Hudson and Ilka want to market a new line of kayaks and related gear under the brand
name Journeys as a corporationJourneys Inc. To avoid income taxes at the corporate
level, they should form
a. a C corporation.
b. a close corporation.
c. an S corporation.
d. a private corporation.
The Bay City Planning Department, the Coastal County Zoning Commission, the
Delaware Environmental Quality Agency, and the U.S. Bureau of Land Management
issue regulations. These rules constitute
a. administrative law.
b. case law.
c. stare decisis.
d. statutory law.
Deb buys a song through eSongs, an online music vendor. Before completing the
purchase and downloading the song, Deb must agree to a provision stating that she will
not make and sell copies of the song. This provision is
a. a browse-wrap term.
b. a click-on agreement.
c. a shrink-wrap agreement.
d. a wrap-on agreement.
Mary’s home is in a state that has a $30,000 homestead exemption. Mary defaults on a
$60,000 debt that she owes to Nina. Mary’s home is sold at auction for $80,000.
Mary will receive
a. $0.
b. $30,000.
c. $50,000.
d. $60,000.
Mall Stores Corporation owns 95 percent of the shares of Niche Retail Corporation.
Mall Stores combines with Niche Retail, but only Mall Stores continues to exist. This
transaction was
a. a consolidation.
b. a tender offer.
c. a short-form merger.
d. a termination.
Ratzo is asked to be a witness to Sade’s will. Before attesting to the will,
a. Ratzo does not have to read the will or be informed of its contents.
b. Ratzo must read the will and recite its contents.
c. Sade must orally tell Ratzo of the will’s contents.
d. Sade’s attorney must read the will aloud to Ratzo.
Mit-E Mart LLC was formed in New Jersey. Mit-E Mart’s members are Odel, who is a
citizen of New Jersey, and Pola, who is a citizen of New York. For federal diversity
jurisdictional purposes, Mit-E is a citizen of
a. all states.
b. New Jersey and New York.
c. New Jersey only.
d. no state.
Kris presents an instrument that states “pay to the order of Kris” to Metro Bank for
payment. This is a special type of draft drawn on a bank, ordering the bank to pay a
fixed amount of money on demand. This is
a. a commercial wire transfer.
b. a check.
c. a debit card transaction receipt.
d. a cash transaction
Mediterranean Herbs Inc. wants to purchase all of the assets of Nature’s Spice
Company. Olina is a Nature’s Spice shareholder. Approval of the deal must be obtained
from the shareholders of
a. Mediterranean Herbs only.
b. Nature’s Spice only.
c. both corporations.
d. neither corporation.
Venerable Company leases office furniture to Design Architects, Inc., under a contract
that states, “Bailee agrees to pay Bailor for any damage to the furniture.” During the
lease, while the furniture is in Design’s possession, it is stained by inks used in
computer printers, copiers, fax machines, and so on. Most likely liable for the damage
is
a. Venerable.
b. Design.
c. “Bailor.”
d. no one.
Nimble Numbers Accounting Corporation, a private employer, handles bookkeeping for
small employers. In most circumstances, with exceptions, federal law clearly prohibits
Nimble from subjecting its employees to
a. job-skills tests.
b. monitoring of business communications.
c. drug tests.
d. lie-detector tests.
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.
Under the Securities Exchange Act of 1934, Hu is most likely
a. liable for insider trading.
b. not liable because Hu is only a tippee, not a tipper.
c. not liable because Hu is too far down the chain of disclosure.
d. not liable because Hu traded on the basis of a true fact.
Richly Merchandise, Inc., contracts with Stand-Rite Contractors to build a store.
Stand-Rite assigns the contract to Town Builders, which has a poor record of
completing projects. Richly could most successfully argue that the contract cannot be
assigned because
a. Richly did not consent to the assignment.
b. Richly did not receive adequate consideration for the assignment.
c. the assignment will materially increase the risk of nonperformance.
d. Town Builders was not an original party to the deal.
The Texas Supreme Court decides the case of Livewire Co. v. Power Corp. Of nine
justices, five believe the judgment should be in Livewire’s favor. Justice Bellamy, one
of the five, writes a separate opinion. The four justices who believe the judgment should
be in Power’s favor join in a third separate opinion.
Refer to Fact Pattern 1-1. Bellamy’s opinion is
a. a concurring opinion.
b. a dissenting opinion.
c. a majority opinion.
d. a per curiam opinion.
Angie borrows $20,000 from First Line Credit using a field of timber trees as collateral.
To perfect its security interest, First Line Credit must file its financing statement with
a. the county clerk.
b. the mayor.
c. the city counsel.
d. the secretary of state.
Drake enters into a contract with Eve, who claims to have access to a stock-trading
algorithm that will multiply an investment many times over. When the results do not
match this promise, Drake learns that Eve does not have access to any unique software
and files a suit against her, alleging fraud. Proof of an injury is required to
a. recover damages.
b. rescind the contract.
c. undo Eve’s influence.
d. punish the defendant.
Property Financial Corporation makes loans that qualify, under a Federal Reserve
Board amendment to Regulation Z, as Higher-Priced Mortgage Loans (HPMLs). Quinn
applies to Property Financial for an HPML. To make the loan, the lender must
a. convince an appraiser to inflate the value of the property.
b. impose a prepayment penalty for the duration of the loan.
c. structure the loan to specifically evade the HPML protections.
d. verify the borrower’s ability to repay the loan.
Hubert borrows $100,000 from Integrity Mortgage Mart to buy a home. Soon after
obtaining the mortgage, Integrity convinces Hubert to refinance. This is
a. a short sale.
b a subprime mortgage.
c. loan flipping.
d. steering and targeting.
Feder prepares federal corporate income tax returns for Giant Stores, Inc., and other
firms. Under the Internal Revenue Code, with respect to an understatement of a client’s
tax liability, Feder may be liable for
a. negligent or willful misconduct.
b. no misconduct.
c. only negligent misconduct.
d. only willful misconduct.
Caf Cuisine Dining, Inc., employs one hundred workers at three locations in two states.
Under federal law, Caf Cuisine must provide its employees, during any twelve-month
period, family or medical leave of up to
a. twelve days.
b. twelve weeks.
c. twelve months.
d. twelve years.
Rock Mining Company operates a gravel pit next to Siera’s residence. Siera files a suit
against Rock, alleging that the pit is a nuisance and unreasonably interferes with the
enjoyment of her property The court is most likely to award Siera an injunction
a. if letting the pollution continue is equally as harmful as stopping it.
b. if letting the pollution continue is less harmful than stopping it.
c. if letting the pollution continue is more harmful than stopping it.
d. under no circumstances.
Jackie distributes a handbill throughout her neighborhood accusing her neighbor Ked of
being a convicted sex offender. The statement is defamatory if
a. a neighbor repeats it.
b. Ked suffers emotional distress.
c. the statement is true.
d. the statement is false.
Kendall performs a contract with Lainie to add a covered porch and a pool deck to
Lainie’s house, but Lainie does not pay. Kendall notifies Lainie that the property will be
sold to satisfy the debt. This is
a. a judicial lien.
b. a mechanic’s lien.
c. an artisan’s lien.
d. a violation of most state laws.
Good Tire Company and Hiway Auto Service enter into a contract for a sale of tires.
Good Tire is a merchant who deals in goods of the kind sold. Under the UCC, an
implied warranty of merchantability arises
a. automatically in sales contracts.
b. only if the buyer asks for it.
c. only if the seller does not expressly disclaim it.
d. only in conjunction with lease contracts, not sales contracts.
Hollister and Gladys do business as partners in Frothy Confections. For federal income
tax purposes, Frothy Confections would be treated as
a. a pass-through entity.
b. a natural person.
c. a tax-paying entity.
d. a partnership by estoppel.
In an action against the sate of Idaho, Jaime obtains a remedy. This is
a. the relief given to an innocent party to enforce a right or to prevent or compensate for
the violation of a right.
b. medication paid for by the government.
c. a right guaranteed by the Bill of Rights.
d. a situation or state of facts that gives a person a right to initiate a judicial proceeding.
In a bike shop, Barrie, who is not knowledgeable about bikes, overhears Cullen say,
“This bike could win any race!” Barrie buys the bike, but does not win any races with it.
Cullen’s statement is
a. a mistake.
b. fraudulent.
c. an opinion.
d. an attempt at undue influence.
In 2005, Facebook launched a social media site that allows its users to designate certain
other users as “friends.” Facetrak, a gaming site that allows its users to play with
designated “friends,” claims that Facebook’s use of the word constitutes false
advertising and trademark infringement. Under the principles discussed in “A Sample
Court Case,” Apple, Inc. v. Amazon.com, Inc., Facebook’s use most likely
a. creates an impression of seamless integration with Facetrak’s “friends.”
b. implies something false about the quality of Facebook’s “friends.”
c. makes no statement about the quality of Facetrak’s “friends.”
d. misleads gamers about the quality of Facebook’s “friends.”
Bess wishes to appeal a decision from a federal bankruptcy court. Bess must appeal to
a. a county court.
b. a federal district court.
c. the U.S. Supreme Court.
d. a state court.
Charlton files a petition in bankruptcy in a liquidation proceeding. If the court
administers the means test and concludes that Charlton is abusing the bankruptcy
process by filing for a liquidation, most likely
a. Charlton will be forced to file for relief through an individual repayment plan.
b. the court will discharge Charlton’s debts.
c. the court will distribute Charlton’s property to Charlton’s creditors.
d. the court will issue an automatic stay against any actions by Charlton’s creditors.
Lyla is a common shareholder in Norman’s Nutty Nuts Corporation. As a common
shareholder, Lyla is
a. guaranteed regular payments of dividends.
b. not guaranteed any payments of dividends.
c. not given any voting rights.
d. liable for all of Norman’s Nutty Nuts’s debts.
A party seeking to recover in quasi contract must show that he or she has been unjustly
enriched.
The Civil Rights Act of 1964 does not prohibit job discrimination in the hiring process.
Intent to deceive is an element of fraud.
Beta Software Company and Gamma Sales Corporation agree to follow a certain
security procedure in transacting their business online. Beta fails to follow the
procedure, however. Due to this failure, Beta does not detect an error in the deal, which
will have a negative impact on Gamma’s interest in the deal. Can Gamma avoid the
effect of this error? How?
In a sole proprietorship, the owner receives 90 percent of the profits and the
government receives 10 percent.
To be enforceable as a contract, a writing must have been signed by the party who seeks
to enforce it.
By delegating some of its authority to make and implement laws, Congress violates the
U.S. Constitution.
A merger involves the legal combination of one or more corporations.
Grapple Market Share Corporation would like to know what information federal
agencies have about Grapple’s operations, so that the firm will know what its
competitors may be able to learn about it. Can Grapple require the agencies to disclose
whatever information they may have concerning it? If so, how should the firm make its
request? What federal law applies? Is any information exempt?
Under the Statute of Frauds, an oral contract for the transfer of a mortgage is
enforceable.
A principal is responsible for all intentional torts committed by an agent.
A tenant is responsible for all damage to leased premises.
If a principal does not ratify an authorized contract, the principal is not bound.
A shipment contract requires that the seller deliver the goods to a particular location.
The equal dignity rule requires that a principal and agent treat each other with “equal
dignity.”
The articles of incorporation serve as a primary source of authority for the corporation’s
future organization and business functions.
In a few states, statutes allow the homestead exemption only if the judgment debtor has
a family.
The need to protect intellectual property is recognized in the Declaration of
Independence.
If goods identified to a contract are destroyed through no fault of either party, both
parties are excused from performance.
A group boycott is not a per se violation.