Pat, a world famous musician and composer, agrees to give ten piano lessons to Quinn
in exchange for $1,000. Pat’s attempt to delegate his contract to Ruth, an inexperienced
pianist, will probably be
a. permitted because contracts may be freely delegated.
b. permitted because the contract is concerned with music lessons.
c. prohibited because contracts may not be freely delegated.
d. prohibited because Pat and Ruth have very different skill levels.
Drew and Earl are brothers. They agree to act as guarantors on a loan made by their
sister, Flo. Flo defaults on the payments and Drew refuses to pay. Earl pays the debt.
Earl can recover from
a. Drew and Flo under the right of proportionate liability.
b. Drew and Flo under the right of reimbursement.
c. Drew under the right of contribution and Flo under the right of subrogation.
d. no one, because the parties are brothers and sister.
Tristan promises to paint Katy’s house in exchange for Lila’s promise to plant trees on
Tristan’s property. This is
a. a delegation.
b. an assignment.
c. a third party beneficiary contract.
d. none of the choices.
Julia orders twelve violins for her music shop from Notable Notes Instrument
Manufacturers. The sale is made on credit. Julia orders the violins on May 1, Notable
Notes ships the violins on May 2, and Julia receives the violins on May 4. Julia sells all
the violins by June 15. Julia’s credit period most likely began on
a. May 1.
b. May 2.
c. May 4.
d. June 15.
Green River Energy Corporation wants to begin operations that include the discharge of
waste into navigable waters. Under the Clean Water Act, Green River must install
certain equipment
a. after beginning operations.
b. before beginning operations.
c. during operations.
d. only if a regulatory agency challenges the discharge.
Qang and other foreign citizens allege human rights violations committed overseas by
the government of Burma on behalf of Railway Construction Company, a U.S. firm. To
seek redress for their injuries in a U.S. court, these citizens can
a. allege antitrust injuries under the Sherman Act.
b. bring civil suits under the Alien Tort Claims Act.
c. file criminal complaints under Title VII of the Civil Rights Act.
d. do nothing.
Rita borrows $30,000 from South State Credit Union. South State accepts Rita’s equity
in her home as collateral, which can be seized if the loan is not repaid on time. This is
a. a home equity loan.
b. an adjustable-rate mortgage.
c. an interest-only mortgage.
d. a violation of the law.
Posing as Platinum Bank, Oswald e-mails Nadia, asking her to update her personal
banking information through a link in the e-mail. She clicks on the link and types in the
data, which Oswald promptly sells to Moe. This is
a. hacking.
b. identity theft.
c. cyberterrorism.
d. bribery.
Picabo drives a truck as an employee for Quik Delivery, Inc. Picabo would most likely
be considered acting outside the scope of her employment if she
a. crashed into a car at the airport while off duty.
b. hit a pedestrian in a parking lot during a “working” lunch.
c. ran over an attendant at Quik’s gas station while refueling the truck.
d. smashed into a store-front while intoxicated on-duty.
Phil owns a farm in South Dakota. He does not like it when planes from the local
airport fly over his property. Phil is unlikely to win a case claiming that airplanes flying
over his land violate his property rights unless
a. the planes fly over more than twice a day.
b. he can prove there are more efficient routes for the planes to take.
c. the flights are low and frequent and cause direct interference with Phil’s enjoyment of
the land.
d. the planes belong to private individuals.
Melanie files an employment discrimination suit against Natural Gas Industries Corp.
under Title VII on a disparate-impact theory. To succeed, Melanie must show that a
protected group of people are adversely affected by any of the following except the
employer’s
a. practices.
b. procedures.
c. tests.
d. seniority system.
Craft Engineering, Inc., contracts for a sale of technical instruments to Detail Design
Company. Before the date on which performance is due, Craft notifies Detail that it will
not perform. This is
a. anticipatory repudiation.
b. perfect tender.
c. rejection of performance.
d. revocation of acceptance.
Denise, Ervin, and Flem occupy the positions of directors on the board of Gallery
Corporation. As directors, they may not
a. authorize major corporate policy decisions.
b. decide to issue stock and bonds, and declare dividends.
c. select and remove corporate officers.
d. subordinate the corporation’s welfare to their personal interests.
Muffins-2-Go buys a truck from Street Vehicles, Inc., under a contract signed by Riley,
Muffins-2-Go’s president, making him personally liable if Muffins-2-Go does not pay
the loan. Riley is
a. a guarantor.
b. a surety.
c. a co-surety.
d. a co-creditor.
A court deems an agreement between Silver Saddles Saddlery and Time Tested Tack,
Inc. to be a per se violation of the Sherman Act. The court is
a. prevented from determining whether the agreement’s benefits outweigh its
anticompetitive effects.
b. required to unanimously decide whether the agreement’s benefits outweigh its
anticompetitive effects.
c. required to apply the rule of reason.
d. required to issue a formal complaint against Silver Saddles and Time Tested Tack.
Thorpe buys an HD TV from Viewpoint Electronics store, which agrees to keep the TV
for Thorpe until he picks it up. Before Thorpe gets the TV, a fire destroys the store and
the set. The loss is suffered by
a. neither Thorpe nor Viewpoint
b. Thorpe and Viewpoint.
c. Thorpe only.
d. Viewpoint only.
William goes to Saddle Up Stables in the middle of the night when no one is around and
takes five saddles. William’s crime is
a. forgery.
b. larceny.
c. robbery.
d. embezzlement.
The Pennsylvania legislature enacts a state law that violates the U.S. Constitution. This
law can be enforced by
a. no one.
b. the federal government only.
c. the state of Pennsylvania only.
d. the United States Supreme Court only.
Martha has a checking account with Homeplace Bank. Martha signs a check “payable
to Phillipa” drawn on Martha’s account. Homeplace Bank is
a. the payer.
b. the drawee.
c. the drawer.
d. the payee.
Klondike and Leola own 10,000 shares of stock in My-T Gro Corporation. On the death
of either owner, that owner’s interest in the stock passes to the surviving owner. This is
a. a joint tenancy.
b. community property.
c. a tenancy in common.
d. ownership in fee simple.
Straitway Company encourages its managers to behave ethically, reasoning that the
employees will take their cues from management. One of the most important ways to
create and maintain an ethical behavior workplace is for management to
a. demonstrate a commitment to ethical decision making.
b. discreetly engage in unethical or illegal acts.
c. look the other way when an employee engages in an unethical act.
d. direct employees to “do as we say, not as we do.”
Venture Capital, LP, is a limited partnership. Its limited partners include more than 150
sophisticated investors and investment professionals. A Venture limited partner loses his
or her limited liability if he or she
a. acts as the firm’s manager.
b. does not participate in the firm’s management.
c. invests in Unified Fund, one of Venture’s competitors.
d. votes on the firm’s sale or dissolution.
Genetic Seed Company hires Howie to work on Genetic’s shipping dock, accepting
deliveries and dealing with other companies’ drivers. With respect to Genetic, Howie is
most likely
a. an agent.
b. an independent contractor.
c. a principal.
d. a work for hire.
Frothy Beverage Corporation is a public company whose shares are traded in the public
securities markets. Under the Securities Act of 1933, Frothy is required to
a. contribute to the operations of national stock exchanges.
b. disclose financial and other information about its securities.
c. engage in market surveillance to deter undesirable practices.
d. solicit proxies for voting.
Colleen is intoxicated, but still mentally capable of understanding the consequences of
her actions when she signs a contract to sell the rights to her latest phone app design to
Addie. The contract is
a. enforceable only if Colleen does not attempt to disaffirm it.
b. enforceable even if Colleen attempts to disaffirm it.
c. unenforceable if Addie attempts to disaffirm it.
d. enforceable only if Addie does not attempt to disaffirm it.
Ric designs a new tablet computer that he names “Sci Phi.” He also writes the operating
manual to be included with each final product. Ric can obtain patent protection for
a. the tablet computer.
b. the “newness” of the tablet computer.
c. the name.
d. the operating manual.
Haya obtains an insurance policy from Inviolable Insurance Corporation (IIC). IIC may
cancel, or refuse to renew, the policy because of
a. Haya’s appearance as a witness against IIC.
b. Haya’s gender.
c. Haya’s national origin.
d. none of the choices.
Carol is married to Andy. Carol buys food for their children’s lunches and charges the
cost to Andy’s account. This is
a. an agency by operation of law.
b. an agency by estoppel.
c. an agency by ratification.
d. not the creation of an agency relationship.
Portia owes Bon $500 on their contract, but refuses to pay. To collect, Bon files a
mechanic’s lien, under which security for the debt is represented by
a. Portia’s personal property.
b. Portia’s real estate.
c. the $500 owed under the contract.
d. the contract.
Tyro has the right to drive across Ula’s land, which is next to Tyro’s property, to reach
an access road. Tyro’s right is
a. a tenancy at will.
b. a license.
c. an easement.
d. a profit.
Sara has a flat-screen TV, a Blu-ray disc player, set of computer games and an
investment portfolio that includes stock in the Internet game company Zynga. Sara’s
intangible property includes
a. the TV and Blu-ray player.
b. the computer games.
c. the Zynga stock.
d. the TV only.
Cory employs Daily Delivery Agency as an agent under a written agreement that
describes the rights and duties of both parties. This is
a. apparent authority.
b. equal authority.
c. express authority.
d. implied authority.
When processing a check, Superior Bank encodes information, such as the amount of
the check, on the item. Superior thereby warrants to any subsequent bank or payor
a. the item has been returned to the drawer.
b. nothing.
c. the check has been processed manually.
d. the encoded information is correct.
Marco and Fred enter into a contract for the sale of Marco’s apartment for which Fred
agrees to pay him $100,000. Marco cannot prohibit Fred from transferring his right to
the ownership of the apartment because such a prohibition is
a. against public policy.
b. immoral.
c. unconscionable.
d. a crime.
Sierra borrows $175,000 from Regional Home Finance Corporation to buy a home. The
loan is a twenty-year, 3/1, adjustable-rate mortgage, with an initial interest rate of 4.0
percent for three years and potential increases of up to 3.0 percent to a cap of 11.0
percent. Before the loan is completed, the lender discloses the amount of the loan
principal, the initial interest rate, the initial annual percentage rate, and associated fees
and costs. Not disclosed are material details about the amounts of the payments when
the interest rate changes. Before the first increase takes effect, Sierra decides that she
wants to rescind the loan. What is a “twenty-year, 3/1, adjustable-rate mortgage”? Can
Sierra rescind this loan? Why or why not?
A court can refuse to enforce a contract that the court deems to have been
unconscionable at the time it was made.
A check is not negotiable if it is payable on demand.
A corporation whose shares are held by relatively few persons is a close corporation.
For a party to a contract to receive relief from either a unilateral or a bilateral mistake,
the mistake must involve a material fact.
Generally, stock offerings that are made in a limited manner during any twelve-month
period are exempt from the registration requirement.
Monopoly power is a minor amount of market power.
A bank is not responsible for determining whether a signature on a customer’s check is
genuine.
Today, most checks are processed manually.
A bank that pays a customer’s check with a forged drawer’s signature can generally pass
the loss onto the customer.
In order of priority, the claims of all unsecured creditors in a class must be satisfied
before any remaining amounts can be distributed to the next class.
Employees are entitled to overtime pay only at their employer’s discretion.
If a buyer wrongfully refuses to accept goods that conform to a contract, the seller can
recover damages.
Umberto and Tiara, who are married, borrow $110,000 from Sterling Credit Union to
buy a home. The loan is a fixed-rate mortgage at 5.25 percent with a thirty-year term,
subject to an acceleration clause, and secured by the home, which is their principal
residence. When Umberto and Tiara have paid off $10,000 of the mortgagestill owing
$100,000they lose their jobs and stop making payments. Sterling Credit makes
numerous attempts to contact the couple, but they do not respond. Meanwhile, the
market value of their home has declined to $85,000. After six months, Sterling Credit
decides to take steps to recover the unpaid amount of the loan. What are the lender’s
options? Which option seems most likely? Why? What are the steps are involved?
In a limited liability partnership, a partner can be exempt from personal liability for the
malpractice of other partners.
Generally, a foreign government cannot sue under U.S. antitrust laws in U.S. courts.
A time draft is payable on sight.