No oral contract is enforceable under the UCC.
In contract law, “consideration” refers to the courtesy that one party shows another in
negotiating a deal.
An assignment of a negotiable instrument is generally prohibited.
Under the mailbox rule, no acceptance is valid until it is received.
When a corporation is dissolved voluntarily, the corporation must file articles of
dissolution with the state.
Usually, a private equity firm buys an entire corporation and may later reorganize it as a
publicly held corporation.
A marketing technique can be a trade secret.
The extreme risk of an activity is a primary basis for imposing strict liability.
The first bank to receive a check for payment is the depositary bank.
Merchants are required to warrant that the goods they sell are fit for their ordinary
purpose.
Lenders can require balloon payments for loans with terms of five years or less.
As with partnerships, a court can order a limited liability company to dissolve in certain
circumstances.
A seller must use words such as “warrant” to make an express warranty.
A minor’s right to disaffirm a contract terminates sixty days after the contract’s date.
Super Toolmakers, Inc., contracts to sell its business to TRUE Hardware Corporation.
Before either party has performed, rescission of this contract requires
A.a mutual agreement to rescind.
B.consideration.
C.performance by all of the parties.
D.an accord and satisfaction.
An inadequate warning is not a product defect that will support the imposition of
liability on a strict product liability basis.
Few securities can be resold without registration.
Phishing occurs when a criminal poses as a member of the rock group Phish.
Under certain conditions, a purchase-money security interest will take priority over a
previous creditor’s interest in after-acquired property.
Thinking about killing someone constitutes the crime of attempted murder.
A party to a licensing agreement generally agrees to pay royalties on some basis.
A person who enters into a contract when he or she is intoxicated can void the contract
if the terms are obviously favorable to the other party.
A drawer is not liable to the holder of a check if the check is not honored.
All rights can be assigned.
A lessor is a party who acquires a right to the possession and use of goods under a
lease.
Under a deed in lieu of foreclosure, the property is conveyed to the lender in satisfaction
of the mortgage.
Adhesion contracts are often held to be contrary to public policy.
In contract law, “consideration” refers to the time that a party takes to evaluate a deal.
An instrument payable “with interest” must specify a particular rate to be negotiable.
The doctrine of negligence per se applies if an event causing harm does not normally
occur in the absence of negligence.
Accountants and other professionals may not be held liable for negligence in the
performance of their service.
A covenant not to compete in the sale of an ongoing business is unenforceable.
The Idaho Supreme Court rules against Jiffy Mart in a case against Kwik Stop Stores,
Inc. Jiffy Mart files an appeal with the United States Supreme Court. The Court does
not hear the case. This
A.is a decision on the merits with value as a precedent.
B.indicates agreement with the Idaho court’s decision.
C.means nothing.
D.means that the Idaho court’s decision is the law in Idaho.
First Editions, Inc., a book dealer based in Texas, does business in all fifty states
exclusively online. According to a decision of the United States Supreme Court, for an
individual state to compel an out-of-state business to collect and remit state taxes, the
business must have in that state
A.a substantial physical presence.
B.a potential marketing base.
C.an accessible Web site.
D.a party paid to solicit business for its products.
Cray returns a digital music player that he bought from Discount City, which refunds
the price. Their exchange involves
A.an emancipation.
B.a ratification.
C.restitution.
D.severability.
In 2010, Online Marketing Corporation registers its trademark as provided by federal
law. After the first renewal, this registration
A.is renewable every ten years.
B.is renewable every twenty years.
C.runs for the life of the corporation plus seventy years.
D.runs forever.
Elle buys a new textbook for $100 and a used car for $5,000, and signs a one-year lease
for an apartment for $1,000 monthly rent to start at the beginning of the next month.
The Statute of Frauds covers
A.the apartment lease, and the textbook and car purchases.
B.the apartment lease and the car purchase only.
C.the apartment lease only.
D.the textbook and car purchases only.
The abbreviation “P.A.” in the name “Painless Dental, P.A.” means that this
organization is
A.a private association.
B.a professional association.
C.a public association.
D.a publicly administered corporation.
Laurel borrows $150,000 from Marketplace Mortgage Loans to buy a home. The
financing documents require Laurel to maintain the property, obtain homeowners’
insurance, and pay all property taxes and other assessments through the lender. With
respect to these terms, a court is most likely to
A.enforce them.
B.refuse to enforce them.
C.rescind them.
D.rewrite them.
Sayer is an employee of Thorny Foliage Eradication, Inc. Sayer tweets messages about
Thorny Foliage to employees and outside interested parties, including investors and
others. According to the Securities and Exchange Commission, Sayer’s messages are
subject to
A.federal securities laws.
B.international communications regulations.
C.state blog and tweet rules.
D.no law.
Congress intends to enact a law to criminalize the distribution of illegal child
pornography on the Internet. Most likely to be held constitutional is a statute that
prohibits
A.offers to provide, and requests to obtain, child pornography.
B.the possession of virtual child pornography.
C.the possession of real and virtual child pornography.
D.a substantial amount of protected speech-especially pornography.
Todos Ltd. agrees to supply United Steel, Inc., with minerals from Venezuela. When the
government is unexpectedly overthrown in a revolution, Todos can obtain the goods
only at a much higher price. United agrees to pay but later files a suit to recover the
difference. The court will most likely rule that
A.a change in government is a risk ordinarily assumed in business.
B.an unforeseen difficulty supported the contract modification.
C.Todos engaged in extortion or the so-called holdup game.
D.Todos had a preexisting duty to supply the goods at the initial price.
Leslie, an accountant, enters into a contract to provide services to Marty. Leslie does
not finish the work within the contract’s deadline. Leslie is
A.liable for breach of contract.
B.not liable, because Leslie is a professional.
C.not liable, because Leslie’s failure must have been Marty’s fault.
D.not liable, because the work took longer than foreseen.
E-Bank, an online financial institution, gives financial information about Paula and
other customers to a federal agency without the customers’ permission. E-Bank may be
liable under
A.the Federal Trade Commission Act.
B.the Financial Services Modernization Act.
C.the Right to Financial Privacy Act.
D.the Uniform Electronic Transactions Act.
Double D Ranch and Esau enter into a contract on August 1 for the sale of 200 cattle.
Esau cancels the contract ten days later. Double D is unable to sell the cattle to another
buyer. Double D is entitled to
A.force Esau to accept the cattle and recover the contract price.
B.keep the cattle and recover the contract price from Esau.
C.keep the cattle only.
D.recover the contract price from Esau but must destroy the cattle.
Dora writes a check for $100 drawn on Eastern Bank and presents it to Fast Cash, Inc.,
for payment. If the check is not backed by sufficient funds, Dora may be prosecuted for
A.forgery.
B.fraud.
C.negligence.
D.robbery.
Business Credit Company files a suit against City Developers, Inc., and seeks, as part of
discovery, certain electronic documents in City Developers’s possession. City
Developers did not preserve the requested data-e-mail messages among employees. The
court is not likely to sanction City Developers if
A.the data was not saved because there was no reasonable anticipation of litigation.
B.the e-documents were destroyed when the suit was filed.
C.the e-mail messages were trashed when the discovery request was made.
D.the e-mail system was wiped clean to avoid revealing incriminating evidence.
Pharma Meds Corporation employs Ogilvie under an employment contract that sets out
a specific amount of money to be paid for certain results over a stated period of time.
During the term of the contract, it becomes clear that the results are not likely to be
attained. Pharma then gives Ogilvie the option of accepting a lesser position with fewer
duties for less money. Ogilvie accepts via e-mail, but soon files a suit against Pharma
for breach of the original contract. The court is most likely to rule that Ogilvie’s e-mail
A.showed only an agreement to agree.
B.accepted the proposed modification of the employment contract.
C.constituted a non-binding, non-contractual communication.
D.contained an acceptance but is unenforceable because it is electronic.
The payment of Jose’s debt to Klint is guaranteed by Jose’s personal property. The
process by which Klint can protect himself against the claims of third parties to this
property is
A.attachment.
B.communication.
C.perfection.
D.search and seizure.
Main Street Lenders, Inc., attempts to coerce Nolan-who specializes in determining the
value of real and personal property-into misstating the value of a property on which a
loan is to be issued. This is
A.a legal and ethical-but morally arguable-financial ploy.
B.a legal-but unethical-business practice.
C.a necessary tactic to generate a profitable loan in today’s market.
D.a violation of the law.
Fact Pattern 6-1
Minka uses her computer to secretly install software on hundreds of personal computers
without their owners’ knowledge.
Refer to Fact Pattern 6-1. Minka’s software is harmful to the computers on which she
installed it. This program is
A.malware.
B.badware.
C.harmware.
D.infectware.
Danielle delivers her dress to Every Day Cleaners for dry cleaning. Every Day’s clerk
promises that the dress will be ready within five business days. Danielle agrees to pay
the charge for the cleaning when she picks up the dress. These parties have a contract.
This is
A.an implied bailment.
B.an involuntary bailment.
C.an express bailment.
D.no bailment.
Bess runs Creditors Asset Recovery. She recruits clients by misrepresenting the facts
and pretending to be licensed in various occupations in Michigan. Bess’s conduct most
likely warrants
A.an ethical admonishment but no other sanctions.
B.an injunction plus other sanctions.
C.no sanctions but no praise.
D.praise for her aggression in recovering the assets of “deadbeat” debtors.
UniOil, a U.S. firm, owns property in Venezuela. When the government of Venezuela
seizes the property, UniOil asks a U.S. court to order the property’s return. The court
rules that Venezuela is exempt from the court’s jurisdiction. This is
A.a travesty of justice.
B.the act of state doctrine.
C.the doctrine of sovereign immunity.
D.the principle of comity.
Region Bank wants to perfect its security interest in timber owned by Superior Lumber,
Inc. Most likely, a financing statement should be filed with
A.the local chamber of commerce.
B.the county clerk.
C.the federal loan officer.
D.the secretary of state’s office.
Chip is a director of Diners Restaurants, Inc. Chip would breach his duty of loyalty if
he
A.becomes a director of Fluffy Mattresses, Inc., a noncompeting firm.
B.buys a controlling interest in Gulpin’ Foods Corporation, a competing firm.
C.votes for Diners to buy a controlling interest in Eateries, Inc., which causes Diners to
suffer a loss.
D.votes against Diners’ purchase of a controlling interest in Eateries, Inc., which causes
Diners to suffer a loss.
Rich Financial, Inc., files a financing statement regarding a transaction with Supreme
Business Company. To be valid, the financing statement must contain all of the
following except
A.a description of the collateral.
B.a statement of the purpose for the transaction.
C.Rich’s name.
D.Standard’s name.
Elin decides to try to sell her collection of celebrity memorabilia in an auction “with
reserve.” If Elin changes her mind, she can withdraw her collection
A.only before the auctioneer announces that the items are sold.
B.only before the auctioneer delivers the items to the buyers.
C.under no circumstances.
D.within thirty days after the auction.
Doug is an accountant whose clients include Everyday Products, Inc. (EPI). Under the
Ultramares rule, if Doug is negligent in his work for EPI, he could be liable to
A.EPI and any third party.
B.EPI and third parties who are foreseen users of his work for EPI.
C.EPI and third parties who are reasonably foreseeable users of his work for EPI.
D.EPI only.
Dina and Elle agree that Elle can satisfy a preexisting debt owed to Dina by paying the
money directly to Fava. The designation of this contract as a third party beneficiary
contract is determined by the intent to benefit
A.Dina, Elle, and Fava.
B.Dina only.
C.Elle only.
D.Fava only.
Vladimir negotiates a bearer instrument to Wendy by
A.assignment.
B.delivery.
C.presenting it in response to a demand by Wendy.
D.promising to pay.
USA Oil Corporation signs an instrument that states it is being executed “in accord with
a contract for the purchase of 4,000 barrels of oil dated May 1.” This instrument is
A.negotiable.
B.nonnegotiable, because information about the sale must be obtained from another
source.
C.nonnegotiable, because it states an express condition to payment.
D.nonnegotiable, because the terms of the sale are not clear.
Debit & Credit Accounting Services and Brickwork Construction Company negotiate a
contract. Terms in the contract that are the subject of separate negotiation will be
considered subordinate to
A.standardized terms.
B.terms that can be understood only by lawyers and judges.
C.terms that are not negotiated separately.
D.none of the choices.