Jack buys a Kitchens, Inc., franchise, which the franchisor later terminates. In
determining whether the termination was proper, a court will generally
a. balance the rights of both parties.
b. emphasize the right of Kitchens, Inc., to its business operation.
c. focus on the right of Jack to be dealt with fairly.
d. underscore the interest of consumers in affordability.
In newspaper ads, Lo-Price Autos falsely accuses My-T Value Vehicles, a competitor, of
selling stolen cars. My-Ts sales decrease. Lo-Price has most likely committed
a. slander of quality.
b. slander of title.
c. wrongful interference with a business relationship.
d. none of the choices.
The Environmental Protection Agency (EPA) has the authority to regulate “any air
pollutant. In issuing standards for the discharge of soot and other pollutants, the EPA
a. does not have to take economic costs into account.
b. must take into account the economic costs to businesses.
c. must take into account the economic costs to government.
d. must take into account the economic costs to the general public.
Karson orally agrees to pay Jaime to plant and harvest a quarter of Karsons farm
acreage for four corn-planting seasons. After Jaime prepares the land and plants the first
crop, Karson says that their deal is off. Jaime can most likely recover
a. in quasi contract.
b. in reformation.
c. in restitution.
d. on the parties existing contract.
Bild-Rite, Inc., is a Colorado-based firm that does business with clients throughout
North America. Bild-Rite oversees construction projects, and buys and sells commercial
buildings, undeveloped land, and construction supplies and other goods. Bild-Rite has
had to deal with work-site theft and vandalism. With respect to these circumstances, the
Uniform Commercial Code (UCC) provides a framework for
a. commercial transactions for the sale of and payment for goods.
b. international construction contracts.
c. domestic and foreign transactions in real estate.
d. prosecuting crimes against business interests.
Through fraudulent means, Fred induces Gail to sign a contract to build resort cabins on
land that Fred does not own. Gail performs, but Fred does not pay. When Gail learns the
truth, she may
a. do nothing with respect to the contract.
b. recover for the performance or its value.
c. recover for the performance only.
d. recover the value of the performance only.
Docs Sports Club enters into a franchise agreement with Elite Fitness Centers that
provides for termination at any time for “cause. Docs fails to meet Elites “Friends and
Family membership sales quota. Is this “cause for termination? Explain.
Mona contracts to repair a computer for NuData, Inc. (NDI). Mona knows that without
the computer, NDI will lose a sale. Mona does not perform as promised. NDI files a suit
against Mona. As consequential damages, NDI can recover
a. the cost of a new computer.
b. the difference between Monas price and the actual cost of repair.
c. the loss of profit from the lost sale.
d. nothing.
Ernies Good Eatin Cafe uses a distinctive decor, layout, menu, and style of service. This
restaurants image and overall appearance is
a. a certification mark.
b. a collective mark.
c. a service mark.
d. trade dress.
A court adjudicates Huck mentally incompetent and appoints Inez to be his guardian.
Later, without Inezs knowledge, Huck signs a contract to sell his farm to Kyle for its
real market value. The contract is
a. enforceable if Huck comprehended the consequences.
b. enforceable if Huck knew the market value of the farm.
c. enforceable if Huck was the record owner of the farm.
d. void.
Kirk is the chief financial officer of Lemon Corporation, which is required to file
certain financial statements with the Securities and Exchange Commission (SEC).
Under the Sarbanes-Oxley Act of 2002, Kirk must personally
a. certify that the statements are accurate.
b. delegate the responsibility for preparing the statements.
c. deliver the statements to the appropriate SEC officer.
d. prepare the statements.
Bild-It-Rite Corporation is a public company that is preparing to issue securities that do
not qualify for an exemption from registration. This means that Bild-It-Rite must
a. file a registration statement with the SEC.
b. issue the securities through an online registration site.
c. refrain from issuing the securities to unregistered investors.
d. register the securities with a national stock exchange.
Rona and Stiv do business as Treasure Island Traders. In acting on the firms behalf in a
deal with Unlimited Potential, Inc., Rona makes an honest error in overestimating the
profit. To her firm, Rona is
a. liable for breach of the duty of care.
b. liable for breach of the duty of economic sense.
c. liable for breach of the duty of loyalty.
d. not liable.
In deciding questions of corporate social responsibility, Valley Disposal & Recycling,
Inc., is concerned with
a. how the corporation can best fulfill any ethical duty to society.
b. the effect on corporate profits of ignoring any ethical duty to society.
c. whether the corporation owes any ethical duty to society.
d. all of the choices.
Missoula, Montana, passes an ordinance to regulate waste disposal. The disposal of
waste may also be regulated by
a. all other levels of government.
b. no other levels of government.
c. the federal government only.
d. the Montana state government only.
Boz runs an illegal gambling business and pays Colin, a police officer, not to interfere.
The payments are discovered. Boz and Colin are sent to prison. With respect to the
amount of the payments, Boz can recover
a. all of it.
b. none of it.
c. only as much as Colin has not spent.
d. only as much as Colin has spent.
Consumer Goods, Inc., and Delta Distribution, Inc., sign a written contract for a sale of
goods. To be enforceable, this written contract must include
a. a correct title, such as “Purchase Order or “Sales Invoice.
b. a declaration of the subject matter.
c. a quantity term.
d. the parties names.
Iggy uses his computer to break into Hye Technology Companys computer. Iggy is
a. a hacker.
b. a bot.
c. a botnet.
d. a worm.
Edie files a suit against Frank. If this suit is like most cases, it will be
a. dismissed during a trial.
b. dismissed or settled before a trial.
c. resolved only after a trial.
d. settled at a trial.
Bubbly Cola features Sparkly Colas trademark without its owners permission. Bubblys
use of the mark is actionable provided
a. consumers are confused.
b. Bubblys use is intentional.
c. Bubblys use reduces the value of Sparklys mark.
d. Sparklys mark is registered.
Chita owns the land on which Downwind Farm is situated, plus the farmhouse, barn,
and other structures permanently attached to the land. Chitas brother Elvin owns
everything else on the farmimplements, seed, and so on. The real property is owned by
a. Chita and Elvin.
b. Chita only.
c. Downwind Farm.
d. Elvin only.
Mango Corporation believes that Melon Corporation engages in anticompetitive
behavior in an attempt to drive Mango and its other competitors out of the market.
Antitrust laws can be enforced against Melon by
a. Mango and its competitors only.
b. Mango, its competitors, and the Federal Trade Commission only.
c. Mango, its competitors, the Federal Trade Commission, and the U.S. Department of
Justice.
d. the Federal Trade Commission and U.S. Department of Justice only.
Miklos grants an ordinary power of attorney to Nathalie to handle a list of financial
transactions on Mikloss behalf. This power will terminate on
a. any transaction causing a loss to Miklos.
b. Mikloss death or incapacity.
c. Mikloss sixty-fifth birthday.
d. Nathalies handling of one of each stipulated transaction.
Owen, in Pennsylvania, and Quik Jobs, Inc., in Maryland agree to have their dispute
resolved in arbitration according to the law of Virginia. This is a ground for a court to
a. do nothing.
b. review the merits of the dispute.
c. review the sufficiency of the evidence.
d. set aside the award.
Big Screen Video Corporation sells high-definition television sets. Under most circum-
stances, Big Screen Video will be presumed to have warranted that its title to the TVs is
a. the same as each brands name.
b. none of the choicesa warranty of title is not presumed.
c. good and valid.
d. the best that money can buy.
Liu enters Mountain Triathlon, an athletic competition in which Liu has never
competed. Regarding the risk of injury, Liu assumes the risks
a. attributable to the Triathlon in any way.
b. different from the risks normally associated with the Triathlon.
c. greater than the risks normally associated with the Triathlon.
d. normally associated with the Triathlon.
On Toms eighteenth birthday, he decides that he no longer wants to keep a car he
bought from Select Autos, when he was seventeen. His right to disaffirm the deal will
depend on
a. the cars condition when Tom bought it.
b. the cars current condition.
c. whether Tom acts within a reasonable period of time.
d. whether Select has the right to disaffirm.
Ollie files a petition in bankruptcy. At the moment of filing
a. an automatic stay goes into effect.
b. Ollies debts are discharged.
c. Ollies petition is dismissed.
d. Ollies property is distributed to Ollies creditors.
Herb, a computer programmer for Inventory Control Corporation, is arrested in his
employers parking lot on suspicion of larceny. Herb must be informed of his right to
a. a trial by jury.
b. punishment.
c. question witnesses.
d. remain silent.
Housemate, Inc., makes and sells a variety of household products. With a fair amount of
certainty, Housemates decision makers can predict whether a given business action
would be legal in
a. all situations.
b. many situations.
c. no situations.
d. practically no situations.
BroadView Company arranges to have Carrier Corporation, a common carrier, transport
500 DVD players from New York to California. Dan is Carriers driver. BroadView will
have no cause of action against Carrier if Carrier fails to deliver the players on time
because
a. authorities are stopping and searching all trucks entering California.
b. Carriers dispatcher mistakenly delays Dans departure.
c. Carriers truck is broken into and the players are stolen.
d. Dan has to wait two days in Denver for the truck to be repaired.
Kris transfers a note, on which Liu is the maker, to Mia, who takes it for value and in
good faith. Mia knows that Kris breached the contract underlying the note, giving Liu a
defense against payment. With respect to this note, Mia is
a. a knowledgeable holder in due course.
b. an ordinary holder.
c. an ordinary holder in due course.
d. an ordinary note taker.
Nero and Olav each buy certain quantities of oil to sell to Petro Refinery, and agree to
share storage costs until Petro can take delivery. The oil is commingled so that Neros oil
cannot be distinguished from Olavs. This is
a. accession.
b. confusion.
c. conversion.
d. irresolution.
Fact Pattern 21-1
Fresh Goods, Inc., wants to make an initial public offering of securities. Fresh believes
that it qualifies for an exemption under Regulation A from the full registration
requirement of the federal Securities Act of 1933.
Refer to Fact Pattern 21-1. Fresh decides to sell its new securities via the Internet. This
offering
a. will avoid the payment of commissions to brokers or underwriters.
b. is an investment scam.
c. is a Ponzi scheme.
d. constitutes insider trading.
In contracts involving a carrier, a seller can complete performance only through a
destination contract.
It is generally illegal to send an ad via fax without the recipients permission.
A breach of contract entitles the nonbreaching party to file a criminal complaint.
Contractual capacity refers to the legal ability to enter into a contract.
A signature can consist of initials signed by a party.
A principal who causes a third person to believe that another person is the principals
agent can be estopped from denying the agency relationship.
A corporation can recapture any profits realized by an insider on any purchase or sale of
the firms stock within any twelve-month period.
Embezzlement is like robbery in that neither crime requires the use of force or fear.
A lack or failure of consideration is no defense to payment of a negotiable instrument to
any holder.
When a buyer breaches a contract, the risk of loss immediately shifts to the buyer.
An agency relationship may not occur by operation of law in a family.
A bank is subject to a civil suit if its customer writes a bad check.
A crime can be committed only against persons.
Rescission is the substitution of one party to a contract for a third party, who agrees to
assume the contractual duties.
Mandatory arbitration clauses in employment contracts are not enforceable.
Tune Products, Inc., offers to sell to Unlimited Sales Company one hundred MP3
players at $50 a piece, subject to certain specific delivery dates. Unlimited replies with
a signed purchase order that reads, “Accept your offer for 100 I-appliances at $50 each.
Must be delivered to our warehouse. Tune does not respond or deliver the goods.
Unlimited files a suit for breach of contract, to which Tune answers that there is no
contract because Unlimiteds purchase order contained additional terms and is not
signed by Tune. Can Unlimited recover? Explain.