikki at work. This is a violation of
a. no federal law.
b. the Fair and Accurate Credit Transactions Act.
c. the Fair Debt Collection Practices Act.
d. the Truth-in-Lending Act.
Luke is an owner of Lucky Luke’s Corporation. Luke uses the corporate entity of Lucky
Luke’s to perpetuate fraud. In this case, a court is likely to expose Luke to personal
liability by
a. piercing the corporate veil.
b. issuing a de facto judgment.
c. issuing a de jure judgment.
d. issuing a ultra vires judgment.
The abbreviation “P.A.” in the name “Conrad & Drake, Accountants, P.A.” means that
this organization is
a. a private association.
b. a professional association.
c. a public association.
d. a publicly administered corporation.
Gage buys from Fishing Guide Corporation the exclusive right to sell Fishing Guide
rods and reels in a certain area. Their franchise agreement requires Gage to pay certain
administrative expenses. Their agreement may also require Gage to pay a percentage of
the franchisor’s
a. advertising costs.
b. personal expenses.
c. retirement income.
d. none of the choices.
Sid rents an apartment from Town Properties, Inc. The lease, which ends on May 31,
does not include an option for renewal, and Sid and Town do not discuss whether Sid
can stay on at the end of the term. On June 1, Sid has
a. an implied option to renew the term.
b. a right to remain contingent on notice from Town.
c. a right to remain subject to notice to Town.
d. no right to remain.
Michelle gives out a business card with an e-mail address on it. It is reasonable to infer
that Michelle has consented to
a. transact business electronically.
b. submit to the jurisdiction of any selected forum.
c. accept and respond to any correspondence sent to that address.
d. nothing.
Rally Speedboat Corporation refuses to sell its products to Super Weekends, Inc., a
recreational water products dealership. This is
a. an exclusive-dealing contract.
b. a horizontal market division.
c. attempted monopolization.
d. a unilateral refusal to deal.
Mary works in the public relations department of New Trends Sales Company. Her job
includes portraying New Trends’s activities in their best light. In this context, ethics
consist of
a. a different set of principles from those that apply to other activities.
b. the same moral principles that apply to non-business activities.
c. those principles that produce the most favorable financial outcome.
d. whatever saves New Trends’s “face.”
Frooty Drinks, Inc., and Great Gulp Bottling Company have a processing-plant
franchise arrangement. This involves the transfer of
a. a license.
b. a trade name.
c. the formula to make a certain product.
d. the ownership of the business.
Longway Trucking, Inc., files a suit against Midge, an accountant, under the antifraud
provisions of the Securities Exchange Act of 1934 and Rule 10b-5 of the Securities and
Exchange Commission. To succeed in recovering damages, Longway must show that
Midge
a. acted with scienter.
b. bought or sold a security.
c. is incompetent.
d. knows nothing about securities.
Cardio, Inc., makes and sells Drawdown, the most prescribed name-brand heart
medication. Emitate Corporation has the potential to make a generic version of the
same drug.
A court would most likely rule that the agreement between Cardio and Emitate is
a. a deal that neither restrains trade or harms competition.
b. a legal restraint of trade.
c. a per se violation of the Sherman Act.
d. subject to analysis under the rule of reason.
Ralph contracts to sell his Double-R Ranch to Samantha on May 1. On April 20, Ralph
tells Samantha that he will not go through with the deal. Samantha can recover
a. the cost of any property that Samantha would find suitable.
b. the cost of a similar, nearby ranch.
c. the Double-R Ranch.
d. nothing.
Laurel borrows $150,000 from Marketplace Mortgage Loans to buy a home. The
financing documents require Laurel to maintain the property, obtain homeowners’
insurance, and pay all property taxes and other assessments through the lender. With
respect to these terms, a court is most likely to
a. enforce them.
b. refuse to enforce them.
c. rescind them.
d. rewrite them.
Kathleen sells Richard a racehorse for $1,000. Both Kathleen and Richard think that the
horse is too slow to win any races. Richard then enters the horse in a race, and it wins
easily. He enters it in more races, and the horse soon wins more than $1 million.
Kathleen tries to rescind the contract to sell the horse, claiming that it was worth more
than $1,000. A court will
a. cancel the contract due to Kathleen’s failure to know the horse’s value.
b. cancel the contract due to Richard’s failure to know the horse’s price.
c. cancel the contract due to the difference between the contract price and the horse’s
true value.
d. enforce the 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.
Marie claims that a Nebraska state statute infringes on her “procedural due process”
rights. This claim focuses on
a. procedures used in making decisions to take life, liberty, or property.
b. the content of the statute.
c. the similarity of the treatment of similarly situated individuals.
d. the steps to be taken to protect Marie’s privacy.
The commerce clause’s express grant of exclusive authority to regulate commerce that
substantially affects trade and commerce among states is referred to as the
a. dormant aspect of the commerce clause.
b. positive aspect of the commerce clause.
c. negative aspect of the commerce clause.
d. exclusive aspect of the commerce clause.
Congress enacts a law prohibiting toys made in China from being sold in the United
States. The Hawaii state legislature enacts a law allowing the sale of Chinese-made
toys. Hawaii’s law will most likely be struck down under
a. the commerce clause.
b. the equal protection clause.
c. the due process power.
d. the supremacy clause.
Smithy Saddlery is a saddle shop subject to the laws of New York. In New York, the
highest-ranking (superior) law is
a. a case decided by the New York Court of Appeals.
b. a rule created by a New York state administrative agency.
c. a provision in the New York constitution.
d. a statute enacted by the New York legislature.
Mona offers Ned, a building inspector, $5,000 to overlook the violations in her new
warehouse. Ned accepts the cash and overlooks the violations. Mona is charged with
the crime of bribery. The crime occurred when
a. Mona decided to offer the bribe.
b. Mona offered the bribe.
c. Ned accepted the bribe.
d. Ned overlooked the violations.
The payment of Yves’s debt to Zac is guaranteed by Yves’s personal property. Their
agreement identifies Yves’s property by serial number. To establish Zac’s interest, this is
most likely
a. irrelevant.
b. not sufficient.
c. sufficient if it accurately describes the collateral.
d. sufficient unless it is too tedious to review.
Data Analytics, Inc., is a corporation engaged in the business of compiling, analyzing,
and marketing data. To accomplish its purposes, Data Analytics obtains financing, and
hires and fires employees. Laws and government regulations affect such business
activities as
a. hiring and firing decisions.
b. the manufacturing and marketing of products.
c. business financing.
d. all of the choices.
Nika owns land in Ohio. Her ownership rights include the right to sell or give away the
property without restriction, and the right to commit waste, if she chooses.
Nika conveys some of her land to Reggie with the right to possess and use the property
for a certain period of time. Nika has given Reggie
a. a fee simple absolute.
b. a leasehold estate.
c. a life estate.
d. an easement.
To obtain office supplies for All-Care Medical Clinic, Britney executes a draft in favor
of Chris. A draft is
a. a conditional promise to pay money.
b. an unconditional written order to pay money.
c. a qualified promise to set aside a sum of money.
d. a restricted promise to deliver goods at a future date.
Speedy Shipping Corporation applies to TransInsurance Company for a fire insurance
policy on Speedy’s warehouse. On the application, Speedy misrepresents the age of the
property to obtain a lower premium. When a fire soon destroys the warehouse,
TransInsurance can
a. deny payment, because a fire destroyed Speedy’s warehouse.
b. deny payment, because of Speedy’s fraud in the application.
c. not deny payment, because a fire destroyed Speedy’s warehouse.
d. not deny payment, because the application is not part of the policy.
A customer has a right to stop payment on a check that has been certified or accepted by
a bank.
Restricting the bonuses that are paid to executives is unethical.
A material breach occurs when performance is substantial, but not complete.
Charging different prices to different buyers for identical goods is price discrimination.
Any person who buys preferred stock has priority over a holder of common stock to
payment on the corporation’s dissolution.
The concept of a floating lien applies to a constantly changing inventory.
Only a board of directors can initiate the dissolution of a corporation.
A syndicate may exist in the form of a partnership but not a corporation.
Employers can consider mitigating measures or medications when determining if an
individual has a disability that fits the definition in the Americans with Disabilities Act
of 1990.
A contractual obligation may not be discharged through novation.
If a debt is liquidated, accord and satisfaction cannot take place.
The basic purpose of antitrust law is to regulate economic competition.
Title VII of the Civil Rights Act of 1964 prohibits only intentional discrimination.
Raconteur Data Analysis Corporation in Seattle, Washington, offers a job to Trista, who
lives in Utah. Trista orally agrees to work for Raconteur for two years. She moves her
family to Seattle and begins work. Three months later, she is fired for no stated cause.
She files a suit against Raconteur for reinstatement or pay. Raconteur pleads the lack of
a written contract. In whose favor is the court likely to rule, and why?
When there is a breach of an underlying contract for which an instrument was issued,
the maker of a note can refuse to pay it.
A lender can make a higher-priced mortgage loan based on the value of the consumer’s
home without verifying the consumer’s other credit obligations.
A client’s negligence is never a defense to a charge of negligence against an accountant.