Mit-E Mart LLC was formed in New Jersey. Mit-E Marts 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.
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.
A bank that encodes information on an item after its issue warrants to any subsequent
bank that the information is correct.
a. True
b. False
To buy a stuffed cow,Ken executes a check “pay to Laura or bearer and gives it to
Laura, who does not own a stuffed cow. This check is
a. negotiable.
b. nonnegotiable, because it does not indicate a specific payee.
c. nonnegotiable, because it may be a joke.
d. nonnegotiable, because Laura does not own a stuffed cow.
Chocolate Sundry LLCs members and managers are Devlin, Effie, and Flavia. After
Devlins relationship to the firm ends, Effie and Flavia agree to discontinue the business.
This is
a. illegal.
b. optional.
c. required.
d. wrongful.
A Rhode Island state statute requires machinery in industrial plants to include automatic
shut-off switches accessible to each employee working on the machine. Steel
Companys equipment does not have the switches. Trudy, a Steel employee, suffers an
injury that an accessible shut-off switch would have prevented. Trudys best theory for
recovery is
a. assault.
b. assumption of risk.
c. invasion of privacy.
d. negligence.
Clancy sells shares in Darling Pool & Spa Company to Eton. Clancy does not deliver
the actual possession of the shares to Eton, but gives him the key to a safety-deposit box
in First State Bank in which the stock certifi-cates are locked. Presenting the key is
a. realdelivery.
b. constructivedelivery
c. delivery by agent .
d. nodelivery
Speedy Shipping Corporation applies to TransInsurance Company for a fire insurance
pol-icy on Speedys warehouse. On the application, Speedy misrepresents the age of the
property to obtain a lower premium. When a fire soon destroys the ware-house,
TransInsurance can
a. deny payment, because a fire destroyed Speedys warehouse.
b. deny payment, because of Speedys fraud in the application.
c. not deny payment, because a fire destroyed Speedys warehouse.
d. not deny payment, because the application is not part of the policy.
A whistleblower is an employee who reveals confidential information about a fellow
employee to an employer.
a. True
b. False
Jill, in good faith and for value, gets from Kiley a negotiable bearer in-stru-ment. 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.
Keisha is an employee of Leeway Corporation. She uses social media in a way that
violates her employers stated social media policies. Leeway first disciplinesits
employee and then, after a second transgression, fires her. This
a. isa violation of Keishas rights as an employee.
b. iswithin Leeways rights as an employer.
c. isa subject for dispute resolution by the social media that Keisha used.
d. fallsunder the “business-extension exception to the Electronic Communications
Privacy Act.
Jane develops a new color of lipstick. To market her lipstick, Jane uses a computer
design program to show a famous model using Janes lipstick. Jane does not ask the
models permission. The model can sue Jane for
a. battery.
b. fraudulent misredefamation.presentation.
c. defamation.
d. invasion of privacy.
Jason files a suit against Maybelline. If Maybelline fails to respond, Jason
a. must appeal the case to a different court.
b. must refile the suit in the same court.
c. will be awarded the remedy sought.
d. will have a default judgment entered against him.
Scienter exists if
a. Martin knows that the transmission on his truck is defective, but does not tell this fact
to potential buyers.
b. The racehorse that Karen is trying to sell has a genetic defect, but Karen does not
know about the defect, and so she does not warn potential buyers.
c. Jake, a real estate agent, tells a client that he has a house that “will make all her
dreams come true.
d. Jon forces Bill to sign a contract to sell Jon a car below market value.
Shareholders do not need to approve fundamental changes affecting the corporation
before the changes can be effected.
a. True
b. False
Corporations can be perceived as owing ethical duties to groups other than their
shareholders.
a. True
b. False
Some states impose a duty on a minor who disaffirms a contract to re-store the adult
party to the position he or she held before the con-tract was made.
a. True
b. False
Drew contracts to sell a residential duplex to Evan. The contract pro-vides that if Drew
does not close the deal by September 15, he must pay Evan one-half of the contract
price. This provision is not enforceable be-cause it is
a. a liquidated damages clause.
b. a mitigation clause.
c. a nominal damages clause.
d. a penalty clause.
Yves is an accountant charged with negli-gence by Zesty Soup Company, a client. Yves
may successfully defend against the claim if he can show that
a. scienter was lacking.
b. he complied with all International Financial Reporting Standards.
c. the negligence was not the proximate cause of the clients losses.
d. the negligence was only contributory.
Carly is a minor. Without her parents knowledge, she signs a contract to buy an airplane
ticket to Hawaii for spring break. Carlys parents are
a. liable for the contract.
b. not liable for the contract.
c. liable for up to half the value of the goods in the contract.
d. liable for up to one third of the value of the goods in the contract.
A business firm’s profits may suffer if the firm is not a “good corporate citizen.
a. True
b. False
In 2015,Congress enacts the Act to Restrict Commercial Speech (ARCS). The ARCS
will be considered valid if it directly advances a substantial government interest
a. but goes no further than necessary to achieve its purpose.
b. without regard to how “far it goes.
c. and the parties affected by it can elect how “far to go in applying it.
d. and goes further than necessary to ensure full coverage.
Tamis Tasty Tacos, a fast food outfit, files a suit against the state of Texas, claiming that
a Texas state law violates the commerce clause. The court will agree if the statute
imposes a substantial burden on
a. a local government.
b. interstate commerce.
c. noneconomic activity.
d. the state.
Dividends can be paid only in stock in other corporations.
a. True
b. False
Leslie, an accountant, enters into a contract to provide services to Marty. Leslie does
not finish the work within the contracts deadline. Leslie is
a. liable for breach of contract.
b. not liable, because Leslie is a professional.
c. not liable, because Leslies failure must have been Martys fault.
d. not liable, because the work took longer than foreseen.
Mineral Resource Company contracts to provide several manufacturers with tin. When
a cartel of tin-producing countries suddenly embargoes future shipments of tin to
Mineral Resource so that it cannot fulfill its contracts, the distributor
a. can substitute some other material for the tin.
b. is excused from the performance of its contracts.
c. is liable for breach of contract.
d. must still supply the tin needs of its customers.
A contract must be in writing to be enforceable if it makes performance possible only
over a period of more than one year.
a. True
b. False
Many companies have provided guidelines about what is appropriate when making
posts on social media accounts.
a. True
b. False
Jake and John make an illegal contract that unjustly enriches Jake at the expense of
John. A court will
a. not be concerned with the unjust enrichment of Jake.
b. force Jake to pay damages to John.
c. reform the contract to prevent undue burdens.
d. enforce the contract as it was originally written.
The failure of one party to perform a contract entitles the other party to rescind it.
a. True
b. False
Arbitration is always legally binding.
a. True
b. False
A restriction on commercial speech is valid as long as it forbids only the expression of
views on controversial issues.
a. True
b. False
Parents who sign a contract made by their minor child with an adult have the same
option to disaffirm as the child.
a. True
b. False