Book Title
Business Law with UCC Applications 14th Edition

BUS LAW 95469

March 1, 2019
The annual percentage rate (APR) is calculated by consumers with tables provided by
the Federal Trade Commission.
Brink Hospital employs emergency room physicians who are independent contractors.
Brink may be liable for their torts under the doctrine of apparent authority.
The parties involved in the dispute can use early neutral evaluation (ENE) to settle a
case or proceed to trial.
By taking a graduated-payment mortgage, Jake will pay a fixed interest rate and make
increased monthly payments over the term of the loan.
The mortgagee has the unrestricted right to sell, assign, or transfer the mortgage to a
third party.
A receiver is an individual appointed by the shareholders to hold property subject to
diverse claims.
The landlord will be held responsible for any injury caused to others due to a defect in
public areas, such as hallways and stairways.
A felony is a crime punishable by death/imprisonment in a federal/state prison for a
term exceeding one year.
Gaston finds a book in the middle of the street. Gaston must leave the book at the
nearest police station so the true owner may return and recover the book.
To avoid risk while waiting for an insurance policy to be formally accepted, an insured
may choose to have the insurer issue a binder to provide interim coverage.
When dealing with architects, the "cost of repair" rule applies to situations where a
structure is unusable for its originally intended purpose.
Police power is the state's authority to promote public health, safety, welfare, and
The Classic Case of Overseas Tankship v. Morts Dock and Engineering involved a
question of whether the harm suffered by the plaintiffs was reasonably foreseeable.
The UN's power to enforce its decrees is a matter of voluntary acquiescence.
If property was obtained by a partner in his or her role as a partner, it is considered
partnership property.
Under the UCC, individuals who buy goods from minors have voidable ownership
rights, and can transfer valid ownership rights to an innocent third-party purchaser of
those goods.
The process of doing business as a self-governing corporation is called associative
A bailment is the transfer of possession and control of personal property to another with
the intent that the same property will be returned later.
When a minor indicates the intention not to live up to a contract, that minor is entitled
to a return of everything given to the other party.
Proactive ADR increases the likelihood of litigation.
To a liberal internationalist, the final best state of affairs that all nation-states seek (or
should seek) is the formation of a democratic or a republican world government.
The debtor can discharge any cash advances—up to $2,500—paid to a creditor under an
open-ended credit plan.
The Federal Trade Commission requires used car dealers in most states to display
statements that the cars are sold "as is" if the cars are sold with no warranties.
An agency coupled with an interest may not be revoked without the consent of the
The Hart-Scott-Rodino Antitrust Act is designed to police any expansion attempts that
might hurt competition in the marketplace.
In case of an implied-in-law contract, the court will apply reasons of justice and fairness
and may obligate one who has unfairly benefited at the innocent expense of another.
In a bailment for the sole benefit of the bailor, any ordinary and expected expense
incurred in the use of another's property must be borne by the bailee.
A cost-plus contract is one in which the market price is determined by references to the
price of goods on a specific date.
The courts are judicial tribunals that meet in a regular place and apply the law in an
attempt to settle disputes by weighing the arguments presented by advocates for each
A reverse mortgage is a type of loan that allows older homeowners to convert some of
the equity in their home into cash, while retaining ownership of their home.
Jackson Furniture Co. states in writing that their offer to sell sofas to a hospital will be
held open for 40 days. The written offer requires a consideration to be legally binding.
Settlement week is a five-day period during which a court's docket is cleared of all
business, except for settlement hearings.
The text of the U.S. Constitution gives the Supreme Court appellate jurisdiction in a
case in which a state is a party.
A civil union is a quasi-marital bond entered between same sex partners.
If Joe sues Marie as the result of a contract dispute, Marie cannot request that Joe
undergo a physical examination.
When a check is deposited in the payee's own account in a depository bank, any
settlement given by the depository bank is final.
Celeste, a former governor who is running for President, can successfully sue a tabloid
for defamation by merely proving the statements printed in the tabloid are false.
Fair courts, established in 11th century England, were:
A. tribunals set up in seaport towns to handle disputes involving maritime law.
B. composed of judges who applied fair and equitable principles to commercial
C. composed of legal scholars who applied common law to all commercial cases.
D. courts in which juries were composed of merchants who were empowered to hear
cases involving commercial disputes.
Which of the following is true of a shipment contract?
A. The seller must put the goods in the possession of the carrier.
B. The seller must tender the delivery of goods to the buyer.
C. The seller offers to turn the goods to the buyer, and the buyer offers to pay for them.
D. The seller tenders the delivery of goods to the carrier, along with the document title.
Some suggest that the insistence that all disputes involving U.S. corporations be
fashioned under ____________ law a trend known as ____________, makes listing in
the U.S. unpopular.
A. American; special interest group control
B. American; corporate governance
C. American; legal imperialism
D. Sarbanes-Oxley; legal imperialism
A check that a drawee bank guarantees will be paid to the holder is a:
A. bank draft.
B. traveler's check.
C. certified check.
D. treasurer's check.
If a bank uses a substitute check, it makes which of the following warranties?
A. It is not a legal equivalent of the original check.
B. It contains an accurate image of the front and back of the original check.
C. The drawer, indorser, or the depositary bank will be asked to pay a check that has
already been paid.
D. Original checks have to be presented to the drawee bank for payment.
Cato rented a chain saw from Rental Warehouse to cut firewood for his home fireplace.
When it was time for lunch, Cato left the chain saw in the woods while he went home to
eat. When he returned, the saw had been stolen. Cato is ____________ to Rental
Warehouse based on his ____________.
A. liable; duty to use reasonable care
B. not liable; duty to exercise care against gross negligence
C. liable; duty to exercise care against slight negligence
D. not liable; duty of mutuum
Oralia agrees to babysit Avery's daughter "when I can" if Avery promises to clean
Oralia's house every week. This agreement is ____________ because it is based on a(n)
A. enforceable; option contract
B. enforceable; future gift
C. unenforceable; promissory estoppel
D. unenforceable; illusory promise
Viola checked her mink coat at the Landmark Theatre cloakroom while attending a play
and was given a claim ticket. After the play, she handed the ticket to the person at the
counter, but her mink coat could not be found. What must be proven concerning
A. Viola must prove that Landmark was negligent.
B. Landmark must prove that Viola was negligent.
C. Viola must prove that she was not negligent.
D. Landmark must prove that it was not negligent.
Iago has a tenancy for years apartment rental agreement with Ranch Apartments. When
the agreement ends in March, Iago asserts a right to renew, while Ranch states that the
rental agreement ended without notice. Which party is correct?
A. Iago, since there is an implied renewal right.
B. Ranch, since no statute requires a party to give notice when ending a lease.
C. Iago, since the tenancy for years must at least continue until the end of the calendar
D. Ranch, since the tenancy for years automatically terminates on the expiration of the
stated term.
The earliest development of the preemptive war concept was by:
A. Leslie Groves.
B. Curtis LeMay.
C. Thomas More.
D. Socrates.
To accept a draft, the drawee:
A. need only sign the draft across the face of the instrument.
B. needs to write "accepted" on a separate piece of paper.
C. need only sign on a separate piece of paper affixed to the draft.
D. needs to write "accepted" behind the instrument and sign the bank's record.
If a drawee refuses to pay the instrument, it is said to be:
A. delayed.
B. dishonored.
C. detained.
D. defaulted.
Unless an indorsement states otherwise (e.g., by words such as without recourse), every
indorser agrees to pay any subsequent holder the face amount of the instrument if it is
dishonored (not paid by the maker or drawee).
Soft Feet, Inc. manufactures shoes. Walk Style, Inc. is a retailer of shoes. Soft Feet
offers to sell Walk Style 1,000 pairs of shoes at $5 per pair with delivery to be made by
October 31. Walk Style accepts, but writes in the margin "delivery to be made by
October 20." According to the UCC, what is the legal status of Walk Style's October 20
delivery date?
A. Under the UCC, the writing is not a mirror of the offer and is a counteroffer.
B. Under the UCC, the writing binds Soft Feet to accept the conditions about the
delivery date.
C. Under the UCC, the writing binds Soft Feet, unless it objects.
D. Under the UCC, the writing is an unequivocal acceptance.
The World Trade Organization was created as a result of the:
A. Geneva Convention.
B. Uruguay Round Agreements.
C. Bretton-Woods Conference.
D. Asian-Pacific Round.
Attorney Jose wants to personally question Ellen, a witness, about her observation of an
auto accident in advance of a trial concerning the accident. Jose should:
A. send Ellen interrogatories.
B. take Ellen's deposition.
C. ask Ellen to produce tangible evidence.
D. issue a summons for Ellen to appear in court in advance of the trial.
Outside the Bill of Rights, what is widely recognized as the most important amendment
to the U.S. Constitution?
A. 13th Amendment which abolished slavery
B. 18th Amendment which gave 18-year-olds the right to vote
C. 14th Amendment's due process and equal protection
D. 21st Amendment which gave women the right to vote
A protection that insures property that cannot be covered by specific insurance because
the property is constantly changing in either value or location is referred to as a(n):
A. floater policy.
B. collision insurance.
C. annuity.
D. coinsurance.
Gino, a used car salesman, tells BillyBob while test driving a restored '64 Mustang,
"BillyBob, this car is a chick magnet!" So BillyBob buys the Mustang, but later is not
satisfied because no girls want to go riding with BillyBob. BillyBob threatens to sue
Gino. What result?
A. BillyBob will win because Gino's statement is an express warranty.
B. BillyBob will lose because Gino's statement is sales puffery.
C. BillyBob will win because Gino's statement is an implied warranty of fitness for a
particular purpose.
D. BillyBob will lose because there are no express or implied warranties under the
Magnuson-Moss warranty act.
An exception to the _____________ rule states that if a written agreement depends on
some event before it becomes enforceable, __________________ evidence may be
offered regarding that _____________________
A. Parol evidence, written, condition precedent.
B. Standard construction, written, condition precedent.
C. Best Evidence, oral, condition precedent.
D. Parol evidence, oral, condition precedent.
____________ insurance offers protection alone, and is the least expensive kind of life
A. Straight life
B. Universal life
C. Limited-payment life
D. Term
The globalized new world order is the only theory that has abandoned the notion that:
A. multi-national corporations are the seat of power.
B. NGOs should act as a global police.
C. the nation-state is the primary actor on the global stage.
D. international law has a set of unambiguous goals.
A check indorsed "for deposit only":
A. prevents further negotiation of the instrument.
B. requires the amount of the instrument to be credited to the indorser's account before
further negotiation occurs.
C. requires the amount of the instrument to be credited to the indorser's account and
prevents further negotiation.
D. requires the amount of the instrument to be further indorsed by the payee in person
before being credited to the indorser's account.
Henry, a promoter, signs a five-year lease agreement for office space for Ajax Corp.,
which has not yet been formed. After formation, Ajax moves into the office space, pays
rent and occupies it for six months, but then finds a cheaper location and moves out.
Which party is liable on the lease?
A. Henry
B. Ajax
C. No one, since it was a tenancy at will
D. Both Henry and Ajax
Which of the following types of criminal homicide involves killing someone with
premeditation, killing in a cruel way such as with torture, or killing while committing a
major crime?
A. Second-degree murder
B. Involuntary manslaughter
C. First-degree murder
D. Voluntary manslaughter
Jose agrees to sell his car to Diego for $5,000 if he is accepted to Harvard Medical
School. This contract is:
A. illusory.
B. subject to a condition precedent.
C. subject to a condition subsequent.
D. subject to concurrent conditions.
The NSF was created to:
A. conduct research into all aspects of human life and health and to apply that
understanding to cure illnesses, to alleviate disabilities, and to lengthen human life.
B. support scientific research, to stimulate the national economy, and to safeguard
national security.
C. coordinate advances in technology and engineering as they relate to the practical
jobs of improving the American economy.
D. build an integrated technology policy especially designed to meet the needs of the
national government.
The ____________ created ____________ dealing with the sale and licensing of digital
information, and the ____________ dealing with the enforceability of cyber-contracts.
A. NCCUSL; Cyber-Commerce; UCITA
Bill employs Charles as a real estate agent to sell his house. The house is destroyed by
fire. What is the status of the agency relationship?
A. The relationship is applied to the next property Bill sells.
B. It requires Bill to compensate Charles for what he would have received for selling
the house.
C. The relationship is automatically terminated.
D. It depends on what is considered reasonable.
Of the groups listed below, only ____________ can take advantage of Chapter 13
A. self-employed people
B. corporations
C. partnerships
D. educational institutions
In terms of the steps in the incorporation process, which of the following occurs after
the charter is issued?
A. A statutory agent is appointed.
B. The organizational meeting is held.
C. Filing fees are paid.
D. Promoters do preliminary work.
An attorney has a duty of ____________ to protect the client and to make certain that
the client receives advice and representation that is free of conflicting interests.
A. due care
B. loyalty
C. proximity
D. good faith
State security statutes are commonly called ____________ laws.
A. exchange
B. third party
C. common
D. blue sky
Vernon parked his gasoline tanker truck at Moonbeam Hotel while seeking lodging for
the night. Moonbeam employees went to the gasoline truck to assist in finding a
satisfactory parking place, smelled gasoline, noticed a small drip from the truck, and
refused to rent a room to Vernon. Is that action lawful?
A. No, because rooms were available in the hotel.
B. Yes, because the presence of the truck would frighten other guests.
C. No, because the innkeeper cannot discriminate on the basis of social status.
D. Yes, because there is a danger to other guests and the hotel.
The Emergency Economic Stabilization Act (ESSA) of 2008 did not have the authority
to limit executive compensation and the "golden parachutes" of CEOs of institutions
who were granted TARP bailout funds.
Lane offered the mayor of Ontario $12,000 to award Lane's firm a building contract.
The mayor refused the bribe. When Lane was arrested, he claimed that he was innocent
of the charge of bribery because the mayor never took the money. Discuss the
possibility of Lane's actions to be qualified as crime.
Chambers wrote out a check to Smith for $300. Smith attempted to cash the check at
Chambers's bank, but the bank refused to honor it even though there was enough money
in Chambers's account. Can Smith sue the bank for refusing to honor the check?
Herrera already owns 20% of the stock of the Higgins Corp. and plans to use his own
cash to purchase another 30% of Higgins. Herrera's intent is to acquire enough Higgins
stock to mount a takeover. According to law, Herrera is required to file a statement with
the SEC. What information must Herrera include in the statement?
Titanic Industries requires all new employees to have red hair because red is the CEO's
favorite color and all company signs are written in red letters. Minority job applicants
whose hair is not red sue under the Civil Rights Act of 1964. Discuss their likelihood of
Mitchell owed the National Medical Federation $250 for books he had purchased from
that organization. He sent the federation a check for $100, writing on the check, "In full
payment for the books I purchased." The federation cashed the check, but continued to
demand the $150 balance. Discuss if the federation was within its rights to do so and
whether the federation's actions reflect an accord and satisfaction agreement with
Ashton Bank knows that its customer, Juan, has died. One day after Juan's death,
Ashton Bank was presented a check for clearing of $3,000. The check was written by
Juan a week prior to his death to Bailey Enterprises. Discuss the legal rights of Bailey
Kay, who is quite elderly, uses a star (*) as her signature. In a written contract Kay's
name is written, but on the signature line for Kay's name only the * that Kay made
appears. Discuss whether or not the * binds Kay to the contract.
Due to a typing mistake, Delta, a limited partner in Derby Limited Partnership, is
identified in the certificate of limited partnership as a general partner. Discuss how this
error should be corrected.
Grant, a construction worker, purchased a double indemnity option from his life
insurance company.
Jon, a promoter, is concerned about being personally liable on preincorporation
contracts he signs on behalf of corporations that have not yet been formed. Discuss
what Jon may lawfully do to avoid this liability.
A hacker threatens to shut down a company's computer system unless the company
pays him $10 million. Discuss the crime and federal statutes involved in the case.
As a prank, Amanda rigs a bucket of water over Leslie's front door so that Leslie will be
soaked when she opens the door to go to work on Monday morning. Can Leslie
successfully sue Amanda for the prank?
Kan Lee is a U.S. citizen and an employee of MetLoc systems. He was caught stealing
and handing over semiconductors to another individual, who is a citizen of a foreign
country. Both individuals were arrested. Which law would be invoked in order to
prosecute Kan Lee and what would be the punishment if Kan is convicted?
The Little Manufacturing Co. plant is located next to the Sierra River and employs 120
workers. A flash flood one weekend washes away the plant. Little decides not to rebuild
and lays off the workers, who are not represented by a union. What legal obligations
does Little have to the workers?
Barnaby is a farmer who receives two-thirds of his total income from the sale of
oranges. After two consecutive years of early frosts that destroyed his orange harvest,
Barnaby found himself deep in debt. Seventy percent of his debt resulted from farm
expenses. Can he file for Chapter 12 bankruptcy? Why or why not?