Bill is injured while standing on the corner of Hollyhock and Vine when Mia’s new Hog
speeds out of control because of a defective part. In most jurisdictions, Bill:
a. can sue the motorcycle manufacturer even though he does not have privity.
b. cannot sue the motorcycle manufacturer because his injuries are personal injuries as
opposed to economic loss.
c. cannot sue the motorcycle manufacturer because the lemon laws require arbitration.
d. cannot sue the motorcycle manufacturer because there is no privity of contract.
Personal property means all property other than:
a. soil, plants, and trees removed from the land.
b. minerals and crops removed from the land.
c. land and all things permanently attached to the land.
d. intangible property.
Vicki entered into a written contract to buy a car from Valley Motors. During the
negotiations, the sales representative said that the car had a two-year full warranty. The
written contract included a provision that stated, “This writing is the full and final
expression of the parties’ agreement; anything said before signing or while signing is
irrelevant.” The written contract did not include a warranty. Two months after Vicki
took delivery of the car, she discovered that the transmission needed to be replaced.
Vicki claimed that it was covered by the full warranty. Will Vicki be able to present
evidence as to the sales representative’s statements concerning the warranty?
a. No. The parol evidence rule will most likely exclude any evidence of the discussion
of the warranty.
b. Yes. The leading object rule will allow evidence as to the discussion of the warranty.
c. Yes. The evidence is needed because the contract is ambiguous.
d. No, because the contract was fully executed.
Generally, in comparison to a donee beneficiary, a creditor beneficiary has:
a. about the same legal rights.
b. substantially greater rights.
c. substantially fewer legal rights.
d. virtually no legal rights.
Betty’s BBQ orally contracts with Denny’s Design House for 10,000 matchbooks at the
price of 10 cents per matchbook. The matchbooks are to be embossed with a logo to be
designed by Denny’s Design promoting Betty’s BBQ. Price, payment terms, delivery
terms are agreed upon between the parties. Denny’s Design creates the logo, gets Betty’s
BBQ’s approval of the design and begins applying the logo on the matchbook covers.
Denny’s Design has almost finished the order when Betty’s BBQ calls to say it has
decided to make the eatery a smoke-free restaurant and cancels the order. Denny’s
Design sues, but Betty’s BBQ states that the agreement is unenforceable under the
statute of frauds. Who wins?
a. Denny’s Design House wins. This situation falls under an exception to the statute of
frauds.
b. Denny’s Design House wins. This is a service contract for design of a logo.
Therefore, the UCC, including the statute of frauds provisions of Article 2, does not
apply.
c. Betty’s BBQ wins. This is a contract for $1000. The statute of frauds requires all sales
contracts in excess of $500 be in writing.
d. Betty’s BBQ wins. The statute of frauds only applies to merchants. Betty’s BBQ is
not a merchant in this instance because it intended to give the matchbooks away and not
sell them.
The three branches of government in the United States are:
a. the executive, legislative, and administrative.
b. the legislative, executive, and statutory.
c. the executive, legislative, and judicial.
d. the administrative, legislative, and international.
An assignment:
a. is generally revocable if it is gratuitous and is either oral or written.
b. for consideration is irrevocable.
c. becomes valid when the obligor receives notice of the assignment.
d. must follow formalities.
What federal agency requires that the seller of a franchise give the potential buyer an
offering circular and audited financial statements?
a. The Securities and Exchange Commission (SEC).
b. The Interstate Commerce Commission (ICC).
c. The Federal Trade Commission (FTC).
d. The Franchise Sales Commission (FSC).
An agreement to pay a lesser amount to settle an unliquidated debt is:
a. enforceable, as there is consideration.
b. unenforceable, as there is no consideration.
c. enforceable in only some states.
d. unenforceable as a violation of public policy.
The government itself prosecutes the wrongdoer in a case involving behavior so
threatening that society outlaws it altogether. This kind of case involves:
a. Procedural law.
b. Private law.
c. Civil law.
d. Criminal law.
Marty, a 16-year-old, contracted with Cream-of-the-Crop Cycles to buy an $8,000
motorcycle. He agreed to make monthly payments until the purchase price plus interest
were paid in full. It is three years later and Marty has not disaffirmed the contract and
has made regular payments on the cycle since turning 18. Which of the following is
correct?
a. The contract is void and Marty has no obligation.
b. The contract is now voidable by Cream-of-the-Crop Cycles.
c. Marty has ratified the contract and is now bound by its terms.
d. Marty has ratified the contract but can still get a return of the payments made while
he was a minor.
A court may, at times, discharge a party who has not performed.
a. True
b. False
Under the UCC, which of the following contracts may be enforceable, even without a
written memorandum?
a. The seller is specially manufacturing the goods for the buyer.
b. The seller admits in court that there was a contract.
c. The seller has delivered the goods.
d. All of the above.
David and George have a contract wherein George agrees to buy sporting goods and
equipment. Since the goods are not to be delivered for several months, they left the
price open. Under the UCC, which of the following will be true?
a. The price will be the reasonable price based on fair market value of the goods at the
time of delivery.
b. David has the freedom to set any price he wants considering George was foolish
enough to enter into a contract without a price established.
c. George has the right to establish a price because he is the buyer. David should have
taken steps to protect his sales interest.
d. None of the above. The contract is not valid because the terms are not definite and
certain.
Which of the following types of property would be classified as “goods” under Article 2
of the UCC?
a. Cash in hand.
b. A stock certificate.
c. A computer.
d. A membership to a health club.
Under corporate law, a corporation that officially states its purpose is “to engage in any
lawful activity for which corporations may be organized under the General Corporation
Law of Idaho” is too broad. A corporation’s purpose must be more narrowly defined.
a. True
b. False
Sonny, a college student, places a telephone order for a new computer from Computers,
Inc. The price of the computer is $1500. The clerk who takes the order sends Sonny a
copy of the invoice. The next week, Sonny calls back and tries to cancel his order.
a. Sonny cannot cancel the order because Computers, Inc. accepted his order.
b. Sonny cannot cancel the order if he has received the invoice.
c. Sonny can cancel the order; the invoice is unenforceable against him, as he did not
sign the invoice.
d. Sonny can now cancel the order but only if he does so in writing within ten days.
A seller may not make repairs or adjustments after the goods have been tendered, even
if that action will bring the goods into conformity in order to “cure” nonconforming
goods.
a. True
b. False
What is not required to establish promissory estoppel?
a. A promise made by the defendant.
b. A promise made by the plaintiff in response to the defendant’s promise.
c. Reliance on the defendant’s promise.
d. Enforcing the promise is the only way to avoid injustice.
An agent is always liable for his or her own torts committed within the scope of the
agency relationship.
a. True
b. False
There is no way to attach a security interest in electronic chattel paper.
a. True
b. False
Which of the following statements concerning a Chapter 11 reorganization plan is true?
a. A reorganization plan will be confirmed by the court only if a majority of each class
of creditors votes in favor of the plan.
b. A reorganization plan can be confirmed by the court over objections of some
creditors if the court determines that the plan is feasible and fair.
c. Only the bankruptcy court has the authority to confirm or reject the reorganization
plan. Creditors do not have a right to vote on the plan.
d. A reorganization plan binds only the debtor and not the creditors.
Tim buys a high-powered tool from Binford Tools to use on the construction of his own
garage. Binford Tools provides a full warranty on the tool for the first six months. To
pay for the tool, Tim signs a negotiable promissory note which contains the FTC
Notice. Binford properly negotiates the note to First Finance. Within three weeks, the
tool stops working and Binford refuses to repair or replace it. In the meantime, First
Finance demands payment from Tim. Under the Federal Trade Commission rules, this
consumer credit situation means First Finance can:
a. collect if it is a holder in due course.
b. collect if it is not a holder in due course.
c. collect whether or not it is a holder in due course.
d. not collect.
All oral contracts are quasi-contracts until they are completely executed.
a. True
b. False
Which of the following exculpatory clauses will most likely be enforceable?
a. An exculpatory clause that relieves a riding stable of negligence.
b. An exculpatory clause that relieves a riding stable of gross negligence.
c. An exculpatory clause that relieves a riding stable from intentional torts.
d. A riding stables exculpatory clause that is hidden in an eight-page document that all
riders are required to sign.
The following is a violation of the Sherman Abnti Trust Act.
a. Setting the minimum price for an item.
b. Lowering prices to put a competitor out of business.
c. Monopolize a market
d. all of the above
The 1934 Act requires companies with a class of stock that is publicly traded to make
regular filings with the SEC.
a. True
b. False
Tom rented an apartment from Margaret on a month-to-month basis, with rent due on
the first of the month. This type of tenancy is known as a “tenancy at will.”
a. True
b. False
Advantages of Alternative Dispute Resolution (ADR) include:
a. ADR is faster than litigation.
b. ADR keeps the parties talking rather than fighting.
c. ADR is less expensive than litigation.
d. All of these are advantages of ADR.
The Model Business Corporation Act states: “All corporate powers shall be exercised
by or under the authority of, and the business and affairs of the corporation managed by
or under the direction of its:
a. shareholders.
b. officers.
c. board of directors.
d. executive committee.
When Randy accepted a job with Buren Construction, Randy signed the following
agreement, “Upon termination of my employment with Buren Construction, I agree
never to work for another employer as an electrician.” If Randy resigns from Buren
Construction, this agreement would be upheld under the theory of freedom of contract.
a. True
b. False
Under the UCC, a holder in due course is a holder who has given value for the
instrument. Which of the following holders have given value for the instrument?
a. Beth promises to paint the neighbor’s house in exchange for a promissory note as an
advance payment for the job.
b. Steve gives a note and mortgage on his house to his attorney as a retainer to handle
his pending divorce.
c. Todd, a newspaper carrier, accepts a properly indorsed two-party check for the past
two months of deliveries.
d. All of the above are correct.
What are the three tests or elements used by the FTC to determine whether a particular
act is an unfair trade practice?
Li is the vice president of marketing for Felson, Inc., a manufacturer of childrens
clothing Felson is considering building a factory in a developing country, where there
are few restrictions on working conditions, wages, or maximum work hours. Which
viewpoint: utilitarian or deontological would support this move? Why?
Tony signed a contract agreeing to purchase a used, high-powered boat for $10,000.
Prior to signing the contract, the sales representative explained that the boat motor was
guaranteed for six months for all labor and parts. The written contract contained nothing
about the warranty; however, it did have an integration clause in it. Tony had problems
with the boat motor, causing expensive repairs. Tony returned the boat to the sales
representative for the repairs, only to learn the salesman denied knowing anything about
a six-month warranty. If Tony sues, discuss the likely outcome.
Douros Realty & Construction Co. had a lead on a “prime” piece of real estate.
Although Douros did not have a listing agreement with the seller of the property, he
contacted Kelley Properties. Douros knew that Kelley was looking for a location for a
commercial development. Douros contacted Kelley stating only that he had the “finest,
most outstanding, viable location in the county and it just came on the market.” Douros
said he would reveal the location of the property and the owner’s name if Kelley would
sign an agreement which would require Kelley to pay a 10% commission if a sale of the
property resulted. The agreement was signed. Four months later, Kelley bought the
property after negotiating the deal himself. Kelley claims he does not owe a
commission to Douros because there was insufficient consideration to support the
payment of commission so large. Kelley claims that all Douros did in the entire
transaction was to reveal the location of the property and the owner’s name. Was there
sufficient consideration to make this promise enforceable?
Sean of Sean’s Shrimp House was enjoying a cup of cappuccino while visiting with
Ollie at Ollie’s Ocean Front Bar & Grill. During the course of their conversation, Sean
agreed to supply 100 pounds of shrimp per month for the next year to Ollie’s restaurant
at the price of $2.50 per pound. When Sean got back to his office, he sent a written
confirmation of the agreement to Ollie. Six weeks after receiving the confirmation Ollie
wrote back, stating that he had not agreed to the price of $2.50 per pound. Is Ollie
bound to the confirmation?
A common problem in cases of express warranty is being able to separate statements
that create express warranties from statements that do not. Discuss what type of
statements create an express warranty and four indications that a statement is likely to
create an express warranty.
Discuss the requirements of the Family and Medical Leave Act.
Identify the main provisions of the Digital Millennium Copyright Act and two
arguments opponents of the Act raise.
Artistic Framing, a business with $120,000 of unsecured debt, needs to file for
bankruptcy, but wants to continue in business. Discuss what chapter of the Bankruptcy
Code should be used, and discuss the effect of the 2005 amendment to the Code on the
proceedings.
A contractor used dynamite to loosen a rocky hillside. The blast from the dynamite
caused a house foundation to crack. The house was located over a half-mile away from
the dynamite site. The contractor was careful when using the dynamite and no
allegation of negligence is made. However, the house owner claims the contractor is
liable for damage to the foundation. Is the house owner correct? Explain.
Discuss the concept of a “material fact” in fraud situations.
Assume that the state of Ohio passed a hazardous waste statute, seeking to protect the
general public and workers. The state statute did not violate the Commerce Clause
because it imposed no restriction on interstate commerce. Both the state statute and the
federal Occupational Safety and Health Act established job safety standards and
specified worker training and employer licensing, but the requirements differed.
Discuss which statute(s) Ohio corporations had to obey, and identify the source of the
answer.
MagNet is a U.S. company based in Utah. It is negotiating to sell $4 million worth of
computer goods to a French company, Legran. MagNet’s attorney suggests that payment
be by a letter of credit. What is a letter of credit and why does MagNet’s attorney
recommend payment by letter of credit?
Identify the basic job of a President of the United States, the source of executive power,
and three key powers associated with the position of President.
Explain horizontal price-fixing and vertical minimum and maximum price-fixing.
Discuss their status under antitrust laws.
ATC, Inc. offered health insurance benefits to unmarried same-sex domestic partners
but not to unmarried, cohabiting heterosexual couples. Ray, an employee of ATC, Inc.,
challenged the benefit plan, claiming that it was in violation of Title VII of the Civil
Rights Act. Under the Civil Rights Act, an employer may not discriminate against any
individual on the basis of sex. Discuss the tools that a court may use in interpreting the
Civil Rights Act.