Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
A bank that pays a customer's check with a forged drawer's signature can generally pass
the loss onto the customer.
Expenses that are caused directly by a breach of contract-such as those incurred to
obtain performance from another source-are incidental damages.
An offer must be practical to be effective.
A deficiency judgment requires a borrower to pay the amount of debt remaining after
the collateral is sold.
Insurance coverage is never effective until a formal written policy is issued.
A power of attorney is a written document.
The recipient of a negotiable instrument becomes a holder regardless of the form of the
transfer.
Under federal law, an employer can dismiss an employee because his or her wages are
being garnished.
A close corporation cannot operate as an S corporation.
Parents are ordinarily liable for the contracts made by their minor children, even if the
children acted on their own.
A buyer has no right to accept goods that fail in any respect to conform to the terms of a
contract in every detail.
A release does not require consideration to be legally binding.
In ethical terms, a cost-benefit analysis is an assessment of the negative and positive
effects of alternative actions on individuals.
According to utilitarianism, an action that affects the majority adversely is morally
wrong.
Some constitutional protections apply to business entities.
An improper filing renders a secured party unperfected.
Because the Internet is vast, the unauthorized use of another's mark in a domain name is
generally permissible.
Intent to deceive is an element of fraud.
Exchanging pirated, copyrighted works with others is not a crime unless money is
involved.
If a contract for a sale of goods does not include a quantity term, it is a requirements
contract.
To be negotiable, an instrument must be signed in the lower right-hand corner.
A partnering agreement reduces the likelihood that a dispute will arise under a contract.
A promise is an assertion that something will or will not happen in the future.
Steering and targeting occur when a lender manipulates a borrower into accepting a
loan product that benefits the lender but is not the best loan for the borrower.
Corporate directors and officers are insurers of business success.
Restitution involves one party's recapture of a benefit through which another party has
been unjustly enriched.
Oral evidence of the modification of a contract after its making can be introduced at a
trial.
No offer can be accepted by silence.
A product is not so unreasonably dangerous as to support the imposition of liability in a
strict product liability suit solely because a less dangerous alternative was commercially
feasible but was not produced.
An employer who hires and fires workers according to a fair seniority system may have
a good defense to an employment discrimination suit.
An agent can take advantage of an agency relationship to make a "secret" profit.
Cheesy Pizza Company contracts to sell 1,000 cases of frozen pizzas to Roller Rinks,
Inc., but refuses to deliver. Due to a spice shortage, Roller Rinks cannot obtain pizza
elsewhere. Roller Rinks's right to recover the goods from Cheesy is the right of
A.cover.
B.cure.
C.replevin.
D.specific performance.
Lora files a suit in Michigan against Ned over the ownership of a boat docked in a
Michigan harbor. Lora and Ned are residents of Ohio. Ned could ask for a change of
venue on the ground that Ohio
A.has a sufficient stake in the matter.
B.has jurisdiction.
C.has sufficient minimum contacts with the parties.
D.is a more convenient location to hold the trial.
Mavis, an advocate of a certain religion, publishes an article in New Times magazine
insisting that Congress base all federal law on her religion's principles. The First
Amendment guarantees Mavis's freedom of
A.religion only.
B.speech only.
C.religion and speech.
D.neither religion nor speech.
Gena borrows $350,000 from Fish Island Bank to buy a home, which secures the
mortgage. In the seventh year of the loan, Gena stops making payments. After the bank
repossesses the property but before it is sold, Gena may buy it by paying
A.an amount that equals the potential proceeds from the property's sale.
B.an amount that exceeds the potential proceeds from the property's sale.
C.the amount of the missed payments, but not more.
D.the full amount of the debt, plus any interest and costs.
Musica Production Company and Nora enter into a contract for Nora to write six songs
for which Musica agrees to pay her. Nora transfers her right to payment under the
contract to Omni Entertainment Agency. Nora is
A.a delegator.
B.an assignor.
C.a payor.
D.a righter.
Clark is a shareholder of Bedrest Mattress Company. Clark will be deemed to have a
fiduciary duty to Bedrest and its minority shareholders if he has
A.preferred stock.
B.a right of first refusal.
C.a sufficient number of shares to exercise de facto control.
D.watered stock.
QuizBooks LLC is a limited liability company. Like any other LLC, unless QuizBooks
chooses otherwise, the firm will be taxed as
A.a corporation.
B.a natural person.
C.a partnership.
D.a sole proprietorship.
The government of Iran violates an international law. Persuasive tactics to remedy the
situation fail. The only recourse of other nations is to
A.approve the European Union's enforcement of the law.
B.ask the International Court of Justice to enforce sanctions.
C.seek enforcement of the law through the United Nations.
D.take coercive actionsever relations, impose boycotts, go to war.
Jaime and Kip, consumers, transact a deal over the Internet. Their contract does not
mention the UETA. The UETA covers
A.none of the contract.
B.only the part of the contract that involves computer data.
C.only the part of the contract that does not involve computer data.
D.the entire contract.
Randy and Beach Biz Company enter into an oral contract under which Randy agrees to
clean Beach Biz's office for two years. This contract is enforceable by
A.Randy only.
B.Beach Biz only.
C.either party.
D.neither party.
Mona, an accountant, prepares for NuTech Corporation a financial statement that omits
a material fact. The financial statement is included in NuTech's registration statement,
which Pam reads. Pam buys NuTech stock. Under Section 11 of the Securities Act of
1933, for Mona to be liable for the omission, Pam must show that
A.Pam relied on the omission.
B.Pam suffered a loss on the stock.
C.Pam knew about the omission before making her purchase.
D.the omission had no causal connection to her loss.
Tippi believes that she needs to obtain a discharge in bankruptcy through an individual's
repayment plan. This proceeding can be initiated by a filing of a petition by
A.a creditor.
B.a debtor.
C.a corporation.
D.a partnership.
Clay buys an MP3 player for $200 and a pair of stereo speakers for $600 from a
Discount City store, and downloads $196 worth of digital music from eMusic.com. To
be enforceable, the contract that must be in writing is the purchase of
A.the digital music, the MP3 player, and the speakers.
B.the MP3 player and the speakers only.
C.the MP3 player only.
D.the speakers only.
Prime Property Investments, Inc., files a financing statement to provide notice of its
security interest in the property of Qwik Breakfast Restaurant. The initial effective term
of a financing statement is a period of
A.five days.
B.five months.
C.five weeks.
D.five years.
Quality Energy Company, a U.S. firm, and Royal Petro, a Dutch firm, enter into a
contract that includes an arbitration clause. This clause must provide that the arbitrator
will be
A.any specified third party.
B.the American Arbitration Association.
C.the Dutch Arbitration Organization.
D.the International Chamber of Commerce.
Jeri is indicted. Before she is arrested, she confesses to the crime in a conversation with
Kelly, the arresting officer. Kelly then arrests Jeri and advises her of the right to
counsel. Later, Jeri claims that her statement should be excluded as evidence from her
trial. The statement will most likely be
A.admitted because Jeri knew she did the crime and confessed.
B.admitted because Jeri made it before being advised of her rights.
C.excluded because a confession is not admissible in a criminal trial.
D.excluded because it was elicited before Jeri was advised of her rights.
Home Products Store buys furniture from Relax Furniture, Inc. The parties agree that
the furniture will be shipped "F.O.B. Relax's warehouse" to Home Products via Swifty
Shipping Corporation. The furniture is lost in transit. The loss is suffered by
A.Home Products and Relax Furniture, but not Swifty Shipping.
B.Home Products, Relax Furniture, and Swifty Shipping.
C.Home Products only.
D.Relax Furniture only.
Principal Resources Corporation contracts with Quality Construction to build an
addition to Principal's corporate office building. Quality contracts with Rite Supply
Company for materials for the addition but refuses to pick up the materials. Meanwhile,
Principal hires Skye, a certified public accountant, to work in its cost-accounting
division as an employee, with no authority to hire or supervise others. Skye asks Theo,
an outside experienced accountant, to advise her on certain accounting procedures but
fails to pay Theo for the service. Principal also contracts with Uma, a salesperson, to
solicit orders for its products in a designated territory. Uma obtains an order from Verity
Industries, Inc., which is assured the order will be filled soon. But Uma does not follow
through with the paperwork and fails to submit the order to Principal. Verity suffers a
loss. Rite Supply, Theo, and Verity Industries claim Principal is liable under agency law.
Discuss fully whether an agency relationship was created by Principal with Quality
Construction, Skye, or Uma.
Tori files a suit against the state of Utah, claiming that a Utah state law violates the
commerce clause. The court will agree if the statute
A.impinges on citizens' private activities.
B.imposes a substantial burden on interstate commerce.
C.imposes a substantial burden on the state.
D.promotes the public order, health, safety, morals, or general welfare.
Fact Pattern 9-2
Brad defends against a breach-of-contract suit by College Credit Corporation by
claiming that their deal-a student loan accruing interest at a certain rate and payable
beginning on a certain date-was unfair because the consideration for their contract was
inadequate.
Refer to Fact Pattern 9-2. "Adequacy" of consideration refers to
A."how much" consideration is given.
B.legally sufficient value in the eyes of the law.
C.the intangible value to a contracting party of a thing exchanged.
D.the substantiality of the consideration exchanged.
Fact Pattern 6-1
Minka uses her computer to secretly install software on hundreds of personal computers
without their owners' knowledge.
Refer to Fact Pattern 6-1. Minka's secretly installed software allows her to forward
transmissions from her unauthorized network to even more systems. This network is
A.a hacker.
B.a bot.
C.a botnet.
D.a worm.
Li'l Canine Company (LCC) uses a trademark that neither LCC nor anyone else has
registered with the government. Under federal trademark law, LCC
A.can register the mark for protection.
B.cannot register a mark that has been used in commerce.
C.has committed trademark infringement.
D.must put off registration until the mark is out of use for six months.
Fact Pattern 9-2
Brad defends against a breach-of-contract suit by College Credit Corporation by
claiming that their deal-a student loan accruing interest at a certain rate and payable
beginning on a certain date-was unfair because the consideration for their contract was
inadequate.
Refer to Fact Pattern 9-2. A court is most likely to evaluate the adequacy of
consideration if
A.a thing exchanged has no intangible value to one of the parties.
B.something exchanged is not of direct economic or financial value.
C.the items exchanged were of unequal value.
D.there is a gross disparity in the value of the consideration exchanged.
Fact Pattern 10-2
Grover contracts to sell two tracts of land to Hank. Both parties believe that the two
tracts are adjacent, but in fact they are not. Grover is still willing to sell the land, but
under these circumstances the deal would adversely affect Hank.
Refer to Fact Pattern 10-2. The parties' belief about the adjacency of the property is
A.a bilateral mistake.
B.a fraudulent misrepresentation.
C.a unilateral mistake.
D.unconscionable.
Eager Beaver Corporation fails to hold a meeting to adopt bylaws. Under this
circumstance, Eager Beaver will still be treated as a legal corporation in those states
that recognize the common law doctrine of
A.corporation by estoppel.
B.de facto corporation.
C.de jure corporation.
D.ultra vires.
Clu serves in a representative capacity for Digger. Elmo is injured through Clu's
negligence. Digger may be liable to Elmo if Clu's conduct occurred
A.due to a propensity Digger was not and could not have been aware of.
B.during normal working hours.
C.in the course and scope of Clu's employment.
D.outside the parties' employment relationship.
On behalf of Bay Oyster Company, Celia types her name at the bottom of an e-mail
purchase order and submits the order to Deepwater Parts Company. Under the UETA,
qualifying Celia's name as her "signature" is
A.attribution.
B.cybernotarization.
C.acceptance.
D.agreement.
Beth is an accountant with Coffee Sales Corporation. Doral buys Coffee Sales stock and
loses money on the investment. To recover from Beth under Section 10(b) of the
Securities Exchange Act of 1934 and SEC Rule 10b-5, Doral must prove
A.none of the choices.
B.fraud and reliance only.
C.fraud, reliance, and materiality only.
D.scienter, fraud, reliance, materiality, and causation only.
Kelly files a suit against Lewis in a state court. The case proceeds to trial, after which
the court renders a verdict. The case is appealed to an appellate court After its review of
Kelly v. Lewis, the appellate court can
A.affirm, reverse, or remand all or part of the lower court's decision.
B.only affirm or reverse all or part of the lower court's decision.
C.only remand all or part of the lower court's decision.
D.only reverse or remand all or part of the lower court's decision.
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.
Deb buys a song through eSongs, an online music vendor. Before completing the
purchase and downloading the song, Deb must agree to a provision not to sell copies of
the song. This provision is
A.a browse-wrap term.
B.a click-on agreement.
C.a shrink-wrap agreement.
D.none of the choices.
Laurel defaults on a loan owed to Maverick Bank. As a creditor, Maverick may attempt
to place liens on all of Laurel's property except
A.motor vehicles used to commute to work.
B.stock in various corporations.
C.items that Laurel selects.
D.vacant commercial property.
A court adjudicates Huck mentally incompetent and appoints Inez to be his guardian.
Later, without Inez's knowledge, Huck signs a contract to sell his farm to Kyle for its
real market value. The contract is
A.enforceable if Huck comprehended the consequences.
B.enforceable if Huck knew the market value of the farm.
C.enforceable if Huck was the record owner of the farm.
D.void.
Bruno is an accountant. Under the Sarbanes-Oxley Act of 2002, the degree of
government oversight over the public accounting practices of Bruno and other
accountants was
A.decreased.
B.increased.
C.eliminated.
D.unchanged.
Donney takes the trade secrets of Effervescent Soda Company without Effervescent's
consent. Donney gives the secrets to Fruity Drinks Corporation, an Effervescent
competitor, without compensation. Fruity knows that the secrets were acquired without
Effervescent's consent. Under federal law, Fruity has committed
A.a crime only if Fruity uses the secrets.
B.a crime only if Effervescent later discovers the theft.
C.not a crime.
D.a crime.
