Cole drives into Dino’s Service Station and asks Erin, the attendant, to fill the tank in
Cole’s hybrid vehicle. After Erin fills the tank, but before Cole pays for the gas, any
contract between Cole and Dino’s is
A.executed.
B.executory.
C.quasi.
D.unenforceable.
Doctors Medical Associates obtains an insurance policy that protects its members
against negligence claims by their patients. This is
A.casualty insurance.
B.fidelity or guaranty insurance.
C.malpractice insurance.
D.workers’ compensation insurance.
In all states, Sports Fitness Club Company and other corporations can pay dividends
from
A.gross profits.
B.net profits.
C.retained earnings.
D.surplus.
Fact Pattern 11-3
Haruko, who owns and operates Garden Orchard, agrees to sell Fresh Produce
Cooperative ten bushels of apples.
Refer to Fact Pattern 11-3. When the market price for apples exceeds the price in the
contract with Fresh Produce, Haruko decides not to deliver the apples. This
A.breaches the contract.
B.discharges the contract.
C.has no effect on the contract.
D.suspends the contract.
Gert, an accountant, contracts to conduct an audit for Hailey. In performing the audit,
Gert fails to detect certain misconduct. Gert is most likely
A.liable if a normal audit would have revealed the misconduct.
B.liable if Gert issues a specifically qualified opinion.
C.not liable if Gert generally disclaims any liability.
D.not liable if the misconduct was due to Hailey’s negligence.
The truncation (shortening) requirement of the Fair and Accurate Credit Transactions
Act of 2003 applies only to receipts that are “electronically printed.” Eagle Motorcycle
Rents accepts reservations on-site and online. On-site customers are given tangible
paper receipts. Online customers are sent an online confirmation. The truncation
requirement applies to
A.Eagle’s online confirmations only.
B.Eagle’s tangible paper receipts only.
C.Eagle’s online confirmations and tangible receipts.
D.none of Eagle’s confirmations or receipts.
Fact Pattern 11-3
Haruko, who owns and operates Garden Orchard, agrees to sell Fresh Produce
Cooperative ten bushels of apples.
Refer to Fact Pattern 11-3. When bad weather destroys Garden Orchard’s apple crop,
Haruko’s obligation to deliver apples to Fresh Produce is
A.breached.
B.discharged.
C.not affected.
D.suspended.
Lather Up Soap Products Company grants its agent Kathy an exclusive territory in
which to sell Lather Up products. The firm cannot compete with Kathy in that territory
under the principal’s duty of
A.avoidance.
B.cooperation.
C.indemnification.
D.reimbursement.
Dee, an accountant, does not work for Emergent Company, but wrongfully obtains
inside information concerning Emergent. Based on the information, Dee buys and sells
Emergent stock for personal gain. The Securities and Exchange Commission prosecutes
Dee, arguing that she is liable because she stole information rightfully belonging to
another. This argument is
A.the blue-sky theory.
B.the misappropriation theory.
C.the red-herring theory.
D.the tipper/tippee theory.
Hi-Five Aero Corporation is required to register its securities under Section 12 of the
Securities Exchange Act of 1934. Section 14(a) of the act regulates
A.the declaration of dividends by Hi-Five’s board of directors.
B.the later re-registration of Hi-Five’s securities.
C.the short-swing activities of Hi-Five’s insiders.
D.the solicitation of proxies from Hi-Five’s shareholders.
Transnational Corporation and United Shipping, Inc., agree to a contract that includes
an arbitration clause. If a dispute arises, a court having jurisdiction may
A.monitor any arbitration until it concludes.
B.order an arbitrator to rule in a particular way.
C.order a party to bring the dispute to court.
D.order a party to submit to arbitration.
Posing as a representative of Global Games Company, Ferris e-mails Evan, a job
seeker, asking him to forward personal banking information so that if he is hired,
payroll checks can be deposited directly into his account. Evan supplies the data, which
Ferris promptly sells to Dixie. This is
A.no crime.
B.employment fraud.
C.phishing.
D.vishing.
Creekside Property Corporation enters into a contract with Downstream Management
Associates to manage and maintain Creekside’s apartment complex. Their contract
provides that neither party can recover damages for a non-fraudulent or unintentional
breach. This is
A.a limitation-of-liability clause.
B.an exculpatory clause.
C.an illegal clause.
D.a quasi contract.
Rodeo Ranch’s agent Slim is authorized to draw checks on Rodeo Ranch’s account in
Town Bank. Upper Range Corporation is a Rodeo Ranch supplier. Slim writes a check
“pay to the order of Upper Range [signed] Slim,” indorses the check in Upper Range’s
name, and deposits it in his account in Verity Bank. If Verity Bank collects payment, the
ultimate party most likely to suffer the loss is
A.no one.
B.Rodeo Ranch.
C.Town Bank.
D.Upper Range.
Procter, who is not in contemplation of imminent death, tells his daughter Opal that she
can have his Dodge truck on his death, whenever that happens. This is
A.a valid gift causa mortis.
B.a valid gift inter vivos.
C.a valid gift largesse.
D.not a valid gift.
Rapid Pest Control itself out to others as being a corporation but makes no attempt to
incorporate. Ponce signs a contract with Rapid Pest Control that is not performed.
Ponce files a suit against the firm. The court will likely hold that Rapid Pest Control is
A.a corporation by estoppel.
B.an alien corporation.
C.an S corporation.
D.ultra vires.
Forest & Field Company makes and leases a backhoe to Zach. Due to a defect
attributable to Forest & Field’s negligence, Zach is injured in an accident in which his
neighbor Aron is also hurt. In a product liability suit based on negligence, Forest &
Field may be liable to
A.Aron only.
B.no one.
C.Zach and Aron.
D.Zach only.
Milo borrows $125,000 from North State Bank to buy a home. To comply with the
Statute of Frauds, the mortgage must be
A.a highly formal document.
B.a particular form.
C.in the same format as the lender’s other loans.
D.in writing.
Cathy uses, on her new recording Drive By, the exact note-for-note melody of a song
written by Earl without his permission. This is
A.copyright infringement.
B.patent infringement.
C.trademark infringement.
D.a theft of trade secrets.
Lovey is a shareholder of Matchless Corporation with preemptive rights. With these
rights, Lovey can
A.buy a prorated share of a new issue of stock before other buyers.
B.choose to have Matchless act exclusively in a certain area.
C.”preempt” managerial decisions that affect shareholders.
D.sell a prorated share of a new issue of stock before other sellers.
Region Construction Company has a right to drive its trucks across Staple Business,
Inc.’s property, which is adjacent to Region’s office. This right is
A.a leasehold estate.
B.a license.
C.an easement.
D.a profit.
Fashion Retail Center enters into a contract with Great Promotions, Inc., to provide
Fashion with a plan to retool its merchandising strategy. If Great Promotions breaches
the contract, Fashion has a duty to
A.reduce the damages that Fashion might otherwise suffer.
B.reduce the loss that Great Promotions might otherwise suffer.
C.punish Great Promotions and deter others from similar acts.
D.take no action.
In studying the legal environment of business, Professor Dooley’s students also review
ethics in a business context. Ethics includes the study of what constitutes
A.fair or just behavior.
B.financially rewarding behavior.
C.legal behavior.
D.religious behavior.
RingTone Corporation is a public company whose securities are traded among
investors. Under the Securities Act of 1933, a security is
A.almost any stake in the ownership or debt of a company.
B.an investment that is guaranteed to make a profit.
C.only such common forms of debt and equity as bonds and stocks.
D.whatever a company represents to the public as a security.
On Monday, Neil tells Outdoor Landscaping, Inc., that he will pay Outdoor $500 if a
variety of tasks are completed by Friday. On Wednesday, when Outdoor is more than
half done with the work, Neil says that he has changed his mind. These parties had
A.an expired contract when Neil said that he had changed his mind.
B.a quasi contract when Neil said that he would pay for certain work.
C.a unilateral contract as soon as Outdoor began to perform.
D.no contract.
Diego performs a contract with Elwood to add a swimming pool to Elwood’s property,
but Elwood does not pay. Diego can file a lien on Elwood’s property if, from the last
date labor or materials were provided, he acts
A.immediately.
B.within 60 to 120 days.
C.within two years.
D.within a reasonable time.
Global Enterprises Corporation (GEC) engages in what some unhappy ex-employees
and disgruntled consumers consider to be bad corporate behavior. These individuals
post “horror stories” about GEC on rogue Web sites. By providing a forum for
complaints, the potential for damage to the reputation of any corporation via the
Internet has
A.decreased.
B.increased.
C.neither decreased nor increased.
D.both decreased and increased.
Uri sells 100 cases of vitamins to Wanda, but before she takes physical possession, the
cases are lost. Under the UCC, the parties’ rights and obligations with respect to the loss
depend on the concept of
A.physical possession.
B.product liability.
C.risk of loss.
D.title.
Fay is mentally incompetent but has not been so adjudged by a court. Any contract Fay
enters into is
A.voidable if Fay has a lucid interval at the time of contracting.
B.voidable if Fay lacks the capacity to comprehend the consequences.
C.voidable if the other party does not realize that Fay is incompetent.
D.unavoidable.
Sophie and Tiny incorporate their beverage-container business as U-Twist Products,
Inc. The first board of directors may be appointed by the firm’s
A.employees.
B.incorporators.
C.officers.
D.shareholders.
In the facts in the previous question, according to the dissent in the Kavarik case, with
respect to Glen and Heidi’s marital estate, the CDs are
A.not included because Heidi’s parents did not intend to give them to her.
B.not included because Irene cashed them without sharing the proceeds.
C.included because Glen and Heidi were married when the CDs were acquired.
D.included because Heidi’s parents gave up control when the CDs were placed in the
names of Heidi and Irene.