Some agreements are so blatantly and substantially anticompetitive that they are
deemed illegal per se under Section 1 of the Sherman Act. Which of the following is not
a per se violation?
a. A price-fixing agreement
b. A group boycott
c. A trade association
d. A market division
Bubbly Cola features Sparkly Cola’s trademark without its owner’s permission.
Bubbly’s use of the mark is actionable provided
a. consumers are confused.
b. Bubbly’s use is intentional.
c. Bubbly’s use reduces the value of Sparkly’s mark.
d. Sparkly’s mark is registered.
Darwin borrows $200,000 from Evermore Bank to buy a home. Less than six months
into the term, Darwin stops making payments on the loan. To initiate the process to
repossess and auction off the property securing the loan, Evermore must
a. issue a notice of sale to the borrower.
b. offer the property for sale in an auction on the courthouse steps.
c. record a notice of default with the appropriate county office.
d. resort to litigation to establish clear ownership of the property.
Wally asks Eddie if he can store his furniture in Eddie’s garage while he serves a tour of
duty with the U.S. Marines Corps. Eddie agrees. This is
a. a bailment.
b. accession.
c. a gift.
d. abandoned property.
Megan is the ethics officer for Nature’s Eggs, Inc., an organic egg raising company. In
overseeing the application of the company’s ethical code of conduct, Megan is most
likely not in charge of
a. an ethics committee.
b. ethical training programs.
c. internal ethical audits.
d. ethical reviews of employees’ family members.
Opalina asks Paolo, who does not understand English, to sign what Opalina says is an
application to open a bank account. In fact, the “application” is a note. If sued on the
note by an HDC
a. Paolo must pay the note.
b. Paolo’s best defense would be fraud in the execution.
c. Paolo’s best defense would be fraud in the inducement.
d. Paolo’s best defense would be mistake.
Bobbie claims that Carly breached their contract. Carly responds that she never
intended to enter into a contract with Bobbie. The intent to enter into a contract is
determined with reference to
a. the conscious theory of contracts.
b. the objective theory of contracts.
c. the personal theory of contracts.
d. the subjective theory of contracts.
Business Rental Corporation (BRC) and Cartage Trucking Company enter into a
contract for a lease of ten hydraulic lifts. Under the perfect tender rule, BRC must ship
or tender goods to the lessee that
a. approximately conform to all of the details of the contract.
b. entirely conform to the contract except in one or two details.
c. exactly conform to the contract in every detail.
d. substantially conform to the contract in most details.
Inadvertently, Rachel leaves her backpack at Chat n” Coffee when she stops for an hour
of coffee and Facebook. The backpack is
a. abandoned property.
b. bailed property.
c. lost property.
d. mislaid property.
Kristal is a member of Laboratory CSI Services, LLC, a limited liability company.
Kristal can participate in the firm’s management
a. only to the extent that she assumes liability for the firm’s debts.
b. only to the extent of her investment in the firm.
c. to any extent.
d. to no extent.
Karen is a judge hearing the case of Local Dispatch Co. v. National Transport Corp.
Applying the relevant rule of law to the facts of the case requires Karen to find
previously decided cases that, in relation to the case under consideration, are
a. as different as possible.
b. as similar as possible.
c. at odds.
d. exactly identical.
Jackson pays Phil in good faith for a promissory note. Phil warrants that the draft has
not been altered. This warranty is a
a. presentment warranty.
b. consideration warranty.
c. conditional warranty.
d. fixed warranty.
Smithy Saddlery is a saddle shop subject to the laws of New York. In New York, the
highest-ranking (superior) law is
a. a case decided by the New York Court of Appeals.
b. a rule created by a New York state administrative agency.
c. a provision in the New York constitution.
d. a statute enacted by the New York legislature.
Pilar is interested in buying a franchise from Quixotic Travel & Tours Corporation.
Quixotic must disclose material facts that Pilar needs to make an informed decision
concerning this purchase, according to
a. no law.
b. the Petroleum Marketing Practices Act of 1979.
c. the Federal Trade Commission’s Franchise Rule.
d. the Uniform Commercial Code.
Fried Food, Inc., operates a commercial frying plant, discharging pollutants into the air.
Greg reports the violations to the Environmental Protection Agency. Greg
a. is not entitled to a payment.
b. may be paid up to any amount.
c. may be paid up to $1,000.
d. may be paid up to $10,000.
Jon writes a check to LocoMotion, Inc., as payment for a golf cart but soon discovers
the cart is broken. He goes to Fairway Bank, the drawee, and orally authorizes Lolly, a
bank officer, to stop payment on the check. This order is valid for
a. fourteen days.
b. fourteen months.
c. fourteen attempts to cash it.
d. fourteen subsequent “on-us” items.
Optima Medico Corporation, a U.S. firm, signs a contract with Pharma Beneficial, Ltd.,
a Canadian firm, to give Pharma the right to sell Optima’s products in Canada. This is
a. a distribution agreement.
b. a joint venture.
c. direct exporting.
d. licensing.
Fact Pattern 21-3
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
announces its new laptop, Dhani, Fay, Geoff, and Hu sell their stock for a profit.
Refer to Fact Pattern 21-3. Under the Securities Exchange Act of 1934, Geoff is most
likely
a. liable for insider trading.
b. not liable because Geoff did not prevent others from profiting.
c. not liable because Geoff did not solicit information from Dhani.
d. not liable because Geoff does not work for Eureka.
Wild Rides Theme Park owes money to both RollercoasterRepair, Inc. and Hot Dog
Harry. 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.
Ellen offers to sell her math textbook to Julia for $50. Julia does not respond. Ellen and
Julia do not have a contract because they lack the requirement of
a. agreement.
b. capacity.
c. consideration.
d. legality.
GR8 Stuf Company files a registration statement with the SEC before making an
offering to the general public. The registration contains false, immaterial statements of
which the investors are unaware. GR8 Stuf is charged with violating the Securities Act
of 1933. GR8 Stuf’s best defense is
a. the investors were not aware of the misrepresentations.
b. the issuer reasonably believed the misstatements were true.
c. the offering was made available to the general public.
d. the untrue statements were not material.
Raul agrees to ship to Ben one hundred ceiling fans for $5,000. Raul initials his notes of
the deal, which include the terms, and files the notes in his office. Ben initials his own
notes of the deal, which include the terms, and files the notes in his office. Raul fails to
ship the fans. Against Raul, as a contract, the deal is
a. enforceable, because under the UCC a contract need not written.
b. enforceable, because Raul’s initialed notes are a sufficient writing.
c. enforceable, because Ben’s initialed notes are a sufficient writing.
d. not enforceable.
Jackson owns an antiques store. He sells a grand piano to Fred for $5,000, a old
jukebox to Sam for $499, an antebellum chest of drawers to Josephine for $659 and a
gold ring to Wendy for $999. Which of Jackson’s sales must be in writing to be
enforceable?
a. The grand piano only
b. The grand piano and the gold ring only
c. The grand piano, the chest of drawers and the gold ring only
d. The grand piano, the chest of drawers, the jukebox and the gold ring
In making decisions for Smartt Investments, Rita uses a cost-benefit analysis. This is a
part of
a. duty-based ethics.
b. Kantian ethics.
c. rights-based ethics.
d. utilitarian ethics.
Fresh Seasonal Fruit Company has assets of less than $10 million and fewer than fifty
shareholders. Gourmand Pastries, Inc., has assets of more than $50 million and more
than five hundred shareholders. The Securities Exchange Act of 1934 applies to
a. Fresh Seasonal Fruit and Gourmand Pastries.
b. Fresh Seasonal Fruit only.
c. Gourmand Pastries only.
d. neither Fresh Seasonal Fruit nor Gourmand Pastries.
Bayou Development Corporation (BDC) hires Gulfview Brokerage Associates to sell
the condominiums in a building at BDC’s coastal resort. The agency will terminate
a. after the condos have been sold.
b. if the prices of the condos must be reduced to sell them.
c. once BDC obtains insurance to cover the property.
d. when BDC pays Gulfview its first commission.
Under federal law, the calorie content of the food on a menu must be posted by Organic
Mix, LLC, if Organic Mix is
a. a restaurant chain with twenty or more locations.
b. a food distributor with twenty or more customers.
c. a food processor with twenty or more products.
d. a food producer with twenty or more acres.
Robert is selling his used lawnmower. He wants to disclaim any implied warranties.
Robert
a. cannot disclaim implied warranties.
b. should include a written disclaimer that the lawnmower is being sold
“as is.”
c. should orally disclose all known faults of the lawnmower.
d. should include a written warranty of title.
Franz asks Gateway Mortgage Credit for a loan to pay for the purchase of a home. With
a poor credit score and a high current debt-to-income ratio, Franz does not qualify for a
standard mortgage. Gateway is most likely to provide
a. a deed in lieu of foreclosure.
b. a home equity loan.
c. a subprime mortgage.
d. a workout agreement.
Kit loses her suit against Lou in a Minnesota state trial court. Kit appeals to the state
court of appeals and loses again. Kit would appeal next to
a. a U.S. district court.
b. the Minnesota Supreme Court.
c. the United States Supreme Court.
d. the U.S. Court of Appeals for the Eighth Circuit.
Bret obtains a fire insurance policy on his rental house with Continental Insurance
Company. Like all insurance, this policy is an arrangement for
a. avoiding the assumption of responsibility.
b. predicting a potential loss based on unknown factors.
c. shifting the imposition of liability.
d. transferring and allocating risk.
Thor Power Products Corporation permits its directors to be elected by cumulative
voting. This
a. allows minority shareholders to be represented on the board.
b. assures directors that they will be selected by their peers.
c. guarantees Thor’s executive officers of the final choice.
d. ensures against persons who may “cloud” the corporate direction.
In newspaper ads, Lo-Price Autos falsely accuses Hi-Value Vehicles, a competitor, of
selling stolen cars. Hi-Value’s sales decrease. Lo-Price has most likely committed
a. slander of quality.
b. slander of title.
c. wrongful interference with a business relationship.
d. none of the choices.
The seller’s or lessor’s major obligation under a sales contract is to tender conforming
goods to the buyer or lessee.
The person who makes a promise is the promisee.
Eppie gives a check to Fund Investments to buy 100 shares of stock in GR8 Tech
Corporation for Eppie. The price of the shares is constantly fluctuating. Fund
Investments asks Eppie to leave the amount of the check blank and allow it to fill in the
price when making the purchase. Eppie agrees. Fund Investments buys the stock when
the price is $4,000, but fills in the check for $5,000. The check is negotiated as payment
for a $5,000 debt to Hasty Accounting Services, which takes the check in good faith and
without notice of Fund Investments’ act. Hasty later learns that Fund Investments was
not authorized to fill in the check for $1,000 over the price. Is Hasty an HDC? If so, for
how much?
A trustee has the power to avoid a sale of the debtor’s property.
Goods must be of the highest quality possible to be merchantable.
Sophie is the president of Tasty Foods Corporation, a wholesale grocery company. An
inspection by Uri, a government agent, uncovers unsanitary conditions in the company’s
warehouse caused by Vic, a Tasty Foods employee. Will, a Tasty Foods vice president,
assures Uri that the situation will be corrected, but a later inspection finds that the
warehouse is still unsanitary. Sophie knows nothing about any of this. Can Tasty Foods
be convicted of a crime in these circumstances? Can Sophie be held personally liable?
A quasi contract is not a true contract.
A promise that an employer makes in an employee handbook regarding discharge will
not be considered part of an implied contract.
A surety can assert the debtor’s bankruptcy as a defense.
Lenders can require balloon payments for loans with terms of five years or less.
Tender of delivery requires that the seller or lessor hold the goods at the buyer’s or
lessee’s disposal, but not that the goods be conforming.
Confusion of fungible goods results in the owners’ loss of their rights in the property.
Before a seller can have an insurable interest in goods, the goods must be identified to a
contract.
Corporations can be good citizens by promoting goals that society deems worthwhile.
Under the UCC, if a contract does not designate the place of delivery for the goods,
then the goods must be made available at a location halfway between the seller’s and the
buyer’s places of business.
The terms “due process” and “equal protection” mean the same thing.
Wrongfully taking personal property without the owner’s permission is conversion.
If a loan is not paid within a reasonable time after a notice of default, the borrower will
receive a notice of sale.
Criminal acts are prohibited only by federal government statutes.