Fact Pattern 44-1
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 44-1. Nika deeds some of her land to Polly. The deed states, “To
Polly, for life, then to Quay.” Nika has given Polly
a. a fee simple absolute.
b. a leasehold estate.
c. a life estate.
d. an easement.
XL Retail Sales, Inc., promises its head buyer Yancey and other salaried employees a
bonus at the end of the year if management thinks that the circumstances indicate “a job
well done.” This promise is
a. enforceable.
b. unenforceable because it is not supported by consideration.
c. unenforceable because the dollar amount is missing.
d. unenforceable because the employees are paid salaries.
Socrates Software Corporation wants to hire Tomas, a noncitizen. To hire Tomas,
Socrates must petition
a. Citizenship and Immigration Services.
b. the U.S. Department of State.
c. Immigration and Customs Enforcement.
d. the National Labor Relations Board.
Riley, a State Bank employee, deposits into his account checks that are given to him by
bank customers to deposit into their accounts. This is
a. embezzlement.
b. larceny.
c. money laundering.
d. no crime.
Kit loses her suit against Lou in a Minnesota state trial court. Kit appeals to the state
court of appeals and loses again. Kit would appeal next to
a. a U.S. district court.
b. the Minnesota Supreme Court.
c. the United States Supreme Court.
d. the U.S. Court of Appeals for the Eighth Circuit.
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.
NuStores accepts a shipment of DVD players from Open-Ur-Eyes Video, Inc. NuStores
later discovers a defect in the players, revokes acceptance, and returns the players via
Playback, Inc. During the return, the players are lost. The loss is suffered by
a. NuStores only.
b. NuStores and Open-Ur-Eyes, but not Playback.
c. NuStores, Open-Ur-Eyes, and Playback.
d. Open-Ur-Eyes only.
Trey, an agent for Uno Music Corporation, executes an unauthorized contract with
Variety Recording, Inc., that is highly advantageous to Uno. Variety withdraws from the
deal before Uno ratifies the contract. The contract is
a. valid.
b. variable.
c. void.
d. voidable.
Clay, a minor, signs a contract to buy a car from Delta Motors by misrepresenting his
age as twenty-one. Clay fails to make the payments. Delta sues. In most states, Clay can
a. not return the car nor avoid further liability.
b. not return the car but can avoid further liability.
c. return the car and avoid further liability.
d. return the car but cannot avoid further liability.
In business deals, Felipe, the chief executive officer of Glazed Donuts, Inc., follows
duty-based ethical standards. These are most likely derived from
a. a corporate ethics code.
b. a cost-benefit analysis.
c. philosophical reasoning.
d. the law.
Remote Disposal Company operates a hazardous waste storage facility. Concerned that
there may be a release of chemicals from the site, Remote sells the property to Serene
Developers, Inc. If there is a release, Remote is most likely
a. liable.
b. not liable because the site was sold before the release.
c. not liable because Remote was concerned about the release.
d. not liable because Remote no longer operates the facility.
Ben allows Cody to store his trailer on Ben’s property for $20 a month while Cody is
out of town. Later, Ben notices rainwater collecting in the trailer and covers it with a
tarp at a cost of $40. This cost is most likely borne by
a. Ben and Cody.
b. Ben only.
c. Cody only.
d. neither Ben nor Cody.
In negotiating a contract with Mikayla for the use of an empty bottling plant to bottle
and market natural spring water, Nero makes a statement that he believes not to be true
with respect to a material fact in the deal. Nero is guilty of
a. a mistake.
b. fraud.
c. puffery.
d. nothing.
Office Equipment Leasing, Inc. (OEL), agrees to lease five computer workstations to
Product Promotion Corporation (PPC). Before any interest in the workstations can pass
from OEL to PPC, they must be
a. in existence and identified as the goods in the contract.
b. in existence only.
c. identified as the specific goods designated in the contract only.
d. none of the choices.
The Constitution provides that no person shall be deprived of “life, liberty, or property
without due process of law.” Under this clause, “persons” include
a. animals and other “beings in nature.”
b. buildings and other “manmade creations.”
c. corporations and other “legal persons.”
d. none of the choices.
Vacation Adventures, Inc., and Wild River Tour Company plan to merge. Most likely,
the articles of merger will be filed with
a. the county recording office.
b. the local chamber of commerce.
c. the state’s secretary of state.
d. the national travel agents’ association.
Sonia manages a Tasty Pastry store for United Food Company. To manage the business,
Sonia’s authority can be implied by
a. an inference from the position Sonia occupies.
b. any inference a reasonable customer or supplier would make.
c. any inference Sonia chooses to make.
d. no inference.
Travel Tours Company faxes ads to Uri and other individual consumers without the
recipients’ permission. This is subject to
a. a cease-and-desist order by the Federal Trade Commission.
b. no sanctions.
c. possible fines by the Federal Communications Commission.
d. rescission on the order of the Federal Reserve Board.
Fact Pattern 36-3
Mediterranean Investment Corporation’s (MIC) articles of incorporation prohibit a sale
of its assets without a vote of the board of directors. MIC’s officers sell some assets to
North Atlantic Company without notice to the board. The officers also fail to pay MIC’s
taxes on time, and some MIC funds are not accounted for.Refer to Fact Pattern 36-3.
With respect to MIC’s shareholders, this conduct is most likely
a. not oppressive because it is undertaken by MIC’s officers.
b. oppressive because MIC’s directors may be personally liable.
c. oppressive because MIC’s shareholders may be personally liable.
d. oppressive because it departs from the standards of fair dealing.
Greta is a member of Hovercraft LLC. As a member, Greta is
a. a manager or officer, but not an owner.
b. an investor, but not a manager, officer, or owner.
c. an owner.
d. a participant, but not an investor, manager, officer, or owner.
Fact Pattern 14-1
Macho Marketing, Inc., and Nacho Food Corporation (NFC) discuss the terms of a
contract. Macho faxes NFC a memo on Macho’s letterhead that summarizes the items
on which they agree, including a two-year term. NFC begins to perform, but Macho
refuses to pay. NFC begins to perform, but Macro refuses to pay.
Refer to Fact Pattern 14-1. Between Macho and NFC, the memo is
a. an oral contract.
b. a pre-contract.
c. a written contract.
d. no contract.
Fact Pattern 30-3
Lita replaces Manny in his job at Neighborly Business Corporation (NBC).
Refer to Fact Pattern 30-3. To succeed with an age-discrimination claim against CBC,
Manny will have to show that
a. Lita is not qualified for Manny’s job.
b. Manny is qualified for his job.
c. NBC’s qualifications for Manny’s job are too high.
d. no one could do Manny’s job as well as he could.
Gas Up, Inc., designs, makes, and sells a fuel injection system that copies Hybrid
Corporation’s design without Hybrid’s permission. This is most likely
a. copyright infringement.
b. patent infringement.
c. trademark infringement.
d. a theft of trade secrets.
Bret and Cory enter into a contract under which Bret agrees to sell his textbook to Cory
for $60 at the end of the fall semester. Bret wants to transfer his right to payment for the
book to Del. This transfer
a. is prohibited.
b. may be oral or written.
c. must be implied.
d. must be in writing.
Louislarger and stronger than Micathreatens to hit Mica before hitting and injuring him.
Mica files a suit against Louis for assault and battery. Mica will most likely recover for
a. assault and battery.
b. assault but not battery.
c. battery but not assault.
d. neither assault nor battery.
Myron is an employee of Nero. Either party can terminate the employment relationship
at any time for any reason without liability. With respect to the employment-at-will
doctrine, this is
a. an example of the doctrine.
b. an exception based on contract theory.
c. an exception based on public policy.
d. an exception based on tort theory.
In an action against Elin, Frank obtains a remedy. This is
a. an administrative agency’s enforcement of its rule.
b. a principle of the law derived from earlier court cases.
c. a statute enacted by a state legislature or Congress.
d. the legal means to recover a right or to redress a wrong.
Sabin and Tyler agree while talking on the phone to form a partnership. Their
partnership agreement is legally binding
a. only if a third person knows of the agreement.
b. only if the agreement is reduced to writing.
c. only if the parties exchange valid consideration.
d. without more.
In all states, Sports Fitness Club Company and other corporations can pay dividends
from
a. gross profits.
b. net profits.
c. retained earnings.
d. surplus.
Mikhail files a petition in bankruptcy. One of the goals of bankruptcy law with respect
to a debtor who has “gotten in over his head” is to
a. encourage the continued use of credit to borrow funds.
b. ensure that co-debtors will continue to guarantee loans.
c. provide relief and protection.
d. shield assets from creditors.
Fresh Produce, Inc., and Great Grocery Stores dispute the interpretation of an
ambiguous phrase in their contract. In a suit between the parties to construe the
contract, a court may accept evidence of
a. consistent additional terms only.
b. consistent additional terms and contradictory terms only.
c. contradictory terms only.
d. anything extrinsic to the contract.
Chas and Dodie sign a contract for a sale of goods. Chas is to set the price for the goods
at the time of delivery, but on delivery, refuses to do so. Dody may only
a. fix a reasonable price.
b. fix a reasonable price or treat the contract as canceled.
c. treat the contract as canceled.
d. wait for Chas to set the price.
Ellen contracts to buy six cases of vintage Fertile Valley wine from Grapes & Vines
Winery for $1,200. The contract states that delivery is to be made at Ellen’s residence
“on or before May 1, to be used for daughter’s wedding reception on May 2.” On May
1, Grapes & Vines’s delivery van is involved in an accident, no wine is delivered that
day, and no one from Grapes & Vines tells Ellen. On the morning of May 2, Ellen buys
the wine from Happy Hill Winery. That afternoon, just before the reception, Grapes &
Vines tenders delivery of the wine at Ellen’s residence. She refuses tender. Grapes &
Vines sues her for breach of contract. How is the court most likely to rule?
A contract involving a lease of land does not need to be in writing to be enforceable.
Property used by a government for a public purpose such as a park is community
property.
The full extent of cyber crime is well known.
With respect to negligence, an accountant is subject to no greater standard of care than a
person who is not an accountant.
A franchisee may be required to pay for certain of the franchisor’s administrative
expenses.
Precise Engineering Corporation has a contract with Quik Mart Stores to provide
customized software for Quik’s inventory control system. Retail Outlets, Inc, Quik’s
competitor, induces Sam, a Precise subcontractor who is writing code for the Quik
software, to delay delivery of the code for one week. As a result, Precise’s delivery of
the software is delayed, and Quik sustains $500,000 in lost profits. On what ground
could Quik recover damages from Retail Outlets?
A franchise exists when the owner of a trademark licenses its use to another party to sell
goods or services.
A contract between parties residing in different countries is subject to United Nations
Convention on Contracts for the International Sale of Goods.
The owners of an unincorporated cooperative have joint liability for its obligations.
The assignment of the same contract right to two different parties results in their
‘splitting the difference.”
An agency can terminate once its purpose is achieved.
An otherwise valid contract may be unenforceable if it is not in writing.
Simply obeying the law does not fulfill all ethical obligations.
The rights of a third party beneficiary under a contract with two other parties vest when
the conditions for vesting are satisfied.
A market division by class of customer between rival firms violates antitrust law.
Charging different prices to different buyers for identical goods is price discrimination.
Privity of contract between the plaintiff and the defendant is required to bring a product
liability suit based on negligence.