The assets in Dongs estate, including the value of his home on Elm Street and its
contents, are insufficient to pay in full all of the gifts provided for in his will. His heirs
will receive
a. full payment in order of seniority until the assets are exhausted.
b. nothingthe assets will descend to the state.
c. reduced benefits.
d. the option of distributing the assets according to their wishes.
Dependable Appliances, Inc., and Elain enter into a contract for a sale of kitchen
appliances. Dependable, a merchant who deals in goods of the kind sold, notes that its
goods come with an implied warranty of merchantability. Under the UCC, this means
that the goods are reasonably
a. fit for the buyers particular purpose.
b. fit for the ordinary purpose for which such goods are used.
c. suitable for resale at an acceptable price.
d. the best quality that money can buy.
National Banks policy is to examine signatures only on checks exceeding $2,500.
Checks for lesser amounts are selected randomly for signature verification. National
fails to verify a forged drawers signature on a check for $1,500 drawn on Odels
account. Most likely liable for the amount is
a. National Bank for a failing to exercise due care.
b. National Banks other customers to whom the loss can be ‘spread.
c. Odel on the ground that she was a fictitious drawer.
d. the specific National employee who did not verify the signature.
To adjust debt and institute a repayment plan, Naomi, a family farmer, may file a
petition in bankruptcy for relief under the Bankruptcy Codes Chapter
a. (1)
b. (3)
c. (5)
d. (12)
Precision Parts Company and Quality Manufacturing, Inc., enter into a contract for the
sale of a certain quantity of machine parts. Although not expressly stated, a concept that
is read into this contract is the concept of
a. good faith.
b. impracticability.
c. square dealing.
d. unconscionability.
Lucy is a limited partner in Metro Contractors, a limited partnership, which cannot pay
its debts. Lucy 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 her capital contribution.
d. to the full extent.
Reno is the beneficiary of a life insurance policy on Sulas life obtained from Thicket
Insurance Company. The insured of this policy is
a. Reno.
b. Sula.
c. Thicket.
d. the agent or broker through whom the policy was obtained.
Pip, a clerk for a Quik Burger, Inc., restaurant goes out on strike with the other
employees. After the strike, Pip must be given his job back if the strike is not deemed
unlawful, there is still work at the restaurant, and the strike was
a. an economic strike only.
b. an economic strike or an unfair labor practice strike.
c. an unfair labor practice strike only.
d. unlawful.
Orville sends Percy a certified check for $5,000. Percy deposits the check into his
account at Quantum Bank. The next business day, the bank confirms a $5,000 increase
in Percys account. He then wires Orville $500 for “fees. Later, the bank discovers that
the check is counterfeit. On these facts, the bank can deduct from Percys account
a. $5,500.
b. $5,000.
c. $500.
d. 0.
Ivy signs a check payable to Jon and gives it to him. Jon indorses the back, and
transfers the check to Ked. To negotiate the check to Luis, Ked must
a. write “Ked on the back.
b. write “pay to the order of Luis [signed] Ked on the back.
c. deliver the check to Luis.
d. obtain Luiss signature on the back.
RiteMade Machinery, Inc., designs, makes, and sells a drill press. Steel Equipment
Company copies the design without RiteMades permission. Steels conduct is actionable
provided
a. consumers are confused.
b. Steels conduct is intentional.
c. Steels conduct reduces the value of RiteMades design.
d. RiteMades design is patented.
Truck Transport Company is subject to a decision by the National Labor Relations
Board. Truck Transport appeals the decision, arguing that it is arbitrary and capricious.
This could mean that the decision
a. followed a consideration of legally appropriate factors.
b. justifiably changed the agencys prior policy.
c. was accompanied by a rational explanation.
d. was plainly contrary to the evidence.
LaDonna signs a one-year lease with Mae to occupy an apartment in Ames, Iowa, near
the University of Iowa. LaDonna needs the apartment only for two semesters and may
have to sublet it for the rest of the term. LaDonnas tenancy is
a. a periodic tenancy.
b. a tenancy at will.
c. a tenancy by the entirety.
d. a fixed-term tenancy.
Kyle files a suit against Lora. The document that informs Lora that she is required to
respond is
a. the answer.
b. the complaint.
c. the service of process.
d. the summons.
Ethan, the president of Financial Investments, Inc. (FII), and Gina, FIIs accountant, are
charged with a crime, after the police search FIIs offices. Under the exclusionary rule
a. certain FII records are excluded from subpoena by the government.
b. certain parties to a criminal action may be excluded from a trial.
c. illegally obtained evidence must be excluded from a trial.
d. persons who have biases that would prevent them from fairly deciding the case may
be excluded from the jury.
Tomato Farms (TF) offers to sell Unified Grocers, Inc., a boxcar load of tomatoes. The
offer is sent via overnight delivery because an acceptance is required urgently. It would
be most reasonable for Unified to accept via
a. a fax, a letter, or a phone call to TF within two weeks.
b. a fax sent to TF as soon as the offer is received.
c. a letter mailed to TF within two days.
d. a phone call to TF within five business days.
Fact Pattern 41-1B
Shrimp Boat Company decides to consolidate its operations with Trawlers, Inc., to form
Coastal Fishers Corporation (CFC).
Refer to Fact Pattern 41-1B. Trawlers owed money to View Harbor Storage and other
creditors. After the consolidation, CFC must pay
a. all of Trawlers debts.
b. half of Trawlers debts.
c. none of Trawlers debts.
d. only debts that Trawlers incurred after consolidation was proposed.
Start-Up Corporation substantially complies with all conditions precedent to incorpo-
ration. Start-Up has
a. corporate existence by estoppel.
b. de facto existence.
c. de jure existence.
d. ultra vires existence.
Hals Hardware store defaults on a debt to Intrastate Bank, which takes possession of the
collateral securing the debt. Intrastate sells the collateral. The proceeds from the sale are
applied first to
a. Hals debt to Intrastate.
b. Hals debts to other creditors.
c. Intrastates fees for the sale.
d. payments Hals made on the debt to Intrastate.
Fact Pattern 42-2A
Dhani, an accountant for Eureka, Inc., learns of undisclosed company plans to market a
new laptop. Dhani buys 1,000 shares of Eureka stock. He reveals the company plans to
Fay, who buys 500 shares. Fay tells Geoff, who tells Hu, each of whom buy 100 shares.
They knows that Fay got her information from Dhani. When Eureka publicly announces
its new laptop, Dhani, Fay, Geoff, and Hu sell their stock for a profit.
Refer to Fact Pattern 42-2A. If Dhani is liable under the Securities Exchange Act of
1934, it will be because the information on which he based his purchase of Eureka
stock was
a. a forward-looking forecast.
b. not material.
c. not yet public.
d. not yet true.
Suki works for Renaldo. At the end of her first year, Renaldo promises to pay her a
bonus for her “four quarters of success. Renaldos promise is
a. unenforceable because Sukis performance was a preexisting duty.
b. unenforceable because Sukis performance is past.
c. enforceable.
d. unenforceable because Sukis performance is not legally sufficient.
Mitch and Nadine enter into a contract for a sale of seventy-six specially made motion
detectors. When Nadine does not deliver within a reasonable time after the agreed
delivery date, Mitch files a suit for breach. Nadine asserts the doctrine of commercial
impracticability. This doctrine extends only to problems that are
a. foreseen.
b. preventable.
c. unforeseen.
d. ordinarily assumed by a seller or lessor.
Home Brand Products, Inc., in its ads, makes claims about its products that are obvious
exaggerations and claims that are false but appear to be true. Home Brand may be
subject to sanctions for
a. neither the claims nor the exaggerations.
b. only the claims.
c. only the exaggerations.
d. the claims and the exaggerations.
Utility Power Company has the right to run its power lines across Velmas land. This is
a. a license.
b. an easement.
c. a profit.
d. a tenancy at sufferance.
Herm promises to pay Nixie to work as an assistant buyer for his Organic Foods stores.
Nixie agrees and quits her job with Pic-U Grocery, but Herm does not hire her. Herm is
most likely liable to Nixie under
a. the concept of accord and satisfaction.
b. the doctrine of promissory estoppel.
c. the preexisting duty rule.
d. no circumstances.
Paisley works for Ricks Air Conditioning & Heating Service. Reasons for holding
Ricks liable under the doctrine of respondeat superior for Paisleys tort injuring Nikki do
not include the employers
a. ability to afford Nikki more effective relief.
b. ability to pay for Nikkis injury.
c. control over Paisley.
d. guilt or innocence.
In Phils suit against Riley, the court issues a judgment in Rileys favor. If the case is
appealed to an appropriate court of appeals, the appellate court will hear
a. all of the evidence.
b. most of the evidence.
c. none of the evidence.
d. select pieces of evidence.
Demi possesses a check that is “payable to bearer. Esther steals the check and delivers it
to Fern. All rights to the check are
a. Demis.
b. Esthers.
c. Ferns.
d. no ones.
Fact Pattern 35-1B
Kit, manager of Long-Term Care Companys office in Metro City, decides to replace the
offices male employees with females. Nia, an assistant manager transferred from a
different Long-Term Care office, refuses to cooperate. Kit retaliates against Nia, who
quits. Within a year, the male employees also quit.
Refer to Fact Pattern 35-1B. Liability for Kits conduct most likely rests with
a. Long-Term Care male employees, who should have acted themselves.
b. Long-Term Care, which should have known, and Kit, who acted.
c. Nia, who did not cooperate.
d. no one, because no law was violated.
Made4U Goods, Inc., asks its employees, many of whom are members of the National
Machinists Union, to apply the utilitarian theory of ethics. This theory does not require
a. a choice among alternatives to produce the maximum societal utility.
b. a determination of whom an action will affect.
c. an assessment of the effects of alternatives on those affected.
d. the acquiring of the means of production by workers.
Eula signs a check “pay to the order of Eula and presents to First National Bank for
payment. The types of liability associated with this check are
a. fitness and quality.
b. potential and real.
c. sealed and delivered.
d. signature and warranty.
Valley Farms offers to sell Whole Harvest Bakeries, Inc., five hundred bushels of
wheat. Whole Harvest responds, “We agree to buy five hundred bushels only if the
wheat is Grade A quality. This statement is
a. a breach.
b. a counteroffer.
c. a confirmation.
d. an acceptance.
Insurance coverage is never effective until a formal written policy is issued.
An auditor must use adequate procedures in an audit to detect any illegal acts of the
company being audited.
The words used in an insurance contract are given special meaning.
Directors and officers must subordinate the welfare of the corporation to their personal
interests.
A donee beneficiary cannot sue a promisor directly for breach of contract.
A buyer who rightfully rejects nonconforming goods can resell the goods and keep the
proceeds.
Arbitration that is mandated by the courts is often binding on the parties.
Presentment warranties protect the person who presents an instrument for payment.
A party who knowingly accepts defective performance of a contract thereby
acknowledges the breach and can take later action on it.
A bailment of persons is possible.
The measure of damages on a breach of contract is the amount that will impress on the
breaching party the harm that has been done.
In most states, a director cannot be removed without cause unless shareholders have
reserved the right.
Dimitri is a director and shareholder of Equitable Corporation and of Four Square
Products, Inc. A resolution comes before the Equitable board to compete with Four
Square. What is Dimitris responsibility?
When a contract party alters a written contract, the other party must adapt his or her
performance accordingly.
A firm can not be a monopolist unless it is the sole seller in a market.
Shareholders are co-owners of the corporation.