The U.S. Small Business Administration issues a new regulation that will have a
significant impact on a substantial number of small businesses. Under the Regulatory
Flexibility Act, the agency must do all of the following except
a. measure the cost that the rule will impose on small businesses.
b. consider less burdensome alternatives.
c. conduct a regulatory flexibility analysis.
d. adjust the rule to the satisfaction of the regulated businesses.
Dian and Elton buy a duplex in Fargo, North Dakota. On the death of either owner, that
owner’s interest in the duplex passes to his or her heirs. This is
a. a joint tenancy.
b. a life estate.
c. a tenancy in common.
d. ownership in fee simple absolute.
County Water & Sewer operates a public water supply system. County Water must send
to every household that it supplies with water an annual statement describing
a. County Water’s financial situation and material facts that might affect it.
b. other operations, such as irrigation and water conservation, in which County Water is
involved and to what extent.
c. parties who might be held liable if pollution problems arise.
d. the source of the water, and any contaminants and health concerns.
The U.S. Fish and Wildlife Service discovers that Grosse Farm Fisheries, Inc. has
violated a federal regulation. If no negotiated settlement can be reached, the agency will
most likely
a. issue a formal complaint against Grosse Farm.
b. do nothing.
c. file a petition with the U.S. Supreme Court.
d. impose immediate sanctions on Grosse Farm.
Bev is an employee of the accounting firm Catz & Douglas, which obtains key-person
life insurance on Bev in the amount of $1 million from Equity Insurance Company. Bev
quits Catz & Douglas to join Financial Analysis, LLC. Bev dies. Under the principle of
insurable interest, Equity Insurance must pay the $1 million to
a. Bev’s spouse Grant.
b. Catz & Douglas.
c. Financial Analysis.
d. no one.
Rita eats Salsa Caliente made and sold by Salsa Zest Corporation and becomes ill. Rita
files a suit against Salsa Zest, alleging that its product was not merchantable.
Merchantable food is food that is fit to eat on the basis of
a. consumer expectations.
b. what constitutes a perfect condition.
c. its maker’s intentions.
d. its producer’s experience.
Noah and Orin do business as partners in Personnel Providers, an employment agency.
In most states, for purposes of suing and being sued, Personnel Providers would be
treated as
a. an aggregate of the individual partners.
b. a natural person.
c. an entity.
d. a non-existent party.
The payment of Olinda’s debt to Pari is guaranteed by Olinda’s personal property. Pari
is most likely to perfect her interest by
a. insuring Olinda’s property for the full amount of its value.
b. calculating the precise amount of Olinda’s debt.
c. correcting grammatical errors in the parties’ written agreement.
d. filing a financing statement with the appropriate authority.
Febo is an employee of Guitar & Drum Company. Guitar & Drum’s employee manual
states that workers, such as Febo, will be dismissed only for good cause. With respect to
the employment-at-will doctrine, this is
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.
Outdoor Outfitters Store contracts to buy fifty tents from Pitched Camp, Inc. Unless the
contract states otherwise, it is assumed to be
a. none of the choices.
b. a destination contract.
c. a shipment contract.
d. a delivery ex-ship.
Fuel Connector Products, Inc., agrees to sell Go-Flo, Inc., a certain quantity of hose
couplings and fittings, but the contract does not specify a place of delivery. Go-Flo is
expected to pick up the goods. The place of delivery is
a. Fuel Connector’s place of business.
b. Go-Flo’s place of business.
c. the current location of the hose couplings and fittings.
d. the U.S. Postal Service office nearest to Go-Flo’s place of business.
Finnegan dies without a will, with no surviving spouse or child. Finnegan’s survivors
include his grandson Gallagher, his niece Hailey, and his cousin Innis. In most states,
his estate would pass to
a. Gallagher.
b. Hailey.
c. Innis.
d. the state.
Vito borrows $110,000 from Watershed Bank to buy a home. If he fails to make
payments on the mortgage, the bank has the right to repossess and auction off the
property securing the loan. This is
a. a short sale.
b. forbearance.
c. foreclosure.
d. the right of redemption.
Dallas asks Eddie if he can store his furniture in Eddie’s garage while he serves a tour of
duty with the U.S. Marines Corps. Eddie agrees. This is
a. a bailment.
b. accession.
c. a gift causa mortis.
d. abandoned property.
Edgar, Jon, and Phoebe do business as partners in Reliable Movers. Phoebe develops a
debilitating illness and can no longer work. Phoebe
a. may dissociate from the partnership.
b. may not dissociate from the partnership without the other partners’ consent.
c. must dissociate from the partnership.
d. may terminate the partnership.
BBQ, Inc., makes and sells grills to Cook’s Choice and Grill Mart, retailers of kitchen
appliances, outdoor cooking equipment, and related utensils. Their contracts limit
consequential damages when the loss is commercial in nature. This is prima facie un-
conscionable with respect to
a. BBQ.
b. Grill Mart.
c. Cook’s Choice.
d. none of these parties.
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, Fay is most
likely
a. liable for insider trading.
b. not liable because Fay did not prevent others from profiting.
c. not liable because Fay did not misappropriate any information.
d. not liable because Fay does not work for Eureka!
Cotton Products Corporation is a public company whose shares are traded in the public
securities markets. With respect to financial and other significant information
concerning its securities, the Securities Act of 1933
a. imposes increased responsibility on chief corporate executives.
b. prevents insiders from trading among themselves.
c. requires disclosure.
d. creates a ‘safe harbor” for companies to make forward-looking statements.
The Association of Organic Food Producers, which does not include all organic farmers
and ranchers, refuses to deal with any parties who do not carry the products of its
members. This group boycott is
a. a situation 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.
Orson signs a check “pay to the order of Painless Dental” drawn on Orson’s account in
Quantum Bank. To impose liability on Orson if the bank dishonors the check, Painless
Dental should present it for payment within
a. one year.
b. six months.
c. ten days.
d. thirty days.
California Produce Company hires Drew to work on California Produce’s shipping
dock, checking outgoing loads and dispatching the company’s drivers. With respect to
California Produce, Drew is most likely
a. an agent.
b. an independent contractor.
c. a principal.
d. a work for hire.
Custom Auto Body & Detailing, LLC, is a limited liability company. Unless indicated
otherwise on the Custom Auto’s federal tax form, the firm will be taxed as
a. a cooperative.
b. a corporation.
c. a joint venture.
d. a partnership.
Kurt writes a check on his account at Liquidity Bank to Mandy, a famous singer. The
person claiming to be Mandy is an imposter, however, named Nila. Nila indorses the
check to Outsize Portions, a casino, restaurant, and nightclub, for which Liquidity Bank
cashes it. Ultimately, the loss will most likely fall on
a. Kurt.
b. Liquidity Bank.
c. Mandy.
d. Outsize Portions.
Technicians Union represents the workers of Unix Toys. A strike by the union will be
legal if the strikers
a. form a picket line.
b. form a massed barrier and deny management and nonunion workers access to Unix
Toys’s plant.
c. stay in Unix Toys’s plant without working.
d. all of the choices.
Amelia executes a separate written instrument to amend her prior will. This separate
document is
a. a codicil.
b. a holographic will.
c. a living will.
d. a nuncupative will.
Roderick negotiates a bearer instrument to Shauna by
a. assignment.
b. delivery.
c. indorsement.
d. promising to pay it.
Lyndon owes $10,000 to Metro Bank. As a prejudgment remedy to collect the debt,
Metro could use a writ of
a. contribution.
b. attachment.
c. execution.
d. subrogation.
Lock & Key Storage Pods and Maxi Discount Stores enter into a contract for a lease of
ten storage pods of a certain size. Lock & Key delivers ten pods, but they are not the
right size. Maxi Discount
a. cannot reject the entire shipment.
b. can reject the entire shipment.
c. must accept the entire shipment.
d. must reject the entire shipment.
Restocking Warehouse Corporation keeps a file of I-9 verifications forms. To inspect
this file, the appropriate government officer must obtain
a. a subpoena and a warrant.
b. a subpoena or a warrant.
c. a special executive order.
d. none of the choices.
Fact Pattern 28-1B
Truck & Transfer Inc. agrees to pick up two containers for United Home Products
Corporation and store their contents, to be delivered later. While Truck & Transfer un-
loads one container, the other disappears from the company’s loading dock.
Refer to Fact Pattern 28-1B. Truck & Transfer can avoid liability
a. by proof that Truck & Transfer was not negligent.
b. by proof that Truck & Transfer’s loading dock is in a high-crime area.
c. by proof that United Home was negligent in hiring TTC.
d. under any circumstances.
Fact Pattern 11-1B
Kyla replaces Lomax in his job at Motor Vehicle Manufacturing Corporation (MVMC).
Refer to Fact Pattern 11-1B. To succeed with an age-discrimination claim against
MVMC, Lomax will have to show that
a. Kyla is not qualified for Lomax’s job.
b. Lomax is qualified for his job.
c. MVMC’s qualifications for Lomax’s job are too high.
d. no one could do Lomax’s job as well as he could.
Often, whether a holder will be able to obtain payment on an instrument will depend on
whether he or she is a holder in due course.
To recover workers’ compensation, an employee must prove that an injury did not occur
on the job or in the course of employment.
Employers can avoid certain tax liabilities by hiring independent contractors instead of
employees.
If a limited liability company (LLC) agreement does not cover a topic, the state LLC
statute will govern.
Check 21 requires banks to change their current check-collection practices.
A credit-card company must send monthly bills to cardholders twenty-one days before
the due date.
The doctrine of commercial impracticability does not extend to problems that could
have been foreseen.
The shelter principle extends the benefits of HDC status and is designed to aid the HDC
in readily disposing of the instrument.
Merchants must issue a refund within a specified period of time when a consumer
cancels an order.
A method of accomplishing a property transfer without a will is through the joint
ownership of property.
Restrictions on the transfer of shares in a close corporation are usually void.
An agent has the implied authority to do what is reasonably necessary to accomplish the
objectives of the agency.
Like statutory law, administrative law is created by legislatures.
The Federal Reserve Board of Governors has issued a regulation that governs credit
provisions associated with sales contractsRegulation Z.
Trade fixtures belong to the owner of the property on which they are installed
regardless of the purpose of their installation or who installed them.
Proceeds from the disposition of collateral after default are distributed in a certain order
with any surplus generally going to the debtor.
Unlike statutes, administrative regulations do not have a binding effect.
An executive officer of a corporation normally can conduct ordinary business
transactions without obtaining written authority from the corporation.