Book Title
Business Law with UCC Applications 14th Edition

Business Law 11787

March 1, 2019
Sue contracts to purchase Sanyo's auto. Only Sue needs to make a tender of
In a Chapter 7 bankruptcy filing, the debtor is referred to as a debtor in possession.
Under the UCC, a signed, written offer made by a merchant that allows acceptance at
any time within a 90-day time period is not binding unless the offeree provides
The quasi-contract concept involves the mutual assent of the parties.
Notes are promises to pay money, while drafts are orders to pay money.
A check given for an illegal gambling contract does not provide a defense to payment
against a holder in due course.
The "Opening Case Round 2" involving the Federal Trade Commission and the Hobby
Lobby case discussed whether the people making decisions at Hobby Lobby can benefit
from corporate rights flowing to the people behind the corporate veil.
In bankruptcy, the proceeds of life insurance policies that have yet to mature are subject
to creditors' claims.
Under the parol evidence rule, evidence of oral statements made before signing a
written agreement is admissible in court to change the terms of a written agreement.
Under the fairness rule, the court will not interfere with most business decisions as long
as the managers do what is fair and legal for the corporation.
The seller is said to have a security interest in shipped goods if the agreement between
the buyer and seller allows the seller to retain title after the goods are shipped.
Under SEC regulations, Jane, a director of ABC Co., can profit from the purchase and
sale of ABC securities in a period of six weeks.
James uses fireworks to celebrate the victory of his favorite team in the soccer finals. If
James unintentionally injures a person walking on the pavement, he can be held
responsible based on strict liability.
If Auto Supply refuses to sell hoses to Small Retail Co. unless Small also buys brake
shoes from Auto, the action will be prohibited by the Clayton Act.
Only the maker of the note is obligated to pay an instrument without reservations of any
If a seller offers to cure an improper delivery of goods, he or she must always do so
before the contractual time for performance expires.
"Hard Power" is waged at the emotional and psychological level.
Jury instructions contain the judge's opinion of the evidence presented.
The defendant's answer may contain a counterclaim which is an affirmative defense.
There is no legal detriment when a person promises not to sue.
A plaintiff in a strict liability case may not recover punitive damages.
A mortgagee has the right to equity of redemption.
The cash surrender value of a straight life insurance policy equals the face value of the
policy at a stated age (usually ninety-five or hundred years).
Duress can be used as a defense for payment against holders in due course.
Jarvis rents an apartment for a period of two months. His lease is governed by the
Consumer Leasing Act.
An individual takes out a typical life insurance and commits suicide three years later.
The beneficiary may collect the insurance.
Under the Communications Decency Act, an Internet service provider can be held liable
for the defamatory content of a customer's posting.
A buyer of Titan Co. that does not want to be burdened by Titan's pension plan should
structure the purchase as an asset acquisition.
Corporate social responsibility is based on the legal advantages granted to the
Under the UCC, a signature includes any symbol made with the intent to authenticate a
A negotiable instrument is a written document signed by the maker that contains a
conditional promise or order to pay a fixed amount of money on demand or at a definite
time to the bearer or to order.
All probate rules are determined by federal law.
If a bank pays a forged check, it is liable for ____________ the payee's funds.
A. converting
B. detaining
C. withholding
D. diverting
Grant wants to know the date of the annual shareholders meeting of Big Co. Which
document will contain this information?
A. Articles of corporation
B. Articles of organization
C. Bylaws or regulations
D. Operating agreement
How does a bank verify the signature of its customers?
A. By the substitute check held by the bank for reference purposes
B. By the signature card filled in by the customer when the account is opened
C. By the signature provided in documents such as passports, ID cards, etc.
D. By the pin number provided by the bank with the ATM card
Myra, the assistant accountant at Multibusiness, Inc. decides to transfer $5,000 from a
Multibusiness account to her personal account in order to pay some personal medical
expenses. Myra plans to repay the money as soon as she receives reimbursement from
her health insurance. Myra has committed:
A. larceny.
B. forgery.
C. embezzlement.
D. forgery.
When one of the parties to a contract has failed to do what he or she has previously
agreed to do, it is a:
A. fraud in the inducement.
B. failure of consideration.
C. breach of contract.
D. lack of delivery.
An easement that Charleen enjoys across her neighbor, Hank's land:
A. is only effective during Charleen's lifetime.
B. is only effective during Hank's lifetime.
C. extends to future owners of Charleen's land.
D. cannot last more than seventy years.
The three issues that author Robert Heilbroner thought would challenge the existence of
the human race are: (1) ____________, (2) the challenge of uncontrolled population
growth, and (3) the destruction of the environment.
A. terrorism
B. nuclear war
C. incurable communicable diseases
D. death of the sun
Lillian, who now lives in Oregon, was charged by an Idaho court with molesting several
children while she worked for Idaho Social Services. Lillian could be brought back to
Idaho for trial based on:
A. the Uniform Commercial Code.
B. persuasive precedent.
C. the Third Amendment to the U.S. Constitution.
D. Article IV of the U.S. Constitution.
In the ICJ, judges who disagree with the advisory opinion of the majority are
empowered to issue ____________ opinions.
A. dissenting
B. qualified
C. adverse
D. reverse
____________ goods are those that are in accordance with the obligations under the
A. Future
B. Nonconforming
C. Tangible
D. Conforming
A criminal defendant is found to be suffering from a mental disease that is so serious
she does not know the nature of her actions or the fact that the acts she commits are
wrong. This describes which of the following tests?
A. M'Naghten Rule
B. Irresistible impulse test
C. American Law Institute test
D. The Durham test
____________ is the process by which the courts decide that a federal statute must take
precedence over a state statute.
A. Devolution
B. Revision
C. Uniformity
D. Preemption
Rodney parks his car at Car Stack Parking Lot, Inc. On the back of the parking stub
provided to Rodney, there is a statement typed in large letters: "NOT RESPONSIBLE
FOR DAMAGE TO CARS." When Rodney returns, his car has been dented by the Car
Stack attendant who was attempting to park more cars on the lot. According to law, the
statement on the stub is an exculpatory agreement that is:
A. enforceable against Rodney regardless of circumstances.
B. enforceable against Rodney only if he had the opportunity to park elsewhere.
C. not enforceable against Rodney because he instructed the attendant to be careful
around his car.
D. not enforceable against Rodney because it is contrary to public policy.
Anthony offers to sell a computer to Salvador for $900 if Salvador replies by e-mail
only, sent no later than noon on Saturday. On Saturday, Salvador is unable to access his
e-mail, so he mails an acceptance at the post office before noon. Which of the following
is true of the situation?
A. A legal contract exists since Salvador's acceptance was sent by noon on Saturday.
B. No contract exists since Salvador's acceptance is not effective until reviewed.
C. Anthony is legally bound to the contract since Salvador's e-mail malfunction was no
fault of his own.
D. A legal contract does not exist since the mode of acceptance specified in the offer
was not used.
Historically, when merchants bought goods, instead of paying for them with gold or
silver, they simply filled in a piece of paper called a ____________ which ordered the
goldsmith or silversmith to give a certain amount of the precious metal to the person
who sold the goods.
A. demand note
B. promissory note
C. bill of exchange
D. certificate of deposit
Criminal law differs from tort law in that:
A. criminal law involves a public wrong.
B. tort law involves legal action by governmental authorities.
C. tort law protects the public.
D. criminal law compensates the injured party's loss.
Employees who believe that their employer has violated FMLA rules can file
complaints with the:
A. Labor Employment Standards Administration.
B. Equal Employment Opportunity Commission.
C. Department of Labor.
D. Office of Veterans' Employment and Training Service.
When goods are sent f.o.b. shipment, the title and risk of loss pass to the:
A. carrier at the point of origin.
B. buyer at the point of origin.
C. buyer at the destination.
D. buyer when he/she accepts the goods.
During a settlement week, the court:
A. settles those cases that cannot be resolved through arbitration.
B. requires attorneys to be present for mediation sessions.
C. resolves all submitted cases to be decided by summary jury trial.
D. subjects all submitted cases to private civil trials.
Which of the following would be considered a valid informed consent by a court?
A. Dr. Ambrose tells her patient in advance about a dangerous procedure and the risk
involved, and obtains the patient's informed consent in writing on a form that is signed
by the patient.
B. Dr. Ambrose tells her patient in advance about a dangerous procedure and the risk
involved, and obtains the patient's informed consent in writing on a form that is signed
by the patient and witnessed by a third party.
C. Dr. Ambrose obtains her patient's oral informed consent, which is witnessed by a
third party.
D. Dr. Ambrose tells her patient the procedure is mandatory.
Alan and Baker are disappointed in the profitability of their A and B Partnership. They
want to join their partnership with the X and Y Partnership. Is it possible for a
partnership to be a partner?
A. Yes
B. No
C. Yes, if the partners agree to personally guarantee the debts of the new partnership
D. No, because a partner must be an entity
Which of the following is true of criminal law under the American law system?
A. When a crime is committed, the victim has a cause of action against the accused and
is permitted to recover money as compensation from the defendant.
B. In a criminal case, the prosecutor or district attorney is required to prove the criminal
defendant guilty by a preponderance of the evidence.
C. Defendants are protected from being tried for a criminal offense and then being sued
under tort law for that same wrongful act.
D. If a defendant is accused of an offense that can be designated as two different
crimes, he or she can be tried in two different courts.
During the ____________ of the jury, ____________ the right to ask questions to
determine who will allowed to sit on the jury.
A. discovery; only the judge has
B. voir dire; both parties have
C. discovery; either party has
D. voir dire; only the plaintiff has
Historically, in tenancy by the entirety:
A. a husband and wife shared entire control over the estate and shared the right to all
rents and profits.
B. only a husband had entire control over the estate, with the exclusive right to
possession and the right to all rents and profits.
C. a husband and wife were regarded, in law, as separate individuals.
D. an execution by a judgment resulting from an action against a husband or wife alone
may have been placed against the entire property.
Because many ADR techniques completely sidestep the courts:
A. ADR cannot control the spending on litigation.
B. the parties are kept from carefully considering their agreements.
C. many attorneys do not adequately develop analytical skills.
D. many critical social issues may never reach the judicial system.
Which of the following is true of coinsurance?
A. It is rarely found in property insurance policies.
B. It allows the insured to pay an extra premium initially in exchange for a guaranteed
option to buy more insurance at certain specified times later.
C. It excuses the insured from paying premiums if he or she becomes disabled.
D. It is a provision under which the insurer and the insured share costs, after the
deductible is met, according to a specific formula.
Robert is interested in leasing Bill's property. Robert must include all of the following
essentials into the lease agreement, except a definite:
A. agreement as to the extent and bounds of the leased property.
B. and agreed term.
C. agreement about the purchase options of the property.
D. and agreed price of rental and manner of payment.
Jodie deposits a $527 check from the IRS made payable to her in her checking account.
When will the $527 be made available to her?
A. Within seven business days of the date of her deposit
B. Within three business days of the date of her deposit
C. Within ten business days of the date of her deposit
D. The next business day following the date of her deposit
In terms of federal laws governing labor-management relations, which of the following
statements is incorrect?
A. Picketing and boycotting are subject to federal court injunctions, under the
Norris-LaGuardia Act.
B. The Wagner Act created the National Labor Relation Board.
C. The Labor-Management Relations Act of 1947 is also known as the Wagner Act.
D. It is an unfair labor practice for a labor union to try to coerce employees to join the
union, under the Taft-Hartley Act.
Tammy leaves her car under Emilia's carport while flying to visit her grandmother.
Emilia allowed Tammy to do so as a favor. Emilia uses the car to go to her office
though she had not been given any permission to do so. One day she meets with an
accident and the car is damaged. Which of these is correct?
A. Emilia is not liable because she let Tammy leave the car as a favor.
B. Emilia is liable because she did not have permission to drive the car.
C. Emilia is not liable because she would have the implied right to drive the car.
D. Emilia is liable because this is a bailment for the sole benefit of the bailor.
Joseph dies with no assets, but over $100,000 in personal debt. Joseph's daughter
Samantha, who is very wealthy, is made executor of his estate. Joseph's creditors assert
that Samantha must personally pay Joseph's debts because she is wealthy, Joseph's
daughter and now the executor of his estate. Is Samantha liable?
Titan Insurance Co. pays the damages for Anna's car. The damages were a result of an
accident caused by Earl, who was drunk while driving. Discuss Titan's legal rights in
this situation.
William develops a new design for a gasoline engine that will increase fuel economy by
30%. He decides not to patent this design because it will be good for the environment
and the entire world. Name and explain the ethical system William has used to make
this decision.
MacLean went to an appliance store to buy an advertised camcorder. The salesperson
discouraged him from buying the advertised product, saying that it was of very poor
quality. The salesperson tried to talk MacLean into buying a more expensive camcorder
of better quality. Discuss the case.
Mr. Zolotas told his landlord that he wanted to make some improvements to the house
he was renting from her. He installed recessed ceiling lights and had bookshelves
custom made to attach to and fit beneath the main staircase. When Zolotas moved out,
he removed the shelves and the ceiling lights. Did he have a legal right to do so? Why
or why not?
Mannix owned 200 shares of Leo Deliveries, Inc. Leo had 600 shares total. Leo decided
to increase its capital stock to 1,200. Assuming that Mannix elected to exercise his
preemptive rights, how many shares would he be entitled to?
Before Kramer entered a detoxification center for his alcoholism, he went to an
electronics store and spent $500 on a new, nonrefundable television. He had several
drinks before he went into the store, but was not intoxicated. After he was released from
the costly center three months later, Kramer decided to return the television. He
believed he could disaffirm the contract because he was drinking when he made the
purchase. Analyze the case.
Tom and Jim from JT Co. plan to engage in the building construction business. They
obtain contracts in the name of JT Co., but fail to keep separate bank accounts for JT
Co. funds, placing JT Co. money in their personal bank accounts. In addition, much of
the JT Co. equipment is titled in the name of Tom and Jim. JT Co. breaches a
construction contract with Titan Co. Discuss if Tom and Jim might have personal
liability for this breach of contract.
Georgia purchases what proves to be a defective product from ZBest Enterprise to give
to her best friend, Sarah, on her birthday. Georgia refuses to take legal action against
ZBest because she is afraid of confrontation. Sarah, wanting to help Georgia, and angry
at ZBest, wants to sue ZBest. Discuss the options Sarah has to sue the company.
Viva ships livestock via Cattle Truck Co. to an out of state feed lot. The cattle are held
at the state line for a week, while the state's agricultural department determines that the
livestock is not diseased. Can Viva require Cattle Truck to pay for the extra expense and
lost profits if Cattle did not inform Viva of this possible delay when it accepted the
At 18, Jackson purchased a straight life insurance policy with a face value of $20,000.
At a later time, he borrows a loan value against the cash surrender value of the policy.
However, Jackson dies unexpectedly while the loan is still outstanding. Discuss the
Spratt, an accountant, deliberately falsified a financial statement she was preparing for
Aniline Industries. Gladden and Jarvis invested in Aniline based on the statement. A
banker at Kidston National Bank also relied on the statement in deciding to make a loan
to Aniline. When Gladden, Jarvis, and Kidston National Bank learned of the deception,
they told Spratt that they were going to bring suit against her. Spratt told them that a
court would never rule in their favor because they were not known third parties. Was
Spratt correct? Why or why not?
Ashley is accused of forgery and is arrested by the city police. She is being compelled
to testify, which she refuses to do. At the trial, she asserts her innocence and informs the
jury that she was not informed of her rights by the officers at the time of her arrest, and
was compelled to testify. She wants the jury to be instructed about the rights of a
criminal defendant and the degree of proof required of both the prosecution and the
defendant (her) in this case. Discuss the case.
Amos was divorced and dying in Mercy Hospital when he executed his will in the
presence of his mother, daughter and two nurses, all of whom signed as witnesses. The
will left all of Amos' property to his mother and daughter and left nothing to Amos' son.
The son challenged the validity of Amos' will. Discuss the legal issues.
Dash's auto insurance policy requires that he file a written notice of a claim with the
insurance company within ten days of any damage in an auto accident or the insurance
company may refuse to pay the damage claim. Dash has several accidents and always
simply orally reports the damage to the insurance agent, and the insurance company
pays the claim; however, on this occasion, after his failure to file a written notice of the
claim, the company refuses to pay the claim. They cite the express language of the
insurance policy. Is the insurance company correct? Discuss.
The manager of Palms Restaurant assembles all employees and announces that because
theft is occurring, she would fire employees until the guilty party confessed. Turning to
an employee, Alice, the manager says, "You're fired." Palms Restaurant is in an
employment-at-will state. Discuss if Alice has any legal remedy against Palms.