Sigrud buys spiked mountain-climbing shoes from Rockridge Gear store. The spikes
come out of the shoes when Sigrud is on the side of a mountain, caus-ing her to be
injured in a fall. Rockridge breached
a. an express warranty.
b. an implied warranty of fitness for a particular purpose.
c. an implied warranty of merchantability.
d. a warranty of title.
Plato works for Quirky Squirters, Inc. During work hours, Plato ‘steals time, space, and
data on his employers computer system to start up his own business, Rowdy Drenchers.
This is
a. burglary.
b. robbery.
c. larceny.
d. no crime.
Four-Square Construction Company enters into a contract with Ben to remodel Carols
Home Store, using products from Delta Building Supplies. Eatery Café is next to Carols
Home Store. The remodeling is a gift from Ben to Carol.
Refer to Fact Pattern 12-1. Carol is
a. a delegatee.
b. an assignee.
c. an incidental beneficiary.
d. an intended beneficiary.
Business ethics focuses on ethical behavior in the business world.
a. True
b. False
Doug agrees with Elinor to sell methamphetamine to patrons of Elinors nightclub
Garden of Eden for 25 percent of the take. Doug sells the drugs but keeps all of the
money. Elinor can
a. recover her share of the money only if she did not aid in the crime.
b. not enforce the deal.
c. recover the total amount of the sales.
d. recover her costs but none of the illegal profit.
Jackson Lumber hires Owen to purchase wood from various sources on behalf of
Jackson Lumber. In this relationship, Jackson Lumber is the
a. employee.
b. independent contractor.
c. principal.
d. agent.
Thirty-one days before filing a petition in bankruptcy, Dee transfers prop-erty and
makes payments that favor one creditor over another. These are
a. affirmation agreements.
b. preferences.
c. secured interests.
d. unsecured debts.
Willful violations of the Securities Act of 1933 may be subject to civil liability, but not
criminal prosecution
a. True
b. False
Stating on an instrument the underlying terms of an agreement renders the instrument
nonnego-tiable.
a. True
b. False
Today, most checks are processed manually.
a. True
b. False
In an assignment, the party receiving the rights is known as the assignor.
a. True
b. False
Liz trespasses on Mega Corporations property. Through the use of rea-sonable force,
Megas security guard Ned detains Liz until the police ar-rive. Mega is liable for
a. assault.
b. battery.
c. false imprisonment.
d. none of the choices.
The Constitution does not explicitly mention a right to privacy.
a. True
b. False
Leonardo contracts to install automatic watering troughs in Kendalls dairy barn.
Leonardo then becomes seriously ill and contracts with Jake to install the troughs. Jake
is unreliable and never shows up to install the troughs. Kendall can sue
a. no one.
b. Jake only.
c. Leonardo only.
d. Jake or Leonardo.
O.K. Oil holds itself out to others as being a corporation but makes no attempt to
incorporate. In this circumstance, O.K. is most likely
a. a corporation by estoppel.
b. a de facto corporation.
c. a de jure corporation.
d. ultra vires.
Administrative law is a source of American law that is comprised of statutes.
a. True
b. False
Olga, a salesperson for Pre-owned Cars & Trucks, Inc., tells Quincy, “This is the best
car Ive ever seen. This statement is
a. an express warranty.
b. an implied warranty.
c. a warranty of title.
d. puffery.
The alter-ego doctrine can be applied to a limited liability company.
a. True
b. False
To reduce traffic, Harbor Town enacts an ordinance that allows only a few street
vendors to op-er-ate in certain areas. A court would likely review this ordinance under
the principles of
a. the commerce clause.
b. the equal protection clause.
c. the due process clause.
d. the First Amendment.
When an agency relationship is terminated, the principal has a duty to personally notify
third parties who knew of its existence.
a. True
b. False
A novation does not require the extinguishing of the old obligation.
a. True
b. False
The E-Sign Act does not preempt the uniform version of the UETA.
a. True
b. False
The payment of Fridas debt to Gianini is guaranteed by Fridas personal property.
Gianini is
a. a debtor.
b. a secured party.
c. a secured transaction.
d. a security interest.
Over the Internet, Red & White Contractors, Inc., arranges to lease storage space from
Blue Services Company. To complete the deal, Red & White clicks on a but-ton that
says, in reference to certain terms, “I agree. Most likely, the par-ties have
a. a binding contract that includes the terms.
b. a binding contract that does not include the terms.
c. an unenforceable contract that includes the terms.
d. an unenforceable contract that does not include the terms.
A person who acquires an instrument knowing that the instrument contains an
unauthorized signature can still be afforded HDC protection.
a. True
b. False
Equipment Rental Corporation and Floodlights, Inc., are parties to an oral agreement
for a lease of goods with payments in excess of $10,000. They may satisfy the Statute
of Frauds by
a. mutually agreeing not to commit fraud.
b. restating the terms in a phone call.
c. setting out the terms in an e-mail.
d. shaking hands on the deal.
Marys home is in a state that has a $30,000 homestead exemption. Mary de-faults on a
$60,000 debt that she owes to Nina. Marys home is sold at auc-tion for $80,000.
Refer to Fact Pattern 20-1. If Nina recovers less than she is owed, she can realize the
difference from a. any property that Mary owns.
b. only exempt property that Mary owns.
c. only nonexempt property that Mary owns.
d. property that any other member of Marys family owns.
Implied warranties can arise from a “course of dealing.
a. True
b. False
Dhani signs a check “pay to the order of Etan drawn on Dhanis account in First State
Bank and dates the check “May 1. Etan presents the check to the bank for payment on
December 15. This is
a. a cashiers check.
b. an overdraft.
c. a certified check.
d. a stale check.
Roys Chickn Shack orders chicken from Standard Food Supplier, but Standard does not
deliver. Roys will probably be unable to enforce the agreement if the parties
a. did not limit the duration of the deal.
b. did not specify a payment term.
c. did not specify a quantity term.
d. have not begun to perform.
Southern Distribution, Inc., signs a receipt for goods that will also serve as a contract
for the goods transport. This is
a. a bill of lading.
b. a destination contract.
c. a shipment contract.
d. a warehouse receipt.
An insurer has a duty to avoid the payment of claims.
a. True
b. False
Jamal signs a lease with Kelvin to occupy a house on Leech Lake in Minnesota for the
summer. Jamals tenancy is
a. a fixed-term tenancy
b. a periodic tenancy.
c. a tenancy at sufferance
d. a tenancy at will.
A registration statement must state how a corporation plans to use the proceeds from the
sale of the securities.
a. True
b. False
A sole proprietor may own and manage any type of business.
a. True
b. False