Resources Recovery, Inc., uses dynamite in its remote mining operations. Sabrina stores
household cleaners in his suburban garage. Most likely liable under the doctrine of
strict liability for any injury caused by an abnormally dangerous activity is
a. neither Resources Recovery nor Sabrina.
b. Resources Recovery and Sabrina.
c. Resources Recovery only.
d. Sabrina only.
Plato works for Quirky Squirters, Inc. During work hours, Plato ‘steals his employers
computer time to start up his own business, Rowdy Drenchers. This is
a. burglary.
b. robbery.
c. larceny.
d. no crime.
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. On this instrument, Commodity Sales is
a. the banker.
b. the drawer.
c. the maker.
d. the trader.
Gillian is a director of Fizzy Soda Company. As a director, Gillian can act as an agent to
bind Fizzy
a. in all circumstances.
b. in no circumstances.
c. to any contract in which Fizzy does not have a conflict of interest.
d. to any contract that represents a corporate opportunity for Gillian.
Speedy Shipping Corporation applies to TransInsurance Company for a fire insurance
policy on Speedys warehouse. On the application, Speedy misrepresents the age of the
property to obtain a lower premium. When a fire soon destroys the warehouse,
TransInsurance can
a. deny payment, because a fire destroyed Speedys warehouse.
b. deny payment, because of Speedys fraud in the application.
c. not deny payment, because a fire destroyed Speedys warehouse.
d. not deny payment, because the application is not part of the policy.
Harbor Bay Bank has made mortgage loans to consumers that qualify for the Home
Affordable Modification Program (HAMP), which offers incentives to lenders to
change the terms of certain loans. The purpose of HAMP is to
a. convey property through lenders to consumers who can afford it.
b. force lenders to forgive all high-risk mortgages.
c. reduce monthly payments to levels that homeowners can pay.
d. transfer affordable property to investors to lease to consumers.
Elton and Florida sign a contract by which Elton agrees to deliver and install a utility
sink on May 15 in exchange for Floridas promise to pay the $150 price on May 15. The
delivery and installation of the sink and the payment of the price are examples of
a. conditions precedent.
b. concurrent conditions.
c. conditions subsequent.
d. implied conditions.
Welding Systems, Inc. (WSI), makes welding torches, masks, and related products. A
WSI product may be unreasonably dangerous due to
a. a defect in its design.
b. the expectations of its seller.
c. the intentions of its distributor.
d. the method of accounting of its maker.
Leather & Suede Stores, Inc., rejects a shipment of goods that does not conform to its
contract with Genuine Cowhide Corporation, but is unable to obtain instructions from
the seller. Leather & Suede can
a. destroy the goods.
b. cure the goods to make them conform to the contract.
c. retain the goods without paying for them.
d. reship or store the goods for the seller.
Pings debt to Oak Furniture Warehouse is past due. Oak obtains a judgment against
Ping, but Ping refuses to pay it. Oak asks the court for an order that directs the sheriff to
seize and sell any of Pings nonexempt real or personal property that is within the courts
geographic jurisdiction. This is a request for
a. a writ of execution.
b. a composition agreement.
c. an order that would violate most state laws.
d. an order of garnishment.
Anchorage Marina in Bay Harbor sponsors a fishing tournament that the crew of the
Chimera enters. The prizes include cash and discount certificates for nautical
equipment. Under the principles discussed in “A Sample Court Case, Fehr v. Algard, the
offer of a prize in a contest is
a. a binding contract in favor of a contestant who complies by the rules.
b. a duty to be obeyed that is defined by the risk perceived.
c. an equitable remedy that a modern trial court may or may not grant.
d. a wager in favor of its offeror that is unenforceable at law.
Fact Pattern 27-2B
Thom draws a check, on his account in State Bank in New York, payable to Digital
Computers, Inc., in San Francisco. Digital deposits the check in its account at First
National Bank. First National deposits the check in the Federal Reserve Bank of San
Francisco, which transfers it to the Federal Reserve Bank of New York. That Federal
Reserve Bank sends the check to State Bank.
Refer to Fact Pattern 27-2B. When Digitals bank received the check, it was required to
pass it on
a. before midnight of the next banking day.
b. before midnight of the next day, whether or not it was a “banking day.
c. before noon of the next banking day.
d. within five business days.
A contract between E-Debits, Inc., and Fiscal Credit Corporation includes a provision
excluding liability as a result of fraud. This provision is
a. enforceable because the parties are protected from liability.
b. enforceable because the parties consented to it.
c. enforceable if the parties have equal bargaining power.
d. not enforceable.
Lacey files a suit in Michigan against Ned over the ownership of a boat docked in a
Michigan harbor. Lacey and Ned are residents of Ohio. Ned could ask for a change of
venue on the ground that Ohio
a. has a sufficient stake in the matter.
b. has jurisdiction.
c. has sufficient minimum contacts with the parties.
d. is a more convenient location to hold the trial.
Owen, Petunia, Quentin, and Rita combine to finance the building of Surfside Stores, a
waterfront shopping mall. Their selected form of business organization is an investment
group, or
a. a business trust.
b. a joint stock company.
c. a joint venture.
d. a syndicate.
Country Style, Inc., makes landscaping tools. Under the Restatement (Third) of Torts:
Products Liability, Country could be liable for a warning defect if there is a foreseeable
risk of harm posed by a product and
a. the omission of a warning renders the product not reasonably safe.
b. there is a reasonable alternative design.
c. there is a lack of care in making of the product.
d. there is insufficient insurance coverage.
Whirlwind Financial Corporation sends its executives to a resort in Mexicoat taxpayers
expenseto consider using the firms cash to buy back its stock and thereby prop up the
value. Many of its competitors are doing the same thing. One of the best ways to learn
about the ethical responsibilities inherent in operating a business is to look at
a. the mistakes made by other companies.
b. the benefits of pursuing profit despite the appearance of impropriety.
c. the prevalence of a practice among other corporations.
d. who is footing the bill for a particular action.
Derby Stables writes a check to Extendo Credit, Inc., that is drawn on Derbys account
at Farm & Ranch Bank. If the bank does not accept the check, liability for its amount is
on
a. Derby.
b. Extendo.
c. Farm & Ranch.
d. the holder of the check.
Pola wants to transfer a check to Quin. The check is defective if it
a. has been previously dishonored.
b. has no irregularities on its face.
c. is not overdue.
d. is so complete that no element of negotiability is lacking.
Rite Contractors, Inc., agrees to build a motel for Sleep Inn Corporation. The project
proceeds according to plan, but before it is done, Sleep tells Rite to quit. Rite may
recover
a. the contract price less costs of materials and labor.
b. the contract price.
c. the costs needed to complete construction.
d. profits plus the costs incurred up to the time of the breach.
Parker, a salesperson for Quality Textiles, Inc., shows Rosa, a fabric buyer for Style
Clothing Company, samples of cloth, stating that any shipment will match the samples.
This statement is
a. an express warranty.
b. an implied warranty.
c. a warranty of title.
d. puffery.
Paolo has cerebral palsy, Quincy has kleptomania, and both work for Reality Insurance
Company. Considered disabled under the Americans with Disabilities Act
a. are Paolo and Quincy.
b. is Paolo only.
c. is Quincy only.
d. is neither Paolo nor Quincy.
Origami Paper Products Corporation meets all of the requirements to be subject to the
federal employment discrimination laws. These laws restrict the ability of employers to
discriminate against workers on the basis of
a. experience.
b. gender.
c. intelligence.
d. skill.
Fact Pattern 21-B1
First State Bank issues a letter of credit in favor of Oboe Company, an American firm,
to facilitate an international sales contract to buy resources from Lapland Mining, Ltd.,
a Finnish company.
Refer to Fact Pattern 21-1. In this letter of credit, the beneficiary is
a. Lapland.
b. Oboe.
c. First State Bank.
d. Finland.
Mona and Nero want to discharge their contract by executing a new agreement with
performance different from what they originally promised. They can best accomplish
this by
a. a mutual agreement to rescind.
b. an accord and satisfaction.
c. a novation.
d. an alteration of the original contract.
Steve agrees to assume a debt of Thumb Grippers Company to Main Street Bank. The
agreement is not in writing. To be enforceable, the promise must be for the benefit of
a. any party.
b. Steve.
c. Thumb Grippers.
d. Main Street.
Dirk is driving a sport utility vehicle in which Elin is a passenger when they are
involved in a traffic accident, and Elin is injured. Liability may be imposed on Dirk for
Elins injury if Dirks driving is
a. neither the causation in fact nor the proximate cause of the injury.
b. only the causation in fact of the injury.
c. only the proximate cause of the injury.
d. the causation in fact and the proximate cause of the injury.
The U.S. Department of Homeland Security issues a rule. Like the rules of other federal
administrative agencies, this rule is compiled in
a. the Administrative Register of the Federal Government.
b. the Code of Federal Regulations.
c. the Federal Rules of Civil Procedure.
d. the United States Code.
Flexo Trucking Company transports hazardous waste. Garn is a Flexo driver, whom the
company knows drives longer hours than federal regulations permit. One night, Garn
exceeds the limit and has an accident. Spilled chemicals contaminate Hill Citys water
source, forcing the residents to move away. Flexo acted unethically because
a. Flexo showed reckless disregard for Hill Citys residents and others.
b. Garn exceeded the federal time limit.
c. harm was caused by an unfortunate accident.
d. Hill City should have better protected its water source.
Quisha operates River Valley Soccer, an athletic equipment shop, as a sole
proprietorship. Taxes on the businesss income are paid by
a. no one.
b. Quisha.
c. the state or federal government.
d. the business.
Smith & Jones Associates is a business customer of Superior Bank. Under federal law,
Smith & Jones cannot demand
a. any proof of payment except Superiors good faith.
b. monthly statements.
c. recrediting of its account on payment of a forged item.
d. the return of its original checks with its monthly statements.
Jeff offers Kelly $500 for her three-year-old laptop computer. Kelly accepts. If a dispute
arises, a court would likely
a. enforce the deal after questioning the adequacy of consideration.
b. not question the adequacy of the consideration.
c. rewrite the deal after questioning the adequacy of consideration.
d. set aside the deal after questioning the adequacy of consideration.
The legislature of the state of Mississippi enacts a new statute that sets standards for the
liability of businesses selling defective products. This statute applies
a. only in Mississippi.
b. only in Mississippi and its border states.
c. in all states.
d. in all states but only to matters not covered by other states laws.
Suki leaves a Update-brand watch at Timepiece Sales & Repair to be fixed. Timepiece
sells the watch to Vera, who does not know that the watch belongs to Suki. Suki can
recover from
a. no one.
b. Timepiece.
c. Vera.
d. Update.
Eager Beaver Corporation fails to hold a meeting to adopt bylaws. Under this
circumstance, Eager Beaver will still be treated as a legal corporation in those states
that recognize the common law doctrine of
a. corporation by estoppel.
b. de facto corporation.
c. de jure corporation.
d. ultra vires.
There are no exceptions to the Statute of Frauds.
Because insurance law follows contract law, bad faith tort actions against insurers are
not allowed.
Generally, an accountant must exercise the degree of care that an ordinarily prudent
accountant would exercise.
A seller has an insurable interest in goods as long as the goods are in existence.
A subprime mortgage is a loan made to a borrower who does not qualify for a standard
mortgage.
Owen plans to open Owens Pets Store, a pet supplies outlet, and to hire Quinn and
Ruth. Owen will invest only his own money. He does not expect to make any profit for
at least two years and to make almost no profit for the first three years, but he hopes to
expand eventually. Which form of business organization would be most appropriate?
A marketing technique can be a trade secret.
The state can bring an action to dissolve a corporation that has failed to pay its annual
taxes.
Any creditor listed in the schedules filed by the debtor must file a proof of claim.
One who dies after having made a valid will is said to have died testate.
The Securities and Exchange Commission can bring a civil action against anyone who
aids in a violation of the Securities Exchange Act of
Irwin was the manager of Highlights Grill, a sports bar and restaurant. Irwin opened a
bank account in Highlightss name, signing the account signature card as “owner. Jody,
who was often at Highlights and had free access to its office, told others that she was
“an owner and “a partner. She also opened a bank account in Highlightss name, and
signed the account signature card as “owner. Irwin told Kelton, the owner of Natural
Cheeses, Inc., that Jody was a member of a partnership that owned Highlights. On this
basis, Natural Cheeses delivered its goods to Highlights on credit. In fact, Highlights
was owned by a corporation. When the unpaid account totaled more than $10,000,
Natural Cheeses filed a suit against Jody to collect. On what basis might Jody be liable
for the debt?
Ethical standards based on religious teachings tend to be absolute.
Some U.S. bribery laws are directed toward accountants.
A violation of federal family and medical leave requirements may result in liability for
an employer but not personal liability for a supervisor.
“Consideration refers to the voluntary consent of all of the parties to a contract.
A deficiency judgment requires a borrower to pay the amount of debt remaining after
the collateral is sold.