Tyrone draws a check payable to “Cash and presents it to United Bank for payment.
This instrument is
a. a bearer instrument.
b. an order instrument.
c. valid but nonnegotiable.
d. void.
Green Landscape Company buys a backhoe on credit from Heavy Equipment
Corporation, but does not make a payment on the loan for several months. Heavy
repossesses the backhoe by towing it from a public street. Green sues Heavy for breach
of the peace. Green will probably
a. not prevail, because Heavy did not use judicial process.
b. not prevail, because the repossession was not a breach of the peace.
c. prevail, because Green did not default on the loan.
d. prevail, because the repossession was a breach of the peace.
GR8 Marketing Company and Hot Tunes, Inc., sign a document that states GR8 agrees
to create a marketing campaign for Hot and Hot agrees to pay GR8 for the service. GR8
and Hot have
a. an executed contract.
b. an express contract.
c. an implied contract.
d. a quasi contract.
Nate tells Opal, “I might sell the skis that I bought last fall since I havent used them and
the skiing season is almost over. This is
a. an acceptance of an offer.
b. an invitation to accept an offer.
c. an offer.
d. a statement of future intent.
Dirk, an employee of Ergonomic Elevators, Inc., pays Ferbie, an employee of
Ergonomics competitor G-Force Risers Company, for a secret G-Force pricing
schedule. This is
a. an effective marketing strategy.
b. commercial bribery.
c. creative legal bookkeeping.
d. money laundering.
According to the dissent in MedImmune, Inc., v. Genentech, Inc. case, a patent licensee
can challenge the validity of a licensed patent
a. only after breaching the license agreement.
b. only before breaching the license agreement.
c. without breaching the license agreement.
d. under no circumstances.
Lon enters into a contract to mine limestone in Micas quarry, sell it, and share the
profits on its sale with Mica. If the duties under this contract are discharged like those
under most contracts, the duties will be
a. assigned.
b. breached.
c. performed.
d. rescinded.
A contract between Donald and Chloe to lease commercial property contains an excul-
patory clause. This clause is
a. enforceable as a matter of public policy.
b. enforceable if either party is in a business important to the public.
c. enforceable if an event occurs to which the clause applies.
d. generally unenforceable.
Unity Production Company is suspected of employing illegal immigrants. The
government conducts random compliance audits and other enforcement measures
against those who might violate immigration laws through
a. the CIS.
b. the H1-B.
c. the ICE.
d. the NLRB.
Electric Autos, Inc., sells cars to consumers. To avoid liability for oral express
warranties, each sales agreement should note that a car is sold
a. as is.
b. in perfect condition.
c. subject to warranties included in the written contract only.
d. with no known defects.
Sights Unseen, Inc., (SUI) sells scopes with distinctively designed and made lenses and
mirrors to scientists. Telescopes, Etc. Corporation later begins to sell scopes with
identical set-ups of lenses and mirrors, without SUIs permission, to consumers. This is
most likely
a. copyright infringement.
b. patent infringement.
c. trademark infringement.
d. not infringement.
With a bill of lading, Cartage Common Carrier Company acknowledges possession of
certain goods and contracts to deliver them. Cartage is
a. a bailee.
b. a buyer in the ordinary course of business.
c. a good faith purchaser for value.
d. an F.O.B.
Sid rents an apartment from Town Properties, Inc. The lease, which ends on May 31,
does not include an option for renewal, and Sid and Town do not discuss whether Sid
can stay on at the end of the term. On June 1, Sid has
a. an implied option to renew the term.
b. a right to remain contingent on notice from Town.
c. a right to remain subject to notice to Town.
d. no right to remain.
Sam, an engineer, supervises the construction of a new bridge. When the bridge col-
lapses due to faulty construction, Sam is sued by those injured in the collapse. As a
professional, Sam is held to the same standard of care as
a. ordinary persons.
b. other engineers.
c. other professionals, including doctors, dentists, and lawyers.
d. those injured in the collapse of the bridge.
Lew, a member of a protected class, applies for a job with Mit-E Construction
Company, but fails Mit-Es employment test and is not hired. Lew believes that the test
has an unintentionally discriminatory effect. If so, this is
a. desperate-measure discrimination.
b. disparate-impact discrimination.
c. disparate-treatment discrimination.
d. not discrimination.
Vera gives Willy a $500 check as payment for a debt. Willy crudely raises the amount
of the check to $5,000 and transfers it to Xtreem Sportz store for a new bike. Xtreem
deposits the check in its Yankee Bank account. Vera is liable for the payment of $5,000
to
a. no one.
b. Willy, Xtreem Sportz, and Yankee Bank.
c. Willy only.
d. Xtreem Sportz and Yankee Bank only.
Fact Pattern 26-3
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 buys 500 shares. Fay tells Geoff, who tells Hu. Both Geoff and Hu buy 100
shares. They know that Fay got her information from Dhani. When Eureka publicly an-
nounces its new laptop, Dhani, Fay, Geoff, and Hu sell their stock for a profit.
Refer to Fact Pattern 26-3. If Dhani is liable under the Securities Exchange Act of 1934,
it will be because the information on which he based his purchase of Eureka stock was
a. a forward-looking forecast.
b. not material.
c. not yet public.
d. not yet true.
Zero Sum Games Corporation has forty-three shareholders. The minimum number that
must be present at a meeting for a shareholders vote is
a. all of the shareholders.
b. a quorum.
c. a proxy.
d. three of the shareholders.
Roy and Sheila are parties to a contract. They subsequently agree that Tony should take
Roys place and assume all of his rights and duties under the contract. This is
a. a novation.
b. an accord and satisfaction.
c. an assignment.
d. a modification.
Rex, an accountant, enters into a contract to provide services to Sofi. Rex does not
finish the work within the contracts deadline. Sofi pays a penalty as a result of the
missed deadline and hires Trey to complete the job. Rex is most likely liable for
a. nothing.
b. Sofis penalty and the cost to hire Trey.
c. Sofis penalty only.
d. the cost to hire Trey only.
Salt Corporation wants to acquire or merge with Pepper Corporation. The board and the
shareholders of Pepper are resisting. Salt should
a. file a plan of merger with the secretary of state.
b. file an article of merger with Pepper.
c. make a tender offer to the shareholders of Pepper.
d. make a tender offer to the shareholders of Salt.
Diamond Financial Planners employs Ella, who is the firms most productive performer.
Ella, dissatisfied with the commission structure, quits to work for Feldstar Investments,
Inc. She takes her list of Diamond clients to induce them to switch to Feldstar. Trade
secrets law covers
a. Diamonds list of clients.
b. Ellas performance.
c. Feldstars commission structure.
d. none of the choices.
Dino and Elle engage in a transaction that involves e-documents. The E-SIGN Act
applies if those documents include
a. a divorce decree or a prenuptial agreement.
b. a health-insurance termination.
c. an agreement subject to Article 2 of the Uniform Commercial Code.
d. an eviction or a foreclosure.
Fact Pattern 24-2
Bertram, Claudia, and Dynah form Eat Local, Inc., a closely held corporation, and agree
to restrict the transfer of its stock to anyone else. The agreement provides that if one of
the shareholders dies, his or her shares of stock in Eat Local will be divided to maintain
the proportionate control of the survivors.
Refer to Fact Pattern 24-2. A reasonable purpose for a stock transfer restriction in a
closely held corporation, like the agreement between Bertram, Claudia, and Dynah, is
a. a desire to limit the participation of outsiders in the firm.
b. a goal to restrain insiders from taking advantage of their position.
c. an attempt to restrain the free flow of commerce among investors.
d. a wish to restrict the transfer of the shareholders physical assets.
Delite Candy Company hires Elton to sell Delites products in a certain area. Delite
agrees to pay Elton a salary, plus commission, for a trial period. They also agree that
Elton can sell using any methods and during any hours that seem appropriate. The key
factor in whether Elton is Delites employee is
a. the amount of Eltons salary.
b. the control Delite has over the details of the work.
c. the length of the trial period.
d. the title that designates Eltons position.
Mary Kate Corporation allows Ashley Company to use Mary Kates trademark as part of
Ashleys domain name. This is
a. a license.
b. a likelihood of consumer confusion.
c. cybersquatting.
d. trademark dilution.
Lebron, an attorney, allows a statute of limitations to lapse on a claim by Midwest
Metal Fabrication Company, a client. Lebron
a. can be held liable for malpractice.
b. has violated an ethical standard but cannot be held liable.
c. is subject to criminal penalties under the statute of limitations.
d. will be automatically disbarred.
Mica buys “Nature, a movie, through Open View, an online entertainment vendor.
Before completing the purchase and downloading “Nature, Mica must review a warning
not to make and sell a copy of it. This warning is
a. a browse-wrap term.
b. a click-on agreement.
c. a shrink-wrap agreement.
d. none of the choices.
Equity Company and Faye enter into a contract for Faye to cater a meeting of Equitys
shareholders. When Fayes schedule conflicts, she asks Gudren to serve Fayes coffee
and pastries at the meeting. This transfer of duties is
a. a delegation.
b. an assignment.
c. a novation.
d. prohibited by law.
In the situation set out in either of the previous questions, the dissent in the Prestridge
case would most likely hold Silverado liable for
a. all checks.
b. checks that were cashed less than thirty days after the statement.
c. checks that were cashed more than thirty days after the statement.
d. no checks.
Clarice pays Damien $10,000 to design an ad campaign for her Sweetwater Coffee
Stand chain. The next day, Damien tells Clarice that he has accepted a job in San
Francisco and cannot design her campaign. She files a suit against Damien. As
compensatory damages, she can recover
a. $100,000.
b. $10,000.
c. $1,000.
d. $0.
Brad stands in front of Rustlers Round-Up Café, shouting “fighting words that are
likely to incite Rustlers patrons to respond violently. The First Amendment protects
such speech
a. all of the time.
b. none of the time.
c. only if it is noncommercial.
d. only if it is symbolic.
Greco promises to buy illegal copies of CDs and DVDs from Fava, who promises to
deliver on April 15. These promises are most likely
a. enforceable.
b. valid.
c. void.
d. voidable.
Sonia manages a Tasty Pastry store for United Food Company. To manage the business,
Sonias authority can be implied by
a. an inference from the position Sonia occupies.
b. any inference a reasonable customer or supplier would make.
c. any inference Sonia chooses to make.
d. no inference.
Sayer is an employee of Thorny Foliage Eradication, Inc. Sayer tweets messages about
Thorny Foliage to employees and outside interested parties, including investors and
others. According to the Securities and Exchange Commission, Sayers messages are
subject to
a. federal securities laws.
b. international communications regulations.
c. state blog and tweet rules.
d. no law.
Punitive damages are intended to punish a wrongdoer and deter others.
Title is one concept that the UCC has substituted for the common law concept of risk of
loss.
A corporate officer is expected to be informed on corporate matters.
The doctrine of commercial impracticability only extends to problems that could have
been foreseen.
Business ethics is consistent only with short-run profit maximization.
A severable contract is unenforceable as a violation of public policy.
A bank that fails to detect an alteration to its customers check is liable to the customer
for the loss.
An accountants liability under the Securities Act of 1933 requires privity of contract
with the purchaser of a security.
An agent is authorized to act on behalf of a principal in doing business with third
parties.
Venue is the term for the subject matter of a case.
Most state trial court decisions are not published.
A drawer is not liable to the holder of a check if the check is not honored.
The Magnuson-Moss Warranty Act modifies UCC warranty rules to some extent in
consumer transactions.
An e-contract must meet the same basic requirements as a paper contract.
Forbearance is a process that allows a lender to legally repossess and auction off the
property securing a loan.
A quasi contract is not a true contract.
Any partnership can be dissolved by the partners agreement.