Jackson Lumber hires Owen to purchase wood from various sources on behalf of
Jackson Lumber. In this relationship, Jackson Lumber is the
a. employee.
b. independent contractor.
c. principal.
d. agent.
Doyle and Emily are officers of Fresh Bottled Water Corporation. As corporate officers,
their compensation is determined by Fresh’s
a. directors.
b. incorporators.
c. other officers.
d. shareholders.
Ceramic Tile Company designs and makes floor tiles. In a product liability suit based
on negligence, Ceramic could be liable for violating its duty of care with respect to
a. neither the design nor the making of the tiles.
b. the design and the making of the tiles.
c. the design of the tiles only.
d. the making of the tiles only.
Scott presents an instrument that states “pay to the order of Scott” to Town Bank for
payment. This instrument is the most common type of negotiable instrument, which is
a. a commercial wire transfer.
b. a check.
c. a note.
d. a substitute check.
Sunny Energy Company wants to genetically test its workers for potentially significant,
future health problems. Sunny may
a. discharge employees who test “positive.”
b. discriminate against job applicants who test “positive.”
c. deny group health insurance for its employees who test “positive.”
d. not make employment decisions based on genetic testing.
Noah and Orin do business as Personnel Partners. In most states, for purposes of suing
and being sued, Personnel Partners would be treated as
a. an aggregate of the individual partners.
b. a natural person.
c. an entity.
d. a non-existent party.
Bella owns a farm in Colorado. Doyle drives his sport utility vehicle off a highway and
onto Bella’s land. Doyle commits trespass if he
a. does not have Bella’s permission to drive on the property.
b. drives onto the property for recreational purposes.
c. harms the property in a material way.
d. harms the property in any way.
A Rhode Island state statute requires machinery in industrial plants to include automatic
shut-off switches accessible to each employee working on the machine. Steel
Company’s equipment does not have the switches. Trudy, a Steel employee, suffers an
injury that an accessible shut-off switch would have prevented. Trudy’s best theory for
recovery is
a. assault.
b. assumption of risk.
c. invasion of privacy.
d. negligence.
A unilateral refusal to deal can violate antitrust laws if the refusal
a. is likely to have an anticompetitive effect on a particular market.
b. results in lower prices for consumers.
c. provides no economic benefits for consumers.
d. is likely to increase competition.
Dependable Appliances, Inc., and Elaine enter into a contract for a sale of kitchen
appliances. Dependable, a merchant who deals in goods of the kind sold, notes that its
goods come with an implied warranty of merchantability. Under the UCC, this means
that the goods are reasonably
a. fit for the buyer’s particular purpose.
b. fit for the ordinary purpose for which such goods are used.
c. suitable for resale at an acceptable price.
d. the best quality that money can buy.
Pure Oil Company enters into a contract with QuikBilt, Inc., to construct an oil pipeline
to withstand specific conditions. If QuikBilt fails to meet this standard, which is
construed as a breach of contract and a breach of a duty of care, Pure might be awarded
punitive damages to
a. establish, as a matter of principle, that QuikBilt acted wrongfully.
b. provide Pure with funds for a foreseeable loss beyond the contract.
c. provide Pure with funds for its loss of the bargain.
d. punish QuikBilt and deter others from similar acts.
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 employees’ family members.
Garland induces Jules to enter into a contract for the purchase of a Chef’s Burger House
restaurant. Garland knowingly misrepresents a number of material features about the
restaurant and the business. When Jules discovers the truth, he can
a. not rescind the contract because Jules assumed the risk that the bargain would prove
to be different from what he thought.
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 undue influence.
Like other corporations, Western Steel Corporation can extend its operations through
a. a merger.
b. a dissolution.
c. a termination.
d. a winding up.
Flora, who owns and operates Garden Fresh Organic Farms, agrees to sell Harvesters
Grocery a minimum quantity of fresh fruits and vegetables every week for three
months.
If the market price for organic produce exceeds the price in the contract with
Harvesters, and Flora decides not to deliver the order. her contract with the grocery is
most likely
a. breached.
b. discharged.
c. not affected.
d. suspended.
Main Street Lenders, Inc., attempts to coerce Nolanwho specializes in determining the
value of real and personal propertyinto misstating the value of a property on which a
loan is to be issued. This is
a. a legal and ethicalbut morally arguablefinancial ploy.
b. a legalbut unethicalbusiness practice.
c. a necessary tactic to generate a profitable loan in today’s market.
d. a violation of the law.
Shale Oil Processing Corporation combines its assets and debts with those of Tierra
Frakking Company to form United Resources, Inc. Shale and Tierra cease to exist.
United Resources assumes
a. all of Shale’s and Tierra’s debts.
b. half of Shale’s and Tierra’s debts.
c. none of Shale’s and Tierra’s debts unless there is a formal transfer of liability.
d. only debts that Shale and Tierra incurred after a combination was proposed.
Earl holds 1,000 pounds of perishable fruit in storage for Fresh Food Corporation. Fresh
Food does not pay for the storage. Earl sells the fruit to Green Grocers, Inc. This sale
represents
a. a breach of contract.
b. a mitigation of damages.
c. rescission and restitution.
d. specific performance.
Mickey is a director of Fine Art Dealers, Inc. Mickey is trained in art valuation. Fine
Art Dealers makes several purchases in which it pays too much money for artwork.
Mickey approves all the transactions without reading the details. Mickey is most likely
a. liable for breach of the duty of care.
b. not liable for breach of the duty of care.
c. liable for breach of duty of loyalty.
d. liable for violation of the business judgment rule.
Breads & Brews, Inc., files its articles of incorporation with the appropriate government
agency. Least likely to appear in the articles is the name of
a. each of the corporation’s incorporators.
b. each of the corporation’s shareholders.
c. the corporation.
d. the corporation’s initial registered agent.
Lovett County Bank offers to lend money to Kino, the owner of Java Stop, at 15 percent
interest. Before Kino accepts, a state statute is enacted prohibiting loans at rates greater
than 12 percent. Kino and the bank have
a. have a contract for a loan at 15 percent interest.
b. have a contract for a loan at 12 percent interest.
c. have a contract for a loan at 0 percent interest.
d. no contract for a loan.
Dwayne, an electrician, files a suit against Electro Mechanix, Inc., alleging that its
circuit breakers are unreasonably dangerous due to the possibility of electrical shock.
Dwayne’s suit is most likely to
a. fail, because Dwayne assumes the risk if he uses an Electro product.
b. fail, because Dwayne is a knowledgeable user.
c. succeed, because the danger is open and obvious.
d. succeed, because Electro’s products are not safe for all uses.
Dorothy files a petition for bankruptcy under Chapter 13. If she is granted a discharge,
debts that will most likely be discharged include
a. claims not provided for by the plan.
b. payments on retirement accounts.
c. claims for domestic support obligations.
d. credit-card debt incurred more than one year before filing.
Brad is an employee of Custodial Service, Inc. In deciding whether Brad acts within the
scope of his employment when he commits a tort against Didi, a court will not consider
whether
a. Brad was acting within the scope of the agency.
b. Brad was acting within the scope of his employment.
c. Custodial authorized the act.
d. Custodial was personally at fault.
Shingle & Tile Roofing Contractor, LLC, obtains an insurance policy against liability
for injuries or losses sustained by employees during the course of their employment.
The policy covers claims not covered by workers’ compensation insurance. This is
a. casualty insurance.
b. fidelity or guaranty insurance.
c. key-person life insurance.
d. employer’s liability insurance.
Qiana writes a check to Payday Loans, Inc., in an amount that represents half of her
debt to the lender. On the back of the check, Qiana includes the words “payment in
full.” Payday agrees to accept the lesser sum and cashes the check. This discharges the
entire debt
a. if the debt is liquidated.
b. if the debt is past due.
c. if the debt is unliquidated.
d. under no circumstances.
Mary admires Julia’s collection of scarves. Julia says “I might sell you a few someday,
if I get tired of them.” Julia’s statement is
a. an effective offer.
b. not an effective offer because it has not been communicated to Mary.
c. not an effective offer because the Julia does not show a serious intent to be bound.
d. an acceptance.
Will is an agent for MaryElise. MaryElise gives Will clear instructions to only enter into
contracts on Mondays, Wednesdays, or Fridays. Will enters into a contract on
MaryElise’s behalf on Tuesday. Will has breached
a. the duty of performance.
b. the duty of loyalty.
c. no duty.
d. the duty of obedience.
Lena borrows from Mac and Nicol, using the same farm equipment as collateral for
both loans. Only Nicol has a perfected security interest. Lena defaults on both loans.
The party with first rights to the collateral is
a. Lena.
b. Mac and Nicol, in proportion to Lena’s debt to each.
c. Mac only.
d. Nicol only.
Mead, Nero, and Olen do business as Pipe & Plumbing Services. After Mead’s
relationship to the firm ends, Nero and Olen agree to discontinue the business. This is
a. dissociation.
b. dissolution.
c. gross negligence.
d. simple misconduct.
Xavier owns a duplex that he leases to Yvon and Zack. Xavier may sell
a. the duplex at any time.
b. the duplex, but only after the lease expires and the tenants move out.
c. the duplex, but only with the tenants’ permission.
d. the lease, but not the duplex.
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.
Shelby offers to make digital copies of Relay Company’s business conference
videotapes, CDs, DVDs, and other media for $500. Under the mailbox rule, Relay’s
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.
Maria signs an instrument payable to the order of National Loans, Inc., “on or before”
June 15. This instrument is
a. negotiable.
b. nonnegotiable, because the maker can move up the payment date.
c. nonnegotiable, because moving up the payment date is optional.
d. nonnegotiable, because the exact payment date cannot be determined from the face of
the instrument.
Lyn files a suit against Karl. Karl denies Lyn’s charges and sets forth his own claim that
Lyn breached their contract and owes Karl money for the breach. Karl’s claim is
a. a contrary charge.
b. a counterclaim.
c. a counterpoint.
d. a cross complaint.
Informal contracts require a special form or method of creation.
The measure of damages for breach of a construction contract depends on which party
breaches and when.
A person who holds the entire bundle of rights in property is the owner in fee simple.
Some companies set up confidential systems for employees to “raise red flags” about
suspected unethical practices.
Key of G Products, Inc., offers to sell to Harmony Company one hundred MP3 players
at $50 a piece, subject to certain specific delivery dates. Harmony replies with a signed
purchase order that reads, “Accept your offer for 100 I-appliances at $50 each. Must be
delivered to our warehouse.” Key of G does not respond or deliver the goods. Harmony
files a suit for breach of contract, to which Key of G answers that there is no contract
because Harmony’s purchase order contained additional terms and is not signed by Key
of G. Can Harmony recover? Explain.
When Looking Glass Corporation wishes to issue certain securities, it must provide
sufficient information for Alice, and other unsophisticated investors, to evaluate the
financial risk involved. Specifically, the law imposes liability for making a false
statement or omission that is “material.” What sort of information would Alice consider
material?
An accountant’s liability under the Securities Act of 1933 requires privity of contract
with the purchaser of a security.
The main individual beneficiaries of stock buybacks are corporate executives.
It is legally necessary to notify the obligor of any assignment of rights to a third party.
If a debtor’s income is below the median income, there is no presumption of bankruptcy
abuse.
Trade names have the same legal protection as trademarks.
A partnership cannot be a shareholder in an S corporation.
An agency relationship may occur by operation of law in a family.
Certain liquidation cases may be converted to Chapter 13 with the consent of the debtor.
Every contract involves at least two parties.
A trade name can be protected if it is unusual or fanciful.
No state has adopted the Uniform Commercial Code.
In cyberspace, no two businesses can use the same domain name.
For accord and satisfaction to occur, the amount of the debt cannot be in dispute.
Stating on an instrument the underlying terms of an agreement renders the instrument
nonnegotiable.