Maxi Retail Corporation is subject to a decision by the National Labor Relations Board.
Maxi Retail appeals the decision, arguing that it is arbitrary and capricious. This could
mean that the decision
a. followed a consideration of legally appropriate factors.
b. justifiably changed the agency’s prior policy.
c. was accompanied by a rational explanation.
d. was plainly contrary to the evidence.
Pipes & Culverts Company orders six irrigation pumps from Quality Plumbing, Inc.
The pumps are stored in Restorers Warehouse. Under the terms of the order, Quality
must give Pipes & Culverts a warehouse receipt for the goods, which the buyer will
then pick up. Title to the goods passes to Pipes & Culverts when
a. Quality stores the drives.
b. Pipes & Culverts orders the drives.
c. Pipes & Culverts picks up the drives.
d. Quality gives Pipes & Culverts a warehouse receipt for the drives.
Fact Pattern 2-1B
Bryn, Cornell, and Duke are general partners in Equity Lending, a consumer credit,
mortgage, and investment firm. Their agreement states that it is a breach of the
agreement for any partner to assign his or her interest to a creditor without the consent
of the other partners.
The partners decide to dissolve Equity Lending. Duke collects and distributes the firm’s
assets. This results in
a. nothing with respect to the firm’s existence.
b. the continuation of the firm’s business.
c. the termination of the firm’s legal existence.
d. the temporary suspension of the firm’s business.
Root & Branch is a Registered Public Accounting Firm. Root & Branch performs
auditing services for Sales & Service Company. Under the Sarbanes-Oxley Act of 2002,
at the same time, for the same company, Root & Branch can also provide
a. bookkeeping and other services related to accounting records and financial
statements.
b. none of the choices.
c. appraisal and valuation services.
d. financial systems design and implementation.
George buys from Haul-U Corporation the exclusive right to use the Haul-U trademark
and sell and lease Haul-U-brand products in a certain area. Their franchise agreement
requires George to pay certain administrative expenses. Their agreement may also
require George to pay a percentage of the franchisor’s
a. advertising costs.
b. personal expenses.
c. retirement income.
d. none of the choices.
Sarah has a checking account at Secure Bank. Sarah buys her roommate Sophie’s two
tickets to a Broadway musical for $200. Sarah writes Sophie a check for the tickets. In
this situation, Secure Bank is
a. the drawee.
b. the indorser.
c. the payee.
d. the drawer.
Fredrik signs a check “pay to the order of Gennifer” drawn on Fredrik’s account in
Harborside Bank to buy Gennifer’s jet ski. Fredrik asks the bank to indicate on the face
of the check that it will accept it when Gennifer presents it for payment. If the bank
agrees, this will be
a. a cashier’s check.
b. a certified check.
c. a teller’s check.
d. a traveler’s check.
Lovey is a shareholder of Made-2-Order Manufacturing Corporation with preemptive
rights. With these rights, Lovey can
a. buy a prorated share of a new issue of stock before other buyers.
b. choose to have Made-2-Order act exclusively in a certain area.
c. “preempt” managerial decisions that affect shareholders.
d. sell a prorated share of a new issue of stock before other sellers.
Fact Pattern 21-1B
Resource Drilling Company buys equipment for use in its operations, borrowing $1
million from Security Finance Corporation for a security interest in the equipment. The
next day, Resource Drilling borrows $500,000 from Touchstone Loans, also for a
security interest in the equipment. Resource Drilling defaults on both loans.
Refer to Fact Pattern 21-1B. Suppose that two weeks after Resource Drilling takes
possession of the equipment, Security Finance and Touchstone Loans file financing
statements, with Touchstone Loans filing first. In that circumstance, the party with
priority to the equipment is
a. Resource Drilling.
b. Security Finance and Touchstone Loans proportionately.
c. Security Finance only.
d. Touchstone Loans only.
Alain is chairman of the board of Barber & Beauty Supply Corporation. Consuela, a
consumer, is injured while using a Barber & Beauty product. She sues Barber & Beauty
and Alain individually. The corporation may pay Alain’s legal fees under
a. under the director’s right to participation.
b. under the director’s right to compensation.
c. under the director’s right to indemnification.
d. only on the firm’s own initiative.
Pizza Now!, a delivery, dine-in, or takeout restaurant, buys a delivery vehicle on credit
from Quality Auto & Truck Dealers Corporation, but does not make a payment on the
loan for several months. Quality Auto repossesses the vehicle by towing it from a public
street. Pizza Now! sues Quality Auto for breach of the peace. Pizza Now! will probably
a. not prevail, because Quality Auto did not use judicial process.
b. not prevail, because the repossession was not a breach of the peace.
c. prevail, because Pizza Now! did not default on the loan.
d. prevail, because the repossession was a breach of the peace.
Joan borrows money from Jake under a security agreement. After borrowing the money,
Joan buys a new kayak. The kayak is considered
a. a floating lien.
b. after-acquired property.
c. a future advance.
d. proceeds.
Toro, S.A., a company based in Mexico, enters into a contract for the purchase of
portable livestock fencing from United Fencing Company, which is based in the United
States. This contract is governed by
a. Mexican law.
b. the provisions in the laws of both countries that are similar.
c. the Uniform Commercial Code.
d. the United Nations Convention on Contracts for the International Sale of Goods.
Jumbo Juice Inc. offers entrepreneurs the opportunity to operate a franchise under the
Jumbo Juice trade name as a member of a select group of dealers that engage in retail
juice sales.
Jumbo Juice makes earnings claims to potential investors. For those claims, the
franchisor
a. can have a hypothetical basis.
b. must have a reasonable basis.
c. must have an actual basis.
d. can have any or no basis.
Kari is the sole proprietor of Living Earth Garden Shop. As a sole proprietor, on the
business’s profits, Kari pays
a. no income taxes.
b. only personal income taxes.
c. only business income taxes.
d. both personal and business income taxes.
Metro Loan Center refuses to offer mortgages to borrowers, often members of minority
groups, who live in poorer neighborhoods. This is
a. legal lending criteria.
b. reverse redlining.
c. redlining.
d. legitimate wealth-protection.
Cecilia borrows $20,000 from Debit & Credit Union to repair her home and to buy a
car. She buys a laptop from eStuf Store in a transaction financed by the seller. If these
parties are subject to the Truth-in-Lending Act, Regulation Z applies to
a. the car loan only.
b. the home repair loan only.
c. the retail installment sale only.
d. the car loan, the home repair loan, and the retail installment sale.
Kelly transfers shares of stock that she owns in Lone Starz Company to Max. A
shareholders’ meeting takes place before Max’s ownership is entered in Lone Starz’s
stock book. A vote at the meeting can be cast by
a. Kelly and Max.
b. Kelly only.
c. Max only.
d. neither Kelly nor Max.
To raise capital to form Business Apps Corporation with Cris, Dona sells bonds and
stock in other companies, and plans to register an initial public offering under the
Securities Act of 1933. SEC Rule l0b-5 covers
a. just about any form of securities.
b. only bonds.
c. only securities registered under the Securities Act of 1933.
d. only stock.
Brite Cosmetics Corporation purchases all of the assets of Color-All Lipsticks
Corporation. With respect to Brite Cosmetics’ liabilities, Color-All Lipsticks is
a. automatically responsible.
b. not responsible under any circumstances.
c. responsible if Color-All Lipsticks is a competitor of Bright Cosmetics.
d. responsible if the sale is actually a merger or consolidation.
Alana is a dissenting shareholder of Bulls-Eye Arrow Company whose management is
considering a tender offer by Crossbow, Inc. Alana and Bulls-Eye cannot agree on the
fair value of the stock. The value will be determined by
a. a court.
b. Alana.
c. Bulls-Eye.
d. Crossbow.
Luther leaves his pick-up truck at Midtown Auto Service for an oil change. This is
a. a bailment.
b. accession.
c. none of the choices.
d. production.
Lenders Bank files a financing statement regarding a transaction with Metro
Construction 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. Lenders’ name.
d. Metro’s name.
Instead of setting up a business to market her own products, Rita considers entering into
a distributorship franchise with Sports Equipment Corporation. This involves the
transfer of
a. a license.
b. a trade name.
c. the formula to make a certain product.
d. the ownership of the business.
Fact Pattern 20-1B
Michael contracts with Jill to fix the brakes on her Honda Civic. Jill leaves her car with
Michael, but refuses to pay when the work is done.
Refer to Fact Pattern 20-1B. If Michael imposes a lien on Jill’s car, it will end
a. in thirty days.
b. in sixty days.
c. when Michael voluntarily surrenders possession of the car.
d. when Jill obtains a court order requiring Michael to return the car.
Congress enacts a statute to outlaw a specific type of anticompetitive business
agreement. Like other laws that regulate economic competition, this law is referred to
as
a. a federal trade commission act.
b. an antitrust law.
c. an interstate commerce act.
d. a suppressive restraint on trade.
Residential Property Corporation owns apartment buildings in three states. Regarding
standards for maintenance of the buildings, Residential Property should consult
a. the applicable city ordinances and state statutes.
b. the previous owners.
c. the long-term tenants.
d. the Uniform Landlords’ Maintenance Manual.
Gwen applies for a homeowners’ insurance policy on her house with Home & Life
Insurance Company through Ivy, an agent who works for Home & Life. In this
transaction, Ivy is
a. an agent for both parties.
b. Gwen’s agent, and not Home & Life’s agent.
c. Home & Life’s agent, and not Gwen’s agent.
d. not an agent for either party.
Fact Pattern 20-2B
Robin’s home is in a state that has a $30,000 homestead exemption. Robin defaults on a
$60,000 debt that she owes to Suburban Mortgage Company. Robin’s home is sold at
auction for $80,000.
Refer to Fact Pattern 20-2B. Robin will receive
a. $0.
b. $30,000.
c. $50,000.
d. $60,000.
Orina hires Padget, a real estate broker, to sell her oceanfront house. The house is
destroyed in a hurricane before being sold. Padget is
a. Orina’s agent until Orina’s insurer pays Padget’s commission.
b. Orina’s agent until the destroyed house is sold.
c. Orina’s agent until the destroyed house is rebuilt and sold.
d. no longer Orina’s agent.
Energy Products Corporation and First Response Preparedness.com enter into a contract
for a sale of portable generators. Under a destination contract, the seller must
a. allow the buyer to reject the goods for any reason.
b. deliver the goods to a particular destination.
c. inspect the goods before tendering their delivery.
d. place the goods into the hands of a carrier.
Fact Pattern 15-2B
Belle draws a check on her account in Capital Credit Bank in New York, payable to
Distribution Marketing, Inc., in San Francisco. Distribution Marketing deposits the
check in its account at Equity Bank. Equity Bank deposits the check in the Federal
Reserve Bank of San Francisco, which transfers it to the Federal Reserve Bank of New
York. That Federal Reserve Bank sends the check to Capital Credit.Refer to Fact
Pattern 15-2B. Capital Credit, Belle’s bank, is
a. the cashing bank.
b. the depositary bank.
c. the intermediary bank.
d. the payor bank.
A limited liability limited partnership is a type of limited partnership.
If work is usually done under the employer’s direction, this indicates
independent-contractor status.
Equipment Manufacturing Company tells First Choice Supplies, Inc., that it needs an
adhesive to do a particular job. First Choice provides a certain brand. When it does not
perform to Equipment Manufacturing’s specifications, Equipment Manufacturing sues
First Choice, which claims, “We didn’t expressly promise anything.” What should
Equipment Manufacturing argue?
The contract term “delivery ex-ship” means that the risk of loss does not pass to the
buyer until the goods are properly unloaded from the ship or other carrier.
Constructive delivery is a general term for all of those acts that the law holds to be
equivalent to acts of real delivery.
Generally, a dissociated member of a limited liability company (LLC) has the right to
buy his or her interest in the LLC from the other members.
An employer can voluntarily pay overtime to ineligible employees.
Francesca, who is divorced, owns a house. She has no reasonable expectation of benefit
from the life of Gordo, her ex-spouse, but she applies for insurance on his life anyway.
She also obtains a fire insurance policy on the house, which she later sells. Five years
later, Gordo dies and the house is destroyed in a fire. Can Francesca obtain payment on
either the death of Gordo or the loss of the house? Explain.
The bank is liable to the payee or the holder of check in a civil suit if a check is
dishonored for insufficient funds.
To avoid the risk of loss from theft, a holder may convert a blank indorsement to a
special indorsement.
For an employer to successfully defend against a charge of a supervisor’s sexual
harassment, the plaintiff-employee must have taken a tangible employment action
against the supervisor.
A joint tenant cannot transfer his or her rights by sale or gift without the consent of the
other joint tenants.
The results of a consolidation are the same as those of merger.
Ralph gets his paycheck from Shakes n” Burgers Restaurant, his employer, and attempts
to deposit it in his account at Town Bank. Uri, the bank’s teller, notices that on the
check the amount stated in words is different from the amount stated in numerals.
Which amount can the bank lawfully credit to Ralph’s account?
An insurer has a duty to avoid paying a claim even if it means acting in bad faith.