Oklahoma enacts a law requiring all businesses in the state to donate 10 percent of their
profits to Protestant churches that provide certain services to persons whose income is
below the poverty level. PriceLess Stores files a suit to block the law’s enforcement.
The court would likely hold that this law violates
a. no clause in the U.S. Constitution.
b. the establishment clause.
c. the free exercise clause.
d. the supremacy clause.
A petition for a discharge in bankruptcy under Chapter 13 may be filed by
a. Gracie, the sole proprietor of Home Net Services.
b. Internet Portals & Pages, a partnership.
c. World Web Services, Inc., a corporation.
d. Internet Portals & Pages or World Web Services, Inc..
Klondike and Leola own 10,000 shares of stock in My-T Gro Corporation. On the death
of either owner, that owner’s interest in the stock passes to the surviving owner. This is
a. a joint tenancy.
b. community property.
c. a tenancy in common.
d. ownership in fee simple.
George is the founder of Excellent Exotics Corporation. Wilson is a shareholder and
director and Bill is an officer. The daily business operations of Excellent Exotics are
overseen by
a. Bill.
b. Wilson.
c. George.
d. George and Wilson.
Jill, in good faith and for value, gets from Kiley a negotiable bearer instrument. Jill
does not know that Kiley stole the instrument. Jill is
a. an HDC.
b. not an HDC, because Kiley did not acquire the instrument for value.
c. not an HDC, because Kiley did not acquire the instrument in good faith.
d. not an HDC, because the instrument is a bearer instrument.
Clear Creek Corporation enters into a contract with Brightside Management Associates
to manage and maintain Clear Creek’s apartment complex. Their contract provides that
neither party can recover damages for a non-fraudulent or unintentional breach. This is
a. a limitation-of-liability clause.
b. an exculpatory clause.
c. a liquidated damages clause.
d. a quasi contract.
Don, a U.S. citizen, is the owner of Egrets Unlimited, Inc. Egret’s competitors include
Feathered Friends Company (FFC), which is owned by Greg and Huey. The Bill of
Rights embodies a series of protections for Don against types of interference by
a. FFC and its other competitors only.
b. FFC, Greg, Huey, others, and the government.
c. Greg, Huey, and other private individuals only.
d. the government only.
Fact Pattern 13-1
Four-Square Construction Company enters into a contract with Ben to remodel Carol’s
Home Store, using products from Delta Building Supplies. Eatery Café is next to
Carol’s Home Store. The remodeling is a gift from Ben to Carol.
Refer to Fact Pattern 13-1. Carol is
a. a delegatee.
b. an assignee.
c. an incidental beneficiary.
d. an intended beneficiary.
Beachside City enacts an ordinance that bans the distribution of all printed materials on
city streets. Carl opposes the city’s latest “revenue-enhancing” measure and wants to
protest by distributing handbills. In his suit against the city, a court would likely hold
the printed-materials ban to be
a. an unconstitutional restriction of speech.
b. constitutional under the First Amendment.
c. justified by the need to protect individual rights.
d. necessary to protect national interests.
CheezBurger Heaven, Inc., conducts a chain-style franchise. This involves the transfer
to Clive, one of its franchisees, of
a. a license.
b. a trade name.
c. the formula to make a product.
d. the ownership of the business.
Goldtone Corporation makes cell phones. Haji files a product liability suit against
Goldtone, alleging a design defect. In deciding whether to hold Goldtone liable, the
court may consider an alternative design’s
a. popularity among industrial designers.
b. attractiveness to consumers.
c. aesthetics.
d. effect on the product.
Olaf is the creditor in a transaction with Phil. Once certain requirements are met, Olaf’s
rights will attach, which means that Olaf will have
a. an indivisible ownership right to Phil’s property.
b. an enforceable security interest in Phil’s property.
c. a notice affixed to Phil’s property.
d. the permission of a court to seize Phil’s property.
Shasta offers to sell a used hay baler to Roberto, but receives a letter of acceptance from
Quito, who has no relation to Roberto. A valid contract exists between
a. Shasta and Roberto.
b. Shasta and Quito.
c. Roberto and Quito.
d. none of the choices.
Straitway Company encourages its managers to behave ethically, reasoning that the
employees will take their cues from management. One of the most important ways to
create and maintain an ethical behavior workplace is for management to
a. demonstrate a commitment to ethical decision making.
b. discreetly engage in unethical or illegal acts.
c. look the other way when an employee engages in an unethical act.
d. direct employees to “do as we say, not as we do.”
Fact Pattern 13-1
Four-Square Construction Company enters into a contract with Ben to remodel Carol’s
Home Store, using products from Delta Building Supplies. Eatery Café is next to
Carol’s Home Store. The remodeling is a gift from Ben to Carol.
Refer to Fact Pattern 13-1. 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.
Cow Country Corporation (CCC) sells half of its land to the Double R Ranch. On the
land is a reservoir. In the deed, CCC retains the right to remove a limited amount of
water per day from the reservoir. This right is
a. a leasehold estate.
b. a license.
c. an easement.
d. a profit.
Maggie is a surety for Juli’s debt to Bill. Bill and Juli decide to make material changes
to the original contract without consulting Maggie. Maggie is
a. still bound by the contract.
b. discharged completely.
c. still bound by the contract, but allowed to make additional changes to the contract.
d. still bound by the contract unless she contests it within 30 days of the changes.
Rita borrows $30,000 from South State Credit Union. South State accepts Rita’s equity
in her home as collateral, which can be seized if the loan is not repaid on time. This is
a. a home equity loan.
b. an adjustable-rate mortgage.
c. an interest-only mortgage.
d. a violation of the law.
Mabel and Nicol do business as One World Realty. In acting on the firm’s behalf in a
deal with Property Acquisition Company, Mabel fails to account for the profit. To her
firm, Mabel is
a. liable for breach of the duty of care.
b. liable for breach of the duty of economic sense.
c. liable for breach of the duty of loyalty.
d. not liable.
Meri, an accountant, includes a false statement in a report for Novelty Paper Products,
Inc. (NPPI) that is filed with the Securities and Exchange Commission. When Otho
buys stock in NPPI and loses money on the investment, he files a suit against Meri,
alleging fraud under the 1934 Securities Exchange Act. To avoid liability, Meri can
show that she
a. intended to defraud NPPI, not Otho.
b. intended to profit on stock trades generally, not only with Otho.
c. is an otherwise competent accountant.
d. was not aware her statement was false.
Green River Energy Corporation wants to begin operations that include the discharge of
waste into navigable waters. Under the Clean Water Act, Green River must install
certain equipment
a. after beginning operations.
b. before beginning operations.
c. during operations.
d. only if a regulatory agency challenges the discharge.
Senator Brown and other politicians want to restrict the flow of technologically
advanced products and data from the United States to other countries. To restrict or
encourage exports, Congress can
a. do nothing.
b. assess antidumping duties.
c. impose export taxes.
d. set export quotas.
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.
UniOil, a U.S. firm, owns property in Venezuela. When the government of Venezuela
seizes the property, UniOil asks a U.S. court to order the property’s return. The court
rules that Venezuela is exempt from the court’s jurisdiction. This is
a. a travesty of justice.
b. the act of state doctrine.
c. the doctrine of sovereign immunity.
d. the principle of comity.
Rita is appointed as an agent for Superior Sales, Inc. The agency agreement is silent as
to the level of sales that Rita is expected to achieve. She must
a. achieve nothing because the agreement says nothing on the issue.
b. attain the level that Rita achieved with her previous employer.
c. maintain the level Superior attained before Rita became an agent.
d. use reasonable diligence and skill in selling.
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.
Fiona owns one share of stock in SK8 Boards Corporation, as evidenced by a stock
certificate. Fiona loses the certificate. Her ownership of the stock is
a. forfeited immediately.
b. forfeited within ten days of a third party’s claim to ownership.
c. forfeited within thirty days if she cannot find the certificate.
d. not affected.
Organic Cheeses, Inc., Fine & Fresh Foods Company, and Healthy Whole Foods, Inc.
organize together to exchange information and share advertising. This is an example of
a
a. trade association.
b. resale price maintenance agreement.
c. monopoly.
d. territorial restriction.
Bakri owns a house. In the house, on a tile floor is a throw rug. Most likely to meet the
definition of a fixture is
a. the house.
b. the throw rug.
c. the tile floor.
d. none of these choices.
Trucks & Trailers, Inc. (T&T), and United Delivery Service enter into a contract for a
lease of trucks. T&T is a merchant who deals in goods of the kind leased. Under the
UCC, an implied warranty of merchantability arises
a. automatically in lease contracts.
b. only if the lessee asks for it.
c. only if the lessor does not expressly disclaim it.
d. only in conjunction with sales contracts, not lease contracts.
Miranda is a U.S. citizen working in Europe for Tourist Vacations, Inc., a U.S. travel
agency. Tourist fires Miranda for reasons that she believes violate U.S. antidis-
crimination laws. Those laws apply
a. extraterritorially.
b. only to signatories of the North American Free Trade Agreement.
c. only to members of the World Trade Organization.
d. only within U.S. borders.
Riley, an engineer for Shur-2-Gro Seed Corporation, learns that Shur-2-Gro has
developed a corn hybrid to triple the output of any farm. Riley buys 20,000 shares of
Shur-2-Gro stock. He tells Tess, who buys 15,000 shares. After the new hybrid is
announced publicly, the price of Shur-2-Gro stock increases. Riley and Tess sell their
shares for a profit. Under the Securities Exchange Act of 1934, liability may be
imposed on
a. none of these parties.
b. Riley and Tess only.
c. Riley only.
d. Riley, Shur-2-Gro, and Tess.
During the trial phase of Fuel Corporation’s suit against Gas Stations, Inc., their
attorneys engage in voir dire. This is
a. an assessment of the validity of the arguments for both parties.
b. a determination of the issues to be argued before the court.
c. the trial.
d. the selection of jurors.
Ezra, an accountant, intentionally misstates a material fact to mislead Fruit Packing
Industries, Inc., a client. Fruit Packing justifiably relies on the misstatement to its
detriment. Ezra is most likely liable for
a. actual fraud.
b. constructive fraud.
c. destructive fraud.
d. virtual fraud.
Willful violations of the Securities Act of 1933 may be subject to civil liability, but not
criminal prosecution.
A court’s review of an arbitrator’s award may be restricted.
Dumping is the sale of imported goods at “less than fair value.”
Criminal acts are prohibited only by federal government statutes.
Attachment makes the security interest between a debtor and secured party ineffective.
The Civil Rights Act of 1964 does not prohibit job discrimination on the basis of
national origin.
Insurance coverage is never effective until a formal written policy is issued.
There is at least one federal district court in every state.
Uniform laws apply in all states, including those in which the laws have not been
adopted.
If a loan is not paid within a reasonable time after a notice of default, the borrower will
receive a notice of sale.
A contract can be executed on one side and executory on the other.
A bank may not pay any checks on a customer’s account after the date of the customer’s
death.
Under the doctrine of strict liability, people are liable for the results of their acts only if
their intentions are malicious.
Anyone who writes a book has automatic international copyright protection.
Patents are not considered personal property.
In a limited partnership, a limited partner has full responsibility for the partnership and
for all its debts.
A holder takes an instrument for value if he or she gives a check as payment for it.
International law is the law of a foreign nation and varies from country to country.