Mona, an accountant, prepares for NuTech Corporation a financial statement that omits
a material fact. The financial statement is included in NuTech’s registration statement,
which Pam reads. Pam buys NuTech stock. Under Section 11 of the Securities Act of
1933, for Mona to be liable for the omission, Pam must show that
a. Pam relied on the omission.
b. Pam suffered a loss on the stock.
c. Pam knew about the omission before making her purchase.
d. the omission had no causal connection to her loss.
Zeke files a petition for bankruptcy under Chapter 13. Zeke’s Chapter 13 plan must
provide for
a. the turnover of his future income to the trustee.
b. his attendance at a credit-counseling briefing.
c. adequate means for the petition’s execution.
d a preference for one creditor over another.
GR8 Skates Company makes and sells a pair of skates to Hugh. GR8 fails to exercise
“due care” to make the skates safe, and Hugh is injured as a result. GR8 is most likely
liable for
a. assumption of risk.
b. knowledgeable use.
c. negligence.
d. product misuse.
Lia works for Media Marketing Company. Her job includes putting ‘spin” on the firm’s
successes and failures. In this context, ethics consist of
a. “bad” versus “good” publicity.
b. questions of rightness and wrongness.
c. the firm’s quarterly revenue.
d. whatever is legal.
Bango! Business, Inc., a U.S. firm, may have committed, in Chile, acts that would
constitute, in the United States, violations of U.S. antitrust laws. These laws apply
a. extraterritorially.
b. only to signatories of the North American Free Trade Agreement.
c. only to members of the World Trade Organization.
d. only within U.S. borders.
Reno is the beneficiary of a life insurance policy on Sula’s life obtained from
Traditional Insurance Company. The underwriter of this policy is
a. Reno.
b. Sula.
c. Traditional.
d. the agent or broker through whom the policy was obtained.
The U.S. corporation Fun Toys, Inc. sets up a firm in China. The parent company
remains in the United States and retains complete ownership of the China branch as
well as complete authority and control over all phases of the operation. This is
a. a franchise.
b. a wholly owned subsidiary.
c. a joint venture.
d. direct exporting.
The basis for India to give effect to the laws and court decisions of the United States is
primarily
a. courtesy and respect.
b. fear and intimidation.
c. admiration and envy.
d. payments of cash and exchanges of property.
Pola and Quincey want to form and do business as River Tours Corporation. A
corporation can consist of
a. no natural persons.
b. one natural person but not more.
c. one or more natural persons.
d. only more than one natural person.
The Texas Supreme Court decides the case of Livewire Co. v. Power Corp. Of nine
justices, five believe the judgment should be in Livewire’s favor. Justice Bellamy, one
of the five, writes a separate opinion. The four justices who believe the judgment should
be in Power’s favor join in a third separate opinion.
Refer to Fact Pattern 1-1. Bellamy’s opinion is
a. a concurring opinion.
b. a dissenting opinion.
c. a majority opinion.
d. a per curiam opinion.
Middling Credit Corporation asks Little Supply Company to agree to a security
agreement that provides for coverage of the proceeds from the sale of after-acquired
property. This is
a. a first-in-time rule.
b. a floating lien.
c. a funds guaranty.
d. in violation of secured transactions law.
Eden, the chief executive officer of Flo-Thru Piping Corporation, wants to ensure that
Flo-Thru’s activities are legal and ethical. The best course for Eden and Flo-Thru is to
act in
a. good faith.
b. ignorance of the law.
c. regard for the firm’s shareholders only.
d. their own self interest.
Saf-T Lenders, Inc., takes possession of Tiara’s stock in Urgent Care Corporation to
perfect Saf-T’s security interest in the stock. This is
a. after-acquired property.
b. a pledge.
c. a purchase-money security interest.
d. a violation of most state laws.
Kelly, Lars, and Mona agree to be partners in Neighborhood Delivery Service (NDS),
splitting the profits equally. Kelly contributes 67 percent of the capital. When NDS is
dissolved, its liabilities are greater than its assets. The losses are paid by
a. all of the partners in proportion to their capital contributions.
b. all of the partners in proportion to their shares of the profits.
c. Kelly because she contributed most of the capital.
d. Lars and Mona because they contributed the least of the capital.
OK Dry-Cleaning advertises so effectively that the regular customers of its competitor
Purity Cleaners patronize OK instead of Purity. This is
a. appropriation.
b. conversion.
c. wrongful interference with a contractual relationship.
d. no tort.
To reduce traffic, Harbor Town enacts an ordinance that allows only a few street
vendors to operate in certain areas. A court would likely review this ordinance under the
principles of
a. the commerce clause.
b. the equal protection clause.
c. the due process clause.
d. the First Amendment.
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. an easement appurtenant.
b. an easement in gross.
c. a profit appurtenant.
d. a profit in gross.
Exotic Stuff Company and First Pier, Inc., form a business organization to engage in
importing and exporting. Its property is held in the names of the members and its
shareholders have personal liability. This business organization is
a. a business trust.
b. a joint stock company.
c. a joint venture.
d. a syndicate.
Atlantic Applications, Inc., and Pacific Resale Company (PRC) enter into an oral
contract for Atlantic’s sale to PRC of six used forklifts for $1,900 each. Before PRC
takes possession of the items, this contract is enforceable by
a. either party.
b. neither party.
c. Atlantic only.
d. PRC only.
WiFi Corporation, a U.S. firm, signs a contract with Bueno Computadores, Ltd., an
Argentinean firm, for a shipment and payment for WiFi’s goods. This is
a. a distribution agreement.
b. a joint venture.
c. direct exporting.
d. licensing.
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.
MeatMen, Inc. spends a great deal of money and effort to ensure that all employees are
safe on the job, that all products are safe for consumers, and that the environmental
impact of the corporation is minimal. MeatMen appears to strongly believe in the
concept of
a. the moral minimum.
b. corporate social responsibility.
c. “grey areas” in the law.
d. government oversight.
Entrepreneur Auto Rentals owes Sole Saver Auto Dealership $2,000. Entrepreneur
executes a note to Sole Saver as security for the debt. This security
a. does not constitute sufficient consideration for HDC status.
b. does not satisfy the value requirement for HDC status.
c. satisfies the consideration requirement for HDC status.
d. satisfies the value requirement for HDC status.
To raise capital to form Plasticity Corporation with Quinn, Rona sells bonds and stock
in other companies, and plans to register an initial public offering under the Securities
Act of 1933. SEC Rule l0b-5 covers
a. most forms of securities.
b. only bonds.
c. only securities registered under the Securities Act of 1933.
d. only stock.
Mason creates a trust to prevent his son, Newt, the beneficiary, from assigning his rights
to future payments of income from the trust. This is
a. a charitable trust.
b. a constructive trust.
c. a spendthrift trust.
d. an illegal trust.
Denise and Elke do business as Final Curtain Decorators. In most states, for purposes of
holding title to property, this partnership would be treated as
a. an aggregate of the individual partners.
b. a natural person.
c. an entity.
d. a non-existent party.
T.J. owns a red sports car. T.J. can use the car as he wishes and he can also dispose of it
if he wishes. When T.J. dies, the car will descend to his son. With respect to the car, T.J.
is
a. a joint tenant.
b. a tenant in common.
c. an owner in fee simple.
d. an owner of community property.
Donna goes through an involuntary bankruptcy proceeding. An involuntary bankruptcy
occurs when
a. a debtor files forms designated for the purpose in a bankruptcy court.
b. a debtor is unable to pay his or her debts as they come due.
c. a debtor’s creditors force the debtor into bankruptcy proceedings.
d. a debtor’s debts exceed the fair market value of his or her assets.
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.
InterComp normally sells $50,000 worth of software to Power Source, a retail elec-
tronics store, each summer on terms requiring payment in sixty days. One year,
InterComp wants cash, but Power Source wants the usual sixty days. To meet both
needs, the parties can arrange
a. a certificate of deposit.
b. a bearer bond.
c. a trade acceptance.
d. an international letter of credit.
The United States Supreme Court has original jurisdiction in some situations.
General descriptions take precedence over inconsistent samples.
Under the UCC, parties to sales and lease contracts are not free to establish whatever
terms they wish.
Felonies are punishable by imprisonment for more than a year or death.
Only personal contracts can be discharged by agreement of the parties.
A fictitious payee is a payee on a negotiable instrument whom the maker or drawer does
not intend to have an interest in the instrument.
A corporation has an implied power to extend credit to those with whom it has a legal
or contractual relationship.
Sally and Tom decide to go into business, selling discounted merchandise through their
Web site “e-Buy.” They sign a partnership agreement that requires Sally to contribute
$12,000 and Tom to contribute $8,000 in capital to start the firm. The agreement also
states that only Sally will have the authority to bind the partnership in deals with third
parties, but the agreement says nothing about the management of the firm or a division
of profits. Without Sally’s knowledge, Tom tells United Computer Products, Inc., that
he represents the firm and signs a contract with United to buy hard drives for resale on
e-Buy. In the first year, e-Buy makes a profit of $50,000. What are the partner’ rights
with respect to the management of the firm? Is the partnership bound to the contract
with United? Do the partners split the first year’s profits? If so, how much is each
entitled to?
An offer does not need to be communicated to the offeree to become effective.
Certain types of property are exempt from writs of execution or attachment.
In general, a buyer’s duty to pay for tendered goods becomes absolute before the buyer
has had an opportunity to inspect the goods.
A summary judgment is granted only if there is no genuine question of law.
Stare decisis is a doctrine obligating judges to follow the precedents established within
their jurisdictions.
On default, unless the security agreement states otherwise, the secured party has the
right to take possession of the collateral.
To use attachment as a remedy, a creditor must have an enforceable right to payment of
the debt.
A personal check cannot be a negotiable instrument.
A deposition is a sworn testimony by a party to a lawsuit or any witness.