Donald approves on behalf of Evelynbut without authorizationa contract with Farouk to
build a new silo. Evelyn does not ratify the contract. The deal with Farouk is
a. an enforceable contract with Donald.
b. a voidable contract.
c. an enforceable contract with Evelyn.
d. an unaccepted offer.
Round-Up Ranch and Smith & Jones, Accountants, are limited liability partnerships
(LLPs). The major features of an LLP are that it limits the personal liability of the
partners and
a. it allows the partnership to continue as a pass-through tax entity.
b. LLP statutes do not vary from state to state.
c. it can only do business in the state in which it was formed.
d. only a few states have enacted LLP statutes.
Fruit & Flowers Mail Order Corporation’s creditors agree to a workout with the firm.
This is
a. an agreement to pay a debt dischargeable in bankruptcy.
b. an accountant’s summary of a debtor’s financial situation.
c. a private, negotiated adjustment of creditor-debtor relations.
d. a reorganization of corporate debts and debtors.
Great Gear, Inc., enters into a contract to sell sports clothing and equipment to
Healthways Workout store, which in turn sells a pair of bike shorts to Ilene, a consumer.
In comparison to standards that apply to consumers, the UCC imposes on merchants
a. less strict legal standards.
b. special business standards.
c. stricter ethical standards.
d. the same overall standards.
iSharp, Inc., and Jenene, the owner of a Kitchen Time shop, orally agree to a sale of
knives and other utensils for $12,000. Jenene gives iSharp a check for $4,000 as a
partial payment. This contract is
a. enforceable to the extent of $4,000.
b. fully enforceable because it is for specially selected goods.
c. fully enforceable because it is oral.
d. not enforceable.
In the ordinary course of business, Loan2Buy Corporation offers credit to Mai and other
consumers and reports on the loans to credit agencies. To save time and money,
Loan2Buy generally does not correct or update its reported information. This is most
likely to result in
a. a levy of a nominal fine.
b. an assessment of damages.
c. an order of rescission of the loan contracts.
d. no sanctions.
Fact Pattern 7-1B
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 tells Geoff. Both Fay and Geoff buy 100 shares. Geoff knows that Fay got her
information from Dhani. When Eureka! publicly announces its new laptop, Dhani, Fay,
and Geoff sell their stock for a profit.
Refer to Fact Pattern 7-1B. Under the Securities Exchange Act of 1934, Geoff is most
likely
a. liable for insider trading.
b. not liable because Geoff is only a tippee, not a tipper.
c. not liable because Geoff is too far down the chain of disclosure.
d. not liable because Geoff traded on the basis of a material fact.
Fact Pattern 9-1B
Barney hires Clean Air, Inc., to install a new air conditioning system in his Dental
Clinic, LLP. Barney does not have the right to control the details of Clean Air’s
performance.Refer to Fact Pattern 9-1B. While working, Elton, a Clean Air worker,
drops a tool on Francine, Barney’s patient, causing an injury. Barney is
a. liable to Francine because she was injured on Barney’s property.
b. liable to Francine unless Elton’s act is intentional.
c. not liable because Clean Air is an independent contractor.
d. not liable because Clean Air, and thus Elton, are Barney’s employees.
Ronaldo’s debt to Sofia is past due. Ronaldo obtains a judgment against Sofia to collect
the debt, but Sofia will not pay. Ronaldo requests a writ of execution. The property that
is seized under the writ of execution must be
a. in Ronaldo’s possession.
b. in Sofia’s possession.
c. in the possession of Sofia’s employer or other third party.
d. located within the court’s geographic jurisdiction.
Reed owns one share of stock in SK8 Boards Corporation, as evidenced by a stock
certificate. Reed loses the certificate. Reed’s ownership of the stock is
a. forfeited immediately.
b. forfeited within ten days of a third party’s claim to ownership.
c. forfeited within thirty days if she cannot find the certificate.
d. not affected.
Merry draws a check payable to “Cash” and presents it to National Bank for payment.
This instrument is
a. a bearer instrument.
b. an order instrument.
c. valid but nonnegotiable.
d. void.
Lewis is a director of Mines & Refineries, Inc. Using information that is not available
to the public, Lewis makes a profit trading in Mines & Refineries stock. Lewis is most
likely liable for breach of
a. no duty or rule
b. the business judgment rule.
c. the duty of loyalty.
d. the duty of care.
Fact Pattern 26-1B
Natural Gas, Inc., and Olio Energy Company refine and sell natural gas. To limit the
supply of natural gas on the market and thereby raise prices, Natural Gas and Olio
Energy agree to buy “excess” supplies from dealers and “dispose” of it.Refer to Fact
Pattern 26-1B. The Natural Gas and Olio Energy deal is
a. a deal that neither restrains trade nor harms competition.
b. a legal restraint of trade.
c. a per se violation of antitrust law.
d. subject to analysis under the rule of reason.
Riverside Ranch is a horse breeding facility. Steed Stables is a customer looking for a
new stallion for its breeding program. Riverside’s representative Tomas shows Steed a
stallion that he says is very fertile and can easily breed twenty mares per year. This
statement is
a. an express warranty.
b. an implied warranty.
c. a warranty of title.
d. puffery.
Ortensia is married to Paolo. Ortensia executes a will, leaving certain property to Paolo
and other property to Quito, who is unrelated to Ortensia and Paolo. On Ortensia’s
death, the share of property given under the will can be renounced by
a. neither Paolo nor Quito.
b. Paolo and Quito.
c. Paolo but not Quito.
d. Quito but not Paolo.
Bertha owns land located outside Centre City. Bertha sells the land to Disposal &
Recycling, Inc., which establishes a hazardous waste disposal facility at the site.
Disposal & Recycling accepts only waste transported by Eco Trucking Inc. exclusively
from Federated Industries, Inc. Several years later, Disposal & Recycling closes its
facility and sells the land to Garden Variety Retail Corporation, which builds a Home &
Yard store on the site. Meanwhile, some of Centre City’s citizens complain to the
Environmental Protection Agency (EPA) that the city’s municipal water supply is pol-
luted. The EPA investigates and discovers that the sources of the pollution are leaks of
hazardous waste from what is now the Home & Yard site. The EPA cleans up the site.
Who can be held liable for the cost of cleaning up the site? What standards must Centre
City meet regarding the water?
The U.S. Bankruptcy Court for the District of Arizona uses online live chatting as part
of a strategic initiative to educate the public about bankruptcy. Those who have used the
live chat services include
a. individuals interested in filing for bankruptcy without an attorney.
b. paralegals.
c. real estate lawyers who have expanded into bankruptcy law.
d. all of the choices.
General Credit Corporation lends money to Hank, taking a security interest in his
assets. Later, Hank files a bankruptcy petition. From General Credit’s point of view,
once Hank is in bankruptcy, his assets have
a. diminished value, or no value.
b. increased value.
c. the same value.
d. unique value.
Mirena serves in a representative capacity for Netanya. Orla is injured through Mirena’s
negligence. Netanya may be liable to Orla if Mirena’s conduct occurred
a. due to a propensity Netanya was not and could not have been aware of.
b. during normal working hours.
c. in the course and scope of Mirena’s employment.
d. outside the parties’ employment relationship.
Persons who favor the creation of a federal biotech agency to regulate the production of
genetically modified agricultural and animal products should concentrate their lobbying
efforts on
a. Congress.
b. federal administrative agencies that oversee such products.
c. the United States Supreme Court.
d. the president of the United States.
Kenyon steals one of Lavender’s checks and forges her signature. Lavender’s bank,
Metro Bank, pays the check. Lavender can recover from
a. Kenyon, but not Metro Bank.
b. Metro Bank, which cannot recover from Kenyon.
c. Metro Bank, which can recover from Kenyon.
d. no one.
Seiko works for TallTales Publishing, Inc. The basis for Seiko’s contribution under the
Federal Insurance Contribution Act to help pay for benefits that will partially make up
for her loss of income on retirement is her
a. seniority at TallTales.
b. annual wage base.
c. special job skills.
d. county of residence.
Fact Pattern 13-1B
Destiny obtains a check payable to her order from Eugenia. Destiny signs the back and
adds the notation “without recourse.”
Refer to Fact Pattern 13-1B. Destiny’s signature and the notation “without recourse”
constitute
a. a blank indorsement.
b. a qualified indorsement.
c. a special indorsement.
d. a restrictive indorsement.
Boats & Yachts Corporation is a public company, which California regulates and in
which Dorian invests. The Sarbanes-Oxley Act of 2002 introduced direct federal
corporate governance requirements to
a. public companies.
b. private investors.
c. state regulators.
d. the Securities and Exchange Commission.
Lumber Mill Inc. is a private employer with more than twenty employees. Its
employment practices do not indicate a past pattern of discrimination. It is located in
Metro City, which has recently seen an increase in the number of its citizens who are
members of protected classes. Under the Civil Rights Act of 1964, Lumber Mill is
a. required to promote diversity in its workplace, but not to implement an affirmative
action policy.
b. not required to implement an affirmative action policy.
c. required to implement an affirmative action policy until the number of its minority
employees is proportional to the number of minority individuals in Metro’s labor pool.
d. required to implement an affirmative action policy that considers race merely as a
plus factor.
Nancy joins with other creditors to force Odette, a debtor, into bankruptcy. One of the
goals of bankruptcy law with respect to creditors is to
a. provide that creditors will continue to lend to insolvent debtors.
b. protect creditor assets from diminution in value.
c. ensure equitable treatment of creditors who are competing for a debtor’s assets.
d. make all debtor property available for creditors.
Ester sells shares in Fast Food Franchise Company to Gaye. Ester does not hand the
stock certificates to Gaye, but gives her the key to a safety-deposit box in Heartland
Bank in which the certificates are locked. Presenting the key is
a. incomplete delivery.
b. constructive delivery.
c. production.
d. conversion.
Merina and Nelli form Orchids, Inc. Ultimate responsibility for policy decisions
necessary to the management of corporate affairs rests with Orchids’s
a. board of directors.
b. incorporators.
c. officers.
d. shareholders.
Shane’s Auto Parts orders twenty tires from Tough Tires, Inc. The truck delivering the
tires to Shane’s is in an accident and ten of the tires are damaged. Shane’s Auto Parts
a. cannot reject the entire shipment.
b. must still pay for all twenty tires at the original contract price.
c. may inspect the tires and accept the shipment with a reduction in price.
d. must reject the entire shipment.
Kim is asked to serve as a witness to Lian’s will. To qualify, Kim must be
a. a collateral heir.
b. a lineal descendant.
c. at least eighteen years old.
d. mentally competent.
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. none of the choices.
d. a price-fixing agreement.
A sublease releases the tenant from his or her obligations under the lease.
Under the Clean Water Act, criminal penalties apply whether a violation was intentional
or unintentional.
A partially disclosed principal is only partially liable to a third party for a contract made
by an agent.
There are no defenses to liability under the Comprehensive Environmental Response,
Compensation, and Liability Act.
Lamar owns a field behind Megan’s house and property. The only access to the field is
Megan’s driveway, which Lamar uses to get to his field. If Lamar sells the field, can the
buyer use the right-of-way across Megan’s property?
The board of directors normally can remove a corporate officer at any time with or
without cause.
An unauthorized signature is wholly inoperative and will not bind the person whose
name is signed or forged.
Fastart Corporation makes batteries for motor vehicles. The Federal Trade Commission
(FTC) learns that Gas-Up Auto Parts Stores, a retail company that sells Fastart’s
batteries, engages in deceptive advertising practices. What actions can the FTC take
against Quantum?
A purchase-money security interest in consumer goods is perfected automatically at the
time it is created.
If a bank pays a check in spite of a stop-payment order, the bank is liable only for
amount of the actual loss suffered by the drawer because of the wrongful payment.
A broker is not an agent of the insurance company or the applicant.
Vesting gives an employee a legal right to receive pension benefits at some future date
when he or she stops working.
Federal agencies must consider ways to reduce the economic impact of new regulations
on small businesses.
With respect to negotiability, an order on an instrument may be addressed to one person
or to more than one person, either jointly or alternatively.
A finder of mislaid property becomes the caretaker of the property.
A territorial or customer restriction is currently considered a per se violation of antitrust
law.
Private parties can sue violators of Section 10(b) of the Securities Exchange Act of
1934 and SEC Rule 10b-5 for rescission of a contract to buy securities.
Normally, a corporate board of directors appoints itself as the first board at the time the
corporation is created.
A surety is entitled to receive from the debtor the actual amount of the debt paid to the
creditor on behalf of the suretyship arrangement but not other expenses incurred.