General Allied Company obtains insurance policies with Hy-Rate Insurance, Inc., and
Ideal InsurCo against the risk of loss of Generals office building in a fire. Each policy
includes a multiple insurance clause. A fire partially destroys the building. General can
collect from Hy-Rate
a. all of the loss.
b. half of the loss.
c. its proportionate share of the loss to the total amount of insurance.
d. none of the loss.
Agnes borrows $110,000 from Bay Harbor Bank to buy a home under a mortgage with
an acceleration clause. After eighteen payments, Agnes stops making payments on the
mortgage. Bay Harbor
a. can foreclose once on the entire amount of the loan.
b. may seek only the amount of the missed payments, not the entire loan.
c. must foreclose on small amounts over time as each payment comes due.
d must notify Agnes to accelerate the steps to cure the default.
Violet negotiates with Urban Credit Corporation to obtain a loan for $85,000 to buy a
home. During the negotiations, Urban Credit orally misrepresents the terms, but
provides the required documents, which accurately state the terms. Violet does not read
the documents. The party or parties most likely liable for a violation of the law is
a. neither party.
b. Urban Credit.
c. Urban Credit and Violet.
d. Violet.
Minnesota enacts a statute to ban advertising in “bad taste. This statute would likely be
held by a court to be
a. an unconstitutional restriction of speech.
b. constitutional under the First Amendment.
c. justified by the need to protect individual rights.
d. necessary to protect state interests.
Mariah wins her suit against Variety Products Company. Varietys best ground for appeal
is the trial courts interpretation of
a. the conduct of the witnesses during the trial.
b. the credibility of the evidence that Mariah presented.
c. the dealings between the parties before the suit.
d. the law that applied to the issues in the case.
Fact Pattern 47-1B
Thermo Gas, Inc., and Uno Oil Corporation refine and sell gasoline and other
petroleum products. To limit the supply of gas on the market and thereby raise prices,
Thermo Gas and Uno Oil agree to buy “excess supplies from dealers and “dispose of it.
Refer to Fact Pattern 47-1B. The agreement between Thermo Gas and Uno Oil to buy
“excess supplies from dealers and “dispose of it is
a. a horizontal restraint.
b. a refusal to deal.
c. a resale price maintenance agreement.
d. a vertical restraint.
Fact Pattern 19-B1
Fruits & Vegetables, Inc., and Grovers Market enter into a contract for the delivery of
locally grown produce. The parties use a standard Fruits & Vegetables form that
contains some of the terms the parties agree on but not others. Some of the produce
spoils before it can be sold. Grovers refuses to pay for the spoiled goods.
Refer to Fact Pattern 19-1. Fruits & Vegetables responds that it did not waive payment
for spoiled produce in the parties previous transaction. Fruits & Vegetables is arguing
that the court should take into account
a. the course of dealing.
b. the course of performance.
c. the usage of trade.
d. a rule of construction.
Congress intends to enact a law to criminalize the distribution of illegal child
pornography on the Internet. Most likely to be held constitutional is a statute that
prohibits
a. offers to provide, and requests to obtain, child pornography.
b. the possession of virtual child pornography.
c. the possession of real and virtual child pornography.
d. a substantial amount of protected speechespecially pornography.
Lorna borrows $175,000 from Mountainside Credit Union to buy a home. Among the
terms that must be disclosed under federal law is the annual percentage rate. This is
a. the actual cost of the loan on a yearly basis.
b. the average prime offer rate.
c. the interest rate at which the loan is made.
d. the loan principal.
Thor Power Products Corporation permits the election of its directors 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 Thors executive officers of the final choice.
d. insures against persons who may “cloud the corporate direction.
Quik Collection Agency calls Pat several times a day, and sometimes in the middle of
the night, about an overdue bill that Regal Sporting Goods turned over to Quik for
collection. 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.
Solana, a minor, enters into a contract to buy a dozen movies from eHD TV Stream,
Inc., an Internet video service. Solana reaches the age of majority and does not
disaffirm the contract nor make payment on it. eHD files a suit against her. The court
will most likely consider the contract ratified if it is
a. executed.
b. executory.
c. express.
d. emancipated.
Fresh Veggies, Inc., a wholesaler, refuses to sell its produce to Grocery Mart Stores,
Inc., a retailer. Under antitrust law, this is
a. “an unfair or deceptive act or practice.
b. a per se violation.
c. not a violation.
d. subject to analysis under the rule of reason.
Niki owns O.K. Oil Corporation. Niki uses O.K.s funds to pay her personal expenses,
creates Pure Fuel Corporation to engage in the same business as O.K., transfers O.K.s
assets to Pure Fuel, and petitions O.K. into bankruptcy. This most likely warrants
a. a bonus to Niki for financial maneuvers.
b. a discharge for O.K. in bankruptcy.
c. a pierce of the corporate veil.
d. a review of Pure Fuels articles of incorporation.
Todd indorses a check, “Pay to Interstate Trucking if they deliver the lumber by May 1,
2012. This is
a. a blank indorsement.
b. a qualified indorsement.
c. a restrictive indorsement.
d. a special indorsement.
ChemoCorp, Inc., makes and sells pesticides. If a substance is identified as harmful and
the harm is imminent, the Environmental Protection Agency can
a. conduct an inspection of ChemoCorps plant.
b. declare the substance to be unregulated and allow its production.
c. ignore the risk if the benefit outweighs the harm.
d. order the substance to be sold in an adulterated form.
In accord with banking industry practices, US Banks computers are programmed to
verify signatures only on checks exceeding $1,000. US Bank cashes a check for $900
on the forged signature of its customer Vita. Under UCC Article 3, with respect to
reasonable commercial standards, US Bank is
a. definitely liable.
b. definitely not liable.
c. liable if any other bank verifies all signatures on all checks.
d. liable if Vita has never written or cashed a check for more than $899.
Dwayne and Ewell enter into a contract for the design of an addition to Dwaynes house
for which he agrees to pay Ewell. Ewell transfers his right to payment under the
contract to Flex Construction Company. Flex is
a. a delegatee.
b. an assignee.
c. an obligee.
d. an alien.
Fact Pattern 14-A1
Linea, an employee of Hard Labor Industries (HLI), is injured in a work-related
accident. Based on the diagnosis of Newt, a doctor, Linea accepts $50,000 from HLI
and waives the right to future claims. Newts diagnosis later proves to have been wrong.
Most likely, Linea may
a. obtain damages from HLI.
b. obtain damages from Newt.
c. recover nothing.
d. set aside the settlement with HLI.
Fact Pattern 3-A1
Mac and Nan engage in a business transaction from which a dispute arises. Mac
initiates a lawsuit against Nan by filing a complaint.
If Nan responds to Macs complaint by filing a counterclaim, then
a. Mac will also have to file a response.
b. Mac will have a judgment entered in his favor.
c. Nan will also have to file an amended answer.
d. Nan will have a judgment entered in her favor.
Vance points a gun at Workman, threatening to shoot him. Workman hits Vance, causing
his death. Charged with homicide, Workman can successfully claim as a defense
a. nothing.
b. duress.
c. entrapment.
d. self-defense.
Shelley obtains a life insurance policy with no cash surrender value or cash value, and
names her son Thad as the beneficiary. This is
a. limited-payment life insurance.
b. term insurance.
c. universal insurance.
d. whole life insurance.
Edie is injured when she is struck by debris from an explosion at Finest Fireworks
Factory. The rule that harm must be foreseeable to constitute the proximate cause of an
injury under a negligence theory was established in
a. Edie v. Finest Fireworks Factory.
b. Palsgraf v. Long Island Railroad Co.
c. Rylands v. Fletcher.
d. Congress.
Pam is an agent for Refined Chemicals Corporation. Refined Chemicals owes Pam the
duty of
a. accounting.
b. obedience.
c. performance.
d. safe working conditions.
Patsy possesses twenty-four acres of remote, rugged land. Patsy has the right to use the
property, including extracting silver from an existing mine, for life. Patsy also has the
right to lease the land for a period not to exceed her life. This ownership interest is
a. a fee simple absolute.
b. a leasehold estate.
c. a life estate.
d. the power of eminent domain.
Like most successful companies, Paychex, Inc., has trade secrets. The law protects
those secrets if
a. Paychex employees do not divulge the information to outside parties.
b. Paychex employees do not handle confidential documents.
c. Paychex employees never leave the companys employ.
d. the information is unique and has value to a competitor.
Symphony, Inc., a U.S. jewelry designer and maker, files a suit against Kawa, Ltd., a
Japanese jewelry maker, for the infringement of intellectual property rights under
Japans national laws. Under the TRIPS agreement, Symphony is entitled to receive
a. better treatment than Kawa.
b. the same treatment as Kawa.
c. worse treatment than Kawa.
d. nothing.
Fact Pattern 41-1B
Shrimp Boat Company decides to consolidate its operations with Trawlers, Inc., to form
Coastal Fishers Corporation (CFC).
Refer to Fact Pattern 41-1B. Trawlers had rights in certain property. After the
consolidation, CFC acquires the rights
a. automatically.
b. only after completing certain additional statutory procedures.
c. only if Trawlers former shareholders expressly approve.
d. only if the acquisition is a specified result of the consolidation.
Grace applies for a homeowners insurance policy on her house with Heroic Insurance
Company through Ian, a broker. In this transaction, Ian is
a. an agent for both parties.
b. Graces agent, and not Heroics agent.
c. Heroics agent, and not Graces agent.
d. not an agent.
Paula, a disabled person, applies for a job at Quantity Corporation for which she is well
qualified, but for which she is rejected. Quantity continues to seek applicants and
eventually fills the position with a person who is not disabled. Paula is most likely to
succeed in a suit against Quantity for discrimination under the Americans with
Disabilities Act of 1990 if she can show that
a. she was not hired solely because of her disability.
b. she can function well with corrective devices or on medication.
c. her disability causes her undue hardship.
d. she could not perform the job even with reasonable accommodation.
Mitchell orally agrees to pay Lorena to plant and harvest a quarter of Mitchells farm
acreage for four soybean seasons. After Lorena prepares the land and plants the first
crop, Mitchell says that their deal is off. Lorena can most likely recover
a. in quasi contract.
b. nothing.
c. in restitution.
d. on the parties existing contract.
Louis, a certified public accountant and an investor, and Maria, an insurance
salesperson and a realtor, may create an agency relationship for
a. a business purpose only.
b. a legal purpose only.
c. any purpose.
d. no purpose.
Any copyrighted work created by an employee, whether or not an employer requested
it, is a “work for hire.
Stare decisis is a doctrine obligating judges to help persons who have failed to protect
their own rights.
If an action is ethical from an outcome-based perspective, then it cannot be ethical from
a duty-based perspective.
The duties of a limited liability companys managers may be limited by its operating
agreement.
For an instrument to be negotiable, it must not contain an express promise or order to
pay.
A void contract produces legal obligations on the parties but is not otherwise
enforceable.
A homestead exemption allows a debtor to subtract the value of the family home from
the amount of a debt.
A trust created by a will to come into existence on the settlors death is a living trust.
If a creditor surrenders collateral to the debtor without the consent of the guarantor, this
can reduce the obligation of the guarantor.
A covenant not to compete can be enforceable if it is part of the sale of an ongoing
business.
The government needs a subpoena or a warrant to inspect an employers file of I-9
forms.
Accountants and other professionals may not be held liable for negligence in the
performance of their service.
A bailment of real property is possible.
A self-tender is a companys offer to acquire stock from its own shareholders.
State laws often provide more sweeping and significant protections for the consumer
than federal laws.