Leather Products Stores, Inc., rejects a shipment of goods that does not conform to its
contract with Manufactured Cowhide Corporation, but is unable to obtain instructions
from the seller. Leather Products may
a. resell or return the goods only.
b. resell or store the goods only.
c. return or store the goods only.
d. resell, return, or store the goods.
Energy Green, LLC, is a limited liability company. Instead of distributing its profits to
its members, Energy wants to reinvest the profits in its business. For this reason, Energy
may prefer to be taxed as
a. a corporation.
b. a partnership.
c. a sole proprietorship.
d. a natural person.
Phil enters into a contract with Vacation Resorts, Inc., to work as a chef. Under the plain
meaning rule, the meaning of this contract must be determined by reference to
a. any available evidence.
b. any relevant extrinsic evidence.
c. the face of the instrument.
d. the later testimony of the parties.
Dru tells his Excel Company coworkers that Fiona, Excels office manager, is stealing
from their employer. The statement is defamatory only if
a. a coworker believes it.
b. Fiona feels as if she were falsely imprisoned.
c. the statement is true.
d. the statement is false.
In newspaper ads, Lo-Price Autos falsely accuses My-T Value Vehicles, a competitor, of
selling stolen cars. My-Ts sales decrease. Lo-Price has most likely committed
a. slander of quality.
b. slander of title.
c. wrongful interference with a business relationship.
d. none of the choices.
Amelia executes a separate written instrument to amend her prior will. This separate
document is
a. a codicil.
b. a holographic will.
c. a living will.
d. a nuncupative will.
OmniChem Corporation applies for a patent for a certain chemical compound.
Meanwhile, OmniChem licenses its products, including the compound, to Pharmo, Inc.,
which uses the compound to make an anti-cancer prescription drug. Under the terms of
the license, Pharmo agrees to pay royalties on OmniChems “patented products. When a
patent is granted on the compound, OmniChem asks Pharmo to pay royalties on the
sales of the anti-cancer drug or stop selling it. Pharmo files a challenge to the validity of
OmniChems patent. Both firms assert their claims less from an interest in profit than a
belief in the “rightness of their respective causes. This position might arguably be
a. illegal.
b. optimal.
c. socially irresponsible.
d. unethical.
In selling software to Payroll Services Corporation, Ray tells Payrolls purchasing agent
that the software is “almost human. This is
a. fraud.
b. duress.
c. puffery.
d. undue influence.
Fact Pattern 24-2
Bertram, Claudia, and Dynah form Eat Local, Inc., a closely held corporation, and agree
to restrict the transfer of its stock to anyone else. The agreement provides that if one of
the shareholders dies, his or her shares of stock in Eat Local will be divided to maintain
the proportionate control of the survivors.
Refer to Fact Pattern 24-2. Later, Bertram dies. With respect to the stock transfer
restriction agreement, Bertrams death most likely
a. triggers the division provision.
b. invalidates the entire agreement.
c. voids the division provision only.
d. violates the entire agreement.
Even-Flo Hydraulics enters into a contract to repair valves and fittings in Fiesta
Companys plant. If Even-Flo breaches the contract, Fiesta can
a. do nothing but make a deal with .a different service provider.
b. do nothing but temporarily suspend operations and wait.
c. file a criminal complaint against Even-Flo.
d. sue Even-Flo for damages.
Magic Math Corporation makes business accounting software, which is packaged with
a shrink-wrap agreement. National Distribution Company distributes the software to
retailers, including an Office Stuff store, where Peg buys a package of it. The parties to
the shrink-wrap agreement are
a. Magic Math and National Distribution only.
b. Magic Math and Peg only.
c. Magic Math, National Distribution, Office Stuff, and Peg.
d. Office Stuff and Peg only.
Verna files a petition in bankruptcy in a liquidation proceeding. If the court administers
the means test and concludes that Verna is abusing the bankruptcy process by filing for
a liquidation, the court will most likely
a. force Verna to file for relief through an individual repayment plan.
b. discharge Vernas debts.
c. distribute Vernas property to Vernas creditors.
d. issue an automatic stay against any actions by Vernas creditors.
Region Construction Company has a right to drive its trucks across Staple Business,
Inc.s property, which is adjacent to Regions office. This right is
a. a leasehold estate.
b. a license.
c. an easement.
d. a profit.
Via the Internet, Rocky sabotages the computer system of Quik Chikn Company, a food
manufacturer, with the purpose of altering the levels of ingredients of the companys
products so that consumers of the food become ill. Rocky is
a. a cyberterrorist.
b. a botnet.
c. a virus.
d. a worm.
Kris contracts to work exclusively for Little Manufacturing Company during May for
$5,000. On April 30, Little cancels the contract. Kris finds another job during May but
earns only $3,000. Kris files a suit against Little. As compensatory damages, Kris can
recover
a. $3,000.
b. $2,000.
c. $1,000.
d. $0.
Sam, or any U.S. citizen, can bring a civil suit in a U.S. court against a foreign entity
for
a. a tort allegedly committed in the United States only.
b. a tort allegedly committed in the United States or overseas.
c. a tort allegedly committed overseas only.
d. no purpose.
Louis, a certified public accountant and an investor, and Maria, an insurance
salesperson and a realtor, may create an agency relationship for
a. a business purpose only.
b. a legal purpose only.
c. any purpose.
d. no purpose.
The Arkansas state legislature enacts a statute that prohibits the advertising of video
games “because the games might be harmful to minors. Despite this new statute, the
president of Games Marketing, Inc. (GMI), orders GMI marketers to place ads in any
media. When a GMI ad appears on HDTV, a local television station, GMI and HDTV
are charged with violating the statute. What is the defendants best defense against a
conviction?
In the facts of the previous question, under the dissents reasoning in Notz v. Everett
Smith Group, Ltd.,, a minority BC shareholder could bring
a. a claim against Typhoons former directors.
b. a direct claim against SBIs majority shareholders.
c. a shareholders derivative suit against Rewind.
d. no claim.
Celfone Corporation is required to file a registration statement with the Securities and
Exchange Commission. This statement must contain
a. a copy of prospectuses to be provided to investors.
b. a description of securities being offered for sale.
c. a record of pre-registration sales in securities.
d. a sample of advertising to be used to attract investments in Celfone.
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.
Super Toolmakers, Inc., contracts to sell its business to True Hardware Corporation.
Before either party has performed, rescission of this contract requires
a. a mutual agreement to rescind.
b. consideration.
c. performance by all of the parties.
d. an accord and satisfaction.
Rashad accesses Quant Companys computer system without authority to obtain
protected financial data. Under federal law, this is
a. a felony if it is committed for a commercial purpose.
b. a felony if Quant brings a civil suit against Rashad.
c. not a crime.
d. a crime, but not a felony.
Dag is the secured party in a secured transaction with Elmo. In this transaction, Dag
a. has a security interest.
b. owes payment.
c. owes performance.
d. owns collateral.
Carl sells Direct Marketing Enterprises, a sole proprietorship, to Eve. This is a transfer
of
a. a license.
b. a trade name.
c. the formula to make a product.
d. the ownership of the business.
Jen is a third party beneficiary under a contract between Kyla and Leo. Kyla and Leo
can modify or rescind their contract without Jens consent
a. at any time.
b. at no time.
c. only after Jens rights have vested.
d. only before Jens rights have vested.
Seymour borrows $350,000 from Reliable Bank to buy a home. Seymour stops making
payments on the loan ten months later. After the bank repossesses the property securing
the loan but before it is sold, Seymour wants to buy it. This is
a. a deficiency judgment.
b. a reverse mortgage.
c. a violation of the law.
d. the right of redemption.
Glen falsely accuses Hu of stealing from Island Tours, Inc., their employer. Glens
statement is defamatory only if
a. a third party hears it.
b. Hu has not been caught.
c. the statement is puffery.
d. the statement is true.
Coast-to-Coast Distribution, Inc., is a direct-mail distribution company. Like most
corporations, Coast-to-Coasts employees include its
a. board of directors.
b. incorporators.
c. officers.
d. shareholders.
Fleet Feet, an online travel company, buys blocks of rooms from Grande Hotel, a hotel
in Hyper City, at a wholesale rate. Fleet Feet reslls the rooms to consumers at a retail
rate. One recent effort by cities to collect taxes from e-commerce has focused on
a. hotels that sell blocks of rooms at wholesale rates.
b. non-resident consumers who reserve rooms in in-state hotels.
c. online travel companies.
d. the dire financial straits of the cities during the latest recession.
Mikayla enters into a contract with Logan to provide surface material for Mikaylas
tennis courts by April 1 for a tournament to begin May 1. The contract specifies an
amount to be paid if the contract is breached. This is a liquidated damages clause if the
amount is
a. an excessive estimate of the loss on a breach.
b. a reasonable estimate of the loss on a breach.
c. designed to penalize the breaching party.
d. intended to quickly provide cash to the nonbreaching party.
Bret obtains a fire insurance policy on his rental house with Continental Insurance
Company. Like all insurance, this policy is an arrangement for
a. avoiding the assumption of responsibility.
b. predicting a potential loss based on unknown factors.
c. shifting the imposition of liability.
d. transferring and allocating risk.
Regional Lumber Company and Superior Builders Corporation enter into a contract for
a sale of wood products. Regional, a merchant who deals in goods of the kind sold,
makes implied and express warranties in connection with the sale. Under the UCC, if
these are inconsistent
a. all implied warranties displace all express warranties.
b. all express warranties displace all implied warranties.
c. the implied warranty of fitness for a particular purpose takes precedence.
d. the implied warranty of merchantability takes precedence.
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.
Financial institutions that exchange digital images of checks do not have to exchange
the original paper checks.
Informal contracts are usually based on substance rather than form.
Under the covenant of quiet enjoyment, a landlord promises that a tenant will not be
disturbed in the possession of the premises.
Certain debts are not dischargeable in bankruptcy.
Minimum contacts with a jurisdiction are never enough to support jurisdiction over a
nonresident defendant.
Any third party beneficiary to a contract who is not an intended beneficiary is
incidental.
An express trust is created or declared in explicit terms.
A limited liability company can be taxed as a partnership.
The doctrine of negligence per se applies if an event causing harm does not normally
occur in the absence of negligence.
A breach of contract may entitle the innocent party to rescind the contract.
A foreign citizen can bring a civil suit in a U.S. court for a violation of a treaty of the
United States.
A product is not so unreasonably dangerous as to support the imposition of liability in a
strict product liability suit solely because a less dangerous alternative was commercially
feasible but was not produced.
Divestiture of a business interest is a possible penalty under RICO.
Proceeds consist of whatever is received when collateral is sold.
Venture capital is capital provided to new business ventures by professional, outside
investors.
Common stock provides a proportionate interest in the corporation with regard to net
assets.
The measure of damages for the breach of a contract for a sale of land depends on
which party breaches and when.