Jen signs a check “pay to the order of Key” drawn on Jen’s account in Little Bank to
buy Key’s car. If there are insufficient funds in Jen’s account to cover the amount of the
check, but the bank pays it, this creates
a. a cashier’s check.
b. an overdraft.
c. a stale check.
d. a stop-payment order.
Edgar, Jon and Phoebe do business as Reliable Movers. Phoebe develops a debilitating
illness and can no longer work. Phoebe
a. may dissociate from the partnership.
b. may not dissociate from the partnership without Edgar and Jon’s consent.
c. must pay damages to Edgar and Jon for the loss of her work.
d. may terminate the partnership.
John Jones decides to use his personal name for a line of clothing he is developing.
Whether or not the name John Jones acquires a secondary meaning will depend on
a. how extensively John markets his line of clothing.
b. the market for John’s line of clothing.
c. the number of clothing sales John makes.
d. all of the choices are correct.
James buys a copy of the book Downpour. Later, after reading the book, James sells it
to his sister. Under the first sale doctrine, James’s sale of the book is
a. legal.
b. legal only if the copyright has expired.
c. legal only if he sells it for less than he paid for it.
d. illegal.
Fact Pattern 31-3
Dhani, an accountant for Eureka, Inc., learns of undisclosed company plans to market a
new laptop. Dhani buys 1,000 shares of Eureka stock. He reveals the company plans to
Fay, who buys 500 shares. Fay tells Geoff, who tells Hu. Both Geoff and Hu buy 100
shares. They know that Fay got her information from Dhani. When Eureka publicly an-
nounces its new laptop, Dhani, Fay, Geoff, and Hu sell their stock for a profit.
Refer to Fact Pattern 31-3. If Dhani is liable under the Securities Exchange Act of 1934,
it will be because the information on which he based his purchase of Eureka stock was
a. a forward-looking forecast.
b. not material.
c. not yet public.
d. not yet true.
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 jurisdiction.
b. in personam jurisdiction.
c. in rem jurisdiction.
d. no jurisdiction.
Fact Pattern 25-1
Lita replaces Manny in his job at Neighborly Business Corporation (NBC).
Refer to Fact Pattern 25-1. To succeed with an age-discrimination claim against CBC,
Manny will have to show that
a. Lita is not qualified for Manny’s job.
b. Manny is qualified for his job.
c. NBC’s qualifications for Manny’s job are too high.
d. no one could do Manny’s job as well as he could.
Little Local Bank wrongfully fails to honor a check signed by its customer Andrea.
Little Local Bank is
a. not liable to Andrea for damages resulting from its refusal to pay.
b. only liable to Andrea for damages resulting from its refusal to pay if Andrea takes
action against the bank within one business day of the failure to honor the check.
c. only liable to Andrea for one half of the damages resulting from its refusal to pay.
d. liable to Andrea for damages resulting from its refusal to pay.
Jared is arrested and found guilty of a misdemeanor. His punishment will not include
a. imprisonment for six months.
b. a fine of $100.
c. death.
d. imprisonment for six months and a fine of $500.
Sof Chair Company contracts to deliver 100 chairs to Stuffy Furnishings Store on May
1 for which Stuffy agrees to pay. Sof tells Stuffy on April 15 that delivery will be
delayed until June 1. Stuffy may
a. await performance, sue Sof, or suspend its own performance.
b. only await Sof’s performance for a commercially reasonable time.
c. only sue Sof for breach of contract.
d. only suspend its own performance.
Doug is an accountant whose clients include Everyday Products, Inc. (EPI). Under the
Ultramares rule, if Doug is negligent in his work for EPI, he could be liable to
a. EPI and any third party.
b. EPI and third parties who are foreseen users of his work for EPI.
c. EPI and third parties who are reasonably foreseeable users of his work for EPI.
d. EPI only.
Farm2Fork, LLC, is a limited liability company. Rather than distribute its profits to its
members, Energy wants to reinvest the profits in its business. For this reason, Energy
may prefer to be taxed as
a. a corporation.
b. a partnership.
c. a sole proprietorship.
d. a business trust.
Stephanie’s sale of rights she has under a contract with Runway Retail, Inc., to buy the
retailer’s clothing overstock is
a. a delegation.
b. an assignment.
c. a third party beneficiary contract.
d. none of the choices.
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.
Lena borrows from Mac and Nicol, using the same farm equipment as collateral for
both loans. Only Nicol has a perfected security interest. Lena defaults on both loans.
The party with first rights to the collateral is
a. Lena.
b. Mac and Nicol, in proportion to Lena’s debt to each.
c. Mac only.
d. Nicol only.
Leslie, an accountant, enters into a contract to provide services to Marty. Leslie does
not finish the work within the contract’s deadline. Leslie is
a. liable for breach of contract.
b. not liable, because Leslie is a professional.
c. not liable, because Leslie’s failure must have been Martys fault.
d. not liable, because the work took longer than foreseen.
Jaycee is a shareholder for Designer Pet Clothes, Inc. Designer Pet Clothes uses
cumulative voting to elect directors. This means that the number of Jaycee’s votes is
determined by
a. how long Jaycee has been a shareholder.
b. the number of members of the board to be elected multiplied by the total number of
voting shares Jaycee holds.
c. the number of shareholders present at the most recent shareholder’ meeting.
d. the number of shareholder’ meetings Jaycee has attended in the past year.
Karson orally agrees to pay Jaime to plant and harvest a quarter of Karson’s farm
acreage for four corn-planting seasons. After Jaime prepares the land and plants the first
crop, Karson says that their deal is off. Jaime can most likely recover
a. in quasi contract.
b. in reformation.
c. in restitution.
d. on the partie’ existing contract.
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.
Equipment Rental Corporation and Floodlights, Inc., are parties to an oral agreement
for a lease of goods with payments in excess of $10,000. They may satisfy the Statute
of Frauds by
a. mutually agreeing not to commit fraud.
b. restating the terms in a phone call.
c. setting out the terms in an e-mail.
d. shaking hands on the deal.
To acquire monopoly power in its market, Perfect Plastics, Inc., sets its prices lower
than its competitors. Under the Sherman Act, this is
a. a per se violation.
b. a violation if its competitors make similar deals.
c. a violation if it thereby acquires monopoly power.
d. not a violation.
When Jeff’s car breaks down, he asks Insta-Tow, Inc., to tow it to Huey’s Repair Shop.
There is no discussion of a price, and Jeff and Insta-Tow do not sign any documents.
Later, Insta-Tow sends Jeff a bill. With respect to Jeff’s obligation to pay the bill, this is
a. an express contract.
b. an implied contract.
c. an implied-in-law contract.
d. no contract.
Jared downloads some video games from the Internet. There is a page indicating the
terms of use, but nothing that requires Jared to affirmatively indicate his consent before
downloading the games. These terms are
a. a click-on agreement.
b. browse-wrap terms.
c. an attribution agreement.
d. a shrink-wrap agreement.
Rita, the manager of the State University (SU) soccer team, orally agrees to lease a
certain number of specially made SU banners from Top Banners, Inc. This lease is
enforceable only if Top has made a substantial start on making the banners and
a. Rita agreed to the lease on behalf of the SU soccer team.
b. SU does not have other, similar banners available.
c. the banners are not suitable for others in the course of Top’s business.
d. the soccer season has not ended and SU goes to the finals.
The standard for determining whether constructive discharge has occurred is whether or
not
a. a reasonable person in the employee’s position would feel compelled to quit.
b. the employee’s annual wage rate is fair.
c. a person of another race in the employee’s position would feel compelled to quit.
d. a person of the opposite gender in the employee’s position would feel compelled to
quit.
Wild Rides Theme Park owes both RollercoasterRepair, Inc. and Hot Dog Harry money.
RollercoasterRepair orally agrees to assume Wild Rides’s debt to Hot Dog Harry to
prevent Hot Dog Harry from filing suit against Wild Rides. This contract is enforceable
by
a. no party.
b. any party.
c. Wild Rides only.
d. RollercoasterRepair only.
Eton files a suit in a federal district court against Florida, alleging employment
discrimination under the Age Discrimination in Employment Act of The state asks the
court to dismiss the suit. The court is most likely to rule that
a. the state is immune from the suit.
b. the suit can proceed.
c. Eton is immune from any defense the state might offer.
d. the court is immune from such request.
Crafted Iron Works, Inc., offers to design, make, and sell City Transit Agency fourteen
streetcars. Crafted authorizes a particular mode of communication, but City Transit
sends an acceptance via a substituted means. This acceptance is effective when it is
a. in transit.
b. received.
c. sent.
d. written.
Melanie files an employment discrimination suit against Natural Gas Industries Corp.
under Title VII on a disparate-impact theory. To succeed, Melanie must show that a
protected group of people are adversely affected by any of the following except the
employer’s
a. practices.
b. procedures.
c. tests.
d. seniority system.
A provision in the California state constitution conflicts with a provision in the U.S.
Constitution. If challenged
a. neither provision will be enforced.
b. the provisions will be balanced to reach a compromise.
c. the state provision, not the U.S. Constitution, will be enforced.
d. the U.S. Constitution, not the state provision, will be enforced.
Which of the following can not be registered as a trade name?
a. Pear Blossom, Certified Public Accountant
b. Apples & Oranges, Investment Partnership
c. Banana Republic Clothing, Inc.
d. Strawberries
The primary purpose of the Statute of Frauds is to ensure that all parties to a contract
understand all the terms of the contract.
Strict liability depends on privity of contract between an injured party and a seller.
Hiring corporate officers and determining their compensation are decisions that would
be made by a corporation’s board of directors.
A copyright is tangible personal property.
If a lender fails to provide certain material disclosures, a borrower has up to seven years
to rescind the mortgage.
A tenant has a duty to maintain in a reasonably safe condition those areas under his or
her control.
The term cure refers to the right of the buyer to reject, adjust, or replace nonconforming
goods.
An express trust is created or declared in explicit terms.
A merger and a consolidation are not two legally distinct proceedings.
A price-fixing agreement that is reasonable does not violate antitrust law.
If a nonmerchant-seller’s offer expressly conditions acceptance on a
nonmerchant-buyer’s agreement to the terms of the offer, the buyer’s positive response
is an acceptance even if it contains additional terms.
The right to cure is the right of a party who tenders nonconforming performance to
correct his or her performance within the contract period.
Remedies of the agent for breach of duty by the principal arise out of contract and tort
law.
In some states, misrepresentation of age by a minor is enough to prohibit disaffirmance.
Very few states have limited the amount of damages that can be awarded in tort cases.
A divorce revokes an entire will.
Individuals who are arrested must be informed of certain constitutional rights.
Under the Statute of Frauds, oral contracts are void.