Jamie is building a house on her lot. She invites Earnie of Earnie’s Excavation to bid on
the excavation job. Earnie observes that the lot next to Jamie’s is also under excavation
and the soil in that lot is normal and not excessively rocky. Based on the assumption
that the soil in Jamie’s lot will be similar, he and Jamie agree that the excavation will
cost $3,000. When Earnie starts digging, he learns there is solid rock under Jamie’s lot.
Earnie says it will cost an extra $2,500 for the excavation work. Jamie agrees just to get
the job done but later refuses to pay a dime more than $3,000. If Earnie sues, the most
likely result would be:
a. Jamie wins, as Earnie was under a preexisting duty to dig the basement.
b. Earnie wins as this modification is governed by the UCC and consideration is not
required to enforce a modification of the agreement.
c. Jamie wins as Earnie was not acting in good faith and just wanted to put Jamie in a
situation where she didn’t have a choice but to agree to more money.
d. Earnie wins, as the modification was due to unforeseen difficulties.
Sid burned his own warehouse in an attempt to collect on a fire insurance policy. Sid
has committed:
a. arson.
b. larceny since he committed an act intended to wrongfully obtain money from his
insurance company.
c. a crime called “burning to defraud insurers” since the crime of arson only applies to
property owned by another person.
d. an intentional tort, but not a crime since a person has a right to destroy his own
property.
Nikki was an tax accountant with HBR Accounting. Nikki decided to do some tax
consulting in the evenings and on weekends. HBR is unaware of Nikki’s consulting
work. Which statement is correct?
a. Nikki has not breached a fiduciary duty to HBR since her consulting is done after her
work for HBR.
b. Nikki has not breached a fiduciary duty to HBR since her behavior does not reflect
badly on the accounting firm.
c. Nikki has not breached a fiduciary duty to HBR since Nikki has a contractual
relationship with her clients, not her employer.
d. Nikki has breached a fiduciary duty to HBR since she is competing with HBR.
Smalltown, located in a border state, seemed to favor Caucasians over Latinos in their
hiring practices. The courts will review the practice using:
a. minimal scrutiny.
b. intermediate scrutiny.
c. strict scrutiny.
d. Supremacy Clause scrutiny.
Runyon was ready to sign a two-year agreement with Barnett Corp. to become Barnetts
sales representative for a three-state area. LaPrise, who wants to be the representative
for that area, threatens Runyon with bodily harm if he takes the position. Runyon
decides his physical well being is more important to him than the job, so he does not
accept the position. LaPrise:
a. committed tortious interference with a contract.
b. committed tortious interference with a prospective advantage.
c. committed a battery.
d. caused a breach of contract and committed the tort of intrusion.
Ron, a minor, goes to the hospital for treatment of the flu. On the new-patient form Ron
signs, he agrees to pay for any care or treatment he receives. When billed for the
treatment:
a. Ron must pay for the value of the benefit he received, because medical care is a
necessary.
b. Ron must pay for the benefit he received because the contract is fully executory.
c. Ron must pay for the benefit he received because he ratified the contract.
d. Ron does not have to pay for the benefit he received.
The management and union representatives of Prime Manufacturing are bargaining a
new CBA. Management:
a. may use a lockout at any time to pressure the union into compromise.
b. may never use a lockout as a tactic to pressure the union.
c. may use a lockout if the parties have reached an impasse in their bargaining and
management notifies the union before locking the employees out.
d. may use a lockout only as a retaliatory measure if and when the union has threatened
a strike.
Walter enters a dentist office and points to a damaged tooth. The dentist, Matt, treats the
tooth. If Walter refused to pay and Matt sued:
a. Walter would win as there was no contract.
b. Walter would win because of the UCC.
c. Matt would win; this is an implied contract.
d. Matt would win in quantum meruit.
A jury decision in a civil case:
a. must be unanimous.
b. must be reached in the same day the case is heard.
c. depends on whether or not the parties have agreed to have their case decided by less
than a unanimous verdict.
d. is achieved by informal deliberations.
James owned real estate. He leased the building to two tenants. An insurance agent
leased the first floor and a law firm leased the second floor. James later sold the land to
Mary, who used the entire building for her business. She discovered that there were
underground storage tanks buried in the land. She had to remove the tanks and then
sued James and the former tenants for the cost of removing the tanks, even though none
of them knew the tanks had been there.
a. James and the two tenants are liable.
b. James is liable to Mary, but the tenants are not.
c. The tenants are liable to Mary, but James is not.
d. Neither James nor the tenants are liable to Mary.
Assume that Sherrie’s Cherries contracts with Dessert World to sell and ship 600
pounds of cherries in three equal installments of 200 pounds each. If the first
installment arrives with 5 pounds of spoilage, then Dessert World may:
a. reject the installment shipment because of the perfect tender rule.
b. not reject the installment if those in the food industry expect a small percentage of
spoilage with fresh fruits or vegetables.
c. reject the entire contract.
d. declare a breach and “cover.”
In most states dram acts apply to:
a. liquor stores, bars, and restaurants but not to social hosts.
b. liquor stores, bars, restaurants and to social hosts.
c. social hosts, liquor stores, and bars.
d. None of the above.
Which of the following types of property would be goods under the Uniform
Commercial Code?
a. A promissory note.
b. A stock.
c. A patent.
d. A computer.
A company’s trade secret lasts for:
a. 20 years after the application is filed.
b. 70 years after the death of the creator.
c. 10 years, but it can be renewed for an unlimited number of terms as long as it is used.
d. as long as it is kept confidential.
Oxtron, Inc. sent the following price list to its customers.
Which statement is correct?
a. These price quotes would generally be considered offers.
b. These price quotes would generally not be considered offers.
c. These price quotes would generally be considered output contracts.
d. These price quotes would generally be considered requirements contracts.
The doctrine of preemption is based on the Constitution’s:
a. Commerce Clause.
b. Due Process Clause.
c. Equal Protection Clause.
d. Supremacy Clause.
John was driving home one night in a terrible snow storm when his car stalled. He
managed to push the car onto a small shopping center’s parking lot. The next day about
noon he came to get the car and it had been towed away by the owner of the parking lot.
The owner explained she had to remove the car to clean the snow off her lot and told
John where the car had been towed. Which statement is correct?
a. The owner of the parking lot is liable for conversion. She took John’s car without his
consent.
b. The parking lot owner has a qualified privilege for towing the car since it was a
business necessity.
c. Even though John left his car in the parking lot under emergency conditions, he still
committed a trespass on the owner’s property.
d. All the above are correct.
Art and Alma made capital contributions of 60% and 40% respectively to their newly
formed partnership, AA & Associates. They did not have a written partnership
agreement. At the end of the first year, the partnership made a profit of which Alma
now claims half. However, Art maintains he should receive 60%. Who is correct?
a. Art, since the UPA presumes that profits and losses are divided in proportion to
capital contribution.
b. Art, since it would only be fair.
c. Alma, because she works in the business.
d. Alma, as the UPA provides that profits are split equally unless the partners agree
otherwise.
If Cub Cadet wins a trademark infringement suit by proving the defendants trademark,
Kub Kadet, is likely to deceive customers about who made the goods, Cub Cadet is
entitled to:
a. up to three times actual damages.
b. an injunction to prevent further infringement.
c. any profits Kub Kadet made on its infringing product.
d. All of the above.
The Clean Air Act of 1970 directed the EPA to reduce automobile pollution levels by:
a. 50 percent within 10 years.
b. 75 percent within 8 years.
c. 90 percent within 6 years.
d. 80 percent within 20 years.
The Environmental Protection Agency (EPA) was created by Congress to:
a. consolidate environmental regulations under one agency.
b. protect corporate investors.
c. prevent conflicts between the Departments of Commerce and Interior.
d. eliminate discrimination.
Marty, a 16-year-old, contracts with Cream-of-the-Crop Cycles to buy an $8,000
motorcycle. Marty agrees to make monthly payments until the purchase price plus
interest are paid in full. Which of the following is correct?
a. The contract is voidable by Marty.
b. The contract is void as soon as it is made.
c. The contract is voidable by Cream-of-the-Crop Cycles.
d. The contract is voidable by either Marty or Cream-of-the-Crop Cycles.
A misdemeanor is distinguished from a felony based upon:
a. the rules of evidence.
b. the length and place of possible imprisonment.
c. the burden of proof.
d. the type of intent.
Incorporation protects:
a. shareholders against personal liability for the debts of the company.
b. anyone involved in management of the business against personal liability for
wrongdoing.
c. the public from wrongdoing by either the shareholders or the management of the
corporation.
d. All the above are correct.
Harry agreed to pay $100 to rent a rooftop spot in downtown Seattle to watch the New
Year’s Eve festivities. The festivities were unexpectedly canceled because of concern
over a terrorist attack. Harry is:
a. obligated to pay the $100.
b. not obligated to pay under the commercial impracticability doctrine.
c. not obligated to pay under the force majeure doctrine.
d. not obligated to pay under the frustration of purpose doctrine.
Van is using his wrench as a hammer when the wrench breaks and a piece flies off,
injuring his neighbor who is helping Van change a tire on Van’s car. If Van sues the tool
manufacturer, its best defense will be:
a. consent.
b. warranties have been disclaimed.
c. product misuse.
d. that the claim is an economic loss only.
Roxanne was injured when she fell in a hole while walking across her landlord’s
parking lot. She and her lawyer hope they can settle the claim. Which of the following
statements about settlements is correct?
a. A case can be settled provided it has not been filed with the court.
b. A case can be settled provided that discovery has not commenced.
c. A case can be settled provided the jury has not heard any testimony.
d. A case can be settled at any time.
Debbie is a partner with Adam and Marty. She sells her interest in the partnership to
Craig. Which statement below is the most accurate?
a. Adam and Marty must approve the sale for Craig to become a full partner.
b. Either Adam or Marty must approve the sale of Debbie’s interest.
c. Craig has a right to become a full partner once he buys Debbie’s interest.
d. None of the above is correct.
Jill was a limited partner in a retail business that was sued by a customer who fell in the
store. The customer claimed the business was negligent in caring for its floors. Which
statement best describes Jill’s potential liability?
a. Jill has no potential liability to the customer.
b. Jill can be held personally liable to the customer since she is a partner.
c. Jill can only be liable to the amount of her investment.
d. Jill is personally liable, but the woman must first collect from the general partners
before collecting from Jill.
Real property consists of:
a. buildings.
b. air rights.
c. plant life.
d. All of the above.
Bill and Kim moved onto some deserted land. After living on the land for ten years (as
is required by that state’s law), Bill and Kim claimed to be the titled owners by adverse
possession. The state court awarded title to Bill and Kim. Their real property consisted
of:
a. the land.
b. the buildings they constructed on the land.
c. the plants and vegetation on the land, including the growing trees and plants that
produced fruit and other edible items.
d. All of the above.
An example of the type of relationship required to find undue influence would be:
a. a salesperson-purchaser relationship.
b. a bartender-customer relationship.
c. a doctor-patient relationship.
d. a neighbor-neighbor relationship.
Patty is a poor college student struggling to work and keep up with her studies. Fred,
her uncle, promises to pay Patty support of $200 per month for the next six months.
Although Fred didn’t ask her to, she quits her current job in order to devote full time to
her studies for the next six months. Fred makes one payment and then stops with no
explanation. If Patty sues, what is the likely result?
a. Fred would win, as he did not ask Patty to quit her job.
b. Patty would win, as a contract was formed when Fred promised to pay her the
support.
c. Fred would win, as family members cannot sue each other for breach of an oral
promise.
d. Patty may win under the doctrine of promissory estoppel.
Alfred orally promised to pay Robert a salary of $30,000 per year for five years and his
moving expenses up to $10,000 if Robert would quit his job and come to work for him
at his manufacturing plant. Robert agreed to do so, but requested a written contract.
Alfred assured him that the company attorney would prepare such a contract as soon as
possible, but Alfred needed Robert to start at once. Accordingly, Robert sold his house,
moved his family, and commenced to work for Alfred. He was fired without cause two
months later. No written contract was ever executed. Can Robert enforce Alfred’s oral
promise?
a. No. This was a contract for longer than one year. Without a writing it violates the
statute of frauds and is not enforceable.
b. Maybe. Robert should go to court under the theory of promissory estoppel. Alfred
made an oral promise that Robert relied upon, and the way to avoid injustice is to
enforce the promise.
c. Yes. This is a personal satisfaction contract, and Alfred gave no reason for
dissatisfaction. Robert can recoup the loss he took on the sale of his house.
d. Yes. This is a partial performance of the sale of goods. Robert can recoup the loss he
took on the sale of his house.
The IRS files criminal charges against Rich for evasion of federal taxes. Rich’s
accountant, Sonya, is summoned to appear in court to testify against Rich. The state
where the incident occurred recognizes an accountant-client privilege. Does Sonya have
to testify in federal court against her client?
a. Yes.
b. Yes, but only if she is granted immunity by her state.
c. No, the federal court must recognize her state’s accountant-client privilege.
d. No, the federal accountant-client privilege will protect her from testifying.
Tim wrote a negotiable note. Subsequently, Tim’s debts were discharged in bankruptcy.
If a holder in due course presents the note for payment, Tim does not have to pay.
Both per se and rule of reason violations of the Sherman Act are automatically illegal.
A corporation must have a registered agent within the state of incorporation only if the
corporation maintains an office in that state.
Researchers who study happiness find that people expect material goods to make them
happier than they actually do.
Nicholas and Holly are partners in a toymaking shop. If Rudolph obtains a judgment
against Nicholas for injuring Rudolph while Nicholas was on partnership business,
Rudolph must try to collect from the partnership before going after Nicholas personal
assets.
Kaiya is a sales representative of TriColor. Kaiya owes a fiduciary duty to TriColor.
Discuss the advantages and disadvantages of using IFRS.
Under Revised Article 9 of the UCC, electronic chattel paper may be used as collateral
in a secured transaction.
Strawly Corp. runs an “adult bookstore in Metro City, leasing the building from
MegaCorp. Then, Metro City passes an ordinance prohibiting the sales of the types of
merchandise found in “adult bookstores. Strawly is still bound to the contract.
Provisional patents are good for one year.
The behavior of top executives regarding ethical issues has little effect on the behavior
of the employees of the organization.
Offerings under Regulation A of the Securities Act of 1933, although called private
offerings, are really small public offerings.
Alicia and Ted have a written agreement wherein they will share the losses of their joint
business. This agreement is strong evidence they are partners.
Dewayne sold a space heater to Vivian, telling her it would heat a 200-square-foot area,
even though he knew it would effectively heat only about one third of that space.
Dewayne is liable for the intentional tort of fraud.
The name “Johnson Garage Doors cannot be a trademark because a surname is already
being used and other people have the right to continue to use the name.
Pastor Tom was employed by the First Church for 40 years. On Pastor Tom’s retirement
there was no adequate pension plan. Two months after the retirement, a wealthy
parishioner, in consideration for Pastor Tom’s 40 years of faithful service and for being
such a ‘sweet” man, promised to pay him $500 per month for the rest of his life. This
promise probably is not enforceable.
The management and union at TriColor have bargained for two years without reaching
an agreement. After notifying the union, TriColor prohibited the workers from entering
the factory to work. This is a lockout.
Briefly discuss the limitations on a corporation electing Subchapter “S” status.
