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.
A sole proprietor owns the entire business but does not receive all of the profit.
Certified checks are instruments that have been accepted for payment by the institutions
on which they are drawn.
The incompetence of a customer revokes a bank’s authority to pay an item.
Firing a worker who refuses to perform an illegal act violates public policy.
A certificate of deposit may be negotiable even if it does not contain an express promise
to pay.
The chief aim of the World Trade Organization and other trade agreements is to
maximize trade barriers among their members.
If a party breaches a contract, the other party can file a criminal complaint.
A manufacturer’s liability to an injured party on a strict product liability theory is
limited to a refund or a replacement of the defective product.
If a loan is not paid within a reasonable time after a notice of default, the borrower will
receive a notice of sale.
A principal is liable for harm caused to a third party by an agent who commits a tort
while acting in the scope of his or her employment.
Under the Statute of Frauds, all written contracts are enforceable.
A will is probated in part to establish its validity.
The trustee is the person for whose benefit a trust is held.
In an auction, the auctioneer is an offeree.
Businesspersons who would choose to act unethically may be deterred from doing so
because of public opinion.
Persons whose names appear in a corporation’s stock book are ordinarily entitled to
notice of shareholders’ meetings and the right to vote.
Generally, contract doctrines apply to a landlord-tenant relationship.
Some states limit the government’s ability to take private property and give it to private
developers.
A tenant has a duty to maintain in a reasonably safe condition those areas under his or
her control.
Only private attorneys prosecute criminal defendants.
On the breach of a contract involving the sale of land, money damages is always the
most appropriate remedy.
The doctrine of quasi contract applies only if there is an actual contract.
The measure of damages for breach of a construction contract depends on which party
breaches and when.
A consumer lease is exempted from coverage under the UCC.
A stale check is one that has been outstanding for longer than one month.
Liability insurance protects against liability imposed on the insured as a result of
injuries to the person or property of another.
A pledge is a promise by a debtor to take reasonable care of the collateral.
A bailment must be in writing to be valid.
Property used by a government for a public purpose such as a park is community
property.
A reasonable, lawful, and effective meaning will normally be given to all of a contract’s
terms.
Normally, if the numerical amount and the written amount on a check differ, the words
outweigh the figures.
Mariah takes off her ring and places it on her desk while she works. Without her
knowledge or consent, her coworker Nita picks up the ring, puts it on, and walks away.
Nita has likely committed
A.burglary.
B.forgery.
C.larceny.
D.no crime.
Faye owns the land on which Golden Spurs Ranch is situated, plus the ranch house,
barn, and other structures permanently attached to the land. Faye’s brother Huey owns
everything else in the ranch’s operation-livestock, feed, and so on. The personal
property is owned by
A.Faye and Huey.
B.Faye only.
C.Golden Spurs Ranch.
D.Huey only.
With a bill of lading, Cartage Common Carrier Company acknowledges possession of
certain goods and contracts to deliver them. Cartage is
A.a bailee.
B.a buyer in the ordinary course of business.
C.a good faith purchaser for value.
D.an F.O.B.
Olga, a salesperson for Pre-owned Cars & Trucks, Inc., tells Quincy, “This is the best
car I’ve ever seen.” This statement is
A.an express warranty.
B.an implied warranty.
C.a warranty of title.
D.puffing.
Cody believes that Delta Corporation has discriminated against him on the basis of
gender. Cody files a suit against Delta under Title VII. To establish a prima facie case of
employment discrimination, Cody must show that
A.Cody is a member of a protected class.
B.Delta has no legal defenses against the claim.
C.discriminatory intent motivated Delta’s act.
D.other firms in Delta’s industry have committed discriminatory acts.
To raise capital to form Plasticity Corporation with Quinn, Rona sells bonds and stock
in other companies, and plans to register an initial public offering under the Securities
Act of 1933. SEC Rule l0b-5 covers
A.most forms of securities.
B.only bonds.
C.only securities registered under the Securities Act of 1933.
D.only stock.
Greta is the only female employee in the maintenance department of Hydraulics Inc.
Greta’s supervisor and co-workers tease and play tricks on her so relentlessly that she
feels compelled to quit. This is
A.a constructive discharge on the basis of gender discrimination.
B.a harassing discharge on the basis of treatment discrimination.
C.a voluntary discharge on the basis of impact discrimination.
D.not a discharge or discrimination.
Business Markets Coalition (BMC), a political lobbying group, wants a certain policy
enacted into law. If BMC’s policy conflicts with the U.S. Constitution, a law embodying
it can be enacted by
A.any state legislature and Congress.
B.any state legislature but not Congress.
C.Congress but not any state legislature.
D.none of the choices.
Quik Sales Corporation orders goods from Re Stock Company. Re plans to market the
goods to consumers generally. Re identifies the goods. Before they are shipped to Quik,
an insurable interest in the goods exists in
A.Quik and Re, but not consumers generally.
B.Quik only.
C.Quik, Re, and consumers generally.
D.Re only.
Dirk, an employee of Ergonomic Elevators, Inc., pays Ferbie, an employee of
Ergonomic’s competitor G-Force Risers Company, for a secret G-Force pricing
schedule. This is
A.an effective marketing strategy.
B.commercial bribery.
C.creative legal bookkeeping.
D.money laundering.
Coco is considering forms of business organization for her confections business-Coco’s
Cupcakes. Most states require that a limited liability company have
A.no minimum number of members.
B.at least one member.
C.at least two members.
D.at least three members, including at least one general partner.
The Securities Exchange Commission (SEC) is an administrative agency. Like other
administrative agencies, the SEC was established to
A.act as a liaison between federal and state governments.
B.impose uniform laws on the states.
C.perform a specific function.
D.standardize laws for the executive and judicial branches.
Marbled Granite Company files a suit against Natural Stone, Inc., in a Colorado court
with general jurisdiction. In a Delaware court with limited jurisdiction, E-Sales
Corporation files a suit against First State Bank. The difference between general and
limited jurisdiction is
A.the subject matter of the cases that the courts can decide.
B.whether a case is being heard for the first time.
C.whether a suit is filed against a single individual or many people.
D.whether a suit is filed by a citizen or by a business.
Fact Pattern 23-2
Luann and Mace are partners in Networx, a computer peripherals firm.
Refer to Fact Pattern 23-2. Mace dissociates from Networx. Luann signs a contract with
Physik Drives, a wholesale component supplier, apparently on Networx’s behalf. Physik
does not know of Mace’s dissociation. The contract is binding on
A.Luann, Mace, and Networx.
B.Luann only.
C.Networx only.
D.Physik only.
Roy leaves his Honda sport utility vehicle at Sam’s Auto Service for an oil change. This
is a bailment for
A.neither party’s benefit.
B.the parties’ mutual benefit.
C.the sole benefit of the bailee.
D.the sole benefit of the bailor.
Used Car Lot’s salesperson Vic offers to sell Will, who is twenty years of age, a car
about which Vic intentionally misrepresents several material facts. In reliance on the
misrepresentations, Will buys the car. To prove fraud in this transaction, Will would not
have to show that
A.Vic intentionally deceived Will.
B.Vic misrepresented several material facts.
C.Will is under twenty-one years of age.
D.Will justifiably relied on Vic’s misrepresentations.
Xavier owns a duplex that he leases to Yvon and Zack. Xavier may sell
A.the duplex at any time.
B.the duplex, but only after the lease expires and the tenants move out.
C.the duplex, but only with the tenants’ permission.
D.the lease, but not the duplex.
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.
Denise borrows $90,000 from Clear Lake Credit Union to buy a home. Denise loses her
job and fails to make payments on the mortgage, but assures Clear Lake Credit that she
will soon secure a new job. The lender agrees to postpone the payments. This is
A.a bridge loan.
B.forbearance.
C.a reamortization.
D.a restructure.
Bill and Cody agree to guarantee Wyatt’s debt. Bill’s maximum liability is $60,000, and
Cody’s is $40,000. Wyatt owes $40,000 and is in default. Bill pays the creditor the
entire amount. In the absence of an agreement to the contrary, Bill can recover from
Cody
A.$0.
B.$16,000.
C.$20,000.
D.$40,000.
Overnight Delivery Service delivers a package to Pam. At the request of Overnight’s
delivery person, to acknowledge receipt Pam signs a digital pad. This signing creates
A.a cybernotarized signature.
B.a digitized handwritten signature.
C.an asymmetric cryptosystemic signature.
D.a public-key infrastructure digital signature.
Fact Pattern 25-1
Ruben is a shareholder of Speed Bikes Company (SBC). When the directors fail to
undertake an action to redress a wrong suffered by SBC, Ruben files a suit on the firm’s
behalf.
Refer to Fact Pattern 25-1. Ruben’s suit is a shareholder’s
A.indemnification suit.
B.derivative suit.
C.proxy suit.
D.preemptive suit.
Inferior Company sells products that are poorly made. Jack, who has never bought an
Inferior product, files a suit against the company, alleging that its products are
defective. The firm’s best ground for dismissal of the suit is that Jack does not have
A.certiorari.
B.jurisdiction.
C.standing.
D.sufficient minimum contacts.
Lava Excavators, Inc., needs a drill to continue its operations and orders one for $3,000
from Mining Supplies Company. Lava tells Mining that it must receive the drill by
Tuesday or it will lose $10,000. Mining ships the drill late. Lava can recover
A.$13,000.
B.$10,000.
C.$3,000.
D.$0.
The E-Sign Act preempts the uniform version of the Uniform Electronic Transactions
Act (UETA).
Fact Pattern 28-1
Nika owns land in Ohio. Her ownership rights include the right to sell or give away the
property without restriction, and the right to commit waste, if she chooses.
Refer to Fact Pattern 28-1. Nika’s ownership interest is
A.a fee simple absolute.
B.a leasehold estate.
C.a life estate.
D.an easement.
The payment of Nero’s debt to Olly is guaranteed by Nero’s personal property. Nero is
located in Pennsylvania. Olly communicates to the appropriate state official a security
agreement that uses only Quality Engineering, the trade name of Nero’s business. To
perfect Olly’s interest, this is
A.irrelevant.
B.not sufficient.
C.sufficient if Quality Engineering is a sole proprietorship.
D.sufficient if the trade name is spelled correctly or misspelled slightly.
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 parties’ existing contract.
To prepare for a trial between Large Lots Development Corporation (LLDC) and
MiniMansion Construction Company (MMCC), MMCC’s attorney places LLDC’s
president under oath. A court reporter makes a record of the attorney’s questions and the
officer’s answers. This is
A.a cross-examination.
B.a deposition.
C.an imposition.
D.an interrogatory.
Over the course of a year, Real Deal Corporation sells appliances to customers to whom
it extends credit. Real Deal orders the appliances from Superior Appliance Company’s
warehouse, from which the items are shipped via common carrier to Real Deal’s
customers. Article 2 of the UCC governs
A.all of the parties’ sales of the goods.
B.Real Deal’s extension of credit.
C.Superior’s storage of the goods.
D.the common carrier’s delivery of the goods.
Machine Corporation requires its employees to have a high school diploma, claiming a
definite connection between a high school education and job performance. In a suit
against Machine Corporation under Title VII, this requirement is shown to have a
discriminatory effect. The employer has
A.an after-acquired evidence defense.
B.a bona fide occupational qualification defense.
C.a business necessity defense.
D.no defense.
Ben, who runs a livestock breeding business, owes the Circle C Ranch $40,000. Ben
agrees to pay the Circle C a percentage of his profits each month until the debt is paid.
Because of this agreement, the Circle C is
A.Ben’s creditor and partner.
B.Ben’s creditor only.
C.Ben’s partner only.
D.neither Ben’s creditor nor his partner.
Duran applies to EZ Credit Mortgage Company for $100,000 to buy a home. EZ Credit
steers Duran toward an adjustable-rate mortgage even though he qualifies for a
fixed-rate mortgage. This is
A.a short sale.
B.a subprime mortgage.
C.loan flipping.
D.steering and targeting.
Natural Foods, Inc., orders “Grade A” oil from Olive Grove Farms to process and sell to
Pic ‘N Pay Grocers. Olive Grove ships “Grade B” oil, which Natural Foods accepts. To
recover damages for the nonconformity, Natural Foods must give notice of the breach
within a reasonable time to
A.Olive Grove only.
B.Olive Grove, Pic ‘N Pay, and the appropriate government agency.
C.Pic ‘N Pay only.
D.the appropriate government agency only.
Don, a salesperson for Excel Autos, promises Fern that a certain car will give her a
“smooth ride.” Don offers a test drive, which Fern declines. She buys the car but soon
realizes that its suspension is in poor condition. Fern
A.can rescind the contract on the ground of fraud.
B.can rescind the contract on the ground of misrepresentation.
C.can rescind the contract on the ground of mistake.
D.was not defrauded.