Fernando, a seventeen-year-old, signs a contract to sell his car to Gusto Used Autos.
Fernando receives a better offer the next day from Hi-Valu Cars & Trucks, Inc., and
accepts the new offer. Fernando is
a. liable to Gusto and must sell it a car of comparable value.
b. liable to Gusto and must sell it his car.
c. not liable to Gusto because he is a minor.
d. not liable to Gusto because the sale of the car disaffirmed their deal.
Rural Electric Company submits a bid to build a dam on federal land as part of a federal
project. For this action, an environmental impact statement is most likely
a. prohibited.
b. required.
c. unnecessary.
d. voluntary.
Gustav files a petition for bankruptcy under Chapter 13. Gustav is granted a discharge.
Debts that will not be discharged include claims for
a. domestic support, fraudulently incurred debt, and student loans.
b. domestic support only.
c. fraudulently incurred debt only.
d. student loans only.
The idea for “On Your Mark,” a computer game featuring racing cars, is protected by
a. copyright law.
b. patent law.
c. trademark law.
d. trade secrets law.
At a prison in Ohio, inmate Steve recruits other inmates to play Towers & Trolls, a
potentially violent, fantasy, role-playing game. Ryan, the prison’s warden, confiscates
the game materials and bans its play at the prison. Under the principles discussed in “A
Sample Court Case,” Singer v. Raemisch, Ryan most likely acted
a. in violation of Steve’s rights under the First Amendment.
b. reasonably in taking the game materials but not in banning its play.
c. reasonably in banning the game but not in taking the materials.
d. reasonably in the circumstances and under the law.
Mountain Bikes, Inc. (MBI), and Nero enter into a contract for a sale of a mountain
bike. MBI, a merchant who deals in goods of the kind sold, makes implied and express
warranties in connection with the sale. The Magnuson-Moss Warranty Act attempts to
prevent deception in warranties by
a. displacing the UCC as the primary source of warranty rules.
b. making warranties easier to understand.
c. prohibiting disclaimers of warranties.
d. requiring sellers to give written warranties for consumer goods.
Giles and Hubie enter into a sales contract. With respect to the specific contractual
provisions set out in the UCC, Giles and Hubie may
a. agree to different terms only to a reasonable extent.
b. agree to different terms unless they “get caught.”
c. agree to whatever terms they wish.
d. not agree to different terms.
Jaycee is a surety for Katelyn’s loan from Lucre Bank. Jaycee’s right to be repaid by
Katelyn after having paid her debt is the right of
a. contribution.
b. redemption.
c. reimbursement.
d. subrogation.
Owen and Pablo enter into a contract for a sale of fifty Western saddles. Pablo pays, but
Owen does not deliver. Pablo can normally recover as damages the difference between
a. any loss avoided and any profit gained.
b. the actual price and the hoped-for price.
c. the contract price and the market price.
d. the current prices in the parties’ locations.
City Car Company and Dave’s Autos enter into a contract for a sale of motor vehicles.
City assures Dave’s that it has valid title to the vehicles. Under the UCC, a warranty of
title arises
a. automatically in most sales contracts.
b. only if the buyer asks for such a warranty.
c. only if the seller expresses such a warranty.
d. only in conjunction with lease contracts, not sales contracts.
Dirk, an employee of Ergonomic Elevators, Inc., pays Ferbie, an employee of
Ergonomic’s competitor G-Force Risers Company, for a secret G-Force pricing
schedule. This is
a. an effective marketing strategy.
b. commercial bribery.
c. creative legal bookkeeping.
d. money laundering.
Parker, a salesperson for Quality Textiles, Inc., shows Rosa, a fabric buyer for Style
Clothing Company, samples of cloth, stating that any shipment will match the samples.
This statement is
a. an express warranty.
b. an implied warranty.
c. a warranty of title.
d. puffing.
Nate tells Opal, “I might sell the skis that I bought last fall since I haven”t used them
and the skiing season is almost over.” This is
a. an acceptance of an offer.
b. an invitation to accept an offer.
c. an offer.
d. a statement of future intent.
Kip, a representative for Lite-Weight Shipping Company, delivers a bill of lading to
Meg, the owner of Capacity Storage Warehouse. A bill of lading is
a. an invoice for payment for loading and carting.
b. an order to ship goods by carrier to a certain destination.
c. a receipt for goods signed by a carrier.
d. a receipt issued by a warehouser for goods in a warehouse.
Taylor digitally copies business software without the authorization of the owners and
sells the copies to others via the Internet. Under federal law, this is
a. a crime only if the copies are not the same as, or close to, the original.
b. a crime only if Taylor and the buyers are in different jurisdictions.
c. not a crime.
d. a crime.
Miklos grants an ordinary power of attorney to Nathalie to handle a list of financial
transactions on Miklos’s behalf. This power will terminate on
a. any transaction causing a loss to Miklos.
b. Miklos’s death or incapacity.
c. Miklos’s sixty-fifth birthday.
d. Nathalie’s handling of one of each stipulated transaction.
Jill contracts to sell Ken her MP3 player for $50. This contract will be fully discharged
when Jill and Ken
a. agree to sign a bill of sale.
b. exchange the player for the $50.
c. sign a receipt.
d. shake hands and go their separate ways.
Mace copies Nick’s book, Off the Beaten Path, in its entirety and sells it to Parkland
Books, Inc., without Nick’s permission. Parkland publishes it under Mace’s name. This
is
a. copyright infringement.
b. fair use.
c. licensing.
d. protected expression.
Fact Pattern 30-1
Fay works for General Construction Contractors (GCC) but is the only woman on her
shift. The male workers often play minor pranks on each other. Fay attempts a prank.
Hank, her supervisor, fires her, because “GCC doesn”t hold with pranks.”
Refer to Fact Pattern 30-1. To successfully defend itself in Fay’s suit, GCC must show
that Hank’s statement was
a. a legitimate, nondiscriminatory reason for Fay’s discharge.
b. not Fay’s feeling about pranks at GCC.
c. only a pretext for Fay’s discharge.
d. unofficial GCC policy.
Connie, Drew, and Ellen are the general partners of Foreign Auto Repair, a limited
partnership. Connie dies. The partnership can
a. continue only after a distribution of its assets.
b. continue only as a general partnership.
c. continue only if Drew and Ellen consent.
d. not continue because Connie’s death dissolves the firm.
Nadia is a shareholder of Open Air Productions, Inc. Nadia could normally exercise
appraisal rights if Open Air participated in
a. a share exchange.
b. a dissolution.
c. a takeover.
d. a winding up.
Li”l Jewelry Store orders display racks from Mark-Up Supplies, Inc. (MSI). MSI
mistakenly ships racks of the wrong size and color, which Li”l rejects and returns via
Nevermind Shipping Company. During the return, the racks are lost. The loss is
suffered by
a. Li”l only.
b. Li”l and MSI, but not Nevermind.
c. Li”l, MSI, and Nevermind.
d. MSI only.
Senator Wyden and other politicians want to restrict the flow of technologically
advanced products and data from the United States to other countries. To restrict or
encourage exports, Congress can
a. do nothing.
b. assess antidumping duties.
c. impose export taxes.
d. set export quotas.
Jim is an appliance salesperson. To make a sale, he asserts that a certain model of a
Kitchen Helper refrigerator is the “best one ever made.” This is
a. fraud if the statement is the truth.
b. fraud if Jim believes that this statement is not true.
c. fraud if Jim is stating his opinion, not the facts.
d. not fraud.
Fact Pattern 21-1
Bret, a representative of Concrete Products, Inc. assures Dependable Construction
Company (DCC) that Concrete’s cement will not crack within a certain range of
temperatures. DCC uses the product. When cracks develop within the stated
temperature range, DCC files a suit against Concrete.
Refer to Fact Pattern 21-1. The court is most likely to rule in favor of
a. Concrete, because Bret’s statement was an expression of opinion.
b. Concrete, because DCC chose Concrete’s product voluntarily.
c. DCC, because Bret’s statement was an express warranty.
d. DCC, because Concrete’s product is not fit for its purpose.
Olsen Grocery Company files a suit against Pickle Products, Inc. Pickle responds that
even if Olsen’s statement of the facts is true, according to the law Pickle is not liable.
This is
a. a counterclaim.
b. a motion for judgment on the pleadings.
c. a motion for summary judgment.
d. a motion to dismiss.
City Bank’s financing statement in collateral owned by Delta Waters Corporation will
expire in less than a year. Filed timely, a continuation statement could extend the
effectiveness of the financing statement for
a. one year.
b. two years.
c. five years.
d. ten years.
Stratified Industries, Inc., increases its holdings, making tender offers in many states.
These offers are subject to
a. federal securities laws only.
b. state antitakeover statutes only.
c. neither state statutes nor federal laws.
d. state antitakeover statutes and federal securities laws.
Cooper offers to sell Gable his sport utility vehicle (SUV) and says that it has never
been in an accident. Relying on Cooper’s statement, Gable buys the SUV. Later, when it
develops mechanical problems, Gable can
a. not rescind the contract.
b. rescind the contract on the basis of fraud.
c. rescind the contract on the basis of mistake.
d. rescind the contract on the basis of puffery.
Nouveau Riche Corporation, and its officers, directors, and shareholders, buy and sell
securities. SEC Rule 10b-5 applies to
a. only the purchase or sale of a security by a financial corporation.
b. only the purchase or sale of a security involving an officer or director.
c. only the purchase or sale of a security involving a shareholder.
d. the purchase or sale of any security.
Cara and Dru are officers of EZ Trucking Corporation. As corporate officers, the rights
of Cara and Dru are
a. determined by their employment contracts.
b. specified in state corporation statutes.
c. the same as those of the directors.
d. the same as those of the shareholders.
EZ Equipment Corporation leases six forklifts to Fresco Refining Company, but as the
forklifts are delivered, they are lost in an explosion. Under the UCC, the parties’ rights
and obligations with respect to the loss depend on the concept of
a. physical possession.
b. product liability.
c. risk of loss.
d. title.
Fun Toyz Corporation makes skateboards, which it sells to consumers, including Holly
and Ira. Due to a defect, Holly is injured while using her new board. Ira’s board has the
same defect, but he is not injured. In a product liability suit based on strict product
liability, Fun Toyz may be liable to
a. Holly and Ira.
b. Holly only.
c. Ira only.
d. no one.
Stacy contracts to buy a franchise from Tender Steak House Company. In this contract,
as in most franchise contracts, the determination of the territory to be served is made by
a. a court.
b. Stacy.
c. Tender Steak House.
d. the Federal Trade Commission.
Ida, Jerzy, and Kit are the directors of Liberty Convenience Stores, Inc. Liberty has nine
officers and forty-six shareholders. Dividends are ordered by the firm’s
a. board of directors.
b. incorporators.
c. officers.
d. shareholders.
State regulation, when not preempted, may cover many of the same activities as federal
regulation.
A close corporation cannot operate as an S corporation.
Generally, a bank has no obligation to pay a customer’s overdrafts.
Under the “danger invites rescue” doctrine, a person who tries to rescue another
individual from harm is liable for any injuries to the individual.
Misrepresentation of a material fact cannot occur through conduct alone.
Before a principal can ratify a contract, the principal must know all of the material facts
involved in the deal.
Sales of securities must occur within twenty days of registration.
A contract will be discharged if foreseeable circumstances make it impossible to attain
the contract’s purpose.
Independent regulatory agencies include the cabinet departments of the executive
branch.
If a lessee wrongfully refuses to accept goods that conform to a contract, the lessor
must tender substitute goods.
Common carriers are held to a standard of care based on strict liability in protecting
bailed property in their possession.
A party’s refusal to perform his or her contractual obligations is a rescission.
Because the Internet is vast, the unauthorized use of another’s mark in a domain name is
generally permissible.
An oral contract is not enforceable unless the parties admit to its existence in court.
Foreign exchange markets comprise a worldwide system for buying and selling
currency.