Kip opens an account at a Lotsa Goodies Store, and buys a digital music player and
other items, but makes no payments on the account. To collect the debt, Mako, the
manager, contacts Kip’s parents. This violates
a. no federal law.
b. the Fair and Accurate Credit Transactions Act.
c. the Fair Debt Collection Practices Act.
d. the Truth-in-Lending Act.
Oliana is a partner in Pacific Traders. In the majority of states, with respect to any
partnership obligations that Oliana does not participate in, know about, or ratify, Oliana
would be liable for
a. none of the obligations.
b. all of the obligations, jointly and severally.
c. all of the obligations, jointly but not severally.
d. only the contractual obligations.
Downtown Contractors and Equipment Rental Corporation are parties to an oral
agreement for a one-year lease of a crane with payments totaling more than $10,000.
They may satisfy the Statute of Frauds by
a. mutually agreeing not to commit fraud.
b. repeating the terms in a phone call.
c. setting out the terms in a memo.
d. shaking hands on the deal.
Fresh Fruit Company has assets of less than $10 million and fewer than fifty
shareholders. Gourmand Pastries, Inc., has assets of more than $50 million and more
than five hundred shareholders. The Securities Exchange Act of 1934 applies to
a. Fresh Fruit and Gourmand Pastries.
b. Fresh Fruit only.
c. Gourmand Pastries only.
d. neither Fresh Fruit nor Gourmand Pastries.
Grace applies for a homeowners’ insurance policy on her house with Heroic Insurance
Company through Ian, a broker. In this transaction, Ian is
a. an agent for both parties.
b. Grace’s agent, and not Heroic’s agent.
c. Heroic’s agent, and not Grace’s agent.
d. not an agent for either party.
In his will, Bryson makes a gift of $12,000 to Curtis. This is
a. a general bequest.
b. a general devise.
c. a specific bequest.
d. a specific devise.
Fact Pattern 18-B1
Economy Bank issues a letter of credit in favor of Finish & Refining Company, a U.S.
firm, to facilitate an international sales contract to buy resources from Global Mining,
Ltd., a British company.
Refer to Fact Pattern 18-1. Economy Bank is bound to
a. make sure that the parties perform the contract.
b. verify with Finish & Refining that the transaction has been completed.
c. make payment when Global Mining presents the proper documents.
d. pay Global Mining whenever it asks to be paid.
To identify Omar and verify his eligibility to work in the United States, Poultry
Processing Corporation relies on a school identification card. The card later proves to
be invalid. Poultry Processing may
a. be sanctioned for violating antidiscrimination law.
b. be sanctioned for violating immigration law.
c. not be sanctioned for violating any law.
d. be sanctioned for violating principal-agent law.
Big American Oil Company joins with a foreign cartel to control the price of oil. If the
cartel has a substantial effect on U.S. commerce, a suit for violation of U.S. antitrust
laws can be brought against
a. Big American Oil and the foreign cartel.
b. the foreign cartel.
c. Big American Oil.
d. all of the choices.
Business Enterprise Company agrees to sell a commercial office building and parking
garage to City Investments, Inc., which assigns the rights to the realty to Downtown
Properties, LLC. Downtown Properties does not yet exist, but once it is created and
comes into existence, the contract on novation will most likely be
a. quasi.
b. voidable.
c. void.
d. enforceable.
Food Packagers Union represents the workers of Garden Variety, Inc. The company
does not require its new hires to join the union as a prerequisite to obtaining
employment. Food Packagers would like Garden Variety to require the workers to join
after a specified amount of time on the job. This would violate
a. federal labor law.
b. federal immigration law.
c. federal wage and hour laws.
d. no federal law.
Phoenix, a salesperson for Quality Fruit, Inc., shows Robert, a buyer for Sweet Home
Fruit Company, samples of peaches, stating that any shipment will match the samples.
This statement is
a. an express warranty.
b. an implied warranty.
c. a warranty of title.
d. puffery.
For Melinda’s will to be valid, she must be mentally competent at the time of
a. death.
b. the acquisition of the property to be distributed under the will.
c. the making of the will.
d. the probate of the will.
Elaine owns the Fabric & Yarn store. Goldie is a salesperson in the store. When Goldie
makes a sale to Heather, the sale is binding on
a. Elaine.
b. Goldie.
c. Fabric & Yarn onlyand only if Elaine is present at the sale.
d. no one.
Industrial Solvents, Inc., averages $15,000 profit per day before deciding to ignore air
pollution standards, after which the average is $30,000. Industrial Solvents is subject to
a fine of
a. $0.
b. $15,000 per day.
c. $30,000 per day.
d. $30,000 total.
Megan, an agent for a department store, orders one hundred dresses from Sal’s Clothing
Shop for the Spring Blossom Sale. There is no specific agreement in the sale contract
indicating when title will pass to the department store. The title will pass to the
department store when
a. Megan signs the contract.
b. Megan and the Sal’s Clothing Shop agent sign the contract.
c. Sal’s Clothing Shop physically delivers the dresses to the department store.
d. Megan pays Sal’s Clothing Shop for the dresses.
The National Park Service hires Outdoor Play, Inc., to replace outdated playground
equipment in a handful of national parks. For this action, an environmental impact
statement is most likely
a. prohibited because the action does not affect the environment.
b. required because the action is “federal.”
c. unnecessary because the action is not “major.”
d. voluntary because the action does not affect the environment.
Almond Farms contracts for the sale of a certain quantity of nuts to Bulk Natural Foods
Stores. Almond Farms delivers nonconforming goods. Acceptance will be presumed
unless Bulk Natural Foods rejects the goods
a. within a reasonable time after delivery.
b. within a reasonable time after ordering the goods.
c. within any time, since hunting rifles are not perishable.
d. before the last day of the current hunting season.
Valley Bank retains the cancelled checks of its customers. Valley must be able to
provide customers with legible copies of checks paid for
a. one year.
b. five years.
c. seven years.
d. nine years.
Neville, a member of a protected class, applies for a job with Origami Paper Products
Corporation, but fails the company’s employment test and is not hired. Neville believes
that the test has an unintentionally discriminatory effect. If so, this is
a. reverse discrimination.
b. disparate-impact discrimination.
c. disparate-treatment discrimination.
d. not discrimination.
Hobart, an officer with Investment Assets Corporation, misappropriates the firm’s
property through fraud. Later, Hobart and the corporation agree to a mutual release of
claims. Still later, Investment Assets discovers Hobart’s fraud and files a suit to recover
the misappropriated property. Most likely, the court will rule that Hobart
a. breached his duty of loyalty by failing to disclose his misconduct.
b. is not liable due to his duty to act in his own self-interest.
c. is not liable due to the firm’s failure to timely discover the fraud.
d. is not liable due to the mutual release of claims.
Insurance Sales Corporation gives preferential treatment in hiring and promotion to the
members of all protected classes. This treatment results in discrimination against
members of the majority. This is
a. disparate-impact discrimination.
b. gender discrimination.
c. not discrimination.
d. reverse discrimination.
Watercourse Pipe Company includes in its contracts a provision that reads, in large red
letters, “There are no warranties that extend beyond the description on the face hereof.”
This disclaimer effectively negates
a. the implied warranty of fitness for a particular purpose.
b. the implied warranty of merchantability.
c. the implied warranty of title.
d. none of the choices.
Gretel, an inventor, has tools in her workshop, including hammers, a table saw, and
drills. She has a patent on her most recent invention, a kitchen gas grill. She licenses the
patent to Home Appliances, Inc., a company in which she owns stock. Her tangible
personal property includes the
a. workshop tools.
b. Home Appliances stock.
c. patent on the gas grill and license to Home Appliances.
d. all of the choices.
Grain Mills Corporation is required to register its securities under Section 12 of the
Securities Exchange Act of 1934. Section 14(a) of the act regulates
a. the declaration of dividends by Grain Mills’s board of directors.
b. the later re-registration of Grain Mills’s securities.
c. the short-swing activities of Grain Mills’s insiders.
d. the solicitation of proxies from Grain Mills’s shareholders.
Household Appliance Corporation sells Ideal-brand vacuum cleaners to Jolly Discount
Stores and other retailers. Household Appliance will have an insurable interest in the
players as long as
a. Household Appliance remains in business.
b. Household Appliance retains title to the goods.
c. the goods are in existence.
d. there is no risk of loss.
Household Products Corporation wants to make an offering of securities to the public.
This offering is not exempt from registration under the Securities Act of 1933. Before
Household Products sells its securities, it must provide investors with
a. a forward-looking financial forecast.
b. an investment contract.
c. a prospectus.
d. samples of its products.
Portia owes Bon $500 on their roof repair contract, but refuses to pay. To collect, Bon
files a mechanic’s lien. Under a mechanic’s lien, 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.
Fact Pattern 20-2B
Robin’s home is in a state that has a $30,000 homestead exemption. Robin defaults on a
$60,000 debt that she owes to Suburban Mortgage Company. Robin’s home is sold at
auction for $80,000.
Refer to Fact Pattern 20-2B. Suburban Mortgage may recover
a. $0.
b. $30,000.
c. $50,000.
d. $60,000.
With respect to Italo’s bottomland, Jacob has an easement, Kristin has a profit, and
Leopold has a license. A right to possess the bottomland is owned by
a. Italo.
b. Jacob.
c. Kristin.
d. Leopold.
Guitar Maker, Inc., makes guitars. The Occupational Safety and Health Administration
(OSHA) proposes a safety rule governing the handling of wood and its dust in the
workplace, including the woods that Guitar Maker uses in its operations. Guitar Maker
contends that the rule will involve substantial compliance costs without significantly
increasing workplace safety. The firm sends a letter to OSHA indicating its objections
to the proposed rule and enclosing research reports and other data supporting those
objections. Does OSHA have any obligation to consider these objections? What
procedures must OSHA follow when it makes new rules, such as this one?
Amelia writes a check to Barry on her account at Community Savings Bank. The bank
dishonors the check even though Amelia has sufficient funds in her account. The bank
is
a. liable to Amelia.
b. liable to itself.
c. liable to the payee on Amelia’s next check.
d. not liable.
A instrument “payable to the order of bearer” is neither an order instrument nor a bearer
instrument.
The officers and other employees of each corporation involved must approve a merger
or share exchange plan
If a business firm refuses to comply with an agency’s request to inspect facilities or
business records, the agency must defer to the refusal.
Limits on a partner’s authority normally are effective only with respect to third parties
who are notified of the limitation.
In a limited partnership, a general partner’s dissociation from the firm normally will
lead to dissolution unless all partners agree to continue the business.
Warranty liability arises only when a transferor indorses the instrument.
The contract term “free on board” indicates that the selling price of goods includes
transportation costs to the specific F.O.B. place named in the contract.
When OmniOil Corporation wishes to issue certain securities, it must provide sufficient
information for Petra, 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 Petra consider material?
Legislative rules simply declare policy and do not affect legal rights or obligations.
Commerce & Trade Corporation and Distance Shipping & Transport, Inc., form a
business trust. eCharge Auto Company and Fleet Electric Corporation form a joint stock
company. Green AgriCorp and Harvest Farms, Inc., form an incorporated cooperative.
What features do these combinations of business organization have in common?
The implied warranties of merchantability and fitness for a particular purpose extend to
bailments that include rights to use the bailed goods.
Dissociation normally entitles the partner to buy his or her interest from the partnership.
Employee demotion is one of the least frequently cited reasons for a finding of
constructive discharge under Title VII of the Civil Rights Act of 1964.
The purpose of antitrust law is to reduce competition.
Under rules of professional misconduct, an attorney should not engage in conduct
involving deceit.
A party can be directly prosecuted for violating an administrative agency’s interpretive
rule or guidance document.
Generally, in a Chapter 11 case, no orders affecting the estate will be entered without
the consent of the creditors’ committee or after a hearing in which the judge is informed
of the committee’s position
Limited personal liability obviates the need to obtain for insurance for significant
business liability risks.