Convenience Mart, Inc., is a closely held corporation. Convenience Mart is
a. eligible to make public offerings of securities.
b. exempt from filing a certificate of incorporation.
c. generally allowed to restrict the transfer of its stock.
d. taxed in the same manner as a partnership.
Fact Pattern 28-1A
Dollar Value Motors asks Estimable Bank for a loan to increase its vehicle inventory.
Estimable requires Flair, Dollar Values president, sign a personal guaranty to pay the
debt if Dollar Value defaults. Meanwhile, to buy a pick-up truck from Dollar Value,
Gina asks Harper to co-sign a credit application.
Refer to Fact Pattern 28-1A. If Flair is a guarantor, then the guaranty is required to be in
writing because of
a. the debtors right of redemption.
b. the co-signers right of contribution.
c. the creditors transfer of possession.
d. the Statute of Frauds.
Dag and Elke are holders of common stock in Fragrances, Inc. (FI). Like other holders
of common stock, they have a residual position in the overall financial structure of FI,
because they
a. are guaranteed to receive more than the amount of their investment.
b. are the last to receive payment for their investment.
c. have priority to FIs assets if FI becomes insolvent.
d. reside in the state of FIs incorporation.
Genna is a director of Fab Stuff Corporation. Without informing Fab, Genna starts up
Evertrendy, Inc., to compete with Fab. Genna is liable for breach of
a. no duty or rule
b. the business judgment rule.
c. the duty of loyalty.
d. the right of participation.
Phil invents “PhutureNow, new Web site design software, and applies for a patent. If
Phil is granted a patent, his invention will be protected
a. for ten years.
b. for twenty years.
c. for the life of the inventor plus seventy years.
d. forever.
Nutrition Services, LLC, and Oneidas Catering & Café Supply Company sign a written
contract that does not involve a sale of goods. To be enforceable, the writing must
include
a. a correct title, such as “Service Contract.
b. all essential and non-essential terms.
c. a statement of the consideration.
d. a description of the parties businesses.
Rural Development Corporation (RDC) and Sid enter into a contract for the
clear-cutting of RDCs fifty-acre tract for which RDC agrees to pay Sid. Sid transfers his
duty under this contract to Timber Logging Company. Timber is
a. a delegatee.
b. an assignee.
c. an obligee.
d. an alien.
Fact Pattern 43-B1
Jordan and Kacy own and operate Safety Tables, a small-business enterprise that sells
adjustable tables that allow workers to safely work with large, heavy, or oddly shaped
objects. The enterprise does not pay taxes on its profits, but distributes them to Jordan
and Kacy who pay taxes on these amounts as their individual income. Jordan and Kacys
personal liability for Safety Tabless debts and obligations is limited.
Refer to Fact Pattern 43-1. Safety Tables is
a. a corporation.
b. a general partnership.
c. a limited liability company.
d. a sole proprietorship.
Elsa, the owner of Fertile Farm, sells Gina a right to camp on Fertile land overnight.
Ginas right is
a. a leasehold estate.
b. a license.
c. an easement.
d. a profit.
Viola is a director of Water Pure Corporation. With respect to Water Pure, Violas most
important right is the right of
a. compensation.
b. indemnification.
c. participation.
d. certification.
Bayou Boats, Inc., contracts for the sale of seven swamp boats to Tidal Flats Fishing
Tours. Bayou repudiates the contract. Tidal Flatss recovery of damages is measured at
the time
a. Bayou advertised the goods.
b. Tidal Flats ordered the goods.
c. Tidal Flats learned of the breach.
d. Bayou knew that it would repudiate the contract.
On Monday morning, Bob deposits into his account at County Bank a $500 check from
Dyna, who also has an account at County Bank. On that same day, this check is
considered
a. cashiered.
b. certified.
c. paid.
d. provisionally credited.
Farm Equip, Inc., makes farming machinery. Gail discovers that her Farm Equip tractor
is defective and sues the maker for product liability based on negligence. To win, Gail
must show that
a. Farm Equip sold the tractor to Gail.
b. Gail knew and appreciated the risk caused by the defect.
c. Gail suffered an injury caused by the defect.
d. the “defect was a commonly known danger.
Feder prepares federal corporate income tax returns for Giant Stores, Inc., and other
firms. Under the Internal Revenue Code, with respect to an understatement of a clients
tax liability, Feder may be liable for
a. negligent or willful misconduct.
b. no misconduct.
c. only negligent misconduct.
d. only willful misconduct.
John steals an old, battered bicycle that is parked, unlocked, in front of a convenience
store. He repairs, paints, and replaces parts on the bike until it is like new. The original
owner, Kim, claims the bike. The bike belongs to
a. John and Kim as owners in common.
b. John because he made substantial improvements to it.
c. John because Kim claimed it only after John improved it.
d. Kim because John stole it.
Mika buys a Nuance Cabinets, 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 Nuance to its business operation.
c. focus on the right of Mika to be dealt with fairly.
d. underscore the interest of consumers in affordability.
Calvin is a minor. In most states, Calvin may be
a. an agent but not a principal.
b. an agent or a principal.
c. a principal but not an agent.
d. neither an agent nor a principal.
Swinborn sells “Tyger steroids over the Internet. He is arrested and charged with the
sale of a controlled substance. This is cyber crime, which is
a. a crime in which the letter “y is used in the misspelling of a word.
b. a crime that occurs in the virtual community of the Internet.
c. a crime that is less real than the same crime in the physical world.
d. no crime.
Hailey and Ike hold the first organizational meeting of Java Kiosk Corporation.
Probably the most important function of this meeting is
a. adopting Javas bylaws.
b. agreeing on Javas purpose.
c. drafting Javas articles.
d. obtaining a charter for Java.
Braxton questions whether there is consideration for his contract with Tawny to
exchange his accounting services for her payment of a certain amount. To constitute
consideration, there must be
a. a payment of money.
b. a performance of services.
c. a bargained-for exchange.
d. detrimental reliance.
Medico Records Company orders thirty hard drives from Nano Computers, Inc. The
hard drives are stored in Enviro Warehouse. Under the terms of the order, Nano must
give Medico a warehouse receipt for the goods, which Medico will then pick up. Title
to the goods passes to Medico when
a. Enviro stores the drives.
b. Medico orders the drives.
c. Medico picks up the drives.
d. Nano gives Medico a warehouse receipt for the drives.
To borrow money to finance the start-up of his business, Buck executes an instrument
in favor of City Bank. For the instrument to be negotiable, the signature must be
a. anywhere on the instrument.
b. anywhere on the lower half of the instrument only.
c. in the lower left-hand corner of the instrument only.
d. in the lower right-hand corner of the instrument only.
Seth files a petition for bankruptcy. Seth must include with the petition
a. proof of each creditors claim.
b. a list of creditors and the amount of the debt owed to each.
c. all of his debit and credit cards to be disposed of by the court.
d an affidavit testifying to his having read the Bankruptcy Code.
Michigan and many other states have set limits on the amount of general noneconomic
damages that can be awarded in tort cases. Noneconomic damages include damages for
a. disfigurement.
b. lost income.
c. medical expenses.
d. property damage.
John sees that Kris is about to step into the path of an oncoming bus. If John does not
warn Kris of the danger, John is liable
a. only if Kris is injured.
b. only if Kris is not injured.
c. regardless of the consequences to Kris.
d. under no circumstances.
Lauren, a basketball coach at State University, schemes to fraudulently obtain
scholarships for her teams players. This is most likely
a. honest-services fraud, a federal crime.
b. a violation of collegiate athletic rules but no crime.
c. a breach of university rules but no civil or criminal wrong.
d. unethical but no crime.
Miley and Rico enter into a contract for the closing of a sale of Mileys recording studio.
When Ricos schedule conflicts, he asks Oliver to perform his duties at the closing. This
transfer of duties is
a. a delegation.
b. an assignment.
c. prohibited.
d. a negotiation.
Mackenzie, an agent for Lindsay, signs an agreement with Kirk on Lindsays behalf but
neglects to tell her that the agreement requires the payment of a certain tax. The
government prosecutes Lindsay for failing to pay the tax. She is
a. liable, because notice to Mackenzie is notice to Lindsay.
b. liable, because notice to Kirk is notice to Lindsay.
c. not liable, because Mackenzie did not tell Lindsay about the tax.
d. not liable, because Kirk did not tell Lindsay about the tax.
Gravel & Sand, Inc., buys a backhoe on credit from Heavy Equipment Corporation, but
does not make a payment on the loan for several months. Heavy repossesses the
backhoe by towing it from a public street. Green sues Heavy for breach of the peace.
Gravel & Sand will probably
a. not prevail, because Heavy did not use judicial process.
b. not prevail, because the repossession was not a breach of the peace.
c. prevail, because Gravel & Sand did not default on the loan.
d. prevail, because the repossession was a breach of the peace.
Delicious Coffee Company hires Elton to sell Deliciouss products in a certain area.
Delicious agrees to pay Elton a salary, plus commission, for a trial period. They also
agree that Elton can sell using any methods and during any hours that seem appropriate.
The key factor in whether Elton is Deliciouss employee is
a. the amount of Eltons salary.
b. the control Delicious has over the details of the work.
c. the length of the trial period.
d. the title that designates Eltons position.
Direct Mail Sales, Inc., regularly advertises its products. Under the First Amendment, in
comparison to noncommercial speech, these ads are given
a. equal protection.
b. less protection.
c. more protection.
d. no protection.
Callie owns two trucks. She offers to sell the Dodge for $20,000 to Evan, who accepts.
She offers to sell the Ford for $20,000 to Gwen, who says, “Too much. Callies offer was
terminated by
a. Evan and Gwen.
b. Evan only.
c. Gwen only.
d. neither Evan nor Gwen.
A closing argument is a statement by a party that results in a summary judgment in that
partys favor.
If the bailed property was destroyed or stolen, through no fault of the bailee, the bailees
obligation to return the property is excused.
Chrissy and Devon are not married to each other, but they share the ownership of Elm
Street Offices, a commercial building. When they acquired the building, they agreed in
writing that if one dies, the other inherits his or her interest. Are Chrissy and Devon
concurrent owners? If so, in what type of concurrent ownership are their rights held? If
not, how is their ownership classified? Fagin leases an office in the Elm Street building
for a one-year term. If Fagin moves out before the end of the term of the lease, what
happens to the leased property?
Per capita is a method of dividing an intestate share of an estate.
Tiny authorizes United Bank to make transfers from his account to make payments on
his debt to Vics Auto Dealership, which sold Tiny the car that serves as collateral for the
debt. After three payments, Vics repossesses the car and refuses to return it. Tiny
phones the bank to stop the payments and follows up with a confirming letter. The bank
fails to stop the next two payments, and Vics refuses to refund anything. Can Tiny get
his money from the bank? Explain.
With an installment contract, if a buyer or lessee accepts a nonconforming installment,
the contract is breached.
A trial commences with the plaintiffs attorneys direct examination of the first witness.
A sellers failure to disclose a serious defect about a product for sale may give rise to an
action for fraud.
A contract involving a sale is the only contract relating to an interest in land that must
be in writing to be enforceable.
Bona fide competitive behavior can constitute wrongful interference with a contractual
relationship.
A security agreement must contain a description of the collateral that reasonably
identifies it.
Employers can treat their employees more or less favorably based on their religious
beliefs or practices.
Persons who share ownership rights simultaneously are life tenants.
State employers are not immune from private suits brought by employees under the
Americans with Disabilities Act of 1990.
To the extent that it has not been modified by the UCC, the common law of contracts
applies to sales contracts.