Debit & Credit Accounting Services and Brickwork Construction Company negotiate a
contract. Terms in the contract that are the subject of separate negotiation will be con-
sidered subordinate to
a. standardized terms.
b. terms that can be understood only by lawyers and judges.
c. terms that are not negotiated separately.
d. none of the choices.
Tour Vista, an online travel company, buys blocks of rooms from Skyview Towers, a
hotel in River City, at a wholesale rate. Tour Vista reslls the rooms to consumers at a
retail rate. In recent efforts to collect taxes from e-commerce, some cities claim that
hotel occupancy taxes should be assessed and remitted directly to the cities based on
a. the dire financial straits of the cities during the latest recession.
b. the retail rates of the rooms.
c. the states of residency of the consumers who reserve the rooms.
d. the wholesale rates of the rooms.
Hubert borrows $100,000 from Integrity Mortgage Mart to buy a home. Soon after
obtaining the mortgage, Integrity convinces Hubert to refinance. This is
a. a short sale.
b a subprime mortgage.
c. loan flipping.
d. steering and targeting.
Fact Pattern 14-1
Internet Cafes, Inc., contracts to buy all of its requirements for coffee, at a minimum of
1 million pounds per year, from Java Corporation for six years. After three years,
Internet tells Java that it plans to sell its company to Kwik Eateries, Inc. Kwik refuses
to assure Java that it will continue Internets contract.
Refer to Fact Pattern 14-1. Kwiks refusal constitutes
a. a justified response based on Kwiks relation to the contract.
b. an assignment of Internets rights under the contract.
c. a reasonable suspension of performance under the contract.
d. a repudiation of the contract.
Rite Contractors, Inc., agrees to build a motel for Sleep Inn Corporation. The project
proceeds according to plan, but before it is done, Sleep tells Rite to quit. Rite may
recover
a. the contract price less costs of materials and labor.
b. the contract price.
c. the costs needed to complete construction.
d. profits plus the costs incurred up to the time of the breach.
Trey, an agent for Uno Music Corporation, executes an unauthorized contract with
Variety Recording, Inc., that is highly advantageous to Uno. Variety withdraws from the
deal before Uno ratifies the contract. The contract is
a. valid.
b. variable.
c. void.
d. voidable.
Justice For All, a political organization, files a claim to challenge a Colorado statute that
limits the liberty of all persons to broadcast “annoying radio commercials. This claim is
most likely based on the right to
a. engage in interstate commerce.
b. privacy.
c. procedural due process.
d. substantive due process.
Petra signs a check payable to Quincy, who indorses the back, gives it to Regional
Credit Union, and receives cash. The transfer of the check from Quincy to the credit
union is
a. an assignment.
b. a negotiation.
c. a payment.
d. a sale.
Sullivan and Taylor want to form a corporation to provide catering services. The first
step in the incorporation procedure is to
a. file the articles of incorporation.
b. hold the first organizational meeting.
c. secure a corporate name.
d. select a state in which to incorporate.
Cow Country Corporation (CCC) sells half of its land to the Double R Ranch. On the
land is a reservoir. In the deed, CCC retains the right to remove a limited amount of
water per day from the reservoir. This right is
a. a leasehold estate.
b. a license.
c. an easement.
d. a profit.
Fact Pattern 11-2
Bell Medical Education Service enters into a contract to employ Chris as an instructor
for two years to begin May 1. One month before the term begins, Bell is underbid by a
competitor and loses a major client, Delta Hospital Center. Bell now refuses to hire
Chris.
Refer to Fact Pattern 11-2. Under the circumstances, with respect to damages, Chris can
a. bring an action immediately.
b. bring an action only after the contracts two-year term begins.
c. bring an action only after the contracts two-year term ends.
d. do nothing.
Bryces accountant is Caleb and his attorney is Delilah. All states protect, as privileged
information, Bryces communications with
a. Caleb and Delilah.
b. Caleb only.
c. Delilah only.
d. neither Caleb nor Delilah.
Rich Financial, Inc., files a financing statement regarding a transaction with Supreme
Business Company. To be valid, the financing statement must contain all of the
following except
a. a description of the collateral.
b. a statement of the purpose for the transaction.
c. Richs name.
d. Standards name.
Vacation Adventures, Inc., and Wild River Tour Company plan to merge. Most likely,
the articles of merger will be filed with
a. the county recording office.
b. the local chamber of commerce.
c. the states secretary of state.
d. the national travel agents association.
Delia refuses to pay Ewing $500 in cash on their contract to repair certain theater sets,
which Ewing still possesses. Ewings lien on the sets will terminate
a. if Ewing continues to maintain possession.
b. if Ewing does not file a written notice of lien within thirty days.
c. if Ewing voluntarily surrenders possession.
d. within thirty days.
Fact Pattern 16-1
Ewa signs an instrument unconditionally promising to pay to “First State Bank $5,000
with interest in installments with the final payment due June 1, 2012.
Refer to Fact Pattern 16-1. With respect to this instrument, First States Bank is
a. the drawee.
b. the drawer.
c. the maker.
d. the payee.
Fact Pattern 17-1
Echo takes her car to Fix-It, Inc., which repairs the car and bills Echo for $500. Echo
writes out a check drawn on Capital Bank, but later, believing that Fix-It did not repair
the car properly, issues a stop-payment order.
Refer to Fact Pattern 17-1. Capital Bank
a. is liable to Fix-It for the amount of the check.
b. must stop payment if Capital has a reasonable time to act.
c. need not stop payment unless Echo had a valid reason to act.
d. need not follow Echos order unless the check was certified.
Elle buys a new textbook for $100 and a used car for $5,000, and signs a one-year lease
for an apartment for $1,000 monthly rent to start at the beginning of the next month.
The Statute of Frauds covers
a. the apartment lease, and the textbook and car purchases.
b. the apartment lease and the car purchase only.
c. the apartment lease only.
d. the textbook and car purchases only.
Fact Pattern 20-1
Northeast Bank makes mortgage loans to consumers, including Mai, to buy homes.
Refer to Fact Pattern 20-1. Under federal law, disclosures with respect to one of
Northeasts loans must be provided
a. a certain number of days after the loan is finalized.
b. a certain number of days before the loan is finalized.
c. at the same time at which the loan is finalized.
d. at whatever time is most rational and appropriate.
Lou claims that he and Myra entered into an implied-in-fact contract. To establish this
contract, it is not necessary to show that
a. a court imposed a promise in the interest of fairness.
b. Lou expected to be paid for providing services or property.
c. Lou provided Myra with services or property.
d. Myra failed to reject services or property provided by Lou.
Jean is playing a computer game on a bad disk that melts in her drive, starting a fire that
injures her hands. Jean files a suit against K-Tech, Inc., the games manufacturer.
K-Tech is held liable under the doctrine of strict liability. A significant application of
this doctrine is in the area of
a. cyber torts.
b. intentional torts.
c. product liability.
d. unintentional torts.
Lynn files a suit against Karl. Karl denies Lynns charges and sets forth his own claim
that Lynn breached their contract and owes Karl money for the breach. This is
a. a counterclaim.
b. a crosclaim.
c. an affirmative defense.
d. an irrelevant response.
Grain from Harvest Farms is wrongfully commingled with grain from Idyllic Fields,
which obtains possession of all of the grain. This is
a. a bailment.
b. accession.
c. confusion.
d. production.
Cory employs Daily Delivery Agency as an agent under a written agreement that
describes the rights and duties of both parties. This is
a. apparent authority.
b. equal authority.
c. express authority.
d. implied authority.
Expert Stitching Corporation enters into a contract to sell denim clothing to Fine
Fashion Company, which in turn sells a pair of jeans to Grady, a consumer. In contrast
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.
Digital Architecture, Inc., enters into a contract to design robotic software for Chassis
Assembly Corporation. The requirements of this, and any other, contract include
a. something of value received or promised to convince a person to make deal.
b. persons whose characteristics qualify them as implied parties.
c. negotiation and compromise.
d. a paragraph that describes the contracting parties intent.
Mariah works in the public relations department of New Trends Sales Company. Her
job includes portraying New Trendss activities in their best light. In this context, ethics
consist of
a. a different set of principles from those that apply to other activities.
b. the same moral principles that apply to non-business activities.
c. those principles that produce the most favorable financial outcome.
d. whatever saves New Trendss “face.
In a dispute over a sale involving a bicycle, Dain argues that as to this deal Elles Hobby
Shop, where Dain bought the bike, is a merchant. A court may determine whether Elles
is a merchant by assessing whether
a. it has sold any bikes within the last year.
b. it holds itself out by occupation as having knowledge or skill unique to the bike in
the transaction.
c. its owner enjoys biking.
d. it subscribes to Bike, a biweekly trade magazine.
Premier Clothing, Inc., a U.S. firm, obtains a judgment in a U.S. court against Quang
Tri, Ltd., a Vietnamese business. Whether the courts judgment will be enforced by a
court in Vietnam depends on the Vietnamese courts application of
a. the act of state doctrine.
b. the doctrine of sovereign immunity.
c. the principle of comity.
d. the World Trade Organization.
Kenyon files a petition for bankruptcy. Kenyon must include with the petition
a. a plan to turn over his future income to the trustee.
b. a certificate proving attendance at a credit-counseling briefing.
c. a provision of adequate means for the petitions execution.
d a statement of preference for one creditor over another.
In Nebraska, the highest-ranking (superior) law is
a. a case decided by the Nebraska Supreme Court.
b. a provision in the Nebraska constitution.
c. a rule created by a Nebraska state administrative agency.
d. a statute enacted by the Nebraska legislature.
Fact Pattern 19-1
Rico signs a lease on behalf of Start-Up Games, Inc., with Tower Office Suites. As part
of the lease, Rico signs a document titled “GUARANTY, which states that it is “an
absolute guaranty of the leases performance.
Refer to Fact Pattern 19-1. The reason for the result in the previous question is that
a. Rico signed a “GUARANTY.
b. Tower Office Suites owns the property and can re-rent the premises.
c. the other tenants can equitably absorb a slight increase in rent.
d. Start-Up will likely move out when it stops paying the rent.
Pizza & Cookies, LLC, is a limited liability company. Among its members, a dispute
arises that the operating agreement and the state LLC statute do not cover. The dispute
is governed by
a. no law.
b. the federal Uniform LLC Law.
c. the principles of partnership law.
d. the state corporation statute.
A public policy underlying the imposition of strict product liability is that consumers
should be protected against unsafe products.
The assignment of the same contract right to two different parties results in their
‘splitting the difference.
An implied warranty of merchantability arises in every sale or lease by a merchant who
deals in goods of the kind sold or leased.
In a limited partnership, a limited partner is personally liable to the partnerships
creditors.
Unlike an ordinary bailee, a warehouse company cannot limit its liability.
An illegal contract is valid if the parties to it were unaware of the illegality.
A fanciful use of ordinary words may be trademarked.
An instrument is not defective simply because it is overdue.
A partners profit from a partnership is taxed as income to the firm.
A courts direction to a party to do or to refrain from doing a particular act is a
rescission.
A contract cannot be void if its purpose is legal.
There are additional disclosure requirements for a loan that carries a high rate of
interest or entails high fees for the borrower.
When two conflicting security interests are unperfected, the first to attach has priority.
Because the Internet is vast, the unauthorized use of anothers mark in a domain name is
generally permissible.
If an action is ethical from an outcome-based perspective, it is always ethical from a
duty-based perspective.