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Under federal law, the calorie content of the food on a menu must be posted by Organic
Mix, LLC, if Organic Mix is
a. a restaurant chain with twenty or more locations.
b. a food distributor with twenty or more customers.
c. a food processor with twenty or more products.
d. a food producer with twenty or more acres.
Rico does not work for Street Bikes Company, but wrongfully obtains inside
information concerning the firm. Based on the information, Rico buys and sells Street
Bikes stock for personal gain. The Securities and Exchange Commission prosecutes
Rico, arguing that he is liable because he stole information rightfully belonging to
another. This argument is
a. the blue-sky theory.
b. the misappropriation theory.
c. the free-writing prospectus theory.
d. the tipper/tippee theory.
Hamid makes a will leaving a specific sum of money to each surviving relative. The
assets of Hamid's estate are not enough to make all of the gifts in full. This situation
requires
a. an abatement.
b. a constructive trust.
c. a residuary.
d. a revocation.
Sally is the secured party in a transaction with Lilly, who is the debtor. Sally files a
financing statement with the appropriate state official. The financing statement must
contain
a. Lilly's signature.
b. Sally's bank account information.
c. Lilly's credit report.
d. a photograph of the collateral.
Fact Pattern 13-1B
Destiny obtains a check payable to her order from Eugenia. Destiny signs the back and
adds the notation "without recourse."
Refer to Fact Pattern 13-1B. After Destiny signs the back and adds the notation
"without recourse," she adds, "Pay to Florence." This constitutes
a. a blank qualified indorsement.
b. a special qualified indorsement.
c. a restrictive indorsement.
d. none of the choices.
Medical Equipment Supply Company and Natural Rehabilitation Center enter into a
contract for a lease of a certain number of wheelchairs. Medical Equipment assures the
lessee that it has valid title to the goods. Under the UCC, this type of title warranty
arises
a. automatically.
b. only if the buyer asks for such a warranty.
c. only if the seller expresses such a warranty.
d. only if the seller actually has valid title to the goods.
QuikPay Inc. extends credit to consumers. QuikPay is subject to the Equal Credit
Opportunity Act, which prohibits credit discrimination based on
a. intelligence.
b. education.
c. income.
d. race.
Imogen is a shareholder of Jazz Street Studios, Inc. Imogen could normally exercise
appraisal rights if Jazz Street participated in
a. a share exchange.
b. a dissolution.
c. a takeover.
d. a winding up.
Nuncio serves in a representative capacity for Obadiah. With respect to binding
Obadiah to contracts, Nuncio's authority
a. may be actual or apparent.
b. must be actual and apparent.
c. must be actual and not apparent.
d. cannot be actual or apparent.
Pualani and Quentin do business as partners in Rio Vista Builders, a residential
construction firm. For federal income tax purposes, Rio Vista would be treated as
a. a pass-through entity.
b. a natural person.
c. a tax-paying entity.
d. a partnership by estoppel.
Livestock Feedlot orders one hundred sacks of cattle feed from MegaNutrient Feed,
Inc. Each sack is stamped with the phrase "Twenty percent protein." This is
a. an express warranty.
b. an implied warranty.
c. a warranty of title.
d. puffery.
HVAC Heating & Air Conditioning, Inc., is a public company whose shares are traded
in the public securities markets. Under the Sarbanes-Oxley Act of 2002, to ensure that
HVAC's financial results are accurate and timely, the firm's senior officers must set up
and maintain
a. internal "disclosure controls and procedures."
b. external "release and reveal timetables."
c. personal "peruse and review liability policies."
d. public "information and discussion forums."
Brick & Mortar Stores, Inc., signs a lease for a storefront owned by Commercial
Properties, Inc. Unlike a purchaser of real property, Brick & Mortar
a. acquires only temporary possession of the premises.
b. enjoys exclusive possession of the premises.
c. holds only temporary title to the premises.
d. retains temporary, exclusive possession and title to the premises.
Flannery is seventeen years old. Under the Fair Labor Standards Act, she cannot work
a. during school hours.
b. in a hazardous job.
c. more than eighteen hours per week.
d. without a special permit.
Capital Bank's policy requires that indorsements on checks exactly match the names of
the payees. Don, an employee of eData Company, issues and indorses several payroll
checks in the names of former employees and deposits them into his account at Capital.
eData files a suit against Capital to recover the funds. Most likely to suffer the loss is
a. Capital Bank on the basis of bad faith.
b. Don on the ground that he was a fictitious payee.
c. eData Company for failing to monitor its employee.
d. the employees in whose names the checks were issued and indorsed.
Dredging, Inc., borrows $50,000 from Equity Financing Corporation in a secured
transaction using Dredging's equipment as collateral. Dredging then borrows $70,000
from First Choice Lenders, Inc., using the same equipment as collateral. Neither Equity
Financing nor First Choice perfects its security interest. Dredging defaults on the loans.
The party with priority is
a. Equity Financing, because its interest was the first to attach.
b. First Choice, because Dredging owes it more money.
c. First Choice, because its interest was the second to attach.
d. Equity Financing, because Dredging owes it less money.
Janet is the secured party in a secured transaction with Michelle. Janet could also be
referred to as the
a. debtor.
b. secured creditor.
c. collateral.
d. filing officer.
Paulina operates a sole proprietorship, a corporation, and a partnership. Paulina wants
to obtain relief for her individual debts and the debts of her corporation and partnership.
For each of these, Paulina may file a petition in bankruptcy for relief through
a. a liquidation.
b. a reorganization.
c. a repayment plan.
d. a family-farmer bankruptcy plan.
Fact Pattern 6-1B
DIY Fasteners Company decides to consolidate its operations with Evergrip Studs, Inc.,
to form Fit-Rite Bolts & Screws Inc.
Refer to Fact Pattern 6-1B. The articles of consolidation differ from Shrimp Boat's
articles of incorporation. The articles
a. are replaced by Evergrip's articles of incorporation.
b. are replaced by the articles of consolidation.
c. effectively prevent the consolidation.
d. prevail.
Build-It Construction Company contracts with Classic Beverage Corporation to build
Classic Beverage's corporate headquarters. Build-It Construction contracts with
Dependable Tools & Materials Inc. for construction supplies but refuses to pick up the
order. Meanwhile, Classic Beverage hires Elmo, a certified public accountant, to work
in its cost-accounting division as an employee, with no authority to hire or supervise
others. Elmo asks Fayette, an outside experienced accountant, to advise him on certain
accounting procedures but fails to pay Fayette for the service. Classic Beverage also
contracts with Gloria, a salesperson, to solicit orders for its products in a designated
territory. Gloria obtains an order from Highpoint Concessions, Inc., which is assured
the order will be filled soon. But Gloria does not follow through with the paperwork
and fails to submit the order to Classic Beverage. Highpoint Concessions suffers a loss.
Dependable Tools, Fayette, and Highpoint Concessions claim Classic Beverage is liable
under agency law. Discuss fully whether an agency relationship was created by Classic
Beverage with Build-It Construction, Elmo, or Gloria.
Finlay dies without a will. The distribution of Finlay's property, including his
beachfront house near Gulf Shores, Alabama, is prescribed by
a. a court-appointed executor.
b. federal probate statutes.
c. state intestacy laws.
d. Finlay's relatives.
Beef Burgers, Inc. contracts to buy five hundred steers from Fattening Feedlots. Before
Fattening Feedlots can deliver the steers, there is an outbreak of disease in the feedlot,
and all the cattle are quarantined. In this case the perfect tender rule
a. applies to both parties.
b. does not apply.
c. applies only to Beef Burgers.
d. applies only to Fattening Feedlots.
Kalin, Liza, and other consumers form MuniMart Cooperative. This form of business
organization makes it possible for these individuals to
a. avoid personal liability for the acts of the cooperative.
b. obtain an exemption from state laws governing corporations.
c. pay no taxes on their business income.
d. pool their resources to gain an advantage in the marketplace.
Fact Pattern 21-1B
Resource Drilling Company buys equipment for use in its operations, borrowing $1
million from Security Finance Corporation for a security interest in the equipment. The
next day, Resource Drilling borrows $500,000 from Touchstone Loans, also for a
security interest in the equipment. Resource Drilling defaults on both loans.
Refer to Fact Pattern 21-1B. Suppose that Security Finance perfects its security interest
when Resource Drilling takes possession of the equipment. In that circumstance, the
party with priority to the collateral on Resource Drilling's default would be
a. Resource Drilling.
b. Security Finance and Touchstone Loans proportionately.
c. Security Finance only.
d. Touchstone Loans only.
Business Banners, Inc., and Cam's Auto & Truck Sales Dealership enter into a contract
for a sale of thirty advertising banners emblazoned with Cam's logo. The terms do not
explicitly or clearly indicate whether it is a destination or shipment contract. A court
would normally presume that it is
a. a delivery ex-ship.
b. a destination contract.
c. a shipment contract.
d. none of the choices.
Buckley is a general partner in Cut-Rate Shipping, LLLP, a limited liability limited
partnership, which cannot pay its debts. Buckley is personally liable for the debts
a. in proportion to the number of partners in the firm.
b. to no extent.
c. to the extent of his capital contribution.
d. to the full extent.
Fact Pattern 8-1B
Margo works as an administrator and receptionist in Neon's Garage Door Store. Neon
withholds federal taxes from Margo's pay, and controls the methods and details of the
performance of her work. Margo is not authorized to modify the prices or other terms of
a sale at the store. Omar installs Neon's Garage Door products at the buyers' locations.
Refer to Fact Pattern 8-1B. Neon authorizes Omar to sell garage door upgrades and
accessories at the buyers' locations at prices that Omar negotiates with those buyers.
With respect to sales at those locations, Omar is
a. an independent contractor.
b. Neon's employee only.
c. Neon's employee and agent.
d. Neon's principal.
Garry drives a truck as an employee for Heavy Hauling, Inc. Garry would most likely
be considered acting outside the scope of her employment if he
a. crashed into a car at the airport while off duty.
b. hit a pedestrian in a parking lot during a "working" lunch.
c. ran over an attendant at a gas station while refueling the truck.
d. smashed into a store-front while intoxicated on-duty.
When possible, Taye pays recurring monthly bills through automatic bank transfers and
person-to-person payments to e-mail addresses or cell phone numbers. Compared to the
use of paper checks, Taye's payment methods
a. aid sustainability.
b. hurt sustainability.
c. will never affect sustainability.
d. are poised to take a step toward sustainability.
Fact Pattern 6-1B
DIY Fasteners Company decides to consolidate its operations with Evergrip Studs, Inc.,
to form Fit-Rite Bolts & Screws Inc.
Refer to Fact Pattern 6-1B. Evergrip owed money to Guaranty Bank and other creditors.
After the consolidation, Fit-Rite must pay
a. all of Evergrip's debts.
b. half of Evergrip's debts.
c. none of Evergrip's debts.
d. only debts that Evergrip incurred after consolidation was proposed.
Fact Pattern 14-1B
Charlton is the maker of a $200,000 promissory note payable to Development & Sales
Corporation. Development & Sales indorses the note to Equity Lenders, which in turn
indorses it to First Select Investors, which then indorses it to Global Bank, the present
holder.
Refer to Fact Pattern 14-1B. Suppose that First Select pays Global Bank on the note.
With timely notice to the proper parties, First Select may then collect payment on the
note from
a. Charlton, Development & Sales, or Equity Lenders.
b. Charlton or Development & Sales only.
c. Equity Lenders only.
d. no one.
Randall steals a damaged, broken bike that is parked, unlocked, in a dorm bike rack. He
repairs, paints, and replaces parts on the bike until it is like new. The original owner,
Sabi, then claims it. The bike belongs to
a. John and Kim in equal measure.
b. John because he made substantial improvements to it.
c. the state under the applicable estray statute.
d. Kim because John stole it.
With a bill of lading, Interstate Transport Company acknowledges possession of certain
goods and contracts to deliver them. Interstate Transport is
a. a bailee.
b. a buyer in the ordinary course of business.
c. a good faith purchaser for value.
d. an F.O.B.
EquipLease Company leases a thresher to Farm Harvest, Inc., a firm that contracts with
farm owners to harvest their crops. The machine is seriously damaged through Farm
Harvest's neglect. Most likely liable for the damage is
a. EquipLease.
b. Farm Harvest.
c. the farm owners.
d. no one.
Rica is asked to be a witness to Sade's will. Before attesting to the will,
a. Rica does not have to read the will or be informed of its contents.
b. Rica must read the will and recite its contents.
c. Sade must orally tell Rica of the will's contents.
d. Sade's attorney must read the will aloud to Rica.
The UCC applies only to the extent that it has been adopted a state.
A testator may revoke a will by intentionally tearing it.
With a mechanic's lien, real estate becomes security for a debt.
There are age requirements for the witnesses who attest to a will.
Whether a worker is an employee or an independent contractor has no effect on the
employer's liability for the worker's actions.
The Securities and Exchange Commission does not regulate the content of proxy
statements.
A codicil is a will substitute that avoids the cost of probate.
Miriam is an accountant. Natalie is an attorney. Which professional is most restricted
from disclosing her or his client's communication?
Members of limited liability companies are shielded from personal liability in many
situations.
An injured party may sue a business polluter in tort under the negligence and strict
liability theories.
No state requires franchisors to provide presale disclosures to prospective franchisees.
Generally, an offering corporation must notify the Securities and Exchange
Commission and the target corporation's management at the time a tender offer is made.
The United Nations Convention on Contracts for the International Sale of Goods
provides international sellers and buyers with remedies very different to those available
under the UCC.
An indorsement is a signature, with or without additional words or statements.
Liens generally take priority over other claims against the same property.
Businesses typically protect their financial interests by obtaining insurance.
Generally, a corporation that purchases the assets of another corporation is
automatically responsible for the liabilities of the selling corporation.
