George and James create an agency relationship to facilitate the sale of illegal narcotics.
This agency relationship
a. is illegal.
b. is legal.
c. will be recognized by some states, but not others.
d. can exist, but will be subject to sanctions for illegal activity.
Housemate, Inc., makes and sells a variety of household products. With a fair amount of
certainty, Housemate’s decision makers can predict whether a given business action
would be legal in
a. all situations.
b. many situations.
c. no situations.
d. practically no situations.
Lily is a farmer. When bad weather destroys her crop, her obligation to deliver it under
an outstanding contract with Macro Food Corporation is
a. discharged.
b. completely enforceable.
c. enforceable only to the extent of finding an alternative supply.
d. enforceable only to the extent of transferring to the next year’s crop.
Gail enters into a contract with Hi-Price Appliances, Inc. In a suit between the parties
over payment under the contract, Gail claims that a certain clause is unconscionable. If
the court agrees, it may
a. enforce, limit, or refuse to enforce the contract or the disputed clause.
b. enforce the contract without the disputed clause only.
c. limit the application of the disputed clause only.
d. refuse to enforce the entire contract only.
Edy obtains a property insurance policy with First Source Insurance Company for Edy’s
fishing trawler. First Source can cancel the policy
a. if Edy appears as a witness in a case against First Source.
b. if Edy fails to pay the premiums.
c. if Edy makes changes that add to the trawler’s value.
d. under no circumstances.
Realty Credit Company and Second Mortgage Corporation plan to consolidate. Most
likely, the articles of consolidation will be filed with
a. the county recording office.
b. the Securities and Exchange Commission.
c. the state’s secretary of state.
d. the U.S. Department of Justice.
Ryan invents a pen that digitally “remembers” what is written or drawn with it. To
obtain a patent for the pen, Ryan does not have to show that it is
a. novel.
b. marketable.
c. useful.
d. not obvious in light of current technology.
Greta is the only female employee in the maintenance department of Hydraulics Inc.
Greta’s supervisor and co-workers tease and play tricks on her so relentlessly that she
feels compelled to quit. This is
a. a constructive discharge.
b. a destructive discharge.
c. an instructive discharge.
d. not a discharge.
Fred and Joanne are married. Joanne purchases a car. Fred and Joanne each technically
own an undivided one-half interest in the car. This is
a. a joint tenancy.
b. fee simple ownership.
c. community property.
d. illegal.
Obie accuses Portia, a broker with QT Financial Services, of fraudulently inducing him
to invest in Risky Development Company, whose stock price declines in value. The
reliance that gives rise to liability for fraud requires
a. a subjective statement.
b. misrepresentation of a fact knowing that it is false.
c. puffery.
d. seller’s talk.
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.
Daphne defaults on a debt to Country Loan Corporation (CLC). As a creditor, CLC can
place liens on all of Daphne’s property except
a. motor vehicles used to commute to work.
b. stock in various corporations.
c. items that the debtor selects.
d. vacant commercial property.
Odell is a director of Price Rite, Inc. As a director, with respect to the corporation, Odell
is
a. a fiduciary.
b. a forum.
c. a proxy.
d. a quorum.
Martha brings a suit against SafeCars, Inc. claiming that she was injured during a car
crash due to defects in the car she had purchased from SafeCars. There is no evidence
that Martha was injured in the accident, but the trial court awards her $1 million in
damages. SafeCars appeals the decision. The appellate court will most likely
a. not modify the trial court’s finding of fact because appellate courts are forbidden to
look at questions of fact.
b. modify the trial court’s finding of fact because the finding was clearly erroneous.
c. modify the trial court’s finding of fact because the award amount was more than
$25,000.
d. modify the trial court’s finding of fact because the award amount was less than $5
million.
Rolf is an emergency medical technician. Medical personnel such as Rolf are prohibited
by state statute from working more than a certain number of consecutive hours. One
month, Rolf works more than the legal limit. Rolf can recover for
a. the hours up to the statutory maximum but not more.
b. the hours up to the statutory maximum and the extra hours.
c. the hours up to the statutory maximum or the extra hours.
d. nothing.
Dondi contracts to buy a custom espresso maker from Caffee Specialties, Inc., for
$4,500, but Caffee fails to deliver. Dondi buys the appliance elsewhere for $5,500.
Dondi’s measure of damages is
a. $1,000.
b. $1,000 plus incidental damages.
c. incidental damages only.
d. $0.
Lucky owns Mud Flats Ranch, which is situated on certain Nevada acreage. The
exterior boundaries of the land extend
a. 100 feet into the earth and 100 feet into the atmosphere.
b. one mile into the earth and one mile into the atmosphere.
c. to infinity and beyond.
d. to the center of the earth and up to the farthest reaches of the atmosphere.
Ergonomic Corporation convenes its employees for its managers to announce (1) a new
company-wide ethical code of conduct, (2) an ad campaign to publicize the new code,
and (3) the discharge of employees who do not adhere to the code. One of the most
effective ways to set a tone of ethical behavior within a business organization is
a. to create an ethical code of conduct.
b. to discharge employees who create the appearance of impropriety.
c. to post a marketing campaign online touting the firm’s ethical tone.
d. for management to direct employees to “do as we say, not as we do.”
An antitrust action is brought against Tri-State Transport Company, alleging the offense
of attempted monopolization. To be guilty of this offense, Tri-State’s attempt must have
a. a dangerous probability of success.
b. a deadly guaranty of success.
c. a distant possibility of success.
d. a distinct improbability of success.
Bean Vendors, Inc., and Java Bistros Corporation dispute a term in their contract.
Refer to Fact Pattern 3-1. If Bean and Java resolve their dispute by having a neutral
third party render a binding decision, they will have used the method of
a. arbitration.
b. conciliation.
c. intervention.
d. mediation.
Brendan signs a check “pay to the order of City College Bookstore” drawn on his
account in Delta Bank to pay for his current semester’s textbooks. The bookstore
deposits the check in its account in Eagle Bank. Like most checks, this check is
a. a one-party instrument.
b. a nonnegotiable instrument.
c. a special type of draft.
d. not a substitute for cash.
Simon signs a check “pay to the order of Tilly” drawn on Simon’s account in United
Bank. Vela forges Tilly’s indorsement, First Federal Bank cashes the check, and Vela
disappears. United pays First Federal and debits Simon’s account. Most likely, the
ultimate loss will fall on
a. Simon.
b. Trudy.
c. United Bank.
d. First Federal Bank.
Spa Selectiva Company makes and sells beauty salon supplies. By selling its product at
prices substantially below the normal cost of production, Spa Selectiva hopes to drive
its competitors from the market. This is
a. market power.
b. predatory pricing.
c. price discrimination.
d. price-fixing.
Sweet Treats, Inc., wants to market a new snack food. On the product’s label, standard
nutrition facts are
a. prohibited.
b. required.
c. strictly voluntary.
d. warranted by the nature of the food.
Red’s Plumbing Service substantially performs its contract with Shady Grove
Condominiums, Inc. Shady Grove is entitled to
a. damages.
b. nothing more.
c. repudiation.
d. alteration.
Erin and Dooley, a married couple, borrow $120,000 from Capital & Credit Bank to
buy a home. When Erin and Dooley divorce, they are unable to make payments on the
mortgage. The market value of the home has declined to less than the balance of the
loan. Capital & Credit agrees to a sale of the property for this amount. This is
a. a deed in lieu of foreclosure.
b. a home equity loan.
c. a reverse mortgage.
d. a short sale.
Jill, in good faith and for value, gets from Kiley a negotiable bearer instrument. Jill
does not know that Kiley stole the instrument. Jill is
a. an HDC.
b. not an HDC, because Kiley did not acquire the instrument for value.
c. not an HDC, because Kiley did not acquire the instrument in good faith.
d. not an HDC, because the instrument is a bearer instrument.
The credit department of Metro-Mart calls Nikki at work about an overdue bill. Nikki’s
employer objects. Metro-Mart continues to call Nikki at work. This is a violation of
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.
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.
Gina sells “Bulk Up” steroids over the Internet. She is arrested and charged with the
sale of a controlled substance. This is cyber crime, which is
a. a new category of crime that is not related to older types of crime.
b. a crime that occurs the virtual community of the Internet.
c. a crime that is less real than the same crime in the physical world.
d. no crime.
John is sales manager for Kleen “N Brite Products, Inc. Compared to John’s personal
activities, his business activities most likely involve
a. more complex ethical issues.
b. no ethical issues.
c. simpler ethical issues.
d. the same ethical issues.
Norwest Trucking Corporation files a suit in a state court against Bob’s Service
Company (BSC), and wins. BSC appeals the court’s decision, asserting that the
evidence presented at trial to support Norwest’s claim was so scanty that no reasonable
jury could have found for the plaintiff. Therefore, argues BSC, the appellate court
should reverse the trial court’s decision. Is the appellate court likely to reverse the trial
court’s findings with respect to the facts? If not, why not? What are an appellate court’s
options after reviewing a case?
Directors can use corporate funds and confidential information for personal advantage
as long as they disclose that they are doing so.
If a seller fails to deliver the goods, the buyer’s damages do not include all losses
resulting from this course of events.
All forms of gambling are legal in all states.
Merchants must ship orders within the time promised in their ads.
Proximate cause exists when the connection between an act and an injury is strong
enough to justify imposing liability.
If a customer’s debit card is lost or stolen, the customer will not be liable for any
unauthorized use of the card.
Ethical codes of conduct can set the ethical tone of a firm.
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.
If a principal does not ratify an authorized contract, the principal is not bound.
It is not a crime to defraud the public through the use of ads on television.
Once a discharge is granted, it may not be revoked, even if, for example, a debtor
concealed property to defraud a creditor.
A voidable contract is a valid contract that can be avoided at the option of at least one
of the parties to it.
According to the Foreign Sovereign Immunities Act, a foreign state that has committed
a tort in the United States is protected from the jurisdiction of the U.S. courts.
Counteradvertising requires a company to advertise the products of its competitor to
counter its own false claims.
Normally, a franchisee determines the territory that it will serve.
A certified check is a check that has been signed by a notary public.
A single seller acting unilaterally is free to deal, or not to deal, with anyone it chooses.
As long as a contract is personal in nature, all rights under the contract can be assigned.