Jean buys a bike from Mike’s Bike Shop. She wants to make sure that there is a
warranty of title. Jean
a. does not need to do anything because warranties of title arise automatically in most
sales contracts.
b. must request a written warranty of title.
c. must request an oral warranty of title.
d. must request both a written and an oral warranty of title.
Nursing Home Care Company is charged with violating a rule of the Social Security
Administration. Most likely, Nursing Home Care will be required to appear at a hearing
presided over by
a. a federal appellate court judge.
b. a federal district court judge.
c. an administrative law judge.
d. a U.S. Marshal.
Nora signs a contract to buy a car just before reaching the age of majority. After
reaching the age of majority, Nora does not take possession or make payments. Most
courts would hold that she had
a. disaffirmed the contract.
b. executed the contract.
c. ratified the contract.
d. rescinded the contract.
Labor Recruiters, Inc., has been ordered to appear at a hearing before an administrative
law judge of the National Labor Relations Board. A significant difference between a
trial and an administrative hearing is that
a. attorneys are not allowed to attend administrative hearings.
b. clients are not allowed to communicate with their attorneys during administrative
hearings.
c. hearsay can be introduced as evidence in an administrative hearing.
d. the burden of proof is on the charged party to prove innocence.
Mary enters a gas station and points a gun at the clerk. She then forces the clerk to open
the cash register and give her all the money. Mary can be charged with
a. robbery.
b. forgery.
c. larceny.
d. embezzlement.
In January, Jazz Dance Studio owes Katy, its musical director, $1,800 for current
wages, receives $700 as a down payment for dance lessons from Lora, and pays a
Music, Inc., a sheet music supplier, $1,500 of $3,000 owed. In February, the studio files
for bankruptcy under Chapter 7.
Based on the size of the studio’s estate in bankruptcy, each of Jazz’s creditors will get
only 10 percent of their claims. Regarding the payment to Music, Inc., the trustee may
a. not recover it because Music’s claim has priority.
b. not recover it unless Music is an insider.
c. recover it as a fraudulent transfer.
d. recover it as a preference.
Four-Square Construction Company enters into a contract with Ben to remodel Carol’s
Home Store, using products from Delta Building Supplies. Eatery Caf is next to Carol’s
Home Store. The remodeling is a gift from Ben to Carol.
Refer to Fact Pattern 15-1. Delta will realize a profit from the sale of products to
Four-Square to remodel Carol’s store. Delta is
a. a delegatee.
b. an assignee.
c. an incidental beneficiary.
d. an intended beneficiary.
Mix-It Concrete Company has the right to enter Nim’s land and remove the rock from
Nim’s quarry. This is
a. a fee simple absolute.
b. a license.
c. an easement.
d. a profit.
Top Toys Corporation has an online forum where employees can post new toy ideas or
reviews. Thomas posts a racially offensive video on the forum. Top Toys should
a. do nothing because Thomas has the First Amendment right to free speech.
b. do nothing because acknowledging Thomas’s video will give it credibility.
c. take action against Thomas to show that racial discrimination is unacceptable in the
firm.
d. take action against Thomas because videos can consume considerable bandwidth on
a company server.
The Internal Revenue Service (IRS) wants to seize certain documents of Monetary
Propriety, Inc. Whether it is permissible for the IRS to request or seize the documents
depends on whether the documents are
a. incriminating.
b. relevant.
c. technical.
d. valuable.
Without permission, a Honduran firm names itself McDonald’s and begins selling
hamburgers and French fries in Honduras. This is
a. piracy.
b. a licensing agreement.
c. indirect exporting.
d. franchising.
Pat, a world famous musician and composer, agrees to give ten piano lessons to Quinn
in exchange for $1,000. Pat’s attempt to delegate his contract to Ruth, an inexperienced
pianist, will probably be
a. permitted because contracts may be freely delegated.
b. permitted because the contract is concerned with music lessons.
c. prohibited because contracts may not be freely delegated.
d. prohibited because Pat and Ruth have very different skill levels.
Lena borrows from Mac and Nicol, using the same 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.
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. In
deciding whether to hold Safe-Rite liable, the court may consider
a. consumers’ general lack of desire to read the product’s warnings.
b. the plaintiff’s specific lack of desire to read the product warnings.
c. the obvious risks of other products.
d. the obvious risks of this product.
Phil and Mike enter into a contract that expressly prohibits delegation. Phil is the
obligor and Mike is the obligee. Mike delegates his duties to Alex. Phil
a. cannot consent to the delegation under any circumstances.
b. can consent to the delegation by accepting Alex’s performance.
c. must be notified of the delegation to make it effective.
d. cannot prevent Mike from delegating his duties.
Sweetwater Caf defaults on debts to Town & Country Bank and Uno Loan Company.
Town & Country perfected its security interest before Uno. Town & Country takes
possession of the collateral in which it has a security interest. On a sale of the collateral,
the proceeds will be applied first to
a. Sweetwater’s previous payments on the debts.
b. Sweetwater’s unpaid payments on the debts.
c. the balance of Sweetwater’s debt to Town & Country.
d. the balance of Sweetwater’s debt to Uno.
Kelly and Lucas sign a written contract for the sale of Kelly’s Koffee Kiosk to Lucas.
The parties intend their written contract to be a final statement of the terms of their
agreement.
Refer to Fact Pattern 14-1. Lucas later disputes some of the provisions of the deal with
Kelly. If the dispute results in litigation, a court will most likely exclude evidence that
a. buttresses the written terms.
b. contradicts the written terms.
c. duplicates the written terms.
d. reinforces the written terms.
Judge Julia decides that the precedent for the case she is hearing is no longer correct
due to technological changes. She overturns the precedent when she decides the case. It
is likely that her case will
a. go unnoticed by the public.
b. be thrown out of court.
c. receive a great deal of publicity.
d. be ignored by the media.
John promises to paint Kay’s house in exchange for Lila’s promise to plant trees on
John’s property. This is
a. a delegation.
b. an assignment.
c. a third party beneficiary contract.
d. not a delegation, an assignment, or a third party beneficiary contract.
Laredo advertises a reward for the return of his lost dog. Mikayla, who does not know
of the reward, finds and returns the dog. Mikayla cannot recover the reward, because
she
a. did not confer a benefit on Laredo by returning the dog.
b. did not know of the reward when she found and returned the dog.
c. does not need the money.
d. returned the dog.
Merchant Supply Company and National Discount Stores enter into a contract for a
lease of cash registers. Merchant assures National that it has valid title to the goods.
Under the UCC, a warranty of title arises
a. automatically in most lease contracts.
b. only if the lessee asks for such a warranty.
c. only if the lessor expresses such a warranty.
d. only in conjunction with sales contracts, not lease contracts.
Herb, a computer programmer for Inventory Control Corporation, is arrested in his
employer’s parking lot on suspicion of larceny. Herb must be informed of his right to
a. a trial by jury.
b. punishment.
c. question witnesses.
d. remain silent.
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.
Volume Sales Corporation directs its marketing of discounted products to less educated
consumers. In considering the unconscionability of a Volume contract, a court will NOT
likely consider
a. a buyer’s level of education.
b. the parties’ relative bargaining power.
c. the price of the products.
d. the seller’s level of education.
GR8 Skates Company makes and sells a pair of skates to Hugh. GR8 fails to exercise
“due care” to make the skates safe, and Hugh is injured as a result. GR8 is most likely
liable for
a. assumption of risk.
b. knowledgeable use.
c. negligence.
d. product misuse.
William steals a valuable collection of baseball cards from Phillip. William then sells
the cards to Darrel, who does not know that the cards are stolen. Phillip discovers that
Darrel has the cards. Which of the following best describes the rights and liabilities of
the parties involved?
a. Darrel has the right to keep the cards if he compensates Phillip monetarily.
b. Phillip has the right to reclaim the cards from Darrel, but is liable to Darrel for
damages.
c. Phillip has the right to reclaim the cards from Darrel and William is liable to Darrel
for damages.
d. Darrel has the right to keep the cards without compensating William.
Frugal Insurance Company sells a policy to Grover Company, insuring the life of one of
Grover’s key executives. When the executive dies, Frugal refuses to pay, noting that it
was not licensed to sell insurance in Grover’s state and arguing that thus, its policy
cannot be enforced. Grover can recover
a. the amount of the policy from Frugal in full.
b. the amount of the premiums that Grover paid to Frugal.
c. as much of the amount of the policy from Frugal as will cover Grover’s costs.
d. nothing.
Intoxicated and not aware of the consequences, Uri agrees to a two-year cell-phone
service contract with Wander Talk, Inc., at more than the average market price. This
contract is
a. enforceable.
b. not enforceable because contracting parties can change their minds.
c. not enforceable because the contract clearly favors Wander Talk.
d. not enforceable because Uri was intoxicated enough to lack mental capacity when he
agreed to it.
Quality Energy Company, a U.S. firm, and Royal Petro, a Dutch firm, enter into a
contract that includes an arbitration clause. This clause must provide that the arbitrator
will be
a. any specified third party.
b. the American Arbitration Association.
c. the Dutch Arbitration Organization.
d. the International Chamber of Commerce.
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.
Green Grocers, Inc., enters into a contract with Hiway Transport Company for the
delivery of a shipment of fresh produce. In a later dispute between these parties over the
delivery, the doctrine of quasi contract cannot be used because
a. both of the parties involved are businesses.
b. at least one of the parties had greater bargaining power.
c. the subject of the contract was a service.
d. there is an actual contract covering the subject in dispute.
Livewire Company and McCoy’s Candy, Inc., sign a document that states Livewire
agrees to design a Web page for McCoy’s, which agrees to pay for the service. This is
a. an actual contract.
b. a fictional contract.
c. an implied contract.
d. a quasi contract.
The obligation of good faith underlies every contract under the Uniform Commercial
Code.
A preexisting duty may arise from a previous contract.
Because of the ultra vires doctrine, shareholders are told the internal rules of corporate
management.
Starr Cardio, Inc., is a small business. Ted, Uma, and eleven other members of the Starr
family own all of its stock. Currently, Starr’s income is taxed at the corporate level and,
after being distributed to the family members, at the shareholder level. Can Starr retain
its corporate status but otherwise avoid this double taxation? If so, how?
Generally, a state court’s power is limited to the territorial boundaries of the state in
which it is located and the immediately adjacent states.
Consumers can only obtain damages up to half the amount of all finance charges and
fees paid if a lender violates the Home Ownership and Equity Protection Act.
The borrower receives the proceeds of a short sale.
Market concentration refers to the number of firms in the market.
An employee who is fired outside of the terms of an implied employment contract may
succeed in an action for breach of contract.
Crimes occurring in a business context are popularly referred to as white-collar crime.
An agency must conduct a regulatory flexibility analysis of any new regulation.
The Federal Trade Commission is charged with determining what constitutes a
deceptive trade practice.
Some states permit a corporate board to have fewer than three directors.
A lessor is a party who transfers a right to the possession and use of goods under a
lease.
If there is no definite period stated, a firm offer by a merchant is irrevocable without the
necessity of consideration for up to six months.
Picking pockets is larceny.
An eviction occurs when a landlord deprives the tenant of possession of the leased
property.