Jen signs a check “pay to the order of Key drawn on Jens account in Lakeland Bank to
buy Keys car. Jen asks Lakeland Bank to indicate on the face of the check that it will
accept it when Key presents it for payment. If the bank agrees, this will be
a. a cashiers check.
b. a certified check.
c. a trade acceptance.
d. a travelers check.
Natalie agrees to assume Orinas debt to Consumer Credit Corporation. Natalie does not
get any personal benefit for the agreement. To be enforceable, the promise must be in
writing if the debt is for
a. more than $500.
b. more than $5,000.
c. more than $50,000.
d. any amount.
Rudy operates Silver Buckles, a small-business equine enterprise. To raise capital, Rudy
contacts Thad, a venture capitalist. Besides capital, Thad will most likely
a. assist in the drafting of a business plan.
b. decline a proportion of future profits.
c. offer assistance with respect to business strategy.
d. refrain from demanding operational control.
Delfino, an executive with Cartwright Corporation, orders corporate employees to
unknowingly transfer corporate funds to Delfinos personal account. This use of the
employees services is most likely
a. honest-services fraud, a federal crime.
b. a violation of corporate rules but no crime.
c. a breach of workplace rules generally but no civil or criminal wrong.
d. unethical but no crime.
Milo borrows $125,000 from North State Bank to buy a home. To comply with the
Statute of Frauds, the mortgage must be
a. a highly formal document.
b. a particular form.
c. in the same format as the lenders other loans.
d. in writing.
Kim uses, on her new recording Lets Go, the guitar solo from Malcolms digital sound
recording without his permission. This is
a. copyright infringement.
b. fair use.
c. licensing.
d. protected expression.
Rea, an officer with Sel-Mart Company, misappropriates the firms property through
fraud. Later, Rea and Sel-Mart agree to a mutual release of claims. Still later, Sel-Mart
discovers Reas fraud and files a suit to recover the misappropriated property. Most
likely, the court will rule that Rea
a. breached her duty of loyalty by failing to disclose her misconduct.
b. is not liable due to Reas duty to act in her own self-interest.
c. is not liable due to Sel-Marts failure to timely discover the fraud.
d. is not liable due to the mutual release of claims.
Petunia is a debtor. Her employer Quantum Investments, Inc., her ex-husband Rob, her
alma mater State University, and Timely Credit Company are her creditors. For these
parties, a petition in bankruptcy for relief through an individuals repayment plan could
be filed by
a. Petunia only.
b. Petunia, her employer, or her creditors only.
c. Petunia or her creditors only.
d. Petunias employer only.
Java Corporation wants to purchase all of the assets of Kaffee Corporation. Loki is a
Kaffee shareholder. The approval of Loki and other Kaffee shareholders is necessary
a. in all circumstances.
b. in no circumstances.
c. only if Kaffee will be paid with unauthorized, unissued stock.
d. only if Java assumes Kaffees liabilities as part of the deal.
Sayer is an employee of Thorny Foliage Eradication, Inc. Sayer tweets messages about
Thorny Foliage to employees and outside interested parties, including investors and
others. According to the Securities and Exchange Commission, Sayers messages are
subject to
a. federal securities laws.
b. international communications regulations.
c. state blog and tweet rules.
d. no law.
Household Furnishings, Inc., distributes its merchandise on an interstate basis. Under
the commerce clause, Congress has the power to regulate
a. any commercial activity in the United States.
b. only activities that are in intrastate commerce.
c. only activities that are in local commerce.
d. only activities that are not in commerce.
Clive is a purchasing agent for Double D Ranch with the authority to buy cattle at a
certain auction. After the cattle are bought, the agency relationship terminates
a. automatically.
b. following notice to all actual cattle sellers.
c. following notice to all potential cattle sellers.
d. following published notice in a local newspaper.
Nina, an accountant, prepares for Omni Corporation a financial statement that misstates
a material fact. The statement is included in Omnis registration statement. Pete, who is
in privity with Nina, and Quinn, who is not, each buy Omni stock. Under Section 11 of
the Securities Act of 1933, Nina may be liable to
a. neither Pete nor Quinn.
b. Pete and Quinn.
c. Pete only.
d. Quinn only.
Birdie, an accountant for Country Custom Furniture, Inc., issues company checks
payable to nonexistent persons drawn on Countrys account at Debit Bank. Birdie
indorses the checks and deposits them in her account. Country discovers the theft and
demands that Debit recredit its account. Debits best defense is that
a. Birdie was not authorized to issue the checks.
b. Country was in a better position than Debit to prevent the theft.
c. Debit did not know that the checks were not to be paid.
d. the checks were the property of Country, not Debit.
Gleaming Gem Corporation agrees to sell Jewelry Outlets, Inc. (JOI), fifty new
diamonds, but the contract does not specify a place of delivery. JOI is expected to pick
up the goods. The place of delivery is
a. Gleamings place of business.
b. JOIs place of business.
c. the Annual Gems and Jewels Convention.
d. the U.S. Postal Service office nearest to JOIs place of business.
Orin is a shareholder of Pinkwater Corporation. In some states, Orin might incur
personal liability for Pinkwater obligations if he
a. accepts a dividend knowing that it was paid from retained earnings.
b. buys stock for less than its fair-market value.
c. fails to fulfill his fiduciary duty to the majority shareholders.
d. sells his shares.
The police obtain a search warrant and search Errols apartment. After yelling
obscenities at the officers, Errol confesses to a crime and implicates his friends. The
Constitution protects against
a. obscene speech.
b. implication of others.
c. unreasonable searches.
d. none of the choices.
Vehicle Leasing Agency (VLA) and West Coast Trucking Company enter into a
contract for a lease of eight cargo vans. VLA delivers eight vans, but they are not
cargo-sized. West Coast
a. cannot reject the entire shipment.
b. can reject the entire shipment.
c. must accept the entire shipment.
d. must reject the entire shipment.
Jocasta contracts to provide lawn-mowing services to Kevin for $140 per month.
Jocasta cannot transfer this duty
a. under any circumstances.
b. without continuing to be potentially liable.
c. without Kevins consent.
d. without paying Kevin at least one monthly fee.
Ralph, a van driver for Standard Delivery Company, causes a multi-vehicle accident on
a city street. Ralph and Standard are liable to
a. all those who were injured.
b. only those who were uninsured.
c. only those whose injuries could have been reasonably foreseen.
d. only those whose vehicles were closest to Rods van.
Dondi contracts to buy a custom espresso maker from Caffee Specialties, Inc., for
$4,500, but Caffee fails to deliver. Dondi buys the appliance elsewhere for $5,500.
Dondis measure of damages is
a. $1,000.
b. $1,000 plus incidental damages.
c. incidental damages only.
d. $0.
Rock pushes Sylvia to the ground, grabbing her purse as she falls. The use of force or
fear is required for this act to constitute
a. burglary.
b. forgery.
c. larceny.
d. robbery.
Motor Parts Corporation offers to buy the stock of NASCAR Products Corporation
(NPC). NPCs directors oppose the offer. Orin and other NPC shareholders file a suit,
alleging a breach of the directors fiduciary duties. Most likely, the court will
a. apply the business judgment rule to analyze the directors acts.
b. dismiss the suit as a non-judicial dispute over “fair value.
c. evaluate the terms of the deal on the basis of antitrust law.
d. order the shareholders to be paid a “premium for their stock.
Fact Pattern 35-2B
Ida replaces Hector in his job at Grocers Market Corporation (GMC).
Refer to Fact Pattern 35-2B. Hector believes that he has been discriminated against on
the basis of his age. For the Age Discrimination in Employment Act of 1967 to apply
a. all parties must be forty years of age or younger.
b. Ida must be forty years of age or older.
c. Hector must be forty years of age or older.
d. GMC must have been in existence for at least forty years.
Firelite Corporation wants to purchase all of the assets of Glo Power Products, Inc.
Helen is a Glo Power shareholder. The approval of Helen and other Glo Power
shareholders is necessary
a. in all circumstances.
b. in no circumstances.
c. only if Firelite plans to pay with unauthorized, unissued stock.
d. only if the purchase extends Firelites control over more assets.
Rainey signs a promissory note for $10,000 in favor of State University (SU). The note
is undated but specifies that it is “payable one month after date. This note is
a. negotiable.
b. nonnegotiable, because one month is not a reasonable time.
c. nonnegotiable, because there is no option to pay early.
d. nonnegotiable, because the maturity date cannot be determined from the face of the
instrument.
Jay is a member of Kappa, LLC, a limited liability company. Jay is liable for Kappas
debts
a. in proportion to the total number of members.
b. to the extent of his investment in the firm.
c. to the extent that the other members do not pay the debts.
d. to the full extent.
Inez and Jason are the shareholders and directors of Kleen Kustodial Corporation. Lily
and Moe are Kleens officers. As with other corporations, the responsibility for the
overall management of Kleen rests with
a. the board of directors.
b. the officers.
c. the owners.
d. the shareholders.
Milo files a suit against Otis. At the trial, each partys attorney presents the partys case
before a judge who hears the dispute and renders a legally binding decision. This is
a. a mini-trial.
b. a summary jury trial.
c. litigation.
d. not a legitimate form of dispute resolution.
Housemate, Inc., makes and sells a variety of household products. With a fair amount of
certainty, Housemates decision makers can predict whether a given business action
would be legal in
a. all situations.
b. many situations.
c. no situations.
d. practically no situations.
Marie, a driver for Northern States Transport Company, causes a five-car accident on an
interstate highway. Marie and Northern States are liable to
a. all those who are injured.
b. only those whose injuries could reasonably have been foreseen.
c. only those whose cars were immediately ahead and behind Marie.
d. only those who do not have insurance.
Loren files a suit against Mabel, alleging a failure to pay for the harvest of Mabels
orchards. Mabel denies Lorens charge and claims that Loren breached their contract to
harvest a certain number of acres and owes Mabel money for the breach. Mabels claim
is
a. a contrary charge.
b. a counterclaim.
c. a counterpoint.
d. a cross complaint.
A short-form merger is the legal combination of two or more corporations online.
An experts false statement to a naive buyer about a technical detail will not usually
entitle the buyer to rescind a contract.
A law that regulates economic matters violates the equal protection clause.
The only purpose of a licensing statute is to protect the public from unlicensed
practitioners.
Sellers or lessors are liable only for products that are reasonably dangerous.
Ordinarily, the remedy for a sellers breach of a contract for a sale of real estate is
damages.
Congress can only pass legislation that falls within the limits set up by the U.S.
Constitution.
A business may procure coverage for product liability under a comprehensive general
liability policy.
Forcing someone to enter into a contract through fear created by threats is undue
influence.
Agency relationships exist only within employment relationships.
A debtor wishing to file for bankruptcy must complete the means test to determine
whether he or she qualifies.
An instrument is not defective because it has been dishonored.
An unenforceable contract is one that cannot be enforced because of certain legal
defenses against it.
Any promise made with respect to a past event is enforceable because the event is cer-
tainit has already occurred.
An instrument that is “payable on presentment is payable on demand.
Professionals are obligated to adhere to standards of performance commonly accepted
within their profession.
Current City (CC) is a retail seller of television sets. CC sells Dhani a $5,000
large-screen, high-definition, plasma set on a retail installment security agreement in
which he pays $100 down and agrees to pay the balance in equal installments. CC
retains a security interest in the set, and perfects that interest by filing a financing
statement centrally. Two months later, Dhani is in default on the payments to CC and is
involuntarily petitioned into bankruptcy by other creditors. Discuss CCs right to
repossess the TV set and whether CC has priority over the trustee in bankruptcy to any
proceeds from the disposal of the set.
Generally, government inspectors have the right to enter business premises without a
warrant.
In a contract for a sale of goods, the usual measure of compensatory damages is the
difference between the contract price and the market price.