Mountain Bikes, Inc. (MBI), and Nero enter into a contract for a sale of a mountain
bike. MBI, a merchant who deals in goods of the kind sold, makes implied and express
warranties in connection with the sale. The Magnuson-Moss Warranty Act attempts to
prevent deception in warranties by
a. displacing the UCC as the primary source of warranty rules.
b. making warranties easier to understand.
c. prohibiting disclaimers of warranties.
d. requiring sellers to give written warranties for consumer goods.
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 states secretary of state.
d. the U.S. Department of Justice.
Cherry and Basil are minors who marry each other. Their minority status may be
terminated under the laws of
a. all states.
b. most states.
c. some states.
d. no states.
Page points a knife at Rays daughter, threatening to hold her hostage and “cut her unless
Ray takes a certain file from Skelter Supplies Corporation, his employer. Charged with
theft, Ray can successfully claim as a defense
a. insanity.
b. duress.
c. entrapment.
d. self-defense.
Flem is an employee of Glo Goods, Inc. Flem reports to state officials that Glo is
illegally shipping unsafe goods to unsuspecting customers. When Glo learns of Flems
report, Glo fires him. He successfully sues Glo for wrongful discharge. With respect to
the employment-at-will doctrine, this is
a. an example of the doctrine.
b. an exception based on contract theory.
c. an exception based on public policy.
d. an exception based on tort theory.
Flexo Trucking Company transports hazardous waste. Garn is a Flexo driver, whom the
company knows drives longer hours than federal regulations permit. One night, Garn
exceeds the limit and has an accident. Spilled chemicals contaminate Hill Citys water
source, forcing the residents to move away. Flexo acted unethically because
a. Flexo showed reckless disregard for Hill Citys residents and others.
b. Garn exceeded the federal time limit.
c. harm was caused by an unfortunate accident.
d. Hill City should have better protected its water source.
Ethical standards would most likely be considered violated if Retail Mart Corporation
deals with a company in a developing nation that
a. agrees to produce goods at Retail Marts desired price.
b. goes unnoticed by “corporate watch groups.
c. exploits its workers.
d. pays its workers less than the U.S. minimum wage.
Clay buys an MP3 player for $200 and a pair of stereo speakers for $600 from a
Discount City store, and downloads $196 worth of digital music from eMusic.com. To
be enforceable, the contract that must be in writing is the purchase of
a. the digital music, the MP3 player, and the speakers.
b. the MP3 player and the speakers only.
c. the MP3 player only.
d. the speakers only.
The Securities Exchange Commission (SEC) is an administrative agency. Like other
administrative agencies, the SEC was established to
a. act as a liaison between federal and state governments.
b. impose uniform laws on the states.
c. perform a specific function.
d. standardize laws for the executive and judicial branches.
Hu believes that he is a victim of a form of employment discrimination that falls under
Title VII of the Civil Rights Act. Compliance with this statute is monitored by
a. employees and job applicants, not an administrative agency.
b. employers and businesses, not an administrative agency.
c. the courts and Congress, not an administrative agency.
d. the Equal Employment Opportunities Commission.
Modern Clothing, Inc., and National Denim Corporation use the mark “Made by
Members of the U.S. Textile Workers Union on the tags of their products to indicate the
participation of the union in the manufacture. Modern and National are not in business
together and do not own this mark. This mark is
a. a certification mark.
b. a collective mark.
c. a service mark.
d. trade dress.
Hubert mistakenly pays property taxes that should have been assessed against Jesse.
Hubert can recover the amount from Jesse in quasi contract
a. even if Jesse was not aware of the error.
b. only if Jesse tried to conceal the error.
c. only if Jesse was aware of the error.
d. under no circumstances.
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.
Moby, a resident of New Jersey, has an accident with Ogden, a resident of New York,
while driving through that state. Ogden files a suit against Moby in New York.
Regarding Moby, New York has
a. federal question jurisdiction.
b. in personam jurisdiction.
c. in rem jurisdiction.
d. no jurisdiction.
Elmer can write checks on his account at Finance Bank. Gina steals the checks, forges
Elmers signature, and cashes the checks at Finance. The bank is excused from any
liability if, after receipt of the first forged check, Elmer fails to report the forgeries
within
a. five business days.
b. fourteen consecutive days.
c. one year.
d. three years.
Fact Pattern 26-1
Fresh Goods, Inc., wants to make an initial public offering of securities. Fresh believes
that it qualifies for an exemption under Regulation A from the full registration
requirement of the federal Securities Act of 1933.
Refer to Fact Pattern 26-1. Fresh decides to sell its new securities via the Internet. This
offering
a. will avoid the payment of commissions to brokers or underwriters.
b. is an investment scam.
c. is a Ponzi scheme.
d. constitutes insider trading.
The graphics used in “Go!, a handheld video game featuring racecars, are protected by
a. copyright law.
b. patent law.
c. trademark law.
d. trade secrets law.
On Toms eighteenth birthday, he decides that he no longer wants to keep a car he
bought from U-Pick Autos, when he was seventeen. His right to disaffirm the deal will
depend on
a. the cars condition when Tom bought it.
b. the cars current condition.
c. whether Tom acts within a reasonable period of time.
d. whether U-Pick has the right to disaffirm.
Like other corporations, Biopesticide Corporation can extend its operations through
a. a share exchange.
b. a dissolution.
c. a termination.
d. a winding up.
Haya obtains an insurance policy from Inviolable Insurance Corporation (IIC). IIC may
cancel, or refuse to renew, the policy because of
a. Hayas appearance as a witness against IIC.
b. Hayas gender.
c. Hayas natjonal origin.
d. none of the choices.
Summit Supply Company contracts for a sale of medical equipment to Valley
Immediate Care Corporation. Summit can enforce its right to payment
a. only after Valley has actually inspected the goods.
b. only after Valley has had an opportunity to inspect the goods.
c. only before Valley has inspected the goods.
d. whether or not Valley has had the chance to inspect the goods.
Gass Propane Company hires Hick, an independent contractor, to make deliveries.
During a delivery, Iggy is killed in an accident caused by Hicks negligence. Iggys
widow Jade files a suit against Gass, asserting that the employer is liable. Gass argues
that it had no control over the manner in which Hick did his work. The court is most
likely to hold that Gass is
a. liable because Gass employed Hick.
b. liable because Gass should have investigated Hicks qualifications.
c. not liable because Gass did not control Hicks work.
d. not liable because the delivery vehicle was probably faulty.
Fact Pattern 9-2
Brad defends against a breach-of-contract suit by College Credit Corporation by
claiming that their deala student loan accruing interest at a certain rate and payable
beginning on a certain datewas unfair because the consideration for their contract was
inadequate.
Refer to Fact Pattern 9-2. A court is most likely to evaluate the adequacy of considera-
tion if
a. a thing exchanged has no intangible value to one of the parties.
b. something exchanged is not of direct economic or financial value.
c. the items exchanged were of unequal value.
d. there is a gross disparity in the value of the consideration exchanged.
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.
Under Ohios state constitution, the Ohio Environmental Protection Agency issues a new
rule, the Polk County Commission approves a new property tax measure, and the
professors and students at Ohio Law School publish the results of their most recent
legal research. Sources of law do not include
a. the measures approved by local governing bodies.
b. the results of legal scholars research.
c. the rules issued by state administrative agencies.
d. the states constitutions.
To adjust debt and institute a repayment plan, Charliewho is not a corporation, a
partnership, or a family farmer or fishermanmay file a petition in bankruptcy for relief
through
a. a liquidation.
b. a reorganization.
c. a repayment plan.
d. a family-farmer bankruptcy plan.
Donald applies for a life insurance policy with Equity Insurance Company through
Fletch, an agent who works for Equity. Donald pays the initial premium. Fletch writes a
binder, which
a. acknowledges the application and promises to consider it.
b. attests to the truth of each statement in the application
c. evidences receipt of the payment of the initial premium.
d. indicates that a policy is pending and states its essential terms.
Pharma Meds Corporation employs Ogilvie under an employment contract that sets out
a specific amount of money to be paid for certain results over a stated period of time.
During the term of the contract, it becomes clear that the results are not likely to be
attained. Pharma then gives Ogilvie the option of accepting a lesser position with fewer
duties for less money. Ogilvie accepts via e-mail, but soon files a suit against Pharma
for breach of the original contract. The court is most likely to rule that Ogilvies e-mail
a. showed only an agreement to agree.
b. accepted the proposed modification of the employment contract.
c. constituted a non-binding, non-contractual communication.
d. contained an acceptance but is unenforceable because it is electronic.
Jean sends e-mail to Irwin promising a percentage of the amount in an African bank
account for assistance in transferring the funds to a U.S. bank account. Irwin forwards
his account number, but the funds are never sent. Instead, Jean quickly withdraws the
funds in Irwins account. This is
a. online greed but not fraud.
b. an online “fool-me-once, shame on you occurrence but not fraud.
c. online gambling but not fraud.
d. online fraud.
Fact Pattern 2-1
Java Cafes, Inc., and Kaffe Import Corporation dispute a term in their contract.
Refer to Fact Pattern 2-1. If Java and Kaffe have a long-standing business relationship
that they would like to continue, a preferred method of settling their dispute may be
mediation because
a. the case will be heard by a mini-jury.
b. the dispute will eventually go to trial.
c. the process is not adversarial.
d. the resolution of the dispute will be decided an expert.
The government of the United States and the governments of other nations have the
power to enforce their respective national laws within their borders. The power to
enforce international law within the borders of all nations rests with
a. no court or international organization.
b. the European Union.
c. the International Court of Justice.
d. the United Nations General Assembly.
A landlord is usually required to give some period of notice to terminate a periodic
tenancy.
Federal labor law protects employees right to strike.
A time draft is payable at a definite future time.
Each member country of the TRIPS agreement must include in its domestic laws broad
intellectual property rights.
In a share exchange, some or all of the shares of one corporation are exchanged for
some or all of the shares of another corporation.
Private parties cannot sue violators of Section 10(b) and Rule 10b-5.
A public policy underlying the imposition of strict product liability is that a
manufacturer who makes an unsafe product should be put out of business.
An executory contract is one that has been fully performed.
The person who owes the payment of a secured obligation is the secured party.
A dividend may be paid from undistributed net corporate profits.
The Uniform Partnership Act governs the operation of partnerships.
Certain debtors may not qualify to have all debts discharged in bankruptcy.
All employment laws apply to independent contractors.
Foreclosure is the postponement, for a limited time, of part or all of the payments on a
loan in jeopardy of repossession and sale.
A registration statement must state how a corporation plans to use the proceeds from the
sale of the securities.
A covenant not to compete in the sale of an ongoing business is unenforceable.
If a party breaches a contract, the other party can file a criminal complaint.