Joy and Karl contract for the sale of Joy’s prize-winning show dog for $1,000.
Unknown to either party, the dog has died. Karl is
a. entitled to another dog of equivalent value.
b. not required to pay due to the bilateral mistake.
c. not required to pay due to the unilateral mistake.
d. required to pay because he assumed the risk the dog might die.
City Manufacturing Corporation conditions shipments of its products to Exurb Stores,
Inc., on Exurb’s agreement not to buy products from Regional Works Company, City’s
competitor. This is
a. an exclusive-dealing contract.
b. a tying arrangement.
c. price discrimination.
d. a unilateral refusal to deal.
Olivia, a minor, signs a contract to buy a bike from Phil, the owner of SuperCycles Bike
Store. Olivia’s right to disaffirm the contract
a. does not change the fact that Phil is bound by the contract.
b. does not yet exist because Olivia is still a minor.
c. gives Phil, an adult, the right to disaffirm the contract.
d. is not valid because a bike is a “necessary.”
Josh is a director of Sippy Soups, Inc. Josh opposes a tender offer that is in Sippy’s best
interest because its acceptance would cost him his position as a director. Josh is liable
for a breach of duty of
a. no duty or rule.
b. the business judgment rule.
c. the duty of care.
d. the duty of loyalty.
Jack owns the surface rights for Rocky Ridge Ranch, but does not own the subsurface
rights. Ginny owns the subsurface rights. Rocky Ridge Ranch has a historic barn, which
is damaged when Ginny is excavating minerals from the ranch. Who is most likely
responsible for the damage to the barn?
a. Ginny only
b. Jack only
c. Ginny and Jack
d. no one
Bright Brew Coffee, Inc., processes and sells a variety of coffee products. Bright Brew’s
product packages must include
a. the identity of the company owner.
b. the net quantity of the contents.
c. the restaurants and stores in which the product is sold.
d. the type of consumer most likely interested in the product.
In Kettle Cafe’s suit against Food Services, Inc., the court issues a judgment in Kettle’s
favor. The judgment can be appealed to an appropriate court of appeals by
a. either party.
b. Kettle only.
c. Food Service only.
d. neither party.
Kip opens an account at a Lotsa Goodies Store, and buys a digital music player and
other items, but makes no payments on the account. To collect the debt, Mako, the
manager, contacts Kip’s parents. This violates
a. no federal law.
b. the Fair and Accurate Credit Transactions Act.
c. the Fair Debt Collection Practices Act.
d. the Truth-in-Lending Act.
Upton borrows $150,000 from Valley Credit Union to buy a home, which secures the
loan. Three years into the term, Upton stops making payments on it. Valley Credit
repossesses and auctions off the property to Wesley. The sale proceeds are not enough
to cover the unpaid amount of the loan. In most states, Valley Credit can ask a court for
a. a deficiency judgment.
b. a reverse mortgage.
c. a short sale.
d. nothing.
Imperio Caffeine Corporation makes and sells coffee under a variety of brand names.
Imperio wants to merge with Java Company, its main competitor. In weighing a
challenge to the deal, a court looks at the relevant product market. This most likely
includes coffee and
a. no other products.
b. products that are not identical but are related, such as spin-offs.
c. products that are sometimes substituted for coffee.
d. products with identical attributes only.
Starlight Caf brings a suit, seeking a remedy at law. A remedy at law is
a. the payment of money or property as compensation for damages.
b. a decree of specific performance.
c. a judicial proceeding for the resolution of a dispute.
d. an injunction.
Fact Pattern 21-3
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.
Refer to Fact Pattern 21-3. Under the Securities Exchange Act of 1934, Fay is most
likely
a. liable for insider trading.
b. not liable because Fay did not prevent others from profiting.
c. not liable because Fay did not solicit information from Dhani.
d. not liable because Fay does not work for Eureka.
Ross, an employee at Super Snowboard Company, is laid off. Before he exits Super’s
building, he e-mails the company’s marketing campaign to Winter Sports Corporation,
Super’s competitor, without permission. This is
a. copyright infringement.
b. patent infringement.
c. trademark infringement.
d. a theft of trade secrets.
Metro City operates its own municipal public drinking water system for which the
Environmental Protection Agency has set maximum levels of pollutants. Metro does not
use any equipment to meet these standards. With regard to any contamination of the
water, under the Safe Drinking Water Act, this is most likely
a. a violation.
b. not a violation because Metro does not set the standards.
c. not a violation because water is not a stationary source.
d. not a violation because Metro does not use any equipment.
Cook’s Pantry Appliances, a retail store, must use reasonable care on its premises to
warn its patrons of
a. all risks.
b. hidden risks.
c. obvious risks.
d. no risks.
Frida hires Gert, a real estate broker, to act as her agent to sell her house. The house
burns down before being sold. The agency agreement is likely
a. still in force if Frida gives Gert additional consideration.
b. still in force if Gert does not tell prospective customers.
c. terminated by mutual consent of the parties.
d. terminated by operation of law.
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.
Mary creates a t-shirt design that expresses her support for a presidential candidate and
distributes t-shirts to all her friends. The t-shirts are an example of
a. unprotected speech.
b. controlled speech.
c. symbolic speech.
d. illegal speech.
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.
Ivan signs Jeb’s name, without his authorization, to the back of a check.
This is
a. no crime.
b. forgery.
c. larceny.
d. robbery.
Scott, a State Bank employee, deposits into his account checks that are given to him by
bank customers to deposit into their accounts. This is
a. embezzlement.
b. larceny.
c. money laundering.
d. no crime.
WiFi Corporation, a U.S. firm, signs a contract with Bueno Computadores, Ltd., an
Argentinean firm, for a shipment and payment for WiFi’s goods. This is
a. a distribution agreement.
b. a joint venture.
c. direct exporting.
d. licensing.
Precise GPS Company’s ad states that its product is “the finest that money can buy.”
Because of this ad, the Federal Trade Commission is most likely to issue
a. a cease-and-desist order.
b. a counteradvertising order.
c. restitution.
d. none of the choices.
David, the chief accounting officer of Tension Fencing Corporation, wants to be sure
that all the company’s accounts are legal and ethical. Sometimes, however, he is unsure
exactly what is legal and what is illegal. David should
a. not worry about what is legal or illegal as long as the corporate executives benefit in
the short run.
b. try his best to not do anything illegal and keep documentation showing that he
always acts in good faith.
c. not worry about what is legal or illegal as long as it benefits the shareholders.
d. not worry about what is legal or illegal as long as it benefits the chief executive of the
corporation.
Speedy Shipping Corporation applies to TransInsurance Company for a fire insurance
policy on Speedy’s warehouse. On the application, Speedy misrepresents the age of the
property to obtain a lower premium. When a fire soon destroys the warehouse,
TransInsurance can
a. deny payment, because a fire destroyed Speedy’s warehouse.
b. deny payment, because of Speedy’s fraud in the application.
c. not deny payment, because a fire destroyed Speedy’s warehouse.
d. not deny payment, because the application is not part of the policy.
In making a decision as chief executive officer of Straightarrow Archery Supplies,
Robin always considers whether he would feel any guilt about a particular action. As a
guide, Robin is using
a. the categorical imperative.
b. internal company policies.
c. the law.
d. his conscience.
Japan violates an international law. Other countries may take coercive actions, which
include
a. violating the same law in the same way with impunity.
b. confiscating Japanese businesses.
c. boycotting Japanese goods.
d. taxing Japanese citizens.
Regal Autos, Inc., sells cars to consumers. To avoid liability for oral express warranties,
each sales agreement should note that a car is sold
a. as is.
b. in perfect condition.
c. subject to warranties included in the written contract only.
d. with no known defects.
After Edie solicits clients to invest in a nonexistent business, she is charged with “mail
fraud.” This requires, among other things,
a. claiming that an item is “in the mail” when it is not.
b. deceiving postal authorities as to the content of an item of mail.
c. depositing items in the postal system without proper postage.
d. mailing or causing someone else to mail a writing.
Phillipa is the sole proprietor of Incredible Floral Arrangements. As a sole proprietor, on
Incredible’s profits, Phillipa
a. does not pay income taxes.
b. pays only personal income taxes.
c. is taxed twice.
d. pays both personal and sole proprietor income taxes.
Davis points a gun at Eton, threatening to shoot him if he does not steal
from his employer, Freddy’s Convenience Store, and give the stolen funds to
Davis. Charged with theft, Eton can successfully claim, as a defense
a. nothing.
b. duress.
c. entrapment.
d. self-defense.
A-1 Furnishings, Inc., agrees to lease a desk to Business Resources, Inc. (BRI), which
requests that the desk be left outside City Warehouse for BRI to pick up. Before BRI
retrieves the desk, it is stolen. The loss is suffered by
a. A-1 Furnishings and BRI, but not City Warehouse.
b. A-1 Furnishings, BRI, and City Warehouse.
c. A-1 Furnishings only.
d. BRI only.
A deceived person must have a justifiable reason for relying on a misrepresentation.
In a limited partnership, a limited partner is liable for all partnership debts.
There is at least one circumstance in which a person cannot refuse to testify on Fifth
Amendment grounds.
A transfer of contract duties to a third party is an assignment.
An insurance policy is an example of a right that can be assigned.
The verdict in a summary jury trial is binding.
An applicant for insurance has a duty to disclose only material facts that the insurer
asks for.
Ordinarily, the remedy for a seller’s breach of a contract for a sale of real estate is
damages.
In a tenancy in common, the interests are divided.
In contracts involving a carrier, a seller can complete performance through a shipment
contract or a destination contract.
A partner is entitled to make secret profits from the partnership’s business or the use of
its property.
The failure of one party to perform a contract entitles the other party to rescind it.
An expression of opinion”this is perfect!”is an effective offer as long as it is not made
in jest.
Under the Check Clearing in the 21st Century Act, a bank has to credit a customer’s
account as soon as the bank receives the funds.
Under federal law, only key employees who take temporary family or medical leave are
entitled to job reinstatement.
Corporate officers can usually be removed by the board of directors without cause.
“Blue sky laws” regulate securities data stored in cloud computing servers.
Objective impossibility discharges a contract.
A corporate name must include the word Corporation, Incorporated, Company, or
Limited, or abbreviations of these terms.
A bailment must be in writing to be valid.