Fact Pattern 17-2
Tom draws a check, on his account in State Bank in New York, payable to Digital
Media, Inc., in San Francisco. Digital deposits the check in its account at First National
Bank. First National deposits the check in the Federal Reserve Bank of San Francisco,
which transfers it to the Federal Reserve Bank of New York. That Federal Reserve Bank
sends the check to State Bank.
Refer to Fact Pattern 17-2. Digitals bank is
a. the cashing bank.
b. the depositary bank.
c. the intermediary bank.
d. the payor bank.
Green Grocers, Inc., enters into a contract with Hiway Transport Company for the
delivery of a shipment of fresh produce. If the language in the contract has more than
one meaning, it will be construed against
a. the party who drafted the contract.
b. the party with the greater bargaining power.
c. the promisor.
d. the promisee.
Intoxicated but fully aware of the consequences, Uri agrees to a two-year cell-phone
service contract with Wander Talk, Inc., at more than the average market price. This
contract is
a. enforceable.
b. not enforceable because contracting parties can change their minds.
c. not enforceable because the contract clearly favors Wander Talk.
d. not enforceable because Uri was intoxicated when he agreed to it.
Fact Pattern 11-1
Mutual Company enters into a contract to employ Neil as an investment manager for
two years. During the first year, Neil is often absent without explanation and when
present fails to adequately monitor and manage Mutuals investments.
Refer to Fact Pattern 11-1. Neils performance is most likely
a. a material breach.
b. a minor breach.
c. Mutuals breach.
d. no breach.
Dot, a real estate agent, tells Elbert, a home seller, that her commission is 12 percent.
Elbert agrees that Dot can sell his house but refuses to sign a contract unless the amount
of the commission is reduced. After the house is sold, Elbert refuses to pay 12 percent.
Dot is most likely to recover
a. nothing.
b. on a theory of an express contract.
c. on a theory of an implied contract.
d. on a theory of quasi contract.
Briana, an employee of Cotillion Bank, is charged with embezzlement, which requires
a. fraudulently appropriating anothers property.
b. obtaining lawful possession of property.
c. physically taking property from its owner.
d. the use of force or fear.
Garden Field Farms and Haute Gourmet Restaurant, Inc., enter into a contract for a sale
of lettuce before Haute Gourmet declares bankruptcy. Garden Field can stop delivery of
the goods in transit
a. only if the quantity is at least a carload.
b. only if the quantity is at least a planeload.
c. only if the quantity is at least a truckload.
d. regardless of the quantity.
Owen is a holder of a promissory note obtained from Purchase Money, Inc. Regarding
the defenses against payment of the note to which Purchase Money is subject, Owen, as
an ordinary holder, is subject to
a. more defenses.
b. no defenses.
c. some defenses, but not as many.
d. the same defenses.
Luke owns a farm near Marshalltown, Iowa, with stands of trees serving as windbreaks.
Luke grows corn on the property. When Luke sells the farm to Nina, if the contract does
not specify otherwise, the sale includes
a. neither the crops nor the trees.
b. the crops and the trees.
c. the crops only.
d. the trees only.
Lia works for Media Marketing Company. Her job includes putting ‘spin on the firms
successes and failures. In this context, ethics consist of
a. “bad versus “good publicity.
b. questions of rightness and wrongness.
c. the firms quarterly revenue.
d. whatever is legal.
Sable and Rex agree while talking on the phone to form a partnership to deal in
transfers of real property, which fall under the Statute of Frauds. Their partnership
agreement is legally binding
a. only if a copy of the agreement is filed in the appropriate state office.
b. only if the agreement is reduced to writing.
c. only if an information return is filed with the Internal Revenue Service.
d. without more.
Location! Realty LLC is a limited liability company (LLC). Like other LLCs, for
federal jurisdictional purposes, Location! Realty is most likely a citizen of
a. all states.
b. every state in which its members are citizens.
c. no state.
d. only the state in which it was formed.
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 Desmond breaches the contract, Estelles remedy would
most likely be
a. a certain ratio of the amount that Desmond has in liquid funds.
b. a percentage of Desmonds unrealized profit.
c. the difference between the lands contract and market prices.
d. specific performance.
Lovett County Bank offers to lend money to Kino, the owner of Java Stop, at 15 percent
interest. Before Kino accepts, a state statute is enacted prohibiting loans at rates greater
than 12 percent. Kino and the bank have
a. have a contract for a loan at 15 percent interest.
b. have a contract for a loan at 12 percent interest.
c. have a contract for a loan at 0 percent interest.
d. no contract for a loan.
Glen and Hadley sign a written contract. Glen claims that the parties later orally agreed
to modify the contract. Any oral modification is likely not enforceable if it falls under
a. the doctrine of promissory estoppel.
b. the “main purpose exception.
c. the “partial performance exception.
d. the Statute of Frauds.
Dom, an EZ Baked Goods salesperson, follows Flora, a salesperson for Goody Pastries,
Inc., as she attempts to make sales to food stores. Dom solicits each of Floras
customers. Dom is most likely liable for wrongful interference with
a. a bargaining relationship.
b. a business relationship.
c. a contractual relationship.
d. a customer relationship.
Without authorization, Rolf contracts on behalf of Sari to have Tige paint the interior
and exterior of Saris 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.
Kade and Lila each press certain quantities of olive oil to sell to Mediterranean
Products, Inc., and agree to share storage costs until Mediterranean can take delivery.
The oil is commingled so that Kades cannot be distinguished from Lilas. This is
a. accession.
b. confusion.
c. conversion.
d. dominion.
Bess runs Creditors Asset Recovery. She recruits clients by misrepresenting the facts
and pretending to be licensed in various occupations in Michigan. Besss conduct most
likely warrants
a. an ethical admonishment but no other sanctions.
b. an injunction plus other sanctions.
c. no sanctions but no praise.
d. praise for her aggression in recovering the assets of “deadbeat debtors.
Raw Resources Corporation authorizes Stefan, its employee, to oversee its mining
operation. In the course of this employment, Stefan commits a tort. Liability for this tort
most likely rests with
a. neither Raw Resources nor Stefan.
b. Raw Resources and Stefan.
c. Raw Resources but not Stefan.
d. Stefan but not Raw Resources.
Scott presents an instrument that states “pay to the order of Scott to Town Bank for
payment. This instrument is the most common type of negotiable instrument, which is
a. a certificate of deposit.
b. a check.
c. a note.
d. a trade acceptance.
Randy and Beach Biz Company enter into an oral contract under which Randy agrees to
clean Beach Bizs office for two years. This contract is enforceable by
a. Randy only.
b. Beach Biz only.
c. either party.
d. neither party.
Personnel Staffing Corporation meets all of the requirements to be subject to the federal
employment discrimination laws. Among these, the most important statute prohibiting
discrimination against members of protected classes is
a. the Age Discrimination in Employment Act of 1967.
b. the Americans with Disabilities Act of 1990.
c. the Pregnancy Discrimination Act of 1978.
d. Title VII of the Civil Rights Act of 1964.
Jock and Kim decide to wager in violation of a state statute on the outcome of a football
game. They each deposit money with Iverson, who agrees to pay the winner of the bet.
Before the game begins, Kim tells Iverson that she changed her mind about the bet.
Kim can recover
a. the amount of her bet and the amount of Jocks bet.
b. the amount of her bet minus Iversons expenses.
c. the amount of her bet only.
d. nothing.
Bob, a salesperson at a Carpets Galore store, tells Dita, a customer, “Buy your carpet
here, and Ill install it for half of what the store would charge. Dita buys the carpet,
which Bob installs for half the stores price. Bob keeps the money. Bob has breached
a. no duty.
b. the duty of loyalty.
c. the duty of notification.
d. the duty of obedience.
According to the court in the Media General Operations, Inc. v. National Labor
Relations Board case, in determining whether a discharge for an employees “outburst in
violation of a workplace rule violates the NLRA, significant factors include
a. the ability of the employee to obtain employment elsewhere.
b. the nature of an employees outburst.
c. the sensitivity of those who witness the outburst.
d. the specific phrasing of the rule.
Mona and Nero want to discharge their contract by executing and performing a new
agreement. They can best accomplish this by
a. accord and satisfaction.
b. novation.
c. reinvention.
d. specific performance.
Vicky contracts with Warren for the delivery of hospice services to benefit Xavier. This
is
a. a delegation.
b. an assignment.
c. a third party beneficiary contract.
d. a novation.
Silky Material Corporation in New Jersey sells fifty tons of fabric to Tattered Clothing,
Inc., in Ohio, “F.O.B. New Jersey. The cost of transporting the fabric to Ohio will be
paid by
a. Silky Material.
b. Tattered Clothing.
c. New Jersey.
d. Ohio.
Belle enters into a contract to subdivide and sell housing lots in Coles hillside field if
Dell City annexes the property within the next year. Belles duty to perform is
a. absolute.
b. conditional.
c. illusional.
d. irresolute.
Fact Pattern 10-1
Moore Properties, Inc., offers in writing to sell to Lawn Acres Development
Corporation a certain half-acre of land for “$112,000. After Lawn Acres signs the offer
in acceptance and returns it, Moore discovers that the price should have been stated as
“$121,000.
Refer to Fact Pattern 10-1. The effect of Moores misstatement of the price will most
likely fall on
a. Moore and Lawn Acres, who must split the difference.
b. Moore only.
c. Lawn Acres only.
d. neither Moore nor Lawn Acres.
Jane offers to sell Kyle three desks for his Lights & Lamps Company administrative
office. Kyle sends a rejection first, then changes his mind and sends an acceptance.
Whether they have a contract is determined by
a. Kyles rejection.
b. Kyles subjective intent.
c. whatever Jane decides.
d. whether Kyles rejection or acceptance is received first.
Inez and Jason are the shareholders and directors of Kleen Kustodial Corporation. Lily
and Moe are Kleens 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.
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.
If it can be shown that a trespass to land was warranted, a complete defense exists.
A special warranty deed provides the most protection against defects of title.
To recover workers compensation, an employee must prove that an injury was the fault
of the employer.
The chief aim of the World Trade Organization and other trade agreements is to
maximize trade barriers among their members.
An unconditional assignment of rights in a contract does not extinguish the rights of the
assignor.
A mortgage must be in writing to comply with the Statute of Frauds.
If a buyer repudiates a contract, the seller cannot recover damages.
An order stating “I wish you would pay is sufficient to create a negotiable instrument.
In a gratuitous bailment, a bailee has a right to be compensated for costs incurred in
keeping bailed property.
A tenant has a duty to maintain in a reasonably safe condition those areas under his or
her control.
When an owner is unable to make mortgage payments, a lender may agree to a short
sale.
One of the primary effects of a discharge is to relieve the liability of a co-debtor.
A contract must be in writing to be enforceable unless its performance is impossible
within one year.
A sale of “things attached to realty is always considered a sale of goods.
A promise to perform under a contract is never absolute.
Colby contracts in writing to sell his 2005 Dodge-brand pick-up truck to Efrem for
$10,500. Colby agrees to deliver the truck on Friday, and Efrem promises to pay the
$10,500 on the following Monday. On Thursday, Efrem tells Colby that he changed his
mind and will not buy the truck. Over the weekend, Efrem changes his mind again and
tenders $10,500 to Colby on Monday. Colby has not sold the truck to another party but
refuses the tender and refuses to deliver. Efrem claims that Colby has breached their
contract. Colby contends that Efrems repudiation released him from his duty to perform
under the contract. Who is correct, and why?
When a corporation is dissolved voluntarily, the corporation must notify its creditors of
the dissolution.
An Internet service provider cannot be held liable for disseminating defamatory
remarks under any circumstances.
Corporate shareholders are the ultimate authority in every corporation.
Personal property that is most often exempt from satisfaction of judgment debts does
not include livestock.