An illegal contract is valid if the parties to it were unaware of the illegality.
An “assignment of all rights” absolves the assignor of all liability under the contract that
created the rights.
An accountant’s liability under the Securities Act of 1933 requires privity of contract
with the purchaser of a security.
Gaining unauthorized access to an electronic fund transfer system is a felony.
In many states, the plaintiff’s negligence is a defense that may be raised in a product
liability suit based on strict liability.
An employer is not liable for the sexual harassment of an employee by a co-worker.
Each member country of the TRIPS agreement must include in its domestic laws broad
intellectual property rights.
In a general partnership, the partners are personally liable for the debts of the
partnership.
Punitive damages are almost never available in contract disputes.
Corporations, unlike persons, cannot be liable for crimes.
Some states permit a corporate board to have fewer than three directors.
All mistakes of fact are material.
Directors are rarely compensated, but when they are, they can set their own
compensation.
Identification takes place when specific goods are designated as the subject matter of a
sales or lease contract.
If property is owned as community property, each spouse owns an undivided one-half
interest in it.
A closed shop is a firm that rejects union membership as a condition of employment.
The injury suffered by a nonbreaching party due to the breach of a contract may be
remedied by payment of compensatory damages.
Pricing information cannot be a trade secret.
A partner’s profit from a partnership is taxed as income to the firm.
Expression of all kinds is subject to reasonable restrictions.
Most crimes must be prosecuted within a certain number of years.
Life tenants are persons who share ownership rights simultaneously.
A court cannot exercise jurisdiction over an out-of-state defendant who has only done
business in the state over the Internet.
A director cannot be elected by the other members of the board.
After a consolidation, there is only one surviving corporation.
The UETA covers only e-records and e-signatures relating to a transaction.
Under the Constitution, the states retain all powers not specifically delegated to the
federal government.
In contracts involving a carrier, a seller can complete performance only through a
destination contract.
An agency relationship cannot exist in the absence of a formal agreement.
A contract can contain both a warranty of merchantability and a warranty of fitness for
a particular purpose.
A gift to a dying donee is a gift causa mortis.
Federal securities laws strictly control the terms, duration, and circumstances under
which most tender offers are made.
An accountant who prepares a financial statement in good faith may avoid liability
under Section 18 of the Securities Exchange Act of 1934.
The content of a family-fisherman bankruptcy plan is basically the same as that of a
repayment plan.
An insurer has a duty to avoid the payment of claims.
Any “person” may be a debtor in a liquidation proceeding.
Requiring union membership as a condition of continued employment is legal.
There are no revocable offers.
Hua, a resident of Illinois, owns a warehouse in Indiana. A dispute arises over the
ownership of the warehouse with Jac, a resident of Kentucky. Jac files a suit against
Hua in Indiana. Regarding this suit, Indiana has
A.federal question jurisdiction.
B.in personam jurisdiction.
C.in rem jurisdiction.
D.no jurisdiction.
Fact Pattern 18-2
General Leasing Company (GLC) buys equipment for use as inventory, borrowing $1
million from Helpful Finance Corporation for a security interest in the equipment. The
next day, GLC borrows $513,000 from Interstate Bank, also for a security interest in the
equipment. GLC defaults on the loans.
Refer to Fact Pattern 18-2. Suppose that Helpful perfects its security interest when GLC
takes possession of the equipment. In that circumstance, the party with priority to the
collateral on GLC’s default would be
A.GLC.
B.Helpful and Interstate proportionately.
C.Helpful only.
D.Interstate only.
Consumer Shops, Inc., signs a lease for a storefront owned by Downtown Building
Company. Unlike a purchaser of real property, Consumer Shops
A.acquires only temporary possession of the premises.
B.enjoys exclusive possession of the premises.
C.holds only temporary title to the premises.
D.retains temporary, exclusive possession and title to the premises.
Gladys is a shareholder of Frozen Yogurt, Inc. As a shareholder, Gladys must approve
A.amending the bylaws.
B.declaring a corporate dividend.
C.hiring a chief executive officer.
D.issuing additional shares.
Fact Pattern 31-1
First State Bank issues a letter of credit in favor of Oboe Company, an American firm,
to facilitate an international sales contract to buy resources from Lapland Mining, Ltd.,
a Finnish company.
Refer to Fact Pattern 31-1. To obtain payment, Lapland must comply with all of the
requirements of the letter of credit
A.strictly.
B.substantially.
C.reasonably.
D.materially.
Fact Pattern 17-1
Echo takes her car to Fix-It, Inc., which repairs the car and bills Echo for $500. Echo
writes out a check drawn on Capital Bank, but later, believing that Fix-It did not repair
the car properly, issues a stop-payment order.
Refer to Fact Pattern 17-1. Capital Bank pays the check. Capital
A.can sue Echo for a wrongful stop-payment order.
B.can sue Fix-It for breach of contract.
C.can sue no one because it paid a check that was not properly payable.
D.is liable for Echo’s loss due to the wrongful payment.
Pat, an accountant, includes a false statement in a report for Quantity Overstock, Inc.,
that is filed with the Securities and Exchange Commission. Quantity publishes a
misleading ad about its future prospects. Rita sees the ad and calls Stan, who buys stock
in Quantity. Under Section 18 of the Securities Exchange Act of 1934, liability may
attach to
A.Pat’s report.
B.Quantity’s ad.
C.Rita’s call.
D.Stan’s purchase.
Ivy and Justin want to form and do business as Kayak Adventures Corporation. A
corporation can be owned by
A.natural persons only.
B.artificial persons only.
C.artificial or natural persons.
D.neither “artificial” nor “natural” persons.
Jen files a suit against Kopper Kettle Company. While the suit is pending, Kopper
Kettle merges with Luminous Pans, Inc., with Luminous absorbing Kopper Kettle.
Now, liability in the suit, if any, rests with
A.Jen.
B.Kopper Kettle.
C.Luminous.
D.no one.
Vieux Carr S.A., a French firm, imports its goods into the United States and offers those
goods for sale at “less than fair value.” “Fair value” is the price of
A.comparable goods in a select “basket” of other countries.
B.Vieux Carr’s goods in France.
C.Vieux Carr’s goods in the United States.
D.Vieux Carr’s goods on the world market.
Svetlana, a fifty-five-year-old member of a racial minority with a disability, believes
that she is a victim of employment discrimination. Potentially the most widespread
form of discrimination is based on
A.age.
B.disability.
C.gender.
D.race.
Expert Pavers, Inc., contracts with Fabricated Building Corporation to repave
Fabricated’s parking lot for which Fabricated agrees to pay. The requirements of this,
and any other, contract do not include
A.consideration.
B.capacity.
C.legality.
D.practicality.
In Sales Distribution Corp. v. Consumer Products Co., the court decides that a
precedent is incorrect or inapplicable. The court
A.may rule contrary to the precedent.
B.must apply the precedent.
C.must ask a higher court to rule on the case.
D.must refuse to decide the case.
Cotton Products Corporation is a public company whose shares are traded in the public
securities markets. The Securities Act of 1933 requires Cotton to disclose financial and
other significant information concerning its securities in order to
A.increase corporate accountability by imposing responsibility on chief corporate
executives.
B.prevent insiders from trading among themselves.
C.protect investors.
D.provide a “safe harbor” for companies that make forward-looking statements.
Flo agrees to work as Gary’s personal accountant for one year but dies in the sixth
month of the contract. Flo’s estate
A.is discharged from any contractual liability.
B.must find a competent accountant to fulfill the contract.
C.must pay liquidated damages.
D.must refund any money paid to Flo on the contract.
Opal asks Paolo, who does not understand English, to sign what Opal says is an
application to open a bank account. In fact, the “application” is a note. If sued on the
note by an HDC, Paolo’s best defense would be
A.extreme duress.
B.fraud in the execution.
C.fraud in the inducement.
D.mistake.
According to the dissent’s opinion in Media General Operations, Inc. v. National Labor
Relations Board, in determining whether a discharge for an employee’s “outburst” in
violation of a workplace rule violates the NLRA, the court should focus on whether
A.the arrest of the employee is warranted.
B.the NLRA generally protects the employee from discharge.
C.the remark undermines workplace discipline.
D.the rule is fair and justifiable.
Steven, who is Bertha’s guardian, convinces her to buy a certain parcel of land from
Christy at a greatly inflated price. Steven may be liable for
A.duress.
B.fraud.
C.puffery.
D.undue influence.
National Consumer Goods Corporation and Paula Purchaser agree to resolve their
dispute in arbitration. The arbitrator’s decision is called
A.a conclusion of law.
B.a finding of fact.
C.an award.
D.a verdict.
Dan writes a check to Emma on his account at First State Bank. The bank dishonors the
check even though Dan has sufficient funds in his account. The bank is
A.liable to Dan only.
B.liable to Dan and Emma.
C.liable to Emma only.
D.not liable to Dan or Emma.
Imported Carpets Store and Jill enter into a contract for a sale of an Oriental rug.
Imported Carpets, a merchant who deals in goods of the kind sold, generally describes
the goods, details technical specifications, and shows a sample. Under the UCC, if these
are inconsistent
A.the general description displaces the sample.
B.the general description displaces the technical specifications.
C.the sample takes precedence over the general description.
D.the sample takes precedence over the technical specifications.
Cook’s Pantry Appliances, a retail store, must use reasonable care on its premises to
warn its patrons of
A.all risks.
B.hidden risks.
C.obvious risks.
D.no risks.
In Ed’s suit against First National Bank, the discovery phase would include all of the
following except
A.Ed’s complaint.
B.Ed’s deposition.
C.Ed’s requests for First National’s admissions.
D.First National’s replies to Ed’s interrogatories.
Sam, a citizen of New Mexico, wants to file a suit against Tanya, a citizen of Texas.
Their diversity of citizenship may be a basis for
A.any court to exercise in rem jurisdiction.
B.a federal district court to exercise original jurisdiction.
C.a U.S. court of appeals to exercise appellate jurisdiction.
D.the United States Supreme Court to issue a writ of certiorari.
Any decision by the management of Fast-Food Franchise Corporation may significantly
affect its
A.operators only.
B.operators, owners, suppliers, the community, or society as a whole.
C.owners only.
D.suppliers, the community, or society as a whole only.
Mary Kate Corporation allows Ashley Company to use Mary Kate’s trademark as part
of Ashley’s domain name. This is
A.a license.
B.a likelihood of consumer confusion.
C.cybersquatting.
D.trademark dilution.
Jim organized, and owns and operates, Jim’s Landscaping Service in the simplest form
of business organization. This is
A.none of the choices.
B.a limited liability company.
C.a partnership.
D.a sole proprietorship.
Yves is an accountant charged with negligence by Zesty Soup Company, a client. Yves
may successfully defend against the claim if he can show that
A.scienter was lacking.
B.he complied with all International Financial Reporting Standards.
C.the negligence was not the proximate cause of the client’s losses.
D.the negligence was only contributory.
Oven Products Company makes microwave ovens. Pico discovers that his Oven
Products oven is defective and sues the maker for product liability based on strict
liability. To win, Pico must show that
A.Oven Products sold the oven to Pico.
B.Pico knew and appreciated the risk caused by the defect.
C.Pico suffered an injury caused by the defect.
D.the “defect” was a commonly known danger.
Safe-Rite Company makes electrical cords and other connectors for electronic devices.
Tina files a product liability suit against Safe-Rite, alleging a warning defect. Under the
Restatement (Third) of Torts: Products Liability, in deciding whether to hold Safe-Rite
liable, the court may consider
A.neither the characteristics of expected users nor the content of any warning.
B.only the characteristics of expected users.
C.only the content of any warning.
D.the characteristics of expected users and the content of any warning.
Sullivan and Taylor want to form a corporation to provide catering services. The first
step in the incorporation procedure is to
A.file the articles of incorporation.
B.hold the first organizational meeting.
C.secure a corporate name.
D.select a state in which to incorporate.
U-Can-Own-It Corporation sells appliances to less educated consumers, including Vi,
on installment plans. U-Can-Own-It files a suit against Vi when she stops making
payments. Vi claims that the deal is unconscionable. The court will most likely consider
A.the geographic area of the relevant market.
B.the parties’ relative bargaining power.
C.the quality of related products in the general market.
D.the relation of this deal to those of other customers.
In the situation set out in either of the previous questions, the dissent in the Prestridge
case would most likely hold Silverado liable for
A.all checks.
B.checks that were cashed less than thirty days after the statement.
C.checks that were cashed more than thirty days after the statement.
D.no checks.
According to the majority in Casserlie v. Shell Oil Co., a commercially reasonable and
nondiscriminatory price is
A.evidence of a seller’s good faith.
B.parol evidence.
C.unconscionable.
D.a requirement for an inquiry into the seller’s motives.