O.K. Oil holds itself out to others as being a corporation but makes no attempt to
incorporate. In this circumstance, O.K. is most likely
a. a corporation by estoppel.
b. a de facto corporation.
c. a de jure corporation.
d. ultra vires.
Fresh Seasonal Fruit Company has assets of less than $10 million and fewer than fifty
shareholders. Gourmand Pastries, Inc., has assets of more than $50 million and more
than five hundred shareholders. The Securities Exchange Act of 1934 applies to
a. Fresh Seasonal Fruit and Gourmand Pastries.
b. Fresh Seasonal Fruit only.
c. Gourmand Pastries only.
d. neither Fresh Seasonal Fruit nor Gourmand Pastries.
Pine Mills Corporation and Ur-Choice Lumberyards enter into a contract for a sale of
plywood. Under a destination contract, the seller must
a. allow the buyer to reject the goods for any reason.
b. deliver the goods to a particular destination.
c. inspect the goods before tendering their delivery.
d. place the goods into the hands of a carrier.
Marshall owns a piece of land, but James owns the mineral rights to Marshall’s land.
James wishes to sell the mineral rights. James
a. cannot sell the mineral rights.
b. can only sell the mineral rights if Marshall agrees.
c. must give Marshall 30 percent of the proceeds of the sale of the mineral rights.
d. can sell the mineral rights without consulting Marshall.
Silky Coordinates, a women’s clothing store, employs female attendants to assist
customers in the dressing rooms. Radley, a forty-one-year-old male, applies for an
attendant’s job, but is not hired. In Radley’s suit against Silky for employment
discrimination under Title VII, the store has
a. no defense.
b. a bona fide occupational qualification defense.
c. a business necessity defense.
d. a seniority systems defense.
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.
Duran applies to EZ Credit Mortgage Company for $100,000 to buy a home. EZ Credit
steers Duran toward an adjustable-rate mortgage even though he qualifies for a
fixed-rate mortgage. This is
a. a short sale.
b a subprime mortgage.
c. loan flipping.
d. steering and targeting.
Dru signs a check “pay to the order of Eppie” drawn on Dru’s account in Bayside Bank.
Greta forges Eppie’s indorsement. Bayside pays the check. Most likely
a. Dru will be liable for the amount.
b. Eppie will have to pay Dru for the amount.
c. Bayside will have to recredit Dru’s account.
d. the Federal Reserve will reimburse all parties for their costs.
Kristal is a member of Laboratory CSI Services, LLC, a limited liability company.
Kristal can participate in the firm’s management
a. only to the extent that she assumes liability for the firm’s debts.
b. only to the extent of her investment in the firm.
c. to any extent.
d. to no extent.
Fact Pattern 36-1
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.
Refer to Fact Pattern 36-1. 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.
Parker and Oscar sign a partnership agreement to do business as “Parker’s Plumbing”
without specifying a duration. This partnership is terminable
a. at any time by either partner.
b. only after a reasonable term.
c. only if Parker dissociates from the firm.
d. only if Oscar dissociates from the firm.
Regional Steel, Inc., and Overland Transport Company enter into a contract. Smooth
Oil Corporation, which will indirectly benefit from the deal, is prevented from having
rights under the contract by the principle of
a. assignment.
b. delegation.
c. privity.
d. vesting.
Megan is the ethics officer for Nature’s Eggs, Inc., an organic egg raising company. In
overseeing the application of the company’s ethical code of conduct, Megan is most
likely not in charge of
a. an ethics committee.
b. ethical training programs.
c. internal ethical audits.
d. ethical reviews of employee’ family members.
Fact Pattern 19-2
Tom draws a check, on his account in State Bank in New York, payable to Digital
Media, Inc., in San Francisco. Digital deposits the check in its account at First National
Bank.
Refer to Fact Pattern 19-2. Tom’s bank is
a. the cashing bank.
b. the depositary bank.
c. the intermediary bank.
d. the payor bank.
Susan is unhappy with the way her mother has made out her will. Susan has a lawyer
draft a new will and then signs her mother’s name to it without her mother’s consent.
Susan has committed
a. larceny.
b. no crime.
c. robbery.
d. forgery.
Guy and Hanna do business as G-H Associates. If G-H is a partnership, it is governed
by the Uniform Partnership Act
a. in the absence of an express agreement.
b. in the absence of an implied agreement.
c. only in the presence of an express agreement.
d. under all circumstances.
Jackie inserts a debit card issued by her bank into a machine and keys in her personal
identification number. She is then able to withdraw $500 in cash. Jackie is using
a. an automated teller machine.
b. a point-of-sale system.
c. a direct deposit system.
d. an Internet payment system.
Rhea is a director of Spex Corporation, which makes and sells sunglasses and other
eyewear. As a Spex director, Rhea sits on the board, which
a. governs Spex.
b. is governed by the Spex incorporators.
c. is governed by the Spex officers.
d. is governed by the Spex shareholders.
Demi promises to buy a house from Caleb, who promises to vacate the property on June
1. If these promises are in writing, they are most likely
a. enforceable.
b. unenforceable.
c. void.
d. voidable.
Greta is the only female employee in the maintenance department of Hydraulics Inc.
Greta’s supervisor and co-workers tease and play tricks on her so relentlessly that she
feels compelled to quit. This is
a. a constructive discharge.
b. a destructive discharge.
c. an instructive discharge.
d. not a discharge.
Pete borrows $5,000 from Willy in a secured transaction using Pete’s BMW as
collateral. Pete then borrows $7,000 from Janet using the same car as collateral. Neither
Willy nor Janet perfects their security interests. Pete defaults on the loans. The party
with priority is
a. Willy, because his interest was the first to attach.
b. Janet, because Pete owes her more money.
c. Janet, because her interest was the second to attach.
d. Willy, because Pete owes him less money.
Holiday Sales Company and Global Distributors, Inc., enter into an express contract for
the delivery of imported specialty goods. Express contract terms are given
a. less priority than the partie’ prior dealing.
b. less priority than the trade usage in the partie’ industry.
c. less priority than the partie’ course of performance.
d. more priority than the prior dealing, course of performance, and trade usage.
Harbor Bay Bank has made mortgage loans to consumers that qualify for the Home
Affordable Modification Program (HAMP), which offers incentives to lenders to
change the terms of certain loans. The purpose of HAMP is to
a. convey property through lenders to consumers who can afford it.
b. force lenders to forgive all high-risk mortgages.
c. reduce monthly payments to levels that homeowners can pay.
d. transfer affordable property to investors to lease to consumers.
Julia, the head executive of Fine Woolen Sweaters, Inc., is a committed Christian who
strongly adheres to the Ten Commandments. One of Julia’s employees is found to be
stealing sweaters and giving them to a local homeless shelter. Julia is likely to
a. punish the employee for stealing even though the employee’s motive was benevolent.
b. view the employee’s actions as justified because the employee was clothing the poor.
c. contribute more sweaters to the homeless shelter.
d. gently reprimand the employee without suggesting that the employee’s actions were
unethical.
Jamie is redoing his kitchen and decides he needs a floor sander to complete the job.
Jamie tells Rachel, his neighbor, that he needs a floor sander. Rachel tells Jamie to call
Home Repair Rentals, Inc. Home Repair Rentals leases Jamie a floor sander. In this
transaction the lessor is
a. Jamie.
b. Rachel.
c. Home Repair Rentals.
d. both Jamie and Rachel.
Ruby is young and healthy when she gives Pearl a prize-winning horse. The gift meets
all the requirements to be effective. This is a gift
a. inter vivos.
b. causa mortis.
c. by accession.
d. by confusion.
Idle Investments, Inc., and Harbor Bank are secured parties with security interests in
property owned by GR8 Manufacturing Corporation. Priority between these security
interests is generally determined by
a. the amount of the claim.
b. the custom in the trade.
c. the time of perfection.
d. the time the security agreement was signed.
Squeaky Clean Corporation wants to make an offering of securities to the public. This
offering is not exempt from registration under the Securities Act of 1933. Before
Squeaky sells its securities, it must provide investors with
a. a forward-looking financial forecast.
b. an investment contract.
c. a prospectus.
d. samples of its products.
Newt is considering forms of business organization for Newton Design, an architectural
firm. An advantage of a limited liability partnership is that partners can avoid personal
liability for
a. their own wrongful acts.
b. only other partner’ malpractice.
c. only partnership obligations that exceed capital contributions.
d. only partnership obligations that fall within capital contributions.
Elections for union officers are regulated by
a. the Labor-Management Relations Act.
b. the Civil Rights Act.
c. the Labor-Management Reporting and Disclosure Act.
d. no federal law.
Donald applies for a life insurance policy with Equity Insurance Company through
Fletch, an agent who works for Equity. Donald pays the initial premium. Fletch writes a
binder, which
a. acknowledges the application and promises to consider it.
b. attests to the truth of each statement in the application
c. evidences receipt of the payment of the initial premium.
d. indicates that a policy is pending and states its essential terms.
Thor Power Products Corporation permits its directors to be elected by cumulative
voting. This
a. allows minority shareholders to be represented on the board.
b. assures directors that they will be selected by their peers.
c. guarantees Thor’s executive officers of the final choice.
d. ensures against persons who may “cloud” the corporate direction.
One goal of bankruptcy law is to protect a debtor.
There are additional disclosure requirements for a loan that carries a high rate of
interest or entails high fees for the borrower.
Most online dispute resolution services apply general, universal legal principles to
resolve disputes.
Secure Courier, Inc., has a requirements contract with Petro Distribution Corporation
that obligates Petro to supply Secure with all the gasoline it needs for its delivery
vehicles for one year at $2.30 per gallon. A clause inserted in small print in the contract
by Secure, and not noticed by Petro, states, “The buyer reserves the right to reject any
shipment for any reason without liability.” For six months, Secure orders and Petro
delivers under the contract without any controversy. Then, because of a war in the
Middle East, the price of gasoline to Petro increases substantially. Petro tells Secure it
cannot possibly fulfill their contract unless Secure agrees to pay $2.50 per gallon.
Secure, in need of the gasoline, agrees in writing to modify the contract. Later that
month, Secure learns it can buy gasoline at $2.40 per gallon from Refined Oil
Company. Secure refuses delivery of its most recent order from Petro, claiming, first
that the contract allows it to do so without liability, and second, that it is required to pay
only $2.30 per gallon if it accepts the delivery. Discuss Secure’s contentions.
To hire employees from other countries, an employer must first obtain the approval of
the U.S. Immigration and Customs Enforcement.
Bribing foreign officials to obtain favorable business contracts is not a crime.
Statutory law includes state statutes and ordinances passed by cities and counties.
A franchisee normally does not pay a fee for a franchise license until after the first year
of using it.
A fixed-term tenancy is created when a lease does not specify its duration.
A security interest cannot be perfected without the filing of a financing statement.
Each partner is deemed to be an agent of the other partners and of the partnerships.
An offer that a statute makes illegal terminates only after a reasonable time.
A collection agency must include a validation notice whenever it initially contacts a
debtor for payment of a debt.
An agreement is NOT one of the requirements of a valid contract.
A contract must be in writing to be enforceable if the contract makes performance
possible within any definite period of time.
The first bank to receive a check for payment is the depositary bank.
Until the time for performance under a contract expires, the seller has a right to cure.
No person may be a director for two competing corporations at the same time.