Ray is a minor who borrows $1,500 from Savings Bank and buys an insurance policy
from Tristate Insurance Company. Under some circumstances, Ray can disaffirm the
contract for
a. the loan only.
b. the insurance policy only.
c. both the loan and the insurance policy.
d. neither the loan nor the insurance policy.
Margaret has a tomato farm. When Margaret sells her farm to Jackie she does not
include the tomatoes. Margaret sells the tomatoes separately to Wendy. The sale of the
tomatoes is governed by
a. the Uniform Commercial Code.
b. common law.
c. real property law.
d. personal property law.
Mary is buying a house. She issues a promissory note for the unpaid balance on the
house that is secured by a mortgage on the house. The promissory note is called a(n)
a. certificate of deposit.
b. cashier’s check.
c. installment note.
d. mortgage note.
May is a stockbroker. Due to May’s statements, Nora believes that the price of OK
Goods, Inc. (OKGI), a widely traded stock, is going to increase substantially. Nora buys
500 shares of OKGI at $10 per share, but the price soon drops to $2. Nora can
successfully recover
a. nothing.
b. the amount of the purchase price.
c. the amount of the purchase price plus the expected increase.
d. the amount of the purchase price plus the unexpected decrease.
Ollie negotiates an order instrument to Phil by
a. assignment of its rights under a contract.
b. delivery with any necessary indorsement.
c. making an unconditional promise to pay.
d. presenting it in response to a demand by B.
Phil is an insurance broker. This means that Phil is
a. an employee of an insurance company.
b. an independent contractor.
c. not allowed to deal directly with an insurance company.
d. in charge of determining the appropriate premium for an insurance policy.
Mae is granted immunity after she agrees to testify about a crime. Mae has an absolute
privilege against self-incrimination and
a. can be prosecuted only for a crime about which she agreed to testify.
b. cannot be prosecuted for any crime.
c. cannot refuse to testify on Fifth Amendment grounds.
d. can refuse to testify on Fifth Amendment grounds.
Biff signs a note “payable to the order of County Credit Union.” Unless Biff has a valid
defense against payment, Biff’s liability on this note is
a. lateral.
b. primary.
c. secondary.
d. tertiary.
In 2010, Online Marketing Corporation registers its trademark as provided by federal
law. After the first renewal, this registration
a. is renewable every ten years.
b. is renewable every twenty years.
c. runs for the life of the corporation plus seventy years.
d. runs forever.
Skyla and Terry want to form and do business as Unique Boutique Corporation. Its
existence depends generally on
a. city or county corporate codes.
b. the Entrepreneur’s Corporate Handbook.
c. the federal Administrative Procedure Act.
d. state law.
Bud approves on behalf of Codybut without authorizationa contract with Dik to build a
new silo. Cody does not ratify the contract. Later, Dik tries to enforce the deal. This
attempt will be
a. partly successful.
b. partly unsuccessful.
c. totally successful.
d. totally unsuccessful.
Mary admires Julia’s collection of scarves. Julia says “I might sell you a few someday,
if I get tired of them.” Julia’s statement is
a. an effective offer.
b. not an effective offer because it has not been communicated to Mary.
c. not an effective offer because the Julia does not show a serious intent to be bound.
d. an acceptance.
Following negotiations with Coastal Distribution Company, Briggs Trucking, Inc.,
enters into an informal contract. This means that the parties’ contract
a. requires no special form.
b. is not enforceable.
c. is a quasi contract.
d. is voidable.
To drive its competitors out of a certain geographic segment of its market, Fryin”
Potatoes, Inc., sets the prices of its products below cost for the buyers in that area. This
is
a. a refusal to deal.
b. business acumen.
c. predatory bidding.
d. price discrimination.
Beth goes to Dr. Carlton for surgery. Carlton says that Beth should be fully healed
within a week. Beth is not healed within a week. With respect to breach of contract,
Carlton is
a. liable.
b. not liable, because surgery is not a proper subject for a contract.
c. not liable, because the statement was an opinion.
d. not liable, but Beth is excused from paying Carlton.
The functions of the Social Security Administration, like those of other administrative
agencies, include
a. adjudication.
b. declaration.
c. enunciation.
d. pronunciation.
Moore Properties, Inc., offers in writing to sell to Lawn Acres Development
Corporation a certain half-acre of land for “$112,000.” After Lawn Acres signs the offer
in acceptance and returns it, Moore discovers that the price should have been stated as
“$121,000.”
Refer to Fact Pattern 13-1. The effect of Moore’s misstatement of the price will most
likely fall on
a. Moore and Lawn Acres, who must split the difference.
b. Moore only.
c. Lawn Acres only.
d. neither Moore nor Lawn Acres.
George is the founder of Excellent Exotics Corporation. Wilson is a shareholder and
director and Bill is an officer. The day-to-day operations of Excellent Exotics are
overseen by
a. Bill.
b. Wilson.
c. George.
d. George and Wilson.
Earl holds 1,000 pounds of perishable fruit in storage for Fresh Food Corporation. Fresh
Food does not pay for the storage. Earl sells the fruit to Green Grocers, Inc. This sale
represents
a. a breach of contract.
b. a mitigation of damages.
c. rescission and restitution.
d. specific performance.
Delia, a minor, enters into a contract to buy a dozen movies from eHD TV Stream, Inc.,
an Internet video service. Soon after reaching the age of majority, Delia attempts to
disaffirm the contract. eHD files a suit against her. The court will most likely consider
the contract ratified if it is
a. executed.
b. executory.
c. express.
d. emancipated.
Robert is selling his used lawnmower. He wants to disclaim any implied warranties.
Robert
a. cannot disclaim implied warranties.
b. should include a written disclaimer that the lawnmower is being sold as is.
c. should orally disclose all known faults of the lawnmower.
d. should include a written warranty of title.
Julia owns and operates Collectable Dolls without creating a separate business
organization. She receives all the profits from the doll sales. Collectable Dolls is most
likely a
a. general partnership.
b. limited liability partnership.
c. sole proprietorship.
d. limited liability company.
Bren leases an apartment from Cris for one year. After two months, she sublets the
premises for the next six months to Dee, without obtaining Cris’s consent. Dee pays the
rent for only four months. For the last two months of Dee’s six-month term, Bren is
a. liable for the rent, because Dee defaulted.
b. liable for the rent, because the sublease lacked Cris’s consent.
c. not liable for the rent, because Bren does not own the apartment.
d. not liable for the rent, because Bren sublet the premises to Dee.
Jared is ten years old. He may NOT sign a valid contract for the sale of
a. tobacco.
b. baseball cards.
c. tennis balls.
d. candy bars.
Peter offers to pay Quik Delivery (QD) $50 if it picks up and delivers to him a package
of business documents from Rico within 30 minutes. QD can accept the offer only by
meeting the deadline. If QD performs as directed, these parties will have
a. a bilateral contract.
b. a trilateral contract.
c. a unilateral contract.
d. no contract.
Which of the following is NOT likely to be required to obtain a professional license?
a. A certain education and a passing score on a state-administered exam
b. Good moral character
c. A fee
d. The sale of an ongoing business
Rhea is a director of Spex Corporation, which makes and sells sunglasses and other
eyewear. As a Spex director, Rhea sits on the board, which
a. governs Spex.
b. is governed by the Spex incorporators.
c. is governed by the Spex officers.
d. is governed by the Spex shareholders.
Patty creates a formal will designating how she would like her estate distributed after
she dies. Patty is a(n)
a. testator.
b. heir.
c. executor.
d. administrator.
Von seeks information about Wes and other well-known businesspersons under the
Freedom of Information Act. To obtain the information, Von must
a. agree not to reveal any trade secrets.
b. reasonably describe the information.
c. get a court order.
d. have Wes’s and the others’ permission.
Barney offers to sell his Call Marketing Center to Domino for $100,000. Domino
replies, “The price is too high. I will offer to buy it for $90,000.” Domino has
a. accepted the offer.
b. made a counteroffer without rejecting the offer.
c. rejected the offer and made a counteroffer.
d. rejected the offer without making a counteroffer.
Eduardo is an employee of Free-Flo Plumbing Corporation. With respect to the
workplace, under federal health and safety statutes, Free-Flo
a. has a duty to maintain it free from recognized hazards.
b. can discharge an employee who files a complaint of a violation.
c. can discharge an employee who refuses to work in a high-risk area.
d. does not have to report work-related injuries until there have been eleven “events.”
Speedy Shipping Corporation applies to TransInsurance Company for a fire insurance
policy on Speedy’s warehouse. On the application, Speedy misrepresents the age of the
property to obtain a lower premium. When a fire soon destroys the warehouse,
TransInsurance can
a. deny payment, because a fire destroyed Speedy’s warehouse.
b. deny payment, because of Speedy’s fraud in the application.
c. not deny payment, because a fire destroyed Speedy’s warehouse.
d. not deny payment, because the application is not part of the policy.
A contract that is void from the outset can be enforced in some circumstances.
A hacker is someone who uses one computer to break into another.
A buyer in the ordinary course of business cannot know about the existence of a
perfected security interest.
Railroads are eligible for Chapter 11 relief.
If a parent directs a child to commit a tort, then the parent can be held liable for the tort
committed by their child.
When an instrument is dishonored, only written notice is sufficient to hold secondary
parties liable.
A person may be able to understand the nature and effect of entering into a certain
contract but lack the capacity to engage in other activities.
A borrower with an interest-only mortgage pays only the interest portion of the monthly
payments for a specified period of time.
On a sheet of paper, Elle writes, without her signature, “I acknowledge that I owe Frank
$600, payable out of the proceeds of the sale of my car, a 1995 Honda Civic, which I
promise to advertise “For Sale” next week. Payment is to be made on or before six
months from today.” What type of instrument is this? Is it negotiable? If not, why not?
A trademark need not be registered to support a trademark infringement action.
Rescission is the substitution of one party to a contract for a third party, who agrees to
assume the contractual duties.
“Regulation Z” is a generic term for any consumer protection law.
Credit protection is an area of consumer law that is NOT regulated by federal statutes.
A special form is required to create a delegation of duties.
The minimum number of members of a body of officials that must be present before
business can validly be transacted is known as a quorum.
The articles of corporation cannot exclude or limit shareholders’ voting rights.