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A summons is a paper ordering a defendant to appear in court at a certain time.
a. True
b. False
The term "corporate manager" refers to:
a. directors.
b. corporate officers.
c. Both of the above.
d. None of the above.
Congress passed the federal OSHA establishing job safety standards. Illinois passed its
own statute, which had slightly more lenient standards. Illinois workers are only held to
the state standards unless they are involved in interstate commerce.
a. True
b. False
All Seasons, Inc. ordered $5,000 worth of Christmas decorations from Santa, Inc. The
shipment of decorations was to arrive no later than October 1, but did not arrive until
December 1. All Seasons was able to purchase some of the unfulfilled order through
other suppliers, but had to pay 15% more than the price under contract with Santa, Inc.
As a result of the delay, All Seasons' sales were down 25%. All Seasons can recover:
a. punitive damages.
b. nominal damages.
c. compensatory damages and consequential damages.
d. compensatory damages, consequential damages, and punitive damages.
Walter worked nights as a clerk in a fast-food store. On his last work shift, Walter's boss
told him, "I'm really grateful for the year that you have worked here. I am going to give
you a bonus of $1,000 in your last paycheck." When Walter got his last paycheck, there
was no bonus. If Walter sues, the likely result will be:
a. Walter will win, as the promise is enforceable.
b. Walter will lose, as he gave no consideration.
c. Walter will lose unless the promise was in writing.
d. Walter will win, as no consideration is required to modify an employment contract.
The UCC has abolished the common law requirement of consideration in all contracts
involving the sale of goods.
a. True
b. False
A company advertised a pain relief ointment called "Aspercreme." The package stated
"the strong relief of aspirin right where you hurt." The product did not contain any
aspirin. The FTC ruled that:
a. the advertising was not deceptive since the benefit of the product outweighed any
harm caused by potentially misleading claims.
b. the advertising was misleading, and the company would have to change the name of
the product or add aspirin to its formula.
c. the advertising was deceptive, and the FTC required the company to specifically state
in its promotions that the product did not contain aspirin.
d. None of the above
Frank suffers from a mental impairment due to a brain injury from a airplane accident.
He contracts with Glena to purchase her dining room furniture. A month later, he tries to
void the contract. If he is unable to return the furniture, a court will not rescind the
agreement unless Frank can show that Glena acted in bad faith.
a. True
b. False
If Valley Bridge contracts with Rainbow Painters to paint a bridge and the contract
requires that only Sherwin Williams paint be used, then Sherwin Williams, as third
party beneficiary will be able to enforce the contract against either Valley Bridge or
Rainbow Painters.
a. True
b. False
Which of the following words could be registered as a trademark?
a. Crunchy peanut butter.
b. Low-fat peanut butter.
c. Green peas.
d. yStar peanuts.
Mark works as a bartender at The Little Nipper, a local bar. Under state law, bartenders
are required to be licensed. The licensing requires filling out an application and
submitting a $50 application fee. The application does not require any special education
or experience, just the $50 fee. Craig enters Mark's bar, orders a round of drinks for the
house, then notices that Mark's license is not on display behind the bar. Craig learns that
Mark is not licensed and refuses to pay for the round of drinks. The Little Nipper sues.
What result?
a. Since this is an illegal contract, the courts will not enforce it.
b. Since Mark violated a regulatory statute, the contract is unenforceable.
c. Since this is a revenue-raising statute, The Little Nipper wins.
d. Since this is a revenue-raising statute, the licensing law is unconstitutional. Craig
wins.
MegaCorp is incorporated under Delaware law. It is registered to do business in New
York. Legally, in New York MegaCorp is known as what kind of corporation?
a. Domestic.
b. Foreign.
c. Alien.
d. Cumulative.
Which of the following occurs when a person uses labor and/or materials to add value
to personal property belonging to another?
a. Accession.
b. Bailment.
c. An inter vivos gift.
d. A mutual-benefit bailment.
In which case is the offer still valid at the time the acceptance is made?
a. Hal offered to sell a book to Sid. Hal died, and Sid sent an acceptance two days later.
b. By-Waste Co. telephones XXX Co. offering to dispose of XXX Co.'s chemical waste
by a particular method. XXX says it has another way to dispose of the waste. Then
XXX finds out the method it planned to use violates environmental protection statutes,
so it sends a letter of acceptance to By-Waste.
c. Ray offers to sell his AT&T stock for a particular price by May 1. On May 2, Kathy
agrees to buy the stock.
d. In a face-to-face transaction, Pat offers to sell Mike his stereo and Mike accepts.
e. All of the above.
A contract most likely will be declared unconscionable if:
a. it is unbalanced, making it unfair to one party.
b. it contains a cancellation clause.
c. it is oppressive and the weaker party did not fully understand the consequences of the
agreement.
d. it is signed by a minor for an item of luxury.
A letter of intent summarizes progress made during business negotiations, but more
importantly, it creates a binding contract.
a. True
b. False
Jane tells John that Ann was arrested for stealing a car. The story is entirely false. Ann
is not a public figure. Which of the following torts has Jane committed?
a. Slander per se
b. Ordinary Slander
c. Libel
d. None of the above
The officers of a corporation are:
a. chosen by the board of directors.
b. appointed by the president of the company.
c. elected by shareholders.
d. appointed by the Secretary of State.
Federal jurisdiction based upon a "federal question" includes cases based on:
a. the United States Constitution.
b. a federal statute.
c. a federal treaty.
d. All of these.
Upon graduating from college, Kathy announced her plans to enter law school the
following fall and to marry Rick in December. Kathy's father was afraid that marriage
during her first year in law school might cause her to fall behind in her studies or cause
her to drop out of school. He called Kathy and promised her $10,000 if she postponed
her wedding until after completion of her first year of law school. Kathy agreed and
postponed the wedding for a year. Kathy successfully completed her first year of law
school, but soon thereafter, Kathy's father died. The administrator of her father's estate
claimed she was not entitled to the $10,000 because there was no consideration for her
father's promise. If Kathy sues the estate, she will probably be:
a. unsuccessful because her father's death terminated the contract.
b. successful, as there was consideration.
c. unsuccessful because her father received no benefit.
d. unsuccessful because it was merely fatherly advice not to get married during the first
year of law school.
The Grand Performance Hall is in the process of remodeling and is scheduled to open
for business after being closed for 50 years. As part of the remodeling, it is installing a
new sound system. The sound system is to be installed by Sound Systems, Inc. on or
before April 10. Opening night of the hall is May 1. The contract states that "time is of
the essence" because of the opening-night deadline. Sound Systems has some financial
difficulties and doesnt deliver the system until April 20. Grand Hall refuses to accept it,
and Sound Systems sues. What result?
a. Grand Hall wins; the contract date was strictly enforceable.
b. Sound Systems wins; the contract was substantially performed.
c. Grand Hall wins; there was commercial frustration.
d. Sound Systems wins; there was a true impossibility.
Generally, consumers are not adversely affected by tariffs since tariffs affect wholesale
prices, not retail prices.
a. True
b. False
Archer Co. has decided it wants to expand into international business, but it is
concerned about expropriation of its property or losses caused by political unrest.
Archer is considering purchasing insurance through the Overseas Private Investment
Corporation (OPIC). OPIC:
a. provides insurance, but the cost is relatively high.
b. provides insurance, but the list of countries in which it is willing to provide such
protection is fairly short.
c. has had remarkable success at no cost to the U.S. government.
d. insures against expropriation, but not against losses stemming from political
violence.
Only one party can have an interest in particular goods at a particular time.
a. True
b. False
Adam moved into an apartment complex. The rules of the complex prohibit unmarried
men and women from living together in the same apartment. When Adam's friend,
Diane, moved into the apartment he was served with eviction papers. Adam claims the
apartment complex is violating his constitutional rights since it allows married couples
to live together. Is Adam right?
a. Yes. His equal protection rights have been violated.
b. No. His fundamental right of cohabitation has not been violated.
c. Yes. He and Diane are being treated differently than married couples.
d. No. Constitutional protections do not extend to privately owned apartment
complexes.
Which of the following describes the duty of loyalty?
a. It requires managers to make decisions they reasonably believe to be in the best
interest of the corporation.
b. It prohibits making a decision that benefits the decision-maker at the expense of the
corporation.
c. It requires consideration of the interests of the surrounding community.
d. It requires using care that an ordinarily prudent person would take in a similar
situation.
Courts may award damages called "quantum meruit:
a. which means "as much as he deserved.
b. which is money the court believes the plaintiff morally ought to have.
c. even though there was no valid contract entitling the plaintiff to it.
d. All of the above.
Cherise contacted her insurance agent and said she was interested in purchasing several
life insurance policies: (a) a policy on her own life for $100,000, naming her son and
daughter as beneficiaries; (b) a policy on her neighbors life for $100,000, since she had
observed him engaging in reckless behavior, naming herself as beneficiary; (c) a $5,000
policy on another neighbor to cover a loan Cherise made to him, naming herself as
beneficiary; and (d) a $250,000 policy on her business partner, naming herself as
beneficiary. Discuss the legality of each of these potential contracts.
Society is hurt when business managers behave ethically.
a. True
b. False
In a closed-end credit transaction:
a. the lender makes a series of loans with a maximum amount set before the first loan is
made.
b. if the lender is offering a "teaser rate, this must be clearly disclosed.
c. the Federal Reserve Board should be consulted before a lender is chosen.
d. there is only one loan, and the borrower knows the amount and payment schedule in
advance.
If a seller cures within a reasonable amount of time, the contract:
a. has been performed.
b. is breached.
c. is void.
d. is voidable.
The original statute of frauds is the English law that began the practice of requiring
written evidence of certain kinds of contracts, but now the British government has
repealed the writing requirement for most contracts.
a. True
b. False
List the four different types of "marks" that can be protected under trademark law.
Explain how each mark is used.
Explain the origins of equity and its place in contemporary American law.
What are the advantages and disadvantages of using arbitration rather than litigation?
Richard received his credit card bill and noticed an error. He wrote to the company the
next week, pointing out the error in his bill. Under the law, what is the credit card's
obligation once it receives Richard's letter?
Compare and contrast money laundering and embezzlement. Give an example of each.
Garden World orders 120 hand cultivators from Green Thumb, Inc. When the
cultivators arrive, they seem fine, so Garden World accepts them. As the stock person is
putting the cultivators on display, she notices that the tines are loose on all the
cultivators. Garden World returns the cultivators to Green Thumb, but they are lost
when the delivery truck slips on an oily spot in the road and drives into a nearby lake.
Discuss who bears the risk of loss for the shipment.
Briefly discuss the limitations on a corporation electing Subchapter "S" status.
Southern Fuels Co. and Langham-Hill Petroleum, Inc. are both in the business of
buying and selling large quantities of petroleum products. In October, the parties
entered into a fixed price contract wherein Southern agreed to purchase 4.2 million
gallons of No.2 fuel oil at a specified price per gallon to be delivered in four monthly
installments. The contract included a force majeure clause. The first three monthly
shipments of oil were purchased by Southern as agreed. In January of the next year, the
price of oil in the world market collapsed as a result of Saudi Arabian attempts to regain
its share of the world oil market. Southern refused to purchase the last shipment under
the contract. Southern informed Langham-Hill that because the drop in world oil prices
was caused by Saudi Arabians who were "outside Southern's control" that it was
invoking the force majeure clause. Langham-Hill sued for damages in the amount of
$306,075. What is a force majeure clause? Southern's basic argument is that it can now
buy oil at a substantially lower price. Will Southern succeed on this basis?
Compare and contrast the perspectives of a lawyer and a client when approaching the
negotiation of a contract.
Maria, who lives in the United States, gains unauthorized access to a bank's computer
system and steals financial information about customers. Of what is Maria guilty, and
under what statute(s) could she be prosecuted?
Karen has filed for bankruptcy. Who has the authority to confirm or reject a plan of
payment, and what factors will be considered when deciding whether to approve a
repayment plan under Chapter 13?
Aubry purchased a washing machine, a freezer, and a refrigerator from Gateway
Appliances on credit, giving Gateway a security interest in the appliances. The
appliances were for Aubry's household use. Gateway did not file a financing statement.
Six months later, Aubry had a garage sale and sold the appliances to Tam. Tam bought
the appliances for her student rental property. Aubry left town owing money on the
appliances. If Gateway can trace the appliances to Tam, can Gateway repossess the
appliances? Explain in detail.
When a party to a contract fails to fulfill all of her promises, she has breached the
contract. What response does a court typically have for a breach?
The Trimbles apply to Community Savings & Loan for an installment loan of $20,000
to remodel their bathroom. Discuss the disclosures Community is required to make.
Discuss a bailors liability for defects in the bailed property.
Briefly describe the process of jury selection.
Discuss the two federal statutes that give Americans the power to acquire or protect
personal information.
Spangel Fashions sends out its spring and summer catalog to Cindy. Cindy falls in love
with the cute dress featured on the front cover of the catalog. When Cindy calls to order
the dress, she is informed that the company has sold out of the dress. Cindy is upset and
claims that the store is in breach of contract. She argues that the catalog presented an
offer, which she accepted when she called to order the dress. Is Cindy correct?
Why/why not?
Discuss the pros and cons of gambling and whether there might be any reason for a
court or legislature to treat gambling on credit any differently from gambling itself.
Abigail signed a contract to purchase a new car from Wolf's Auto Sales Company. The
seller breached its agreement by not delivering the car. Abigail went to another car
dealer and purchased the same model of car at the same price. Although she had
experienced a legal injury, Abigail has no actual financial or other damages as a result
of the breach. If Abigail sues and wins, what type of damages will she be awarded?
