Fact Pattern 24-2A
Commodity Sales Corporation and Resource Purchasing Company enter a contract for a
sale of unprocessed silver. Commodity Sales draws a draft unconditionally ordering
Resource Purchasing to pay $50,000 to Commodity Saless order in sixty days.
Resource Purchasing signs and dates the draft.
Refer to Fact Pattern 24-2A. This instrument is
a. a bankers acceptance.
b. a nonnegotiable instrument.
c. a promissory note.
d. a trade acceptance.
A Little Bit of Lipstick, Inc., is a small, U.S.-based business that sells
nanotechnology-based cosmetics for export. Under the National Export Initiative, the
federal government is
a. pursuing trade agreements to improve market access for U.S. firms.
b. banning lending to small businesses, especially for export purposes.
c. placing less emphasis on exports than other governments.
d. playing a less active role in promoting exports in emerging markets.
As a joke, Jem takes Kylas business law textbook and hides it so that Kyla cannot find
it during the week before the exam. Jem most likely committed
a. appropriation.
b. conversion.
c. intentional infliction of emotional distress.
d. trespass to personal property.
Solid Tool Companys decision makers view a particular risk in the use of Solids
product as open and obvious. Continuing to market the product without telling
consumers of the risk could be justified from a perspective of
a. duty-based ethics.
b. Kantian ethics.
c. rights-based ethics.
d. utilitarian ethics.
Dizzy is not Edwinas agent but enters into a contract with Frida on Edwinas behalf.
Edwina later contacts Frida to approve the contract. This is
a. an agency by agreement.
b. an agency by estoppel.
c. an agency by ratification.
d. not the creation of an agency relationship.
Earth Movers, Inc., uses dynamite to prepare land for highway projects. Strict liability
is imposed on this activity because
a. Earth Movers is a corporation.
b. the activity is inherently negligent.
c. the activity is of a dangerous nature.
d. the government pays for highway construction.
Mona files an employment discrimination suit against Nationwide Distribution
Corporation (NDC) under the Civil Rights Act of 1964. If Mona shows that NDC acted
with malice or reckless indifference, she may recover
a. an unlimited amount of compensatory and punitive damages.
b. a limited amount of compensatory and punitive damages.
c. neither compensatory nor punitive damages.
d. compensatory or punitive damages, but not both.
Thai Pizza Corporation is a restaurant chain with twenty locations. Under federal law,
Thai Pizza must post
a. the caloric content of the foods on the chains menu.
b. the recipes for the dishes on the chains standard menu.
c. the chains recommendations for the healthiest selections.
d. none of the choices.
United Company replaces Vera, a forty-five-year-old employee, with Wendy. Vera files
a suit against United under the Age Discrimination in Employment Act of 1967. To
establish a prima facie case, Vera must show, among other things, that she is
a. deserving of higher pay than Wendy.
b. generally more dependable than Wendy.
c. older than Wendy.
d. qualified for the position.
Stratified Industries, Inc., increases its holdings, making tender offers in many states.
These offers are subject to
a. federal securities laws only.
b. state antitakeover statutes only.
c. neither state statutes nor federal laws.
d. state antitakeover statutes and federal securities laws.
The payment of Lewellyns debt to Miklos is guaranteed by Lewellyns personal
property. Miklos is most likely to perfect his interest by
a. insuring Lewellyns property for the full amount of its value.
b. calculating the precise amount of Lewellyns debt.
c. correcting grammatical errors in the parties written agreement.
d. filing a financing statement with the appropriate authority.
Elmo, a minor, misrepresents his age to be twenty-one and contracts to buy a car from
Fine New Autos. Ordinarily, Elmo can disaffirm the contract
a. only if he can prove that Fine New Autos did not know his true age.
b. only if he can prove that Fine New Autos knew his true age.
c. under any circumstances.
d. under no circumstances.
Cupcake Creations, Inc., employs one hundred workers at three locations in two states.
Under federal law, Cupcake must provide its employees, during any twelve-month
period, family or medical leave of up to
a. twelve days.
b. twelve weeks.
c. twelve months.
d. twelve years.
Joy and Kris enter into a contract for Kris to lay sod in Joys yard for which she agrees
to pay Kris. When Kriss schedule conflicts, she contacts Leza, to whom Kris “assigns
all rights under the contract. Kris is
a. absolved of any liability under the contract.
b. in breach of the contract with Joy.
c. liable to Joy if Leza does not perform.
d. liable to Leza for inducing a prohibited contract.
Fun-E Products, Inc., makes and sells toys. The government agency that has the
authority to remove a potentially hazardous toy from the market is
a. the Consumer Product Safety Commission.
b. the Federal Reserve Board of Governors.
c. the Federal Trade Commission.
d. the Food and Drug Administration.
Through unfair trade practices, Super Sales Company induces Trey and other
consumers to enter into one-sided deals. This may be subject to sanctions under
a. federal and state law.
b. federal law only.
c. no law, according to the principles of freedom to contract.
d. state law only.
Taki forges Uriels signature on a check “payable to the order of Taki drawn on Uriels
account in Verity Bank. Most likely, if the bank pays the check
a. the Federal Reserve will reimburse all parties for their costs.
b. the loss will be covered by Veritys insurance policy.
c. Uriel will be liable for the amount.
d. Verity will have to recredit Uriels account.
In 2012, 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.
Orange Computer Corporation sells Pad-brand MP3 players to Quik Discount Stores
and other retailers. Orange will have an insurable interest in the players as long as
a. Orange remains in business.
b. Orange retains title to the goods.
c. the goods are in existence.
d. there is no risk of loss.
Jaqy distributes a handbill among her neighbors accusing one of themKedof being a
convicted sex offender. The statement is defamatory only if
a. a neighbor repeats it.
b. Ked suffers emotional distress.
c. the statement is true.
d. the statement is false.
To borrow the money to buy a car, Klaus signs a note “payable to the order of Lake City
Auto Financing. Minnie cosigns the note to guarantee the repayment of the loan.
Minnies liability on this note is
a. lateral.
b. primary.
c. secondary.
d. tertiary.
Clyde enters Desert Decathlon, an athletic competition in which Clyde has often
competed. Regarding the risk of injury, Clyde assumes the risks
a. attributable to the Decathlon in any way.
b. different from the risks normally associated with the Decathlon.
c. greater than the risks normally associated with the Decathlon.
d. normally associated with the Decathlon.
Miley takes temporary medical leave from her job at Lumber Mill Inc. to care for a
parent with a serious health condition. When she attempts to return to work, Lumber
Mill refuses to reinstate her. Under the Family and Medical Leave Act, Miley may
obtain
a. an award of key employee status but no injunctive or economic relief.
b. a cease-and-desist order or other injunction but no economic award.
c. double damages, job reinstatement, a promotion, and more.
d. nothing.
With some exceptions, every portion of every meeting of the Federal Reserve System
Board of Governors and other federal administrative agencies must be open to public
observation under
a. no federal or state law.
b. the Freedom of Information Act.
c. the Government-in-the-Sunshine Act.
d. the Public Accountability Act.
Overseas Corporation (OC), a U.S. firm, orally agrees to sell six freezers to Pisa Pizza,
Ltd., in Italy. OC fails to deliver. Under the CISG, Pisa Pizza can
a. enforce the agreement.
b. not enforce the agreement because it is not in writing.
c. not enforce the agreement because the price term is not specified.
d. not enforce the agreement because there is no consideration.
Sid borrows Tonys paint sprayer to paint his house. Uma allows Vic to store his
posthole digger in her shed. The party with a right to use the bailed property is
a. neither Sid nor Uma.
b. Sid and Uma.
c. Sid only.
d. Uma only.
The Federal Highway Administration uses notice-and-comment rulemaking. This
process begins with
a. a request to Congress to enact enabling legislation.
b. the filing of a complaint against a charged party.
c. the publication of a notice of proposed rulemaking.
d. the solicitation of public comments.
Tony is an accountant whose clients include U-All Company. If Tony is negligent in his
work for U-All, most courts would hold him liable to U-All and
a. any third party.
b. no third party.
c. third parties who are foreseen users of the work.
d. third parties who are reasonably foreseeable users of the work.
Yvon and Zach are minors who marry each other. Their minority status may be
terminated under the laws of
a. all states.
b. most states.
c. some states.
d. no states.
Girard accepts a job with Deep Vault Bank in reliance on assurances that Deep Vault
will not soon be sold. In fact, negotiations to sell the bank are under way at the time that
Girard is hired. Girard is most likely a victim of
a. fraud.
b. mistake.
c. nothing.
d. puffery.
The Regulatory Flexibility Act has helped reduce record-keeping burdens for
Hometown Gas Company and other small business firms in the area of
a. accounting practices.
b. asset acquisition.
c. hazardous waste management.
d. tax reporting.
Clayton dies without a will. The distribution of Claytons property, including his farm
near Lincoln, Nebraska, is prescribed by
a. a court-appointed executor.
b. federal probate statutes.
c. state intestacy laws.
d. Claytons relatives.
Precise Device Corporation and Quality Instruments, Inc., decide to merge. This
corporate combination does not require the approval of
a. Precise and Qualitys directors.
b. Precise and Qualitys officers.
c. Precises shareholders.
d. Qualitys shareholders.
The purpose of tort law is to punish criminal wrongdoers.
Federal agencies must consider ways to reduce the economic impact of new regulations
on small businesses.
A contract for a sale of goods priced at $499.99 must be in writing to be enforceable.
A person who forges a check can be held personally liable for payment by a holder in
due course.
Discharge in bankruptcy is no defense on any instrument regardless of the status of the
holder.
If a statute prohibits the assignment of certain rights, those rights cannot be assigned.
Winding up is the process by which corporate assets are valued before a merger or other
plan of consolidation.
If the subject matter of a contract turns out to be more valuable than one of the parties
believed it would be, that party can rescind the contract.
Any irregularity on the face of an instrument that creates an ambiguity as to the party to
pay will bar HDC status.
Before shareholders can bring a derivative suit, they must submit a written demand to
the corporation, asking the board of directors to take action.
A finder of lost property can claim title to the property against the whole worldexcept
the true owner.
The degree of care to be exercised in a situation can vary with a persons profession or
occupation.
When there is a breach of an underlying contract for which an instrument was issued,
the maker of a note can refuse to pay it.
For most purposes, most states treat a partnership as an aggregate of its members.
A person assumes any risk that is different from or greater than the risk normally
carried by an activity.
A fire insurance policy is assignable without the insurers consent because the policy
“runs with the insured property.
Only a defendant may file a motion for summary judgment.
A promise to pay a debt for which a statute of limitations bars recovery is an
enforceable promise.
The Environmental Protection lists all hazardous air pollutants (HAPs) on a prioritized
schedule.