Larceny relies on fear and force.
Office Accounting, Inc., hires Perry to repair a computer on site for $400, but Perry
does not show up as agreed. Office Accounting hires Raul to do the job for $350. Office
Accounting may recover from Perry
a. compensatory damages.
b. consequential damages.
c. nominal damages.
d. punitive damages.
Bob, research manager for CornAgri Products, Inc., applies utilitarian ethics to
determine that an action is morally correct when it produces the greatest good for
a. Bob.
b. CornAgri.
c. the fewest people.
d. the most people.
Rollo promises to perform, for a price, shoe repair services in affiliation with Togs “n
Things, a clothing store. To support a contract, the consideration exchanged by the
parties must be
a. adequately considerate.
b. equally valuable.
c. legally sufficient.
d. wisely priced.
iTablets, Inc., files a suit against Andromeda Pads Corporation. Suri is a witness for
iTablets. Kevin is a witness for Andromeda. iTablets may direct interrogatories to
a. Andromeda.
b. Suri.
c. Kevin.
d. the judge.
Big Red Drinks, Inc. contracts to buy two tons of cranberries from Super Fruits, Inc.
The contract states that Super Fruits is required to ship the cranberries to Big Red
Drinks by Speedy Wind Air Freight. The contract is
a. a bill of lading.
b. a destination contract.
c. a shipment contract.
d. a warehouse receipt.
Bulbous Cordials, Inc., a U.S. firm, enters into an agreement with Columbiana Cacao,
S.A., a South American firm, to fix the price of dark chocolate in the U.S. market. If the
agreement is a per se violation of U.S. antitrust laws, a U.S. court could exercise
jurisdiction over
a. Bulbous Cordials and Columbiana Cacao.
b. Bulbous Cordials only.
c. Columbiana Cacao only.
d. neither Bulbous Cordials nor Columbiana Cacao.
Clear Lake Credit Corporation lends funds to Donny, a consumer, to apply to the cost of
a boat, which is the collateral for the loan. An enforceable security interest requires
a. a written agreement and Clear Lake’s possession of the boat.
b. a written agreement or Clear Lake’s possession of the boat.
c. the boat seller’s acknowledgement of the loan in writing.
d. Donny’s possession of the boat.
Metallic Metals, Inc., a U.S. firm, files a suit against a Venezuela government agency.
The agency has committed a tort in the United States. Under the Foreign Sovereign
Immunities Act
a. the Venezuelan government agency is not immune from the jurisdiction of the U.S.
courts.
b. the Venezuelan government agency is immune from the jurisdiction of the U.S.
courts.
c. Metallic Metals cannot bring a suit against the Venezuelan agency.
d. Metallic Metals must file suit in Venezuela.
Michael contracts with Jill to fix the brakes on her Honda Civic. Jill leaves her car with
Michael, but refuses to pay when the work is done. Michael refuses to return the car
until she pays. Michael’s lien on Jill’s car will end
a. in thirty days.
b. in sixty days.
c. when Michael voluntarily surrenders possession of the car.
d. when Jill obtains a court order requiring Michael to return the car.
Fact Pattern 21-3
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. Both Geoff and Hu buy 100
shares. They know 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 21-3. Under the Securities Exchange Act of 1934, Hu is most
likely
a. liable for insider trading.
b. not liable because Hu is only a tippee, not a tipper.
c. not liable because Hu is too far down the chain of disclosure.
d. not liable because Hu traded on the basis of a true fact.
Zeke files a petition for bankruptcy under Chapter 13. Zeke’s Chapter 13 plan must
provide for
a. the turnover of his future income to the trustee.
b. his attendance at a credit-counseling briefing.
c. adequate means for the petition’s execution.
d a preference for one creditor over another.
Grace purchases three tons of fine merino wool on behalf of Woolen Creations. Woolen
Creations wants the wool to remain in the warehouse where it is being stored until it is
needed. Grace makes an offer for the wool on Monday. The offer is accepted on
Tuesday. The warehouser gives Woolen Creations a warehouse receipt on Wednesday.
Woolen Creations picks up the wool from the warehouse three months after the sale.
Title for the wool passed to Woolen creations
a. on Monday.
b. on Tuesday.
c. on Wednesday.
d. three months after the sale.
Fact Pattern 15-1
Mary’s home is in a state that has a $30,000 homestead exemption. Mary defaults on a
$60,000 debt that she owes to Nina. Mary’s home is sold at auction for $80,000.
Refer to Fact Pattern 15-1. If Nina recovers less than she is owed, she can realize the
difference from
a. any property that Mary owns.
b. only exempt property that Mary owns.
c. only nonexempt property that Mary owns.
d. property that any other member of Mary’s family owns.
Katie buys a car when she is seventeen. When she is twenty-five, Katie tries to
disaffirm the contract and recover all her car payments. A court will likely find that the
contract was
a. ratified and Katie cannot recover her payments.
b. not ratified and Katie can recover her payments.
c. not a valid contract because Katie was a minor when she entered into it and she can
recover her payments.
d. ratified, but Katie can still recover her payments because she was a minor when she
entered into the contract.
Nature’s Products, Inc., sends its standard order form to Interbusiness Distribution
Corporation (IDC) to evidence a sale of packing materials. IDC responds with its own
standard purchase order form. Additional terms in the purchase order automatically
become part of the contract unless
a. the terms materially alter the original contract.
b. the original offer expressly required acceptance of its terms.
c. the offeror objects to the new terms within a reasonable time.
d. any of the choices.
In the following situations, two parties claim the same goods. Who is most likely to
prevail in each circumstance? Explain.
(a) Olan steals Phil’s television set and sells it to Quincy, an innocent purchaser, for
value. Phil learns Quincy has the set and demands its return.
(b) Riley takes his television set for repair to Slick, a merchant who sells new and used
television sets. By accident, one of Slick’s employees sells the set to Tuna, an innocent
purchaser-customer, who takes possession. Riley wants his set back from Tuna.
Precious Metals Corporation, a raw materials vendor, sells its commodities in certain
quantities to Quarry Refining Company for a certain price but charges Rich Assets, Inc.,
a Quarry competitor, a higher price. This is most likely a violation of
a. the Clayton Act.
b. the Federal Trade Commission Act.
c. the Sherman Act.
d. no antitrust law.
Fact Pattern 21-2
Sid, a director of Tech Software Company, learns that a Tech engineer has developed a
new, exciting video game. Sid buys Tech stock and tells his friend Uri, who also buys
Tech stock. When the new game is released three weeks later, Sid and Uri sell their
stock for a big profit.
Refer to Fact Pattern 21-2. Under SEC Rule l0b-5, Sid would not be liable if he had
waited to buy Tech stock until
a. after Sid told Uri of the new game.
b. after Uri bought Tech stock.
c. after the public release of the game.
d. just before the game was released.
The U.S. corporation Fun Toys, Inc. sets up a firm in China. The parent company
remains in the United States and retains complete ownership of the China branch as
well as complete authority and control over all phases of the operation. This is
a. a franchise.
b. a wholly owned subsidiary.
c. a joint venture.
d. direct exporting.
Fred has six nieces, ages five to sixteen. He writes an order instrument for $50 that
states, “Pay to the order of my niece.” The order instrument is
a. negotiable.
b. nonnegotiable, because the amount of money is less than $500.
c. nonnegotiable, because it is illegal to write an order instrument
payable to a relative.
d. nonnegotiable, because there is no specific person identified.
To raise capital to form Plasticity Corporation with Quinn, Rona sells bonds and stock
in other companies, and plans to register an initial public offering under the Securities
Act of 1933. SEC Rule l0b-5 covers
a. most forms of securities.
b. only bonds.
c. only securities registered under the Securities Act of 1933.
d. only stock.
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.
Nico is a passenger in a car driven by Owen, whose reckless driving causes an accident,
injuring himself. Nico, uninjured, accompanies Owen to Parkside Hospital in an
ambulance. The ambulance is hit by a car driven by Quin, and Nico is injured. Nico
files a suit against Owen, alleging negligence. The element most likely to be a question
for the court to decide is
a. causation in fact.
b. proximate cause.
c. the duty of care.
d. the injury requirement.
Kris presents an instrument that states “pay to the order of Kris” to Metro Bank for
payment. This is a special type of draft drawn on a bank, ordering the bank to pay a
fixed amount of money on demand. This is
a. a commercial wire transfer.
b. a check.
c. a debit card transaction receipt.
d. a cash transaction
Shakira issues a check drawn on Thrifty Bank to Ranch & Farm Supply to pay for a
rototiller. Later, Shakira discovers a defect in the device and orders Thrifty to stop
payment on the check. Shakira does not renew the order, and the bank clears the check
eight months later. The bank
a. must recredit Shakira’s account.
b. must obtain funds from Ranch & Farm to cover the check.
c. must substitute acceptable goods.
d. need not recredit Shakira’s account.
Whirlwind Financial Corporation sends its executives to a resort in Mexicoat taxpayers’
expenseto consider using the firm’s cash to buy back its stock and thereby prop up the
value. Many of its competitors are doing the same thing. One of the best ways to learn
about the ethical responsibilities inherent in operating a business is to look at
a. the mistakes made by other companies.
b. the benefits of pursuing profit despite the appearance of impropriety.
c. the prevalence of a practice among other corporations.
d. who is footing the bill for a particular action.
Sof” Chair Company contracts to deliver 100 chairs to Stuffy Furnishings Store on May
1 for which Stuffy agrees to pay. Sof” tells Stuffy on April 15 that delivery will be
delayed until June 1. Stuffy may
a. await performance, sue Sof”, or suspend its own performance.
b. only await Sof’s performance for a commercially reasonable time.
c. only sue Sof” for breach of contract.
d. only suspend its own performance.
Dita takes out a student loan from Everloan Bank. When she fails to make the
scheduled payments for six months, Everloan advises her of further action that it will
take. This violates
a. no federal law.
b. the Fair and Accurate Credit Transactions Act.
c. the Fair Debt Collection Practices Act.
d. the Truth-in-Lending Act.
Smalltown, Alabama is incorporated by the government. Smalltown is
a. a foreign corporation.
b. a public corporation.
c. a private corporation.
d. an alien corporation.
In 2012, 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.
Mountaineer Sales, Inc., is the offeror and Camping Goods Corporation is the offeree
under a unilateral sales contract in which Forest Recreation Products Company is also
interested. Mountaineer is not notified of Camping’s performance within a reasonable
time. Mountaineer
a. may treat the offer as having lapsed.
b. must assume that Camping has started to perform.
c. must contact Camping.
d. must contract with Forest.
The government of Japan sets a limit on the amount of rice that can be imported from
the United States. This is
a. a dumping duty.
b. an antidumping duty.
c. a quota.
d. a tariff.
Norma Jean files for Chapter 7 bankruptcy. She turns her assets over to Addie, who
sells the assets and then distributes the proceeds to Norma Jean’s creditors. Addie is a
a. creditor.
b. federal judge.
c. bankruptcy trustee.
d. debtor.
Fact Pattern 15-1
Mary’s home is in a state that has a $30,000 homestead exemption. Mary defaults on a
$60,000 debt that she owes to Nina. Mary’s home is sold at auction for $80,000.
Refer to Fact Pattern 15-1. Nina may recover
a. $0.
b. $30,000.
c. $50,000.
d. $60,000.
Stephanie’s sale of rights she has under a contract with Runway Retail, Inc., to buy the
retailer’s clothing overstock is
a. a delegation.
b. an assignment.
c. a third party beneficiary contract.
d. none of the choices.
Labor unions can organize and bargain without violating antitrust law.
The primary measure of monopoly power is a competitor’s assessment of the acts of a
firm under review.
A holder takes an instrument for value if he or she gives a check as payment for it.
Business ethics is not more complicated than personal ethics.
Labels on vegetables and fruits are not required to indicate where the food originated.
Protection against discrimination under the Civil Rights Act of 1964 does not extend to
individuals who are harassed by members of the same gender.
Most online dispute resolution services apply general, universal legal principles to
resolve disputes.
An unknown individual launches a series of attacks against the Web sites of Prime Sales
Corporation. The attacks significantly slow the sites, leading to $100 million in damage
in terms of lost work time, lost revenue, site repair costs, and other expenses. The
attacker does not intend to profit from the onslaught and in fact does not realize any
financial benefit from the effects. How is this attack most likely orchestrated? Who is
most likely to engage in this actthat is, whose habits and limitations are clearly suited to
such conductand why?
A minor may enter into a contract for the sale of alcoholic beverages if the other
contractual party is an adult.
A major problem facing the Securities and Exchange Commission is how to enforce the
antifraud provisions of the securities laws in the online environment.
Identification, risk of loss, and insurable interest are all concepts that are involved in
determining the rights and liabilities of parties to a contract.
If a contract specifies a certain carrier, a substitution of a different carrier for any reason
breaches the contract.
A close corporation can operate as an S corporation.
A creditor must exhaust all legal remedies against the principal debtor before holding
the surety responsible for payment.
The simplest way for a U.S. firm to do business in a foreign market is to export its
products directly to that market.
A buyer who obtains substitute goods to replace goods that a seller did not deliver can
also recover damages from the seller.
Laws governing franchising are designed in part to prevent franchisors from
terminating franchises without good cause.
Discharge in bankruptcy is no defense on any instrument regardless of the status of the
holder.