Normally, when a nonbreaching party has been damaged by a breach of contract, he or
she has a duty to mitigate those damages.
A transfer of contract rights to a third party is a delegation.
An ethics program can clarify what a company considers to be unacceptable conduct.
Under a dram shop act, liability can be imposed without proof of negligence.
The doctrine of commercial impracticability only extends to problems that could have
been foreseen.
Under the Americans with Disabilities Act of 1990, a person with a physical
impairment that “substantially limits” everyday activities is disabled.
A plaintiff is a person against whom a lawsuit is brought.
A public policy underlying the imposition of strict product liability is that consumers
should be protected against unsafe products.
Disparate-impact discrimination occurs when an employer intentionally discriminates
against an employee who is a member of a protected class.
After a contract is made, a supervening event may make performance impossible and
discharge the contract.
A promise to deliver a gift is constructive delivery.
Under the Statute of Frauds, all contracts induced by fraud must be in writing to be
enforceable.
The crime of bribery occurs when the bribe is offered even if it is not accepted.
Setting realistic workplace goals can reduce the probability that employees will act
unethically.
On default, unless the security agreement states otherwise, the secured party has the
right to repossess collateral.
The person who owes the payment of a secured obligation is the secured party.
A partner owes to the partnership and the other partners a duty of loyalty.
No state has adopted the Uniform Commercial Code in its entirety.
In a contract, specific wording will be given greater weight than general wording.
There are additional disclosure requirements for a loan that carries a high rate of
interest or entails high fees for the borrower.
A merchant cannot disclaim an implied warranty of merchantability.
Managers must apply different standards to themselves than they apply to their
employees.
A quasi contract is not a TRUE contract.
In mediation, the mediator proposes a solution that includes what compromises are
necessary to reach an agreement.
Contractual capacity refers to the legal ability to enter into a contract.
Once a dissenting shareholder elects appraisal rights, the shareholder loses his or her
shareholder status.
A bankruptcy court may deny a discharge based on the debtor’s conduct.
An accountant’s liability under the Section 10(b) and Rule 10b-5 of the Securities
Exchange Act of 1934 requires privity of contract.
Common stock provides a proportionate interest in the corporation with regard to net
assets.
To create an enforceable security interest, the secured party must give value.
A seller must warn those who buy a product of harm that could result from the
foreseeable misuse of the product.
Shareholder appraisal rights do not usually extend to short-form mergers.
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.
Fact Pattern 20-2
24-Hour Credit Corporation issues high-cost and high-fee mortgage products to people,
including Benny, who could not easily obtain credit under other loan programs.
Refer to Fact Pattern 20-2. Under federal law, disclosures with respect to one of
24-Hour Credit’s loans must be provided
A.a certain number of days after the loan is finalized.
B.a certain number of days before the loan is finalized.
C.at the same time at which the loan is finalized.
D.at whatever time is most rational and appropriate.
Fact Pattern 12-1
Estelle enters into a contract to buy 132 acres from Desmond to subdivide and sell in
quarter-acre lots for Country Acres, a residential development.
Refer to Fact Pattern 12-1. If Estelle breaches the contract, Desmond’s remedy would
most likely be
A.a certain ratio of the amount that Estelle has in liquid funds.
B.a percentage of Estelle’s unrealized profit.
C.the difference between the land’s contract and market prices.
D.specific performance.
Liu and Midge-Nero’s creditors-contract with Nero for the discharge of Nero’s
liquidated debts on payment of a lesser sum. This is
A.a composition agreement.
B.a subrogation.
C.a suretyship agreement.
D.in violation of most states’ laws.
Realty Credit Company and Second Mortgage Corporation plan to consolidate. Most
likely, the articles of consolidation will be filed with
A.the county recording office.
B.the Securities and Exchange Commission.
C.the state’s secretary of state.
D.the U.S. Department of Justice.
Based on Bluto’s conduct, Cass reasonably believes that Dee has the authority to act on
Bluto’s behalf even though Dee does not have the actual authority to do so. Cass makes
a payment to Dee for Bluto. Dee keeps the money and disappears. Bluto
A.can demand that Cass make a repayment directly to Bluto.
B.can obtain damages from Cass for Dee’s misconduct.
C.may be estopped from denying that Dee had authority.
D.must repudiate Dee’s misconduct to avoid liability.
Fact Pattern 1-1
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. The opinion joined by the four justices who favor Power is
known as
A.a concurring opinion.
B.a dissenting opinion.
C.a majority opinion.
D.a per curiam opinion.
Brenda is a purchasing agent for Commodities Exchange Corporation. Dennis, a
Commodities corporate officer, gives Brenda written authority to buy for the firm as
many computers and peripheral devices as necessary. The next day, Dennis calls Brenda
and tells her to buy only fifty notebook computers and nothing else. Brenda shows the
written authority to E-Products, Inc., and enters into a contract with E-Products to buy
sixty notebook computers and a selection of printers, scanners, and extra storage media.
E-Products ships the order to Commodities. Is Commodities liable to E-Products under
the contract? Is Brenda liable? In each case, if so, why? If not, why not?
Inez and Jason are the shareholders and directors of Kleen Kustodial Corporation. Lily
and Moe are Kleen’s officers. As in other corporations, the responsibility for the overall
management of Kleen rests with
A.the board of directors.
B.the officers.
C.the owners.
D.the shareholders.
Kai files a suit against Lana based on one of Lana’s statements that Kai alleges is
fraudulent. To give rise to fraud, the statement must be one of
A.emotion.
B.fact.
C.illusion.
D.opinion.
Reconstruction Building Services receives a discharge in bankruptcy, even though some
creditors hold judgments on overdue debts against it and others filed actions to collect
on overdue debts before the bankruptcy. Reconstruction’s discharge will
A.absolve the liability of any co-debtors.
B.permit the debtor to enter into reaffirmation agreements.
C.allow the debtor to file a petition for a reorganization.
D.prohibit actions and void judgments regarding overdue debts.
Miklos grants an ordinary power of attorney to Nathalie to handle a list of financial
transactions on Miklos’s behalf. This power will terminate on
A.any transaction causing a loss to Miklos.
B.Miklos’s death or incapacity.
C.Miklos’s sixty-fifth birthday.
D.Nathalie’s handling of one of each stipulated transaction.
Guy and Hanna do business as G-H Associates. If G-H is a partnership, it is governed
by the Uniform Partnership Act
A.in the absence of an express agreement.
B.in the absence of an implied agreement.
C.only in the presence of an express agreement.
D.under all circumstances.
Justice For All, a political organization, files a claim to challenge a Colorado statute that
limits the liberty of all persons to broadcast “annoying” radio commercials. This claim
is most likely based on the right to
A.engage in interstate commerce.
B.privacy.
C.procedural due process.
D.substantive due process.
On May 1, Dooley signs a check that is payable to the order of Extra Credit Corporation
and that is dated July 1. This check is
A.negotiable.
B.nonnegotiable, because it is payable to Extra Credit Corporation.
C.nonnegotiable, because it is postdated.
D.nonnegotiable, because it is signed by Dooley.
In the facts of the previous question, according to the court in the Central case, a party
that would prefer a different result should seek relief from
A.Congress.
B.the courts.
C.the president.
D.the students of WSU and other state schools.
Molly files a suit against Naomi. They meet, and each party’s attorney argues the party’s
case before a judge and jury. The jury presents an advisory verdict, after which the
judge meets with the parties to encourage them to settle their dispute. This is
A.court-ordered arbitration.
B.early neutral case evaluation.
C.a mini-trial.
D.a summary jury trial.
Sari buys a new sport utility vehicle (SUV) from Terrific Cars & Trucks, Inc. The most
important factor in determining whether an express warranty is created is whether
A.Sari expresses to Terrific what she wants warranted.
B.Sari’s desire for the SUV becomes part of her motivation to deal.
C.Terrific expresses to Sari what it expects of its customers.
D.Terrific promise becomes part of the basis of the bargain.
Bob rents a golf cart at Country Club Golf Course. The brakes are worn, and while Bob
is driving the cart, they fail. The cart crashes into a tree, and Bob is injured. Country
Club could have discovered, with reasonable diligence, that the brakes were worn.
Liability for Bob’s injuries most likely rests with
A.Bob and Country Club.
B.Bob only.
C.Country Club only.
D.neither Bob nor Country Club.
Clarice pays Damien $10,000 to design an ad campaign for her Sweetwater Coffee
Stand chain. The next day, Damien tells Clarice that he has accepted a job in San
Francisco and cannot design her campaign. She files a suit against Damien. As
compensatory damages, she can recover
A.$100,000.
B.$10,000.
C.$1,000.
D.$0.
Ben and Ivy enter into a contract under which Ben agrees to cater Ivy’s wedding in
exchange for a cash down payment. The contract expressly prohibits any transfer of
rights. A contract right may be transferred, however, if the transfer involves
A.a right to receive payment.
B.a right to Ben’s services.
C.rights under Ivy’s insurance policy against Ben’s failing to perform.
D.a right whose transfer is otherwise expressly prohibited by statute.
Clyde enters Desert Decathlon, an athletic competition in which Clyde has often
competed. Regarding the risk of injury, Clyde assumes the risks
A.attributable to the Decathlon in any way.
B.different from the risks normally associated with the Decathlon.
C.greater than the risks normally associated with the Decathlon.
D.normally associated with the Decathlon.
Bernie wants to go into the business of trucking refrigeration units. Among the reasons
that would probably convince Bernie to set up his business as a sole proprietorship
would be
A.its greater flexibility.
B.its limited liability.
C.its perpetual existence.
D.the ease of transferring the business to others.
Kris presents an instrument that states “pay to the order of Liv” 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 certificate of deposit.
B.a check.
C.a debit card transaction receipt.
D.a trade acceptance.
GR8 Marketing Company and Hot Tunes, Inc., sign a document that states GR8 agrees
to create a marketing campaign for Hot and Hot agrees to pay GR8 for the service. GR8
and Hot have
A.an executed contract.
B.an express contract.
C.an implied contract.
D.a quasi contract.
Without authorization, Rolf contracts on behalf of Sari to have Tige paint the interior
and exterior of Sari’s house. Sari ratifies the contract. Later, Sari tries to rescind the part
of the contract relating to the exterior. This attempt will be
A.partly successful.
B.partly unsuccessful.
C.totally successful.
D.totally unsuccessful.
Earl holds 1,000 pounds of perishable fruit in storage for Fresh Food Corporation. Fresh
Food does not pay for the storage. Earl sells the fruit to Green Grocers, Inc. This sale
represents
A.a breach of contract.
B.a mitigation of damages.
C.rescission and restitution.
D.specific performance.
Arizona enacts a statute that directly conflicts with a federal law. Under the supremacy
clause of the U.S. Constitution,
A.Arizona’s statute is rendered invalid.
B.the federal law is rendered invalid.
C.Arizona’s statute and the federal law are both rendered invalid.
D.Arizona’s statute and the federal law apply concurrently.
Eton files a suit in a federal district court against Florida, alleging employment
discrimination under the Age Discrimination in Employment Act of 1967. The state
asks the court to dismiss the suit. The court is most likely to rule that
A.the state is immune from the suit.
B.the suit can proceed.
C.Eton is immune from any defense the state might offer.
D.the court is immune from such request.
To adjust debts and institute a repayment plan that is less expensive and less
complicated than other options, Brunch & Lunch Caf, a small business, may file a
petition in bankruptcy for relief through
A.a liquidation.
B.a reorganization.
C.a repayment plan.
D.a family-farmer bankruptcy plan.
Solid Tool Company’s decision makers view a particular risk in the use of Solid’s
product as open and obvious. Continuing to market the product without telling
consumers of the risk could be justified from a perspective of
A.duty-based ethics.
B.Kantian ethics.
C.rights-based ethics.
D.utilitarian ethics.