Dorothy files a petition for bankruptcy in bankruptcy for relief through an individual’s
repayment plan. 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.
Khalil holds a security interest in inventory owned by Luc. Khalil protects his claim to
the inventory in the event of Luc’s default by
a. assignment.
b. perfection.
c. redemption.
d. retention.
Insurance Sales Corporation hires Jeremy to act as its agent. Insurance Sales’s right not
to perform a contract entered into by Jeremy, if he breaches their agency agreement, is
the right of
a. avoidance.
b. indemnification.
c. nullification.
d. termination.
To drive its competitors out of a certain geographic segment of its market, Fryin”
Potatoes, Inc., sets the prices of its products below cost for the buyers in that area. This
is
a. a refusal to deal.
b. none of the choices.
c. predatory bidding.
d. price discrimination.
Aerospace, Inc., makes and sells flight navigation equipment, through independent
salespersons, to retailers for resale to consumers. The Magnuson-Moss Warranty Act
covers
a. implied warranties, oral statements, and written promises.
b. only implied warranties that consumers are aware of.
c. only a salesperson’s oral statements.
d. only a seller’s written promises.
Jumbo Juice Inc. offers entrepreneurs the opportunity to operate a franchise under the
Jumbo Juice trade name as a member of a select group of dealers that engage in retail
juice sales.
To potential investors, Jumbo Juice must provide
a. actual earnings figures.
b. hypothetical earnings figures.
c. projected earnings figures.
d. none of the choices.
Fact Pattern 26-1B
Natural Gas, Inc., and Olio Energy Company refine and sell natural gas. To limit the
supply of natural gas on the market and thereby raise prices, Natural Gas and Olio
Energy agree to buy “excess” supplies from dealers and “dispose” of it. Refer to Fact
Pattern 26-1B. The agreement between Natural Gas and Olio Energy is
a. a horizontal restraint.
b. none of the choices.
c. a resale price maintenance agreement.
d. a vertical restraint.
Fleet Delivery Corporation is a public company with a market capitalization of less than
$75 million. Fleet is poised to issue securities in a transaction that, under the Securities
Act of 1933, is “exempt.” This enables Fleet to
a. reduce the compliance costs by not requiring an auditor report.
b. buy and sell the securities without liability for “recaptures.”
c. make forward-looking financial forecasts without liability.
d. withhold inside information from accredited investors.
Trucking Dispatch Company and Ucello put their agency agreement into a written
document that describes the rights and duties of both parties. Ucello, as the agent, has
a. apparent authority.
b. none of the choices.
c. express authority.
d. implied authority.
Fact Pattern 29-1B
Stores & Shops, Inc., leases space in a certain mall to Trends Clothing Company and
Unique Fashions Store. Later, Unique Fashions begins to sell items that are similar to
Trends Clothing’s goods, and Trends Clothing abandons its space before the end of the
lease term.
Refer to Fact Pattern 29-1B. Trends Clothing is liable to
a. no one.
b. Stores & Shops and Unique Fashions for disputing Unique Fashions’s business
decision.
c. Stores & Shops for at least some of the unpaid rent.
d. Stores & Shops’s tenants, except Unique Fashions, for abandoning Trends Clothing’s
space.
Shakira issues a check drawn on Thrifty Bank to Ranch & Farm Supply to pay for a
rototiller. Later, Shakira discovers a defect in the device and orders Thrifty to stop
payment on the check. Shakira does not renew the order, and the bank clears the check
eight months later. The bank
a. must recredit Shakira’s account.
b. must obtain funds from Ranch & Farm to cover the check.
c. must substitute acceptable goods.
d. need not recredit Shakira’s account.
Lucille is married to Marcus. Lucille buys food for their children’s lunches and charges
the cost to Marcus’s account. This is
a. an agency by operation of law.
b. an agency by estoppel.
c. an agency by ratification.
d. not an agency relationship.
Based on Esteban’s conduct, Floyd reasonably believes that Glynis has the authority to
act on Esteban’s behalf even though Glynis does not have the actual authority to do so.
Floyd makes a payment to Glynis for Esteban. Glynis keeps the money and disappears.
Esteban
a. can demand that Floyd make a repayment directly to Esteban.
b. can obtain damages from Floyd for Glynis’s misconduct.
c. may be estopped from denying that Glynis had authority.
d. must repudiate Glynis’s misconduct to avoid liability.
Gabriella is a beneficiary of a business trust. As a beneficiary, she is required to
a. distribute the trust’s profits.
b. assume responsibility for the trust’s debts.
c. draft a written trust agreement.
d. none of the choices.
Fact Pattern 6-2B
Popular Movies Corporation wants to gain control of Quality Films, Inc. The companies
negotiate for several months, without coming to terms. Popular Movies decides to
pursue a takeover attempt. Quality Films decides to resist.
Refer to Fact Pattern 6-2B. Quality Films issues shares that its shareholders can
exchange for cash if a takeover is successful, intending to make Popular Movies’s
takeover attempt too expensive. This is a
a. crown jewel defense.
b. Pac-Man defense.
c. poison pill defense.
d. white knight defense.
To acquire the ownership of Bart’s mountain cabin by adverse possession, Cody must
occupy the cabin exclusively, continuously, and peaceably for a specified period of time
a. in an, open, hostile, and adverse manner.
b. until Bart files a suit.
c. without Bart’s knowledge.
d. with the state’s permission.
Rollo is the chief executive officer of Specialty Magazines, Inc., which is required to
file certain financial reports with the Securities and Exchange Commission (SEC).
Under the Sarbanes-Oxley Act of 2002, Rollo must
a. certify that the reports are complete and accurate.
b. designate a corporate official to assume liability for inaccuracies.
c. do nothing.
d. read the reports and be prepared to answer questions about them.
To obtain a business license, Bess writes a check to a certain state agency. Bess is
a. the drawee.
b. the drawer.
c. the indorser.
d. the payee.
Mortimer negotiates an instrument to Nadia. Negotiation is the transfer of an instrument
a. for valuable consideration under a contract.
b. in such form that the transferee becomes a holder.
c. pursuant to preliminary contract discussions.
d. without the payment of a recognized medium of exchange.
Mix-It Concrete Company has the right to enter Nim’s land and remove the rock from
Nim’s quarry. This is
a. the power of eminent domain.
b. a license.
c. an easement.
d. a profit.
QuickFreeze Storage, a bailee, holds goods for Restaurant Purveyor, Inc., which has
contracted to sell the goods to Seafood Dining Company. The goods are to be delivered
without being moved. The risk of loss will pass to Seafood Dining when it receives
a. a copy of Restaurant Purveyor’s contract with QuickFreeze Storage.
b. a copy of Restaurant Purveyor’s contract with Seafood Dining.
c. a negotiable document of title.
d. a notice that Seafood Dining’s payment for the goods has cleared.
Grid Tool Company makes and sells tools and other hardware supplies. To cover
injuries to consumers if the products prove defective, Grid Tool should obtain
a. disability insurance.
b. health insurance.
c. liability insurance.
d. life insurance.
Haute Dogs, Inc., sells a franchise to Ilene’s Cuisine, a lunch truck. Ilene’s Cuisine is
a. a franchisee.
b. a franchisor.
c. an agent.
d. a principal.
Danton, a mentally impaired person, is asked by Elmer to sign a piece of paper that he
says is an autograph book. In fact, the document is a note. If later sued on the note by
an HDC
a. Danton must pay the note.
b. Danton’s best defense would be fraud in the execution.
c. Danton’s best defense would be fraud in the inducement.
d. Danton’s best defense would be mistake.
City Bank’s financing statement in collateral owned by Delta Waters Corporation will
expire in less than a year. Filed timely, a continuation statement could extend the
effectiveness of the financing statement for
a. one year.
b. two years.
c. five years.
d. ten years.
Roland files a petition in bankruptcy. After all his assets have been sold and the
proceeds distributed among his creditors, Roland’s remaining debts
a. are discharged.
b. will be paid by the court.
c. must be paid by Roland.
d. are put on hold until Roland has sufficient means to pay them.
Roadtrip County Fairs Corporation orders from Stuffed Animal Sales, Inc., goods that
are stored in a Toy Box Maxi-Storage warehouse. Roadtrip pays for the goods, delivery
is via the transfer of a negotiable warehouse receipt, and Roadtrip moves the goods out
of the warehouse. The risk of loss passes to the buyer when it
a. orders the goods.
b. pays for the goods.
c. receives the negotiable warehouse receipt.
d. moves the goods out of the warehouse.
On Monday, Foster deposits in his account at Guaranty Bank a local check for $500.
After 5:00 p.m. on Friday, from these funds, Foster can withdraw no more than
a. $100.
b. $400.
c. $500.
d. $600.
On April 1 Richard arranges to buy a sixteen-speed bike from his neighbor Phil for
$500. Phil agrees to deliver the bike on May Richard writes a draft for $500 payable to
Phil on May In this situation, the draft is
a. a certificate of deposit.
b. a time draft.
c. a sight draft.
d. a promissory note.
Randi, an accountant, includes a false statement in a report for Social Media Marketing,
Inc., that is filed with the Securities and Exchange Commission. When Theo buys stock
in Social Media Marketing and loses money on the investment, he files a suit against
Randi, alleging fraud under the 1934 Securities Exchange Act. To avoid liability, Randi
can show that she
a. intended to defraud Social Media Marketing, not Theo.
b. intended to profit on stock trades generally, not only Theo’s.
c. is an otherwise competent accountant.
d. was not aware her statement was false.
Nguyen Imports, Inc., accuses Ogilvie, an accountant, of committing defalcation. This
is
a. embezzlement.
b. general misconduct.
c. professional negligence.
d. misrepresentation of professional expertise.
Chi-Lan files a petition in bankruptcy for relief through an individual’s repayment plan.
Chi-Lan’s plan must provide for
a. the turnover of her future income to the trustee.
b. her attendance at a credit-counseling briefing.
c. adequate means for the petition’s execution.
d a preference for one creditor over another.
Franz owns GuestHouse Hotel. His ownership rights include the right to sell or give
away the property without restriction, as well as the right to commit waste, if he
chooses. Franz’s ownership interest is
a. a fee simple absolute.
b. a profit.
c. a life estate.
d. the power of eminent domain.
Employer’s liability insurance insures an employer against liability for injuries or losses
sustained by employees during the course of their employment.
To be negotiable, an instrument must be payable in money.
Notice of dishonor can be given in any reasonable manner, including notice written or
stamped on the instrument itself.
Metro City exercises its power of eminent domain to acquire land for a public project,
including part of a public transit rail system and a traffic bypass. Metro City relocates
more than 10,000 residents from the land and destroys their homes to begin the project.
Nathan’s Deli is adjacent to the project. Nathan’s loses most of its business when the
residents are moved. Nathan’s files a suit against Metro City, alleging that its acquisition
of the land resulted in a taking of the deli’s property interest, entitling it to
compensation. What is a taking? What might Nathan’s claim is its “property interest” to
support this allegation? What is the court likely to rule? Why?
A security agreement need not be in writing if the collateral is transferred to the secured
party.
The Consumer Product Safety Commission conducts research on the safety of
individual consumer products and maintains a clearinghouse on the risks associated
with various products.
If a buyer wrongfully refuses to accept goods, the seller can bring an action to recover
the damages sustained.
An unconscionable sales contract is one that is so unfair and one sided that it would be
unreasonable to enforce it.
A principal is always directly responsible for an agent’s misrepresentation made within
the scope of the agent’s authority.
Only the federal government may restrict emissions from motor vehicles.
If either the principal or the agent petitions for bankruptcy, the agency is not usually
terminated.
A limited liability company can be held liable for any loss or injury caused by the
wrongful acts or omissions of its members.
The Securities and Exchange Commission does not enforce the antifraud provisions of
the securities laws in the online environment.
A check is a special type of draft that is drawn on a bank, ordering the bank to pay a
fixed amount of money on demand.
All federal government agencies must make their records available electronically on the
Internet and in other electronic formats.
The property of a decedent escheats to his or her designated heirs.
The means test forces more people to file for Chapter 7 bankruptcy rather than gave
their debts discharged under Chapter 13.
The franchise agreement is not likely to set out standards such as sales quotas and
record-keeping requirements.