Duffy is a passenger in a car that Caleb is driving when an accident occurs. Both Caleb
and Duffy are emotionally rattled, but neither is physically hurt. Caleb is not liable to
Dufy on a negligence theory because
a. both parties were emotionally rattled.
b. Caleb apparently did not intend to cause an accident.
c. Duffy must have been comparatively negligent.
d. Duffy was not injured.
Jason is the creditor in a transaction with Carol, who is the debtor. Which of the
following requirements is not necessary for Jason to have an enforceable security
interest?
a. The collateral must be in Jasons possession, or there must be a written or
authenticated security agreement.
b. Jason must give value to Carol.
c. Carol must have rights to the collateral.
d. The collateral must be tangible.
Workbilt Hardware Company employs workers, including Gina, at six locations in two
states. Workbilts discharge of Gina outside the terms of an employment contract may
result in
a. Workbilts liability for damages.
b. Ginas deportation under the Immigration Act.
c. discontinuance of Ginas health-plan coverage.
d. monitoring Workbilts communications for privacy violations.
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.
Lulu, an accountant, conducts an audit of Microstuff Toys, Inc. After the conclu-sion of
the audit, the working papers created in preparing the audit must be
a. disposed of immediately.
b. kept until the Public Company Accounting Oversight Boards review.
c. maintained for seven years.
d. retained forever.
Entrusting goods to a merchant who deals in goods of the kind gives the merchant the
power to transfer all rights to a buyer in the ordinary course of business.
a. True
b. False
Jen files a suit against Kopper Kettle Company. While the suit is pending, Kopper
Kettle merges with Luminous Pans, Inc., with Luminous absorbing Kopper Kettle.
Now, liability in the suit, if any, rests with
a. Jen.
b. Kopper Kettle.
c. Luminous.
d. no one.
Vernon claims that his contract with Ulani is voidable. If their contract is avoided
a. both parties are released from it.
b. both parties must fully perform their obligations under it.
c. both parties agree to a wholly different contract.
d. a wholly different contract is imposed “as if the parties had agreed.
An innocent party may neverrescind a fraudulent con-tract.
a. True
b. False
Kerin obtains a property insurance policy for her art collection from Lawton Insurance
Company. Kerin can cancel the policy
a. at any time.
b. only at the end of a period for which a premium has been paid.
c. only if Kerin no longer has an insurable interest in the property.
d. only on advance written notice.
Jeri and Knute are members of Lighthouse Tours LLC, a limited liability company.
With respect to Lighthouse Tourss liability, as members, Jeri and Knute are shielded
from
a. all liability.
b. no liability.
c. personal liability.
d. “alter ego liability.
Thelma is an employee at Foreign Food Mart. Thelma is called for juryduty and as a
result cannot work her scheduled shift at Foreign Food Mart. Foreign Food Mart fires
Thelma. This is a violation of
a. an example of the doctrine.
b. an exception based on contract theory.
c. an exception based on public policy.
d. an exception based on tort theory.
Milo files a suit against Nick in an Ohio state court, noting that Nick op-erates a Web
site through which Ohio residents have done substan-tial business with him. The court
is most likely to have jurisdiction over Nick if Milos claim arises from
a. anything an Ohio resident has done.
b. Nicks Web site activities.
c. nothing an Ohio resident has done.
d. something other than Nicks Web site.
Delite Candy Company hires Elton to sell Delites products in a certain area. Delite
agrees to pay Elton a salary, plus commission, for a trial period. They also agree that
Elton can sell using any methods and during any hours that seem appropriate. The most
important factor in whether Elton is Delites employee is
a. the amount of Eltons salary.
b. thecontrol Delite has over the details of the work.
c. thelength of the trial period.
d. the title that designates Eltons position.
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 re-lat-ing to the exterior. This attempt will be
a. partly successful.
b. partly unsuccessful.
c. totally successful
d. partly successful.
If one partys performance is substantial, the other partys duty to perform remains
absolute.
a. True
b. False
Ellen offers to sell her math textbook to Julia for $50. Julia does not respond. Ellen and
Julia do not have a contract because they lack the requirement of
a. agreement.
b. capacity.
c. consideration.
d. legality.
Sweetwater Café orders five gallons of transfat-free cooking oil from Restaurant
Supply, Inc. The seller mistakenly ships the wrong oil, which the buyer keeps, despite
the nonconform-ity. The oil is destroyed in a kitchen fire. The loss is suffered by
a. Sweetwater and Restaurant Supply, but not Sweetwater customers.
b. Sweetwater, Restaurant Supply, and Sweetwater customers.
c. Sweetwater only.
d. Restaurant Supply only.
Liquidated damages provisions are usually not enforceable.
a. True
b. False
The articles of corporation cannot exclude or limit shareholders voting rights.
a. True
b. False
Miklos employs Nathalie to handle a list of financial transactions on Mikloss behalf.
This power will terminate on
a. any transaction causing a loss to Miklos.
b. Mikloss death or incapacity.
c. Mikloss sixty-fifth birthday.
d. Nathalies handling of one of each stipulated transaction.
Rita believes that Shady Grove Apartments, Inc., her landlord, has vio-lated the law in a
way that entitles her to withhold the rent. This remedy is gener-ally associated with
a. breach of the covenant of quiet enjoyment.
b. breach of the implied warranty of habitability.
c. discrimination.
d. failure to provide security against crimes in com-mon areas.
A quasi contract is nota true contract.
a. True
b. False
A check, like other negotiable instruments, is a formal contract.
a. True
b. False
A material breach occurs when performance is substantial, but not complete.
a. True
b. False
A contract may include a clause stating that no damages can be recovered for a certain
type of breach.
a. True
b. False
Louislarger and stronger than Micathreatens to hit Mica before hitting and injuring him.
Mica files a suit against Louis for assault and battery. Mica will most likely recover for
a. assault and battery.
b. assault but not battery.
c. battery but not assault.
d. neither assault nor battery.
Stefano transfers copyrighted music recordings, without the copyright owners
authorization, to his friends. This is
a. copyright infringement.
b. a license.
c. a safe harbor.
d. none of the choices.
The owner of real property has relatively exclusive rights to the airspace above the land.
a. True
b. False
An accountant is required to discover every impropriety, defalcation, and fraud in a
clients books.
a. True
b. False
In the European Union, the period of royalty protection for musicians is seventy years.
a. True
b. False
Bella Homes enters into a contract to buy 132 acres from Watershed Holdings to
subdivide and sell in fifth-acre lots for Pristine Meadow, a residential development.
Refer to Fact Pattern 13-1. If Watershed breaches the contract, Bellas remedy would
most likely be
a. a certain ratio of the amount that Watershed has in liquidated funds.
b. a percentage of Watersheds unrealized profit.
c. the difference between the lands contract and market prices.
d. specific performance.
An attorney may be liable in negligence to any third party who the attorney knows will
rely on the attorneys work.
a. True
b. False
Stephanies sale of rights she has under a contract with Runway Retail, Inc., to buy the
retailers clothing overstock is
a. a delegation.
b. an assignment.
c. a third party beneficiary contract.
d. none of the choices.
In some states, a judgment creditor must obtain a separate order of gar-nishment to
cover each of the debtors pay periods.
a. True
b. False