Fact Pattern 38-1
Nika owns land in Ohio. Her ownership rights include the right to sell or give away the
property without restriction, and the right to commit waste, if she chooses.
Refer to Fact Pattern 38-1. Nika’s ownership interest is
a. a fee simple absolute.
b. a license.
c. a life estate.
d. an easement.
Under the ____________ Amendment, no one can be deprived of “life, liberty, or
property without due process of law.”
a. Second
b. Fourth
c. Fifth
d. Eighth
Liu enters Mountain Triathlon, an athletic competition in which Liu has never
competed. Regarding the risk of injury, Liu assumes the risks
a. attributable to the Triathlon in any way.
b. different from the risks normally associated with the Triathlon.
c. greater than the risks normally associated with the Triathlon.
d. normally associated with the Triathlon.
First National Bank may subject its employees to lie-detector tests when investigating
a. health and medical conditions.
b. losses attributable to theft.
c. prior work history.
d. suspected drug use.
Rollo deeds a plot of timberland to Scholars University as a gift. The university pays
nothing for the property. Rollo has given the university
a. a fee simple absolute.
b. a license.
c. an easement.
d. the power of eminent domain.
Marshall owns a piece of land, but James owns the mineral rights to Marshall’s land.
James wishes to sell the mineral rights. James
a. cannot sell the mineral rights.
b. can only sell the mineral rights if Marshall agrees.
c. must give Marshall 30 percent of the proceeds of the sale of the mineral rights.
d. can sell the mineral rights without consulting Marshall.
Title VII of the Civil Rights Act of 1964 applies to which of the following?
a. An employer with five employees
b. An employer with ten employees
c. A labor union with twenty-five members
d. A labor union with twelve members
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.
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.
Jared is a surety for Alfred’s loan from Hometown Bank. Alfred defaults on his loan. As
a surety, Jared can
a. assert Alfred’s bankruptcy, but not the statute of limitations as a defense to avoid
liability.
b. assert the statute of limitations, but not Alfred’s bankruptcy as a defense to avoid
liability.
c. assert neither the statute of limitations nor Alfred’s bankruptcy as a defense to avoid
liability.
d. assert either Alfred’s bankruptcy or the statute of limitations as a defense to avoid
liability.
Robert owns Textbooks Plus, a sole proprietorship that sells textbooks. When Robert
dies, Textbooks Plus will
a. be automatically dissolved.
b. pass directly to his oldest child.
c. pass directly to the state.
d. be evenly divided among all Robert’s heirs.
SuperBumperCars, Inc. requires all customers to sign a release that contains a clause
that releases SuperBumperCars from all liability in the event of an injury occurring
during a bumper car ride, no matter who is at fault. This is an example of
a. a covenant not to compete.
b. an adhesion contract.
c. an exculpatory clause.
d. none of the choices.
Japan violates an international law. Other countries may
a. impose fines on Japan.
b. imprison Japan’s leaders.
c. boycott Japan’s goods.
d. tax Japanese citizens.
Glen falsely accuses Hu of stealing from Island Tours, Inc., their employer. Glen’s
statement is NOT defamatory if
a. only Hu hears it.
b. a third party hears it.
c. the statement is published.
d. the statement is a lie.
DeAnn is the payee of a bearer instrumenta promissory note in the amount of $10,000.
LeBurt offers to irrigate DeAnn’s ranch next week in exchange for the note. DeAnn
agrees and delivers the note to LeBurt. LeBurt is
a. an HDC, because he promised to perform services at a future date.
b. an HDC, because the transferor was the original payee on the note.
c. not an HDC, because he did not acquire the instrument in good faith.
d. not an HDC, because he did not yet give value for the instrument.
Sights Unseen, Inc., (SUI) sells scopes with distinctively designed and made lenses and
mirrors to scientists. Telescopes, Etc. Corporation later begins to sell scopes with
identical set-ups of lenses and mirrors, without SUI’s permission, to consumers. This is
most likely
a. copyright infringement.
b. patent infringement.
c. trademark infringement.
d. not infringement.
Baked Goods Company agrees to supply Comida Caf with all the corn chips that it
requires for a year. A sudden demand for ethanol results in a shortage of corn, and the
price rises sharply. Baked Goods asks Comida to pay a higher price for the chips. This
request is
a. invalid as an attempt at extortion or the so-called holdup game.
b. invalid under the preexisting duty rule.
c. valid as a risk ordinarily assumed in business.
d. valid due to the unforeseen difficulty of the sudden price increase.
Rita is appointed as an agent for Superior Sales, Inc. The agency agreement is silent as
to the level of sales that Rita is expected to achieve. She must
a. achieve nothing because the agreement says nothing on the issue.
b. attain the level that Rita achieved with her previous employer.
c. maintain the level Superior attained before Rita became an agent.
d. use reasonable diligence and skill in selling.
Julia and Mary have a contract that is still executory. They mutually agree to rescind
their contract and at the same time make a new contract. If the new contract is contested
in court and the court finds that there was a preexisting duty under the original contract,
then the new contract
a. will not be enforceable.
b. will still be enforceable.
c. will not require consideration from either side.
d. will be legally sufficient.
Wilson buys a lottery ticket at his local gas station. Wilson has accepted an offer for a
a. bilateral contract.
b. unilateral contract.
c. void contract.
d. unenforceable contract.
Orin enters into a contract with Natalie. Later, Orin is adjudged mentally incompetent
and Moseby is appointed Orin’s guardian. Lila, Orin’s daughter, attempts to void Orin’s
contract with Natalie on the grounds of Orin’s incompetency. The contract is
a. enforceable if Orin does not attempt to disaffirm it.
b. enforceable if Natalie is also incompetent.
c. enforceable if Moseby knew of the contract when he was appointed.
d. void.
Macro Marketing, Inc., and Nature Foods Corporation (NFC) discuss the terms of a
contract. Macro faxes NFC a memo on Macro’s letterhead that summarizes the items on
which they agree. NFC begins to perform, but Macro refuses to pay. Between Macro
and NFC, the memo is
a. an oral contract.
b. a pre-contract.
c. a written contract.
d. no contract.
Dom, an EZ Baked Goods salesperson, follows Flora, a salesperson for Goody Pastries,
Inc., as she attempts to make sales to food stores. Dom solicits each of Flora’s
customers. Dom is most likely liable for wrongful interference with
a. a bargaining relationship.
b. a business relationship.
c. a contractual relationship.
d. a customer relationship.
Paltry Assembly Company makes espresso machines and sells one to Vim through a
misrepresentation on the label on which Vim relies and that results in an injury to Vim.
Paltry is most likely liable for
a. a commonly known danger.
b. fraud.
c. privity.
d. puffery.
Hank, a salesperson for Ideal Autos, promises Jennie a certain car will give her a
‘smooth ride.” Hank offers a test drive, which Jennie declines. She buys the car but soon
realizes its suspension is in poor condition. Jennie
a. can rescind the contract on the ground of fraud.
b. can rescind the contract on the ground of misrepresentation.
c. can rescind the contract on the ground of mistake.
d. was not defrauded.
Julia receives an unsolicited credit card in the mail. The next day, the card is stolen and
the thief makes $5,000 of charges. The credit card company
a. can charge Julia for $2,500.
b. can charge Julia for $5,000.
c. can charge Julia for $100.
d. cannot charge Julia for any of the charges.
Adam and Britney are partners who own and operate Chick”n Hut, a chain of fast food
restaurants. Their partnership obtains insurance on Adam’s and Britney’s lives. This is
a. casualty insurance.
b. fidelity insurance.
c. key-person insurance.
d. liability insurance.
Erin is a shareholder in African Adventures. As a shareholder, Erin
a. owns shares of stock in African Adventures.
b. is the founder of African Adventures.
c. has no say in the election of African Adventure’s board of directors.
d. is liable for all the debts of African Adventures.
Checkerboard Pizza, Inc. (CPI), files for bankruptcy under Chapter 11. CPI’s Chapter
11 plan must contain
a. a plan to turn over its future income to the trustee.
b. a certificate proving attendance at a credit-counseling briefing.
c. a provision of adequate means for the plan’s execution.
d a statement of preference for one creditor over another.
Wally asks Eddie if he can store his furniture in Eddie’s garage while he serves a tour of
duty with the U.S. Marines Corps. Eddie agrees. This is
a. a bailment.
b. accession.
c. a gift.
d. lost property.
Alan applies for a mortgage loan at Class Act Bank. Class Act Bank does not fully
disclose all terms of the loan to Alan. This is
a. commercial lending.
b. false lending.
c. predatory lending.
d. an acceptable way of doing business.
Kit loses her suit against Lou in a Minnesota state trial court. Kit appeals to the state
court of appeals and loses again. Kit would appeal next to
a. a U.S. district court.
b. the Minnesota Supreme Court.
c. the United States Supreme Court.
d. the U.S. Court of Appeals for the Eighth Circuit.
Bild-Rite, Inc., is a Colorado-based firm that does business with clients throughout
North America. Bild-Rite oversees construction projects, and buys and sells commercial
buildings, undeveloped land, and construction supplies and other goods. Bild-Rite has
had to deal with work-site theft and vandalism. With respect to these circumstances, the
Uniform Commercial Code (UCC) provides a framework for
a. commercial transactions for the sale of and payment for goods.
b. international construction contracts.
c. domestic and foreign transactions in real estate.
d. prosecuting crimes against business interests.
Phil enters into a contract to hire Bob’s Building Business to build a warehouse for Phil.
The contract specifies that the warehouse should be built with HighQual Bricks. When
construction starts, HighQual Bricks cannot provide enough bricks for the warehouse.
Bob’s Building Business substitutes Big Red Bricks, which are comparable in quality
and price to HighQual Bricks. This deviation from the contract
a. discharges Phil from the contract.
b. has no effect on the contract.
c. increases Bob’s Building Business’s duties under the contract.
d. suspends Bob’s Building Business’s duty to perform.
Elinor sells Cathy a horse for $2,000. When Elinor goes to the bank to deposit Cathy’s
check, the check bounces. Elinor is furious and files suit against Cathy. Elinor probably
filed her suit in
a. a small claims court.
b. a domestic relations court.
c. a municipal court.
d. a probate court.
A bearer instrument is an instrument that does not designate a specific payee.
Rob applies to Standard Insurance Company for a life insurance policy. On the
application, Rob understates his age. Rob obtains the policy, but for a lower premium
than he would have had to pay had he disclosed his actual age. The policy includes an
incontestability clause. Five years later, Rob dies. Can Standard refuse payment on the
policy?
A bank has no right to charge a customer’s account for the amount of a stale check.
An appellant is the party who appeals to an appellate court.
A written contract for a transfer of land is usually enforceable.
A limited liability company is operated in compliance with state law.
Ethical codes of conduct can set the ethical tone of a firm.
No person may be a director for two competing corporations at the same time.
Humberto and Tiara, who are married, borrow $110,000 from Sterling Credit Union to
buy a home. The loan is a fixed-rate mortgage at 5.25 percent with a thirty-year term,
subject to an acceleration clause, and secured by the home, which is their principal
residence. When Humberto and Tiara have paid off $10,000 of the mortgagestill owing
$100,000they lose their jobs and stop making payments. Sterling Credit makes
numerous attempts to contact the couple, but they do not respond. Meanwhile, the
market value of their home has declined to $85,000.After six months, Sterling Credit
decides to take steps to recover the unpaid amount of the loan. What are the lender’s
options? Which option seems most likely? Why? What are the steps are involved?
Past consideration can be legally sufficient consideration.
In every leasehold estate, the tenant has an unqualified right to exclusive possession.
Few nations have restrictions on imports.
Drugs must be shown to be effective before they can be marketed.
To “publish” a will means to record it in the appropriate county office.
Vested is the condition in which rights have taken effect and cannot be taken away.
An illusory promise is unenforceable.
A shrink-wrap agreement is normally enforced.
In general, courts consider the fairness of a contract when deciding if the contract is
binding.
A bank is NOT obligated to pay an uncertified check presented less than six months
from its date.
Under the UCC, if a contract is unilateral, the offeror must be notified of the offeree’s
performance.