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Mayco has received goods from Wallace pursuant to a sale or return agreement. If
Mayco subsequently declares bankruptcy, the goods will be:
a. returned to Wallace because title did not pass to Mayco under this type of sale.
b. belong to Mayco and will not be a part of the bankruptcy.
c. subject to the claims of Mayco's creditors under Section 2-326 of the Uniform
Commercial Code.
d. will be kept by the bankruptcy judge and clerk.
Assume that Bubba orders 15 cases of BBQ chips from Mays Potato Chips for his
restaurant, Bubba's BBQ. Mays ships 15 cases of regular chips by mistake. If Bubba
decides to keep the regular chips, in spite of the nonconformity with the contract, then
the destruction of the chips when a water pipe breaks in the food storage room will
result in:
a. Mays having to bear the loss, because it shipped nonconforming goods to Bubba.
b. Mays having to bear the loss, because it failed to insure the chips.
c. Bubbas having to bear the loss, because he accepted delivery of the nonconforming
chips.
d. Bubbas having to bear the loss, because it was a sale on approval contract.
Farmers Fortune Insurance has a contract with Farmer Fran to insure her crops against
insect damage. The contract does not specify which insects are covered or how much
damage is necessary to make a claim. The contract will probably be enforced in favor
of:
a. Farmer Fran.
b. Farmers Fortune Insurance.
c. Neither side, as it is ridiculous to try to insure against insects.
d. Cannot determine... would have to go through litigation to decide.
Fact Pattern 39-1
Two universities located within 30 miles of each other agree to divide their market so as
to help them both. The two schools draw a line down a map and each university agrees
to accept students only on their side of the line.
Such an agreement is:
a. a per se violation of antitrust law.
b. subject to the rule of reason test to determine if it violates antitrust law.
c. not governed by antitrust law since educational institutions are exempt from this area
of law.
d. subject to state regulations but not to the Justice Department.
A corporation's obligation to provide shareholders with financial information:
a. depends on whether the company is publicly or privately held.
b. depends on the requirements of the Model Business Corporation Act, which is widely
followed in regard to the shareholders' right to information.
c. is extensive and is carefully regulated by the SEC if the company is privately held.
d. All the above.
Important steps in the criminal process, in the proper order, include:
a. probable cause hearing, search, arrest, indictment, arraignment, plea bargain, and
trial.
b. arraignment, booking, bail hearing, trial, and grand jury indictment.
c. arrest, probable cause hearing, motion to suppress, booking, and trial.
d. indictment, arrest, probable cause hearing, plea bargain, arraignment, trial, and
appeal.
Which of the following actions would prevent a discharge of debts under Chapter 7?
a. Discharge under Chapters 7 or 11 within the past eight years.
b. Falsified records presented to bankruptcy court by debtor.
c. Failure to disclose assets.
d. All of the above would prevent a discharge of debts.
Garth's Imports sold a car to Wally on credit for $30,000. Garth assigned to Cassandra
all of his rights to receive money from Wally. Cassandra did not inform Wally of the
assignment. Therefore, Wally continued to make the next three payments directly to
Garth. Shortly thereafter, Garth left the country with the money. If Cassandra sues
Wally for the missing three payments:
a. Cassandra will not be able to collect the money from Wally.
b. Wally is not liable for the three payments because an assignment is not valid unless
the obligor is notified.
c. Wally is liable for the three payments because Cassandra paid consideration for the
assignment rights.
d. Wally cannot raise the defense of previous payment.
Oxtron, Inc., a U.S. company, and Leer, an Argentinean company, orally agreed to a
contract under which Oxtron is to ship medical devices to Leer. The contract is
governed by the CISG. Which statement is correct?
a. The contract is not enforceable because it is oral.
b. Whether the contract is enforceable without a written agreement depends on the
value of the medical devices.
c. Whether the contract is enforceable without a written agreement depends on whether
the medical devices are a necessity.
d. The contract is enforceable without a written agreement.
Maddie enters into a secured consumer debt transaction with Friendly Bank. When
Maddie pays the loan in full, Friendly Bank is required to file a statement indicating
that it no longer claims a secured interest in the collateral. This statement must be filed
within one month from the date the debt is fully paid.
a. True
b. False
When a party to a contract intentionally makes the terms of a contract unclear, it is
called:
a. vagueness.
b. duress.
c. ambiguity.
d. mistake.
As set forth in the Restatement Second of Contracts, which of the following duties are
imposed on the parties in the performance and enforcement of a contract?
a. perfect performance; honesty
b. strict performance; team work
c. good faith; fair dealing
d. negotiation; arbitration
Regardless of the language of the contract, title to goods passes to the buyer at the time
and place at which the seller physically delivers the goods.
a. True
b. False
The most common form of business ownership is the corporation.
a. True
b. False
Al contracted to sell his house to Bev. Subsequently, they both changed their minds and
agreed to cancel the contract. The contract between Al and Bev is discharged by:
a. full performance.
b. rescission.
c. accord and satisfaction.
d. novation.
A major motion picture distributor offers to provide a television station with three very
popular, desirable films. However, as part of the agreement, the distributor requires that
the television station also purchase four films that are not very desirable. This type of
arrangement is called a:
a. reciprocal dealing agreement.
b. reverter arrangement.
c. joint custody arrangement.
d. tying arrangement.
It was payday. Navidida decided to run some errands and then deposit her check in the
bank over her lunch hour. So that she wouldn't have to spend too long at the bank,
Navidida indorsed the back of the paycheck as follows, "Navidida Jones," before
leaving work. While window shopping, Navidida lost the check. Roger finds Navidida's
paycheck.
(A) Will Roger be able to cash Navidida's check?
(B) How could have Navidida indorsed the check so that she would not have to be
concerned about losing the check?
The Consumer Leasing Act requires a lessor to disclose in writing all EXCEPT:
a. number of payments.
b. penalties for late payments.
c. lease rates of the competition.
d. penalties for early termination.
The UCC is federal legislation enacted by Congress.
a. True
b. False
Jim told his manager, Lana, that a co-worker, Diane, had been in prison for theft. Lana
checked into the matter and, when she learned that Diane had served time in prison for
theft, fired her.
a. Jim is liable to Diane for defamation.
b. Jim is liable to Diane for defamation unless he can show a legitimate reason for
having to tell Lana about Diane's prison history.
c. Jim is liable to Diane for defamation only if she is a public figure.
d. Jim is not liable to Diane for defamation.
Neon orders one thousand 25-foot nylon ropes from Hang'em High Co. Upon
inspection of the delivery, Neon learns that Hang'em sent five hundred 25-foot ropes
and five hundred 20-foot ropes. Neon may:
a. demand that Hang'em send 500 additional 25-foot ropes.
b. accept the 500 conforming ropes and reject the 500 nonconforming ropes.
c. seek an installment contract.
d. declare an anticipatory repudiation.
Under all chapters of the Bankruptcy Code, most of the debtors assets are distributed to
creditors and the debtor has no obligation to share future earnings with creditors.
a. True
b. False
A contract clause which specifies the amount of damages to be paid in the event of a
breach is called:
a. a covenant of damages clause.
b. a reliance interest of damages clause.
c. a liquidated damages clause.
d. an incidental damages clause.
Wayne agrees over the phone to sell L.J. Cartwright 1,000 yards of 1-inch diameter
rope. Wayne honestly believes that L.J. Cartwright offered to pay $1.00 per yard
whereas L.J.Cartwright actually offered to pay 75 cents per yard. If the parties
subsequently take their dispute to court, the fact that L.J.Cartwright admits on the stand
that he offered to pay Wayne 75 cents per yard will:
a. prevent L.J.Cartwright from using the statute of frauds to nullify the contract.
b. create an unconscionable contract.
c. make it possible for Wayne to enforce the contract to sell 1,000 yards of rope at a
price of 75 cents per yard.
d. Both a and c are correct.
Bruce tells his son, "You can have my 1990 truck, but if your grades fall, Im taking it
back. Bruce:
a. has made no gift.
b. has made a "revocable gift, which is effective as a gift as long as the stated condition
is met.
c. intended to transfer ownership.
d. has made a constructive gift.
If a buyer does not receive goods by the contract deadline, remedies available include:
a. incidental and consequential damages.
b. cover.
c. damages for non-delivery.
d. All of the above.
"Bait and switch" tactics are not a violation of FTC rules if the consumer is given a
choice of which product to buy.
a. True
b. False
In a breach of contract the injured seller may resell goods not accepted by the buyer. If
the resale is commercially reasonable, the seller may recover the difference between the
resale price and contract price, but cannot recover incidental damages.
a. True
b. False
Mike sold his car to Beth, who was to pick the car up at Mike's house by 12:00 noon on
September 1. Mike was at his house waiting for Beth but she was late. In fact, when
Beth arrived she discovered Mike's home and the car destroyed by a fire that started at
1:00 p.m. The risk of loss falls on:
a. Mike because Beth had not taken possession of the car.
b. Beth because Mike was ready, willing, and able to tender the car at 12:00 noon.
c. Beth because under the UCC, the buyer bears the risk of loss.
d. Mike, as he had possession of the car.
The business form that is taxed as a partnership and gives all owners limited liability, is:
a. a close corporation.
b. a limited partnership.
c. a limited liability company.
d. a general partnership.
Personal and real defenses are valid against an ordinary holder, only real defenses can
be used against a holder in due course.
a. True
b. False
Monumental, Inc. contracts with Champion Builders to erect a three-story office
building on a parcel of land it has purchased. Before construction begins, the local
zoning board changes the zoning of the parcel and those adjoining it to residential use
only. Monumentals contract with Champion is discharged.
a. True
b. False
A PMSI can be created only in goods and software.
a. True
b. False
A party injured by fraud generally has the choice of suing for damages or rescinding the
contract.
a. True
b. False
Preferred Contractors was a general contractor and owner of a condominium complex
which was under construction. Barrett, a subcontractor, had been hired by Henderson
Plumbing, another subcontractor, to help it complete the plumbing work on the project.
When Henderson began using shoddy installation procedures and subsequently fell
behind the scheduled completion time for the project, Preferred Contractors urged
Barrett to correct Henderson's mistakes and to finish the job. Barrett refused to continue
until he knew who would pay him, since he feared Henderson's financial position was
shaky. Nonetheless, Preferred Contractors job superintendent told Barrett to go ahead
even if Barrett and Preferred Contractors had no contract because "he would use his
influence to try to help Barrett get his money." Barrett finished the work and sent a
$7,500 bill to Henderson, which was never paid. When Barrett later sent the bill to
Preferred Contractors, these facts emerged: Preferred Contractors told him that due to
Barrett's failure to notify Preferred Contractors promptly of Henderson's non-payment,
Preferred Contractors had already paid Henderson in full and therefore would not pay
twice for the work. Discuss the best possible theory of recovery Barrett may argue.
Explain the Title VII requirements on affirmative action, and identify three sources of
affirmative action programs.
Identify some of the trends and characteristics of organized labor. For example, discuss
how the statistics compare for percentage of government vs. private sector employees
with union membership, what occupational groups and industries have the highest
percentage of unionized workers, and what regions of the country have the highest and
lowest union membership.
Discuss the potential liability differences between a delegation and a novation.
Reed, a 15-year-old, has run out of money while on a trip away from home. Martha
gives him food, a place to sleep, and his bus fare home, in exchange for Reed's promise
to pay $200 after he got home. Is Reed's promise enforceable?
Discuss the requirements of promissory estoppel.
Discuss the UCC rules on the limitation of damages in a contract.
Discuss the growing problem of identity theft, including how thieves get personal
information, what they do with this information, and how a victim should respond.
ACME, Inc. is a software producer that entered into a verbal agreement with XYZ
Corporation wherein XYZ agreed to buy ACME's newly developed software. The
agreement also provided that ACME would supply training personnel, as well as
technical personnel, to work with XYZ employees in installing and learning the
software. What law governs this agreement?
Jackie learned of insider trading information while talking to Mark, a director of a large
corporation. She took advantage of the information to buy stock and make a huge
financial gain. If she is accused of violating securities law, what must the government
prove in order to gain a conviction against Jackie?
Identify and explain the parts of the following case name: Palsgraf v. Long Island
Railroad Co., 248 N.Y. 339, 162 N.E. 99, New York Court of Appeals.
What are the three main purposes of the federal Bankruptcy Code? How are these
purposes supported and fostered in the Code?
Andy wants to start his own business. He has decided to rent space in a 'strip mall" and
open a pet shop. Additionally, he will provide dog grooming services. He figures he can
do almost everything himself, though he will need to hire a part-time employee on an
"as needed" basis. His friend, Lacy, has agreed to work when needed.
Andy is considering operating his business as a sole proprietorship. What are the
primary legal advantages and disadvantages to this form of business ownership for
Andy's pet shop?
What is the process for filing a suit under Title VII of the Civil Rights Act?
McCann Construction purchased a poured concrete form from Advance Concrete
Forms, Inc. McCann purchased the concrete form by placing a phone call to Advance in
Madison, Wisconsin. Advance delivered the concrete form with an invoice stating the
terms of the sale required payment within 30 days and a 1 1/2 % interest per month
finance charge would be charged on accounts over 30 days. When McCann failed to
pay the invoice on time, interest was charged according to this rate. Later, McCann
refused to pay the accumulated interest charge, claiming there was not a meeting of the
minds regarding the finance charge in any conversation prior to the sale. The trial court
concluded that the finance charge was in fact an additional term added by Advance
when it accepted McCann's purchase order. Discuss Uniform Commercial Code Section
2-207 in general and with regard to this situation. Does McCann owe the interest
accrued?
Adrianna wants to purchase a ten-acre tract of land. Under what circumstances would
the seller be required to divulge information Adrianna does not possess?
Inez contracted with Filippo Furnaces Co. for the installation of a new furnace. Inez
selected the furnace she wanted, accepting no suggestions from Filippo Furnaces'
heating engineer. The furnace operated fine, but it did not heat the entire house. The
size of the blower on the furnace was too small to accommodate the third floor of the
house. Inez sued Filippo Furnaces Co. for the breach of the implied warranties of
merchantability and fitness. What result?
