Guaranty Bank receives a check drawn on the account of Get-Rich Industries, Inc., one
of the banks customers, at 3 p.m. Friday. Garry, the presenter of the check, is not one of
the banks customers. The bank uses deferred posting with a 2 p.m. cutoff hour. If it
decides to dishonor the check, it must do so by midnight
a. Saturday.
b. Sunday.
c. Monday.
d. Tuesday.
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. Hawaiis law will most likely be
a. rendered invalid under the supremacy clause.
b. rendered valid the free exercise clause.
c. struck down under the due process clause.
d. upheld under the commerce clause.
Everyday Loans, Inc., takes possession of Ferbies stock in Glade Electronics
Corporation to perfect Everydays security interest in the stock. This is
a. after-acquired property.
b. a pledge.
c. a purchase-money security interest.
d. proceeds.
Della, an officer for Energy Petrol Corporation (EPC), buys 100 shares of EPC stock.
One week later, EPC announces that it will merge with a competitor, Fuel Oil Company,
and the price of EPC stock increases. One month later, Della sells her shares for a
profit. Under Section 16(b) of the Securities Exchange Act of 1934, Della would not be
liable if, after buying the stock, she had waited
a. less than fourteen days to sell it.
b. more than six months to sell it.
c. ninety days to sell it.
d. two months to sell it.
ChemoCorp, Inc., makes and sells pesticides. If a substance is identified as harmful and
the harm is imminent, the Environmental Protection Agency, among other things, 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.
Fact Pattern 9-1
Moore Properties, Inc., offers in writing to sell to Lawn Acres Development
Corporation a certain half-acre of land for “$112,000. After Lawn Acres signs the offer
in acceptance and returns it, Moore discovers that the price should have been stated as
“$121,000.
Refer to Fact Pattern 9-1. Moores misstatement of the price is
a. a bilateral mistake.
b. a fraudulent misrepresentation.
c. a unilateral mistake.
d. unconscionable.
The Association of Southeast Asian Nations is a regional trade association that was
created through
a. a bilateral agreement.
b. a lateral agreement.
c. a multilateral agreement.
d. a unilateral agreement.
Ethical standards would most likely be considered violated if Retail Mart Corporation
deals with a company in a developing nation that
a. agrees to produce goods at Retail Marts desired price.
b. goes unnoticed by “corporate watch groups.
c. exploits its workers.
d. pays its workers less than the U.S. minimum wage.
Vieux Carré S.A., a French firm, imports its goods into the United States and offers
those goods for sale at “less than fair value. “Fair value is the price of
a. comparable goods in a select “basket of other countries.
b. Vieux Carrés goods in France.
c. Vieux Carrés goods in the United States.
d. Vieux Carrés goods on the world market.
Brad borrows $20,000 from Citizens Bank to repair his home and to buy a car. Brad
buys a stereo from Deep Discount Store in a transaction financed by Deep. If these
parties are subject to the Truth-in-Lending Act, Regulation Z applies to
a. the car loan only.
b. the home repair loan only.
c. the retail installment sale only.
d. the car loan, the home repair loan, and the retail installment sale.
Fact Pattern 15-2
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. First National deposits the check in the Federal Reserve Bank of San Francisco,
which transfers it to the Federal Reserve Bank of New York. That Federal Reserve Bank
sends the check to State Bank.
Refer to Fact Pattern 15-2. Toms bank is
a. the cashing bank.
b. the depositary bank.
c. the intermediary bank.
d. the payor bank.
Fact Pattern 8-1
Daves Hobby Town and Evas Yarn Shoppe are adjacent stores with adjoining parking
lots. Dave offers Eva a discount on purchases from Daves store if Eva will not tow the
cars of Daves customers who park in Evas lot.
Refer to Fact Pattern 8-1. Evas forbearance from towing is legally sufficient consid-
eration
a. because it is a promise of something of value.
b. only if Daves customers park in Evas lot.
c. only if Evas customers cannot park in her lot because it is full.
d. under no circumstances.
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.
Shelby offers to make digital copies of Relay Companys business conference
videotapes, CDs, DVDs, and other media for $500. Under the mailbox rule and the
Uniform Electronic Transactions Act (UETA), Relays acceptance by e-mail will be
considered effective when
a. received.
b. sent.
c. followed up by a confirmation letter sent by regular mail.
d. composed on a Relay computer.
Fact Pattern 22-1
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.
Refer to Fact Pattern 22-1. Cardio pays Emitate not to sell its product. This is
a. a customer restriction.
b. a joint venture.
c. an exclusive-dealing contract.
d. a price-fixing agreement.
Principal Resources Corporation contracts with Quality Construction to build an
addition to Principals corporate office building. Quality contracts with Rite Supply
Company for materials for the addition but refuses to pick up the materials. Meanwhile,
Principal hires Skye, a certified public accountant, to work in its cost-accounting
division as an employee, with no authority to hire or supervise others. Skye asks Theo,
an outside experienced accountant, to advise her on certain accounting procedures but
fails to pay Theo for the service. Principal also contracts with Uma, a salesperson, to
solicit orders for its products in a designated territory. Uma obtains an order from Verity
Industries, Inc., which is assured the order will be filled soon. But Uma does not follow
through with the paperwork and fails to submit the order to Principal. Verity suffers a
loss. Rite Supply, Theo, and Verity Industries claim Principal is liable under agency law.
Discuss fully whether an agency relationship was created by Principal with Quality
Construction, Skye, or Uma.
Sam, a citizen of New Mexico, wants to file a suit against Tanya, a citizen of Texas.
Their diversity of citizenship may be a basis for
a. any court to exercise in rem jurisdiction.
b. a federal district court to exercise original jurisdiction.
c. a U.S. court of appeals to exercise appellate jurisdiction.
d. the United States Supreme Court to issue a writ of certiorari.
Vernon claims that his contract with Ulani is voidable. If their contract is avoided
a. both parties are released from it.
b. both parties must fully perform their obligations under it.
c. a wholly different contract is agreed to.
d. a wholly different contract is imposed “as if the parties had agreed.
Miracle Products, Inc., engages in deceptive advertising when it markets its product
Weight-Off as able to help consumers lose weight in their sleep. Miracle is ordered to
include in all future advertising of Weight-Off the statement, “Weight-Off will not cause
anyone to lose weight in their sleep. This is
a. a counteradvertising order.
b. a multiple product order.
c. bait-and-switch advertising.
d. excessive abuse of authority.
Inadvertently, Bret leaves his briefcase at Clean n Dry Launderers when she stops to
pick up her clothes. The briefcase is
a. abandoned property.
b. bailed property.
c. lost property.
d. mislaid property.
Primo Pools Company and Aquatic Recreation, Inc., enter into a contract for a sale of
prefabricated swimming pools. Under either a shipment contract or 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. place the goods into the hands of a carrier.
d. provide the buyer with any necessary documents of title.
Now Shopping Mall Corporation leases space to Only U Stores and Pik-Ur-Choice, Inc.
Later, Pik-Ur-Choice begins to sell items that are similar to Only Us goods, and Only U
abandons its space before the end of the lease term. Only U is liable to
a. not Now or its other tenants.
b. Now and its other tenants, except Pik-Ur-Choice, for any effect on their business.
c. Now and its other tenants, including Pik-Ur-Choice, for any effect on their business.
d. Now only for the unpaid rent.
Isabel obtains a fire insurance policy on her home from Justice Insurance Company.
The home is lost in a fire, but the parties dispute the amount of Justices liability under
an ambiguous clause in the policy. A court would most likely
a. interpret the clause against Isabel.
b. interpret the clause against Justice.
c. rewrite the clause and apply it as rewritten.
d. strike the clause from the policy.
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.
Mona offers Ned, a building inspector, money to overlook the violations in her new
warehouse. Ned accepts the money 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.
George has a badly infected right foot. Herb, Georges physician, prescribes amputation.
George agrees. During the operation, Herb amputates the left foot. In Georges suit
against Herb, Georges best theory for recovery is
a. assumption of risk.
b. negligence per se.
c. res ipsa loquitur.
d. strict liability.
Mabel and Nicol do business as One World Realty. In acting on the firms behalf in a
deal with Property Acquisition Company, Mabel fails to account for the profit. To her
firm, Mabel is
a. liable for breach of the duty of care.
b. liable for breach of the duty of economic sense.
c. liable for breach of the duty of loyalty.
d. not liable.
Sudan seizes the assets of Triage Medical, Inc., a U.S. firm. Triages recovery from
Sudan in a U.S. court may be prevented by
a. the act of state doctrine.
b. the doctrine of sovereign immunity.
c. the Foreign Corrupt Practices Act.
d. the principle of comity.
Neil represents himself as a contractor in Ohio, but he is not licensed in that state. A
contract between Pam and Neil by which Neil agrees to build a warehouse for Pam in
Ohio is
a. enforceable only if Pam does not object after learning of Neils status.
b. enforceable only if Pam knows that Neil is unlicensed.
c. enforceable only if the outcome is successful.
d. not enforceable.
Brenda is a purchasing agent for Commodities Exchange Corporation. Dennis, a
Commodities corporate officer, gives Brenda written authority to buy for the firm as
many computers and peripheral devices as necessary. The next day, Dennis calls Brenda
and tells her to buy only fifty notebook computers and nothing else. Brenda shows the
written authority to E-Products, Inc., and enters into a contract with E-Products to buy
sixty notebook computers and a selection of printers, scanners, and extra storage media.
E-Products ships the order to Commodities. Is Commodities liable to E-Products under
the contract? Is Brenda liable? In each case, if so, why? If not, why not?
Avatar, Inc., and Bling Corporation sign a contract in which Avatar agrees to deliver
t-shirts emblazoned with video game characters in exchange for Blings promise to pay.
Avatar delivers. The contract is
a. voidable.
b. executed.
c. executive.
d. executory.
EZ Rentals Company wants to insure the equipment that it rents to the public. To obtain
insurance, EZ must have an insurable interest in the equipment
a. at any time.
b. at the time a loss occurs.
c. at the time a policy is obtained.
d. continuously from the time a policy is obtained to the time a loss occurs.
Geoff serves in a representative capacity for Huck. To accomplish the objectives of this
relationship, Geoffs authority can be implied
a. by contradiction.
b. by custom.
c. by lack of reason.
d. under no circumstances.
RiteMade Machinery, Inc., designs, makes, and sells a drill press. Steel Equipment
Company copies the design without RiteMades permission. Steels conduct is actionable
provided
a. consumers are confused.
b. Steels conduct is intentional.
c. Steels conduct reduces the value of RiteMades design.
d. RiteMades design is patented.
Frawsty Corporation distributes beverages in the greater Northwest. Frawstys board of
directors can delegate some of its functions to
a. Frawstys incorporators.
b. Frawstys officers.
c. Frawstys shareholders.
d. no one.
Before filing a registration statement, an issuer must attempt to sell, or at least offer to
sell, the securities.
If the parties to a sales contract state that a certain remedy is exclusive, then it is the
sole remedy.
To be enforceable, a writing evidencing an oral contract that would otherwise be
unenforceable must be signed by the party who seeks to enforce it.
In some states, business trusts pay corporate taxes.
The management of Sport Shoes Corporation, a U.S. firm, wants to expand into foreign
investment and employment markets. They are considering either opening their own
production facility in a foreign country or entering into a licensing agreement with a
foreign firm. What are the advantages and disadvantages of each of these courses of
action?
Corporations can be perceived as owing ethical duties to groups other than their
shareholders.
A loss sustained between the time of application and the delivery of an insurance policy
may not be covered.
“Forward-looking financial forecasts are prohibited under SEC Rule 10b-5.
A fanciful use of ordinary words may be trademarked.
A buyer who obtains substitute goods to replace goods that a seller did not deliver can
also recover damages from the seller.
A Chapter 11 plan is binding on confirmation and the debtor is discharged.
A foreign state is immune from the jurisdiction of U.S. courts as long as the state is
involved in commercial activity in the United States.
State agency regulations take precedence over conflicting federal agency regulations.
Federal law allows the use of unsolicited commercial e-mail.
If a lessee wrongfully refuses to accept goods that conform to a contract, the lessor
must tender substitute goods.
Minimum resale price maintenance agreements are subject to analysis under the rule of
reason.
There are no registration requirements for trade secrets.