Jay is a surety for Karens loan from Little Bank. Jays right to be repaid by Karen after
having paid her debt is the right of
a. contribution.
b. redemption.
c. reimbursement.
d. subrogation.
Cory employs Daily Delivery Agency as an agent under a written agreement that
describes the rights and duties of both parties. This is
a. apparent authority.
b. equal authority.
c. express authority.
d. implied authority.
Riley is interested in buying a franchise from Soft Shoe Corporation. Soft Shoe must
disclose material facts that Riley needs to make an informed decision concerning this
purchase, according to
a. no law.
b. the federal service-station franchise termination law.
c. the Federal Trade Commissions Franchise Rule.
d. the Uniform Franchise Disclosure Act.
Mica, a minor, signs a contract to pay Natural Health Club a monthly fee for
twenty-four months to use its facilities. Six months later, after reaching the age of
majority, Mica continues to use the club. This act is
a. disaffirmance.
b. emancipation.
c. ratification.
d. restitution.
Sam, a citizen of Tennessee, files a suit in a Tennessee state court against United Sales
Corporation, a Wyoming company that does business in Tennessee. The court has
original jurisdiction, which means that
a. the case is being heard for the first time.
b. the court does not have concurrent jurisdiction.
c. the court has standing.
d. the court has venue.
Marbled Granite Company files a suit against Natural Stone, Inc., in a Colorado court
with general jurisdiction. In a Delaware court with limited jurisdiction, E-Sales
Corporation files a suit against First State Bank. The difference between general and
limited jurisdiction is
a. the subject matter of the cases that the courts can decide.
b. whether a case is being heard for the first time.
c. whether a suit is filed against a single individual or many people.
d. whether a suit is filed by a citizen or by a business.
Oscar is Precise Service Companys chief executive officer. On Precises behalf, Oscar
solicits business, hires and fires workers, and handles the finances. Precise pays Oscar
varying amounts, depending on his “needs. Oscar is most likely
a. a principal.
b. an employee.
c. an employer.
d. an independent contractor.
Hobie, the chief executive officer of Ideal Gamers, Inc. (IGI), intentionally understates
the amount of IGIs debts in information provided to investors as part of an issue of IGI
stock. Jaq buys the stock and suffers a loss. Hobie may be subject to
a. government prosecution and Jaqs suit.
b. neither government prosecution nor Jaqs suit.
c. only government prosecution.
d. only Jaqs suit.
Rhett works at Scarletts Sandwich Café. After work, in the parking lot, Rhett finds a
diamond ring lost by Melanie. Title to the ring is possessed by
a. Rhett.
b. Scarletts.
c. Melanie.
d. the state.
Fact Pattern 15-1
Echo takes her car to Fix-It, Inc., which repairs the car and bills Echo for $500. Echo
writes out a check drawn on Capital Bank, but later, believing that Fix-It did not repair
the car properly, issues a stop-payment order.
Refer to Fact Pattern 15-1. Capital Bank pays the check. Capital
a. can sue Echo for a wrongful stop-payment order.
b. can sue Fix-It for breach of contract.
c. can sue no one because it paid a check that was not properly payable.
d. is liable for Echos loss due to the wrongful payment.
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, Paolos best defense would be
a. extreme duress.
b. fraud in the execution.
c. fraud in the inducement.
d. mistake.
Inez and Jason are the shareholders and directors of Kleen Kustodial Corporation. Lily
and Moe are Kleens officers. As in other corporations, the responsibility for the overall
management of Kleen rests with
a. the board of directors.
b. the officers.
c. the owners.
d. the shareholders.
Dian, a clerk at an Entertainment Unlimited store, takes a DVD player from the store
without permission. Dian is liable for
a. appropriation.
b. benefiting an employee.
c. conversion.
d. wrongful interference with a business relationship.
China Bank is a foreign entitya firm owned and operated by investors in a foreign
country. With respect to an LLC in the United States, China Bank can
a. act as a creditor, but cannot otherwise invest or participate.
b. become a member.
c. not become a member, but can participate in its operations.
d. not become a member or otherwise participate in its operations.
Over the course of a year, Real Deal Corporation sells appliances to customers to whom
it extends credit. Real Deal orders the appliances from Superior Appliance Companys
warehouse, from which the items are shipped via common carrier to Real Deals
customers. Article 2 of the UCC governs
a. all of the parties sales of the goods.
b. Real Deals extension of credit.
c. Superiors storage of the goods.
d. the common carriers delivery of the goods.
Madison is the chief executive officer of Nitro Medico, Inc., which is required to file
certain financial reports with the Securities and Exchange Commission (SEC). Under
the Sarbanes-Oxley Act of 2002, Madison must
a. certify that the reports are complete and accurate.
b. designate a corporate official to assume liability for inaccuracies.
c. do nothing.
d. read the reports and be prepared to answer questions about them.
Julio meets Inez on Hello!, a social networking Web site. Inez asks Julio to pay her
expenses to travel to meet him in Center City. He sends the funds, but she does not
make the date. This is
a. online embarrassment but not fraud.
b. online date-dumping but not fraud.
c. an online wake-up call but not fraud.
d. online fraud.
Charles, president of DrinkUp Fresh Beverages, Inc., does not apply utilitarianism to
business ethical issues. One problem with utilitarianism is that it
a. gives business profits priority over production costs.
b. ignores the practical costs of a given set of circumstances.
c. requires complex cost-benefit analyses of simple situations.
d. tends to justify human costs that many find unacceptable.
Dru tells his Excel Company coworkers that Fiona, Excels office manager, is stealing
from their employer. The statement is defamatory only if
a. a coworker believes it.
b. Fiona feels as if she were falsely imprisoned.
c. the statement is true.
d. the statement is false.
Vladimir negotiates a bearer instrument to Wendy by
a. assignment.
b. delivery.
c. presenting it in response to a demand by Wendy.
d. promising to pay.
Bob, a salesperson at a Carpets Galore store, tells Dita, a customer, “Buy your carpet
here, and Ill install it for half of what the store would charge. Dita buys the carpet,
which Bob installs for half the stores price. Bob keeps the money. Bob has breached
a. no duty.
b. the duty of loyalty.
c. the duty of notification.
d. the duty of obedience.
Over a forty-year period, Ewa worked in a variety of jobs. She was also occasionally
unemployed, briefly hospitalized, and suffered a temporary disability. She retired last
year. The key law on all of these subjects is
a. the Consolidated Omnibus Budget Reconciliation Act.
b. the Employee Retirement Income Security Act.
c. the Federal Insurance Contributions Act.
d. the Social Security Act.
Mena applies for a homeowners insurance policy on her house with Neighbors
Insurance Company through Obie, an agent who works for Neighbors. In this
transaction, Obie is
a. an agent for both parties.
b. Menas agent, and not Neighborss agent.
c. Neighborss agent, and not Menas agent.
d. not an agent.
Bella owns a farm in Colorado. Doyle drives his sport utility vehicle off a highway and
onto Bellas land. Doyle commits trespass if he
a. does not have Bellas permission to drive on the property.
b. drives onto the property for recreational purposes.
c. harms the property in a material way.
d. harms the property in any way.
Idle Investments, Inc., and Harbor Bank are secured parties with security interests in
property owned by GR8 Manufacturing Corporation. Priority between these security
interests is generally determined by
a. the amount of the claim.
b. the custom in the trade.
c. the time of perfection.
d. the time the security agreement was signed.
On Monday, Eve deposits in her account at Fiscal Bank a local check for $500. After
5:00 p.m. on Friday, from these funds, Eve can withdraw no more than
a. $100.
b. $400.
c. $500.
d. $600.
Elisa steals Filberts personal information from Filberts computer. This is computer
crime in which the computer is
a. the object of the crime.
b. the subject of the crime.
c. the instrument of the crime.
d. irrelevant to the crime.
Fact Pattern 9-2
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 9-2. Because of the parties belief about the adjacency of the
property, their contract is
a. unavoidable.
b. unconscionable.
c. unenforceable.
d. voidable.
Building Restoration, Inc. (BRI), enters into a contract to refurbish an old train depot
for Casual Dining, Inc., to open as Eat Up Restaurant. If BRI completes most of the
work promised in the contract, its performance will be
a. absolute.
b. complete.
c. material.
d. substantial.
Dinas debit card, issued by Eminent Bank, is stolen and used without Dinas permission.
Dina tells Eminent Bank within thirty days. Dina may be required to pay no more than
a. $5.
b. $50.
c. $500.
d. $5,000.
Firms overseas have almost total legal protection against government acts in the
countries in which they operate, under the act of state doctrine.
In a share exchange, neither corporations directors need to approve the exchange.
If the purpose of a licensing statute is to protect the public from unlicensed
practitioners, a contract with an unlicensed professional is illegal.
An agency relationship cannot exist in the absence of a formal agreement.
The price that a secured party obtains on a sale of collateral is all that the creditor can
recover on the debt.
Embezzlement can be committed only by physically taking property from the
possession of another.
Disparagement of property is another term for slander of quality.
In May 2009, National Biotech Corporation generally advertises that it will make a $4
million offering of stock in June. National makes the offering as advertised and, ten
days after the first sale, notifies the Securities and Exchange Commission (SEC). All
buyers of the stock are given material information about the company, its business, and
the stock. Before the end of the year, the offering is completely sold out. The buyers
include forty unaccredited investors and fifty accredited investors. National does not
register the offering. The SEC files a suit against National, seeking civil sanctions on
the ground that this offering was not exempt from registration. National argues that the
applicable exemption is Rule 505 of Regulation D of the Securities Act of 1933 and that
because of this exemption, any resale of the stock is also exempt. Who is correct?
A firm can have monopoly power without violating antitrust law.
The injury suffered by a nonbreaching party due to the breach of a contract may be
remedied by payment of compensatory damages.
A cyberstalker must act from a location near the victim.
An employer who hires and fires workers according to a fair seniority system may have
a good defense to an employment discrimination suit.
For an agents implied authority to be effective, a principal must confirm it in writing.
Only a foreseeable intervening event can break the connection between a wrongful act
and an injury to another.
Equal protection means that the government must treat similarly situated individuals in
a similar manner.
A trademark must be registered to support a trademark infringement action.
If the assets in a debtors estate in bankruptcy are insufficient to pay fully all creditors,
the debtor is liable for the difference.
A price-fixing agreement that is reasonable does not violate antitrust law.
One requirement for a product liability suit based on strict liability is a failure to
exercise reasonable care.