Pat enters into an agreement with Ole! Food, Inc., to operate a franchise in Region City.
Later, Ole! grants franchises to others within the city, Pat files a suit to close them. This
suit will likely
a. fail because excluding competitors violates the antitrust laws.
b. fail if Ole! did not give Pat exclusive rights to Region City.
c. succeed if Pat paid a franchise fee.
d. succeed if Pat was the first Ole! representative in Region City.
Mineral Resource Company contracts to provide several manufacturers with tin. When
a cartel of tin-producing countries suddenly embargoes future shipments of tin to
Mineral Resource so that it cannot fulfill its contracts, the distributor
a. can substitute some other material for the tin.
b. is excused from the performance of its contracts.
c. is liable for breach of contract.
d. must still supply the tin needs of its customers.
Jared uses his computer to secretly install software on thousands of personal computers
without their owners’ knowledge. The program can reproduce itself and spread from
one computer to another via any USB port. This program is
a. a hacker.
b. a bot.
c. a virus.
d. a worm.
Frosty’s Appliance Store advertises freezers at a “Special Low Price of $299.” When
Garth tries to buy one of the freezers, Huey, the salesperson, tells him that they are all
sold and no more are obtainable. Huey adds that Frosty’s has other freezers for $2,299.
This is
a. a legitimate sales technique.
b. bait-and-switch advertising.
c. counteradvertising.
d. puffery.
Peak & Vale Accountants provides other firms with accounting services. Questions of
what is ethical involve the extent to which Peak & Vale has
a. a legal duty beyond those duties mandated by ethics.
b. an ethical duty beyond those duties mandated by law.
c. any duty beyond those mandated by both ethics and the law.
d. any duty when it is uncertain whether a legal duty exists.
Mike is arrested at a warehouse in North Industrial Park. A government prosecutor
issues a formal charge against Mike for receiving stolen property. This charge is
a. an arraignment.
b. an indictment.
c. an information.
d. an inquisition.
Dinsmore Corporation employs Coolwater Cyberspace Security, Inc. to protect the
integrity of Dinsmore’s computer system. Coolwater assigns Brigit and each of
Dinsmore’s other authorized users an individualized password. A serious security
problem would most likely exist if Brigit
a. does not change the password.
b. changes the password immediately.
c. changes the password on a regular basis.
d. changes the password at irregular intervals.
Convenience Mart, Inc., is a close corporation. Convenience Mart is
a. eligible to make public offerings of securities.
b. exempt from filing a certificate of incorporation.
c. generally allowed to restrict the transfer of its stock.
d. taxed in the same manner as a partnership.
Fiesta Coffee Company agrees to buy an unspecified quantity of coffee beans from
Global AgriCorp. Global breaches the contract. Fiesta can most likely
a. enforce the agreement to the extent of a reasonable quantity.
b. enforce the agreement to the extent of Fiesta’s requirements.
c. enforce the agreement to the extent of Global’s output of coffee beans.
d. not enforce the agreement.
Rashad accesses Quant Company’s computer system without authority to obtain
protected financial data. Under federal law, this is
a. a felony if it is committed for a commercial purpose.
b. a felony if Quant brings a civil suit against Rashad.
c. not a crime.
d. a crime, but not a felony.
Fact Pattern 1-1
The Texas Supreme Court decides the case of Livewire Co. v. Power Corp. Of nine
justices, five believe the judgment should be in Livewire’s favor. Justice Bellamy, one
of the five, writes a separate opinion. The four justices who believe the judgment should
be in Power’s favor join in a third separate opinion.
Refer to Fact Pattern 1-1. The opinion joined by the four justices who favor Power is
known as
a. a concurring opinion.
b. a dissenting opinion.
c. a majority opinion.
d. a per curiam opinion.
Fact Pattern 17-1
Bayside Construction Company enters into a contract with Clio to remodel Dewey’s
Home Store, using products from Eagle Building Supplies. Fresh Food Café is next to
Dewey’s Home Store. The remodeling is a gift from Clio to Dewey, Clio’s nephew and
the owner of Dewey’s Home Store.
Refer to Fact Pattern 17-1. The value of Fresh Food’s property will increase after
Dewey’s store is remodeled. Fresh Food is
a. a delegatee.
b. an assignee.
c. an incidental beneficiary.
d. an intended beneficiary.
Noddy threatens physical harm to force Odell to sell his business, Pasta Palace, Inc., to
Noddy for a below-market price. This is
a. duress.
b. fraud.
c. puffery.
d. undue influence.
Bret buys a franchise from Comida Mexicano Ltd. If their agreement is like most
franchise agreements, it will specify that Comida can terminate the franchise
a. at will.
b. for any reason.
c. for cause only.
d. for no reason.
Sweet Treats, Inc., wants to market a new snack food. On the product’s label, standard
nutrition facts are
a. prohibited.
b. required.
c. strictly voluntary.
d. warranted by the nature of the food.
Opal asks Paolo, who does not understand English, to sign what Opal says is an
application to open a bank account. In fact, the “application” is a note. If sued on the
note by an HDC, Paolo’s best defense would be
a. extreme duress.
b. fraud in the execution.
c. fraud in the inducement.
d. mistake.
Rail Systems Equipment Corporation discharges Porter, who sues Rail Systems for
employment discrimination under Title VII. The defendant learns that Porter lied on his
job application and argues that, had it known of the lie, it would have fired him. This is
a. an affirmative action defense.
b. a bona fide occupational qualification defense.
c. a business necessity defense.
d. no defense.
Business Investment Company and Chic Properties, Inc., contract for the sale of a retail
mall. A mutual mistake of fact will make it possible for either party to rescind the
contract
a. if the mistake of fact is immaterial.
b. if the mistake of fact is material.
c. under any circumstances.
d. under no circumstances.
Magic Math Corporation makes business accounting software, which is packaged with
a shrink-wrap agreement. National Distribution Company distributes the software to
retailers, including an Office Stuff store, where Peg buys a package of it. The parties to
the shrink-wrap agreement are
a. Magic Math and National Distribution only.
b. Magic Math and Peg only.
c. Magic Math, National Distribution, Office Stuff, and Peg.
d. Office Stuff and Peg only.
Kelly offers to buy 1,000 gallons of oil from Jim for fifty cents per gallon. Jim believes
Kelly offers $1 per gallon and orally agrees to the sale. When the parties later dispute
the price in court, Jim’s claim of $1 and Kelly’s testimony that she offered fifty cents
a. supports an enforceable contract for a price of $1 per gallon.
b. supports an enforceable contract for a price of seventy-five cents per gallon.
c. supports an enforceable contract for a price of fifty cents per gallon.
d. prevents the enforcement of any contract between these parties.
Phil and Kelsey enter into a contract for a sale of Harmonica, a dog. Phil pays the price,
but Kelsey does not deliver. Phil can use specific performance as a remedy if
a. Kelsey is lawfully withholding delivery of Harmonica.
b. Phil cannot effectively cure the defect.
c. Harmonica is unique.
d. Harmonica has not been identified to the contract.
Fact Pattern 11-3
Cut-Rate Construction Company (CCC) begins building a restaurant for Diners
Restaurants, Inc., but after two months demands an extra $100,000. Diners agrees to
pay.
Refer to Fact Pattern 11-3. If CCC offers no reason for the extra $100,000, but says
only that it will otherwise stop construction, the agreement is
a. enforceable as an accord and satisfaction.
b. enforceable because of unforeseen difficulties.
c. unenforceable as an illusory promise.
d. unenforceable due to the preexisting duty rule.
ChemoCorp, Inc., makes and sells pesticides. If a substance is identified as harmful and
the harm is imminent, the Environmental Protection Agency, among other things, can
a. conduct an inspection of ChemoCorp’s plant.
b. declare the substance to be unregulated and allow its production.
c. ignore the risk if the benefit outweighs the harm.
d. order the substance to be sold in an adulterated form.
The River City Council, the Santa Clara County Board, the Texas state legislature, and
the U.S. Congress enact laws. These laws constitute
a. administrative law.
b. case law.
c. stare decisis.
d. statutory law.
Opal conveys three acres of wetlands to Pristine Places, Inc., with a deed that warrants
only that Opal held good title during her ownership of the property. This deed is
a. a grant deed.
b. a quitclaim deed.
c. a special warranty deed.
d. a warranty deed.
Mariah takes off her ring and places it on her desk while she works. Without her
knowledge or consent, her coworker Nita picks up the ring, puts it on, and walks away.
Nita has likely committed
a. burglary.
b. forgery.
c. larceny.
d. no crime.
Standard Corporation can not claim a trademark in the phrase “Quality Is Standard” if
the phrase
a. has a secondary meaning.
b. is descriptive.
c. is generic.
d. means nothing.
Fact Pattern 13-2
Grover contracts to sell two tracts of land to Hank. Both parties believe that the two
tracts are adjacent, but in fact they are not. Grover is still willing to sell the land, but
under these circumstances the deal would adversely affect Hank.
Refer to Fact Pattern 13-2. Because of the parties’ belief about the adjacency of the
property, their contract is
a. unavoidable.
b. unconscionable.
c. unenforceable.
d. voidable.
Detroit Automotive Company (DAC) agrees with its employees’ union not to buy any
nonunion-produced component parts from other firms for use in DAC products. This is
a. a permissible secondary boycott.
b. a prohibited secondary boycott.
c. a technically legal secondary boycott.
d. a unilateral one-party boycott.
Fact Pattern 11-3
Cut-Rate Construction Company (CCC) begins building a restaurant for Diners
Restaurants, Inc., but after two months demands an extra $100,000. Diners agrees to
pay.
Refer to Fact Pattern 11-3. If CCC offers, as a reason for the extra $100,000, that
extraordinary unforeseen difficulties will add considerable cost to the project, the
agreement is
a. enforceable as an accord and satisfaction.
b. enforceable because of unforeseen difficulties.
c. unenforceable as an illusory promise.
d. unenforceable due to the preexisting duty rule.
The state office in which a financing statement should be filed depends on the creditor’s
location.
A contract in which a buyer is allowed to take goods on a trial basis is a sale or return.
Unless otherwise agreed, the participants in a joint venture share its profits equally.
A contract is void if one of the parties was intoxicated at the time of its formation.
A manufacturer’s duty of care does not extend to the inspection and testing of products
bought to incorporate in the final product.
Requiring union membership as a condition of continued employment is legal.
Gender can be a determining factor in an employer’s decision to hire, fire, or promote
an employee.
A law that restricts a fundamental right violates substantive due process regardless of
the type of state interest that the law “promotes.”
Only certain funds are legally available for paying dividends.
Stopping crime requires only that it be prohibited.
Two parties can mutually agree to rescind a contract if it is executory.
An accountant can avoid liability by proving that his or her negligence was only the
proximate cause of the client’s loss.
A closed shop is a firm that rejects union membership as a condition of employment.
A mutual mistake of fact has no effect on the enforceability of a contract.
The courts have considerably scaled back the Clean Water Act’s protection of wetlands.