To be enforceable, a contract for a sale of goods priced at $50 or more must be in
writing.
Under a destination contract, if a lessor is a merchant, the risk of loss passes to a lessee
when the lessee takes physical possession of the goods.
Employees who deal with third parties are agents of their employers.
An invitation to negotiate-“can you afford this?” -is an offer.
Concurrent jurisdiction exists when both federal and state courts have the power to hear
a particular case.
Buying or selling securities on the basis of nonpublic information is illegal only if the
profit from the transaction is unreasonable.
Crimes occurring in a business context are popularly referred to as white-collar crimes.
A patent applicant must demonstrate that the invention, discovery, or design is
commercially practicable to receive a patent.
Federal labor law protects employees’ right to strike.
Damages are awarded for whatever injury a nonbreaching party suffers, whether or not
the breaching party could have foreseen the injury.
A coinsurance clause provides that two or more people will be covered by the same life
insurance policy.
A contract can prevent the assignment of the right to receive funds.
There is at least one circumstance in which a person cannot refuse to testify.
The board of directors of each corporation involved must approve a share exchange.
An answer can admit to the allegations made in a complaint.
A failure to follow generally accepted accounting principles and generally accepted
auditing standards is proof of a lack of due diligence.
A corporation can recapture any profits realized by an insider on any purchase or sale of
the firm’s stock within any six-month period.
Generally, stock offerings that are made in a limited manner during any twelve-month
period are not exempt from the registration requirement.
If no children or grandchildren survive a decedent who dies without a will, a surviving
spouse is entitled to the entire estate.
A principal owes an agent a duty of accounting.
Any corporate funds are legally available for paying dividends.
Most state trial court decisions are not published.
A misdemeanor is a crime punishable only by a fine.
For purposes of diversity of citizenship, a corporation is a citizen only of the state in
which it is incorporated.
An oral promise that an employer makes to employees regarding discharge policy may
be considered part of an implied contract.
A surety is secondarily liable for the debt of a principal.
If a lessee wrongfully refuses to accept goods that conform to a contract, the lessor
must tender substitute goods.
Generally, stock offerings that involve a small dollar amount are exempt from the
registration requirement.
Confiscation occurs when a government seizes a private property for a proper public
purpose and awards just compensation.
A covenant not to sue is the substitution of a contractual obligation for a legal action.
Even after a tenant assigns a lease, the tenant may be obligated to pay rent.
Ronaldo agrees to pay Simplex Cash Store a debt that is otherwise dischargeable in
bankruptcy. This is
A.a reaffirmation.
B.a liquidation.
C.a reorganization.
D.a petition.
Delacroix discovers a boat adrift, and retrieves and anchors it. The boat features a
number on its side and other evidence pointing to its owner, Elvira. This is
A.an involuntary bailment.
B.a voluntary bailment.
C.an express bailment.
D.no bailment.
Kelly transfers shares of stock that she owns in Lone Starz Company to Max. A
shareholders’ meeting takes place before Max’s ownership is entered in Lone Starz’s
stock book. A vote at the meeting can be cast by
A.Kelly and Max.
B.Kelly only.
C.Max only.
D.neither Kelly nor Max.
Lively Toys Store and Movin’ Products Company (MPC) enter into an e-contract under
which MPC agrees to ship a case of electronic, remote-controlled bugs to Lively Toys,
which agrees to pay on delivery. The Uniform Electronics Transactions Act (UETA)
A.denies the enforcement of such contracts.
B.does not apply to such contracts.
C.preempts all other laws with respect to such contracts.
D.supports the enforcement of such contracts.
Rocco is a director of Spa Lids & Tubs, Inc. Under the standard of due care owed by
directors of a corporation, Rocco’s decisions must be
A.unwavering and unquestionable.
B.arguable and defensible.
C.informed and reasonable.
D.perfect and unassailable.
Relax Chair Company contracts to deliver 100 chairs to Stuffy Furnishings Store on
May 1 for which Stuffy agrees to pay. Relax tells Stuffy on April 15 that delivery will
be delayed until June 1. Stuffy may
A.await performance, sue Relax, or suspend its own performance.
B.only await Relax’s performance for a commercially reasonable time.
C.only sue Relax for breach of contract.
D.only suspend its own performance.
Frank and AgriShip, Inc., enter into a contract for AgriShip to transport a silo of
soybeans for which Frank agrees to pay. When AgriShip’s schedule conflicts, the firm
contacts Hybrid Transport Company, to which AgriShip “assigns all rights under the
contract.” This transfer is
A.an assignment and a delegation.
B.an assignment only.
C.a delegation only.
D.neither an assignment nor a delegation.
Ken relinquishes the right to his son Lee’s control, care, custody, and earnings. This act
is
A.a disaffirmance.
B.an emancipation.
C.a ratification.
D.restitution.
Intoxicated, Clio agrees to sell her restaurant, Diners Caf, to Evan for half of its real
market value. This deal is most likely void if
A.Clio appeared intoxicated to Evan.
B.Clio disaffirms the contract after becoming sober.
C.Clio was so intoxicated as to have no memory of the deal.
D.Evan fraudulently induced Clio to become intoxicated.
Bret obtains a fire insurance policy on his rental house with Continental Insurance
Company. Like all insurance, this policy is an arrangement for
A.avoiding the assumption of responsibility.
B.predicting a potential loss based on unknown factors.
C.shifting the imposition of liability.
D.transferring and allocating risk.
Sherman dies without a will, survived by his granddaughter Roxy and Roxy’s brother
Pio. Roxy and Pio are Sherman’s
A.collateral heirs.
B.settlors.
C.trustees.
D.lineal descendants.
Edy obtains a homeowners’ insurance policy with First Source Insurance Company.
First Source can cancel the policy
A.if Edy appears as a witness in a case against First Source.
B.if Edy fails to pay the premiums.
C.if Edy makes changes that add to the home’s value.
D.under no circumstances.
The United States taxes each barrel of imported oil at a flat rate. This is
A.an antidumping duty.
B.a dumping duty.
C.a quota.
D.a tariff.
Jerzy is an accountant whose clients include Kopper Kettle Restaurants, Inc. For a
violation of securities laws, Jerzy may be subject to
A.comprehensive liability.
B.corporate liability.
C.criminal liability.
D.no liability.
To “publish” a will means to release it to the media.
Hobby Farms, Inc., owns rural property that it leases to various tenants, including Ira.
Ira’s transfer of his entire interest in the leased property to a Jason is
A.an assignment.
B.an eviction.
C.a right of entry.
D.a sublease.
Mike is arrested at a warehouse in North Industrial Park. A government prosecutor
issues a formal charge against Mike for receiving stolen property. This charge is
A.an arraignment.
B.an indictment.
C.an information.
D.an inquisition.
Ratzo is asked to be a witness to Sade’s will. Before attesting to the will,
A.Ratzo does not have to read the will or be informed of its contents.
B.Ratzo must read the will and recite its contents.
C.Sade must orally tell Ratzo of the will’s contents.
D.Sade’s attorney must read the will aloud to Ratzo.
In deciding questions of corporate social responsibility, Valley Disposal & Recycling,
Inc., is concerned with
A.how the corporation can best fulfill any ethical duty to society.
B.the effect on corporate profits of ignoring any ethical duty to society.
C.whether the corporation owes any ethical duty to society.
D.all of the choices.
Darwin borrows $200,000 from Evermore Bank to buy a home. Less than six months
into the term, Darwin stops making payments on the loan. To initiate the process to
repossess and auction off the property securing the loan, Evermore must
A.issue a notice of sale to the borrower.
B.offer the property for sale in an auction on the courthouse steps.
C.record a notice of default with the appropriate county office.
D.resort to litigation to establish clear ownership of the property.
Liu signs a check “pay to the order of Marv” drawn on Liu’s account in National Bank.
Liu later orders National not to pay the check, but the bank pays it over Liu’s order.
Subsequent checks written on Liu’s account “bounce.” Most likely liable for the costs to
Liu is
A.any party to whom a subsequent check was written.
B.Liu.
C.Marv.
D.National.
Like other corporations, Biopesticide Corporation can extend its operations through
A.a share exchange.
B.a dissolution.
C.a termination.
D.a winding up.
Universal Assembly Company makes espresso machines and sells one to Vim through a
misrepresentation on the label on which Vim relies and that results in an injury to Vim.
Universal is most likely liable for
A.a commonly known danger.
B.fraud.
C.privity.
D.puffery.
Fact Pattern 9-3
Dex and Carmen are in an auto accident. Dex offers Carmen $2,000 if she promises not
to pursue her potential legal claim against Dex. Carmen agrees. Later, Carmen
discovers that it will cost $1,500 to repair her car and $4,000 to cover the medical
expenses for a latent injury.
Refer to Fact Pattern 9-3. The agreement between Dex and Carmen is
A.a covenant not to sue.
B.an accord and satisfaction.
C.a release.
D.promissory estoppel.
Wilbur signs a note that includes a clause under which the note’s holder can delay the
date of its payment indefinitely. This is
A.an acceleration clause.
B.an extension clause.
C.an immaturity clause.
D.a stop-payment clause.
Timber Products, Inc., and Walt, a consumer, enter into a contract for a sale of plywood.
If the contract includes a clause that is perceived as grossly unfair to Walt, its
enforcement may be challenged under the doctrine of
A.good faith.
B.square dealing.
C.the mere image rule.
D.unconscionability.
Bryce’s accountant is Caleb and his attorney is Delilah. All states protect, as privileged
information, Bryce’s communications with
A.Caleb and Delilah.
B.Caleb only.
C.Delilah only.
D.neither Caleb nor Delilah.
Fact Pattern 17-1
Echo takes her car to Fix-It, Inc., which repairs the car and bills Echo for $500. Echo
writes out a check drawn on Capital Bank, but later, believing that Fix-It did not repair
the car properly, issues a stop-payment order.
Refer to Fact Pattern 17-1. Capital Bank
A.is liable to Fix-It for the amount of the check.
B.must stop payment if Capital has a reasonable time to act.
C.need not stop payment unless Echo had a valid reason to act.
D.need not follow Echo’s order unless the check was certified.
Dobry Die & Mold, Inc., enters into a contract with Chet’s Refitting Service to fix
Dobry’s precisely engineered molding equipment. If Chet’s delays the repair for five
days, knowing that Dobry will lose a certain percentage of profit for the delay, Dobry
might be awarded consequential damages to
A.establish, as a matter of principle, that Chet’s acted wrongfully.
B.provide Dobry with funds for a foreseeable loss beyond the contract.
C.provide Dobry with funds for its loss of the bargain.
D.punish Chet’s and set an example to deter others from similar acts.
Bilt-Well Construction Corporation makes a side payment to a government official in
Nigeria to obtain a contract. In the United States, this is
A.illegal and unethical.
B.illegal but not unethical.
C.unethical but not illegal.
D.legal and ethical.
Superior Energy Corporation engages in ethical behavior solely for the purpose of
getting good publicity and thereby increasing profits. Superior is
A.acting unethically in its pursuit of publicity.
B.acting unethically in its pursuit of profits.
C.acting unethically in its setting of priorities.
D.not acting unethically.
Over a forty-year period, Ewa worked in a variety of jobs. She was also occasionally
unemployed, briefly hospitalized, and suffered a temporary disability. She retired last
year. The key law on all of these subjects is
A.the Consolidated Omnibus Budget Reconciliation Act.
B.the Employee Retirement Income Security Act.
C.the Federal Insurance Contributions Act.
D.the Social Security Act.
In 2012, Sara writes Terror at the Track, a novel about racecar driving. Sara does not
register the work with the appropriate government office. Under federal copyright law,
Sara’s work is protected
A.for ten years.
B.for twenty years.
C.for the life of the author plus seventy years.
D.forever.