Book Title
Business Law with UCC Applications 14th Edition

Business Law 29962

March 1, 2019
In federal diversity cases, corporations are only considered a citizen of the state in
which they have their principal place of business.
If Alfredo, a small business owner, engages in cost-benefit thinking, he will generally
only focus on the benefits and problems his business will face as the result of a decision
he makes.
Louisiana was the last state to adopt the Uniform Partnership Act.
A transient guest at a hotel is a guest whose length of stay is fixed.
Mediation always follows the filing of a lawsuit.
Legal tender cannot be refused by a seller.
Shopkeeper's privilege allows a store owner to detain a shopper without suspicion that
an incident has occurred.
In his book, What Money Can't Buy: The Moral Limits of Markets, author Michael
Sandel reveals that market value ethics is the new ethical relativism.
Public policy is the equivalent of Weber's social consensus in that it refers to the idea
that certain activities affect the entire social structure and must be regulated by the
The National Science Foundation (NSF) is a private agency, funded primarily by
private companies and universities.
The Garden Club orders 40 T-shirts from Shirt City, Inc. to be printed with the club
name and motto for a total price of $400. The Garden Club breaches the contract, and
Shirt City discovers that the resale value of the shirts is $1 each. Shirt City may sue the
Garden Club for the order price of the T-shirts.
Partnering is best used when there are only two parties in a dispute about a few issues.
Unsafe electrical wiring in a building would amount to a breach of warranty of
A child is injured after swallowing a piece of glass hidden in a jar of jam. A court will
award money for the injuries suffered only if the child or the child's parents purchased
the jam.
The purpose of a bait-and-switch scheme is to switch customers from buying the
advertised merchandise to buying something else that is usually more expensive.
Danny agrees not to go duck hunting if "Save the Ducks" pays him $100. This is
forbearance on Danny's part.
Title may pass as soon as goods are identified to the contract, but only after they are in
possession of the seller.
If a minor makes a contract for necessaries, he or she will be liable for the fair value of
those necessaries.
Alice's attorney is preparing her will. Witnesses are required when Alice signs her will.
Conway Retailers contracts to buy office furniture from Blue Ridge Furniture to install
in a newly constructed office building. About half of the delivered furniture is defective
and Conway rejects it. Conway may recover the cost of inspecting the defective
furniture from Blue Ridge.
The statute of limitations for breach of a sales contract is two years.
In the "obvious-to-try" standard, if a challenger can show that anyone of ordinary skill
can show the obviousness of the innovation, the invention would not be patentable.
A minor may not disaffirm a contract to sell land after becoming an adult.
The Nuclear Regulatory Commission is responsible for making certain that, on a global
basis, nuclear energy is used only for peaceful purposes.
An example of chattel would be a stock certificate.
If Sally believed in natural law, she would believe that right and wrong are measured by
the obligations imposed on each individual by an implied agreement among all
individuals within a particular social system.
Law consists of values that govern a society's attitudes toward right and wrong.
Assume a minor enters a contract and misrepresents his age and later defrauds the other
party. In some states, the other party can sue the minor under tort law, rather than
contract law.
In an enforceable agreement, a promise itself is adequate consideration when it
represents something of value.
The holder in due course of a note discharged in bankruptcy has no hope of collecting
any funds.
UETA created a new set of legal rules governing electronic contracts.
A "right-to-work" state means that workers can choose to opt-out of unions.
The control test was created by the courts to uncover the true nature of the employment
relationship for cases falling under statutory liability.
A notary is required to read the document when providing acknowledgment of a
The federal government's power to regulate accounting emerges from the inherent
police powers found in the Fifth Amendment.
Insurance companies have the right to step into the shoes of the party they compensate
and sue any party whom the compensated party could have sued.
The shareholders of an S corporation have the profits or losses of the corporation taxed
directly to them in order to avoid double taxation.
Carol borrows $50,000 to purchase seven industrial Xerox copying machines, and open
up her own copy shop. The bank loan requires that Carol grant the bank a security
interest in any property acquired after the original agreement is signed. After she shows
the loan letter to Xerox, it agrees to sell her the copiers for $80,000 to be paid over five
years. Who has priority in the copying machines?
A. The bank, if it filed and perfected its interest first
B. The bank because of the "floating lien" loan agreement
C. Xerox, if it filed the loan agreement before the bank did
D. Xerox, because this is a purchase money security interest
Direct examination of a witness is usually conducted during the ____________ by the
A. plaintiff's case in chief; plaintiff's attorney
B. voir dire; defendant's attorney
C. plaintiff's case in chief; judge
D. closing statements; jury
In deciding if an item is a fixture, the courts look to:
A. attachment, adaptation, and easement.
B. adaptation, easement, and intent.
C. intent, tenement, and attachment.
D. attachment, adaptation, and intent.
Brenner entered into a written contract with the Inkblot Corporation for $1,000 worth of
office supplies. Inkblot subsequently sent Brenner some supplies that were not
requested in the contract. Brenner noticed that the order did not match the contract, but
he accepted the nonconforming goods. Which of the following is true of this situation?
A. The Inkblot Corporation must cure the improper tender.
B. Inkblot is not required to cure the improper delivery since it has been accepted.
C. Brenner can reject the goods without informing Inkblot of the defect in the supply.
D. Brenner can accept the goods and through the court, obligate the Inkblot Corporation
to cure the improper delivery.
Carl finds a lost dog and returns it to its owner, Betty. Betty gives Carl a check for $50
for his efforts, but later stops payment on the check. Carl cashed the check at
Cash-All-Checks, who now seeks to recover from Betty. Will Cash-All-Checks be
A. Betty has a real defense against Carl and Cash-All-Checks.
B. Betty has no defense against Cash-All-Checks, hence the latter will be successful.
C. Betty has a personal defense that allows Cash-All-Checks to be successful.
D. Betty has a defense against Cash-All-Checks since the check is less than $100.
While looking for apartments, Brittany finds one that she likes. The building manager
agrees to an option contract in which he will hold the apartment for Brittany for four
days in return for $100. At the end of the fourth day, Brittany finds another apartment
that she likes better and signs a lease with its building manager. Because Brittany's
contract with the original building manager is an option contract, the building manager
is under:
A. no legal obligation to return more than $50 to Brittany.
B. legal obligation to return Brittany's $100 payment.
C. legal obligation to return one-fourth of Brittany's $100 payment.
D. no legal obligation to return Brittany's $100 payment.
The major provision of the ___________ is that it exempts union activity from antitrust
A. Norris-LaGuardia Act
B. Railway Labor Act
C. Clayton Act
D. Wagner Act
Vienna is a quiet, reclusive, stay-at-home mom. However, last week she became a
____________ after she rescued her neighbor's child from drowning in canal and was
interviewed on national television as "America's Mom." As long as her notoriety lasts,
she will be held to the ____________ test.
A. temporary public figure; actual malice
B. public figure; slander per se
C. temporary public figure; public disparagement
D. temporary public figure; public privilege
Until recently, the goal of making a profit for ____________ was the only view of
corporate responsibility built into statutory and common law.
A. its creditors
B. its shareholders
C. social responsibility
D. the government
Alan and Delen enter into a partnership agreement with a $10,000 capital contribution.
Six months later, Delen loans Alan $1,000. The loan is a:
A. partnership capital contribution.
B. loan to the partnership, rather than to Alan.
C. loan to both the partnership and to Alan.
D. personal loan Alan only.
Under Chapter 13 of the Bankruptcy Code a debtor must begin payments within a
period of ____________ from submission.
A. three days
B. thirteen days
C. thirty days
D. thirty-three days
Through what kind of written instrument would Tim direct Howard to pay $600 to the
order of Celeste?
A. A certificate of deposit
B. A note
C. A draft
D. A dishonored draft
Edward Philips signs a deed allowing the utility company to suspend power lines over
his land. A utility company's right to use Edward's land for suspending power lines is
called a(n):
A. dominant tenement.
B. easement.
C. tenement.
D. servient tenement.
If Tano dies without a will, he dies:
A. testate.
B. intestate.
C. interstate.
D. testator.
Charlena, a shelf-stocker, offers Megan the post of Vice-President of Procurement to
express appreciation for Megan's hard work in stocking the shelves at Charlena's store,
Thrift City. Megan creates business cards with her new title on them and uses one to
purchase a new truck in Thrift City's name from Highway Auto. Which of these types of
authority, if any, has Charlena given Megan?
A. Express authority
B. Operation of law authority
C. Apparent authority
D. Charlena has likely given Megan no authority
Trudy had been a constant companion of Gertrude. When Gertrude died, she left Trudy
$10,000 in her will. On what basis might other heirs best attempt to challenge the
$10,000 gift?
A. Undue influence
B. Unsound mind
C. Improper heir-ship
D. Improper execution
Frisco and his wife, Esperanza, were killed simultaneously in an auto accident. Frisco
had life insurance naming Esperanza as the beneficiary. Frisco's will left all his property
to a charity, and Esperanza's will left all of her property to her mother, Verdad. Who is
entitled to the insurance proceeds under the Uniform Simultaneous Death Act?
A. Verdad
B. No one, since Esperanza is deceased.
C. This is determined by intestate succession.
D. The charity
If the mortgagor has defaulted or has failed to perform some other agreement in the
mortgage, the mortgagee has the right to apply to a court to have the property sold. This
is called the right to:
A. acceleration.
B. foreclosure.
C. perfection.
D. attachment.
Pepe dies without a will leaving a brother, a cousin, and an uncle as his only surviving
relatives. Who is the "next of kin"?
A. The uncle
B. The cousin
C. The brother
D. This must be determined by the state law where Pepe died.
Ron, aged 20 years and 4 months, purchases a car from Slim's Auto Sales for $2,000.
However, Ron returns the car to Slim Auto Sales telling them he does not feel this is the
right car for him and that he wants his money back. At the time of disaffirmance, Ron
was 21, the age at which he is considered an adult in his jurisdiction. Will this
disaffirmance be enforceable in the court of law?
A. No, since Ron did not give Slim a signed disaffirmance.
B. Yes, since Ron disaffirmed during the year he reached his adulthood.
C. No, since the disaffirmance must be written when the price exceeds $500.
D. Yes, since the courts and laws always rule in the favor of minors.
In a(n) ____________, the buyer purchases enough shares in a corporation to gain
voting control of that corporation.
A. asset acquisition
B. stock acquisition
C. consolidation
D. joint venture
When a buyer has a right to inspect the goods, the right usually must be exercised:
A. before the goods are shipped.
B. after the goods are shipped, but before delivery.
C. before accepting the goods.
D. within ten days of accepting the goods.
A(n) ____________ is a new agreement resulting from a bona fide dispute between the
parties as to the terms of their original agreement.
A. mutual rescission
B. accord and satisfaction
C. novation
D. termination by waiver
The Economic Espionage Act (EEA) is designed to protect trade secrets.
____________ is the power of the court to hear a case based on Internet-related
A. Science jurisdiction
B. General jurisdiction
C. Cyber-jurisdiction
D. Subject matter jurisdiction
Better Houses, Inc. has been contracted to build an addition on the Joyners' house. It
built half of the addition and then unexpectedly announced that it was not going to
finish the job. Better Houses' decision to stop the job is called a(n):
A. constructive breach of contract.
B. substantial performance.
C. abandonment of contractual obligations.
D. repudiation of contract.
To be an effective attempt to preserve employment-at-will, a ____________ also must
be written in clear, unequivocal language.
A. quasi-contract
B. disclaimer
C. relinquishment
D. waiver
Tom and Megan die in a plane crash. After their marriage, they had been jointly holding
property. What happens to their property?
A. Tom's heirs inherit the whole property.
B. The state escheats the property.
C. Megan's heirs inherit the whole property.
D. The property is distributed equally between the heirs.
The theory of the ____________ says that right and wrong have no intrinsic value, but
instead are determined by circumstance, situation, or even personal preference.
A. ethical relativism
B. realistic ethics
C. social ethics
D. market value ethics
A(n) ____________ includes any symbol, made with the intent to authenticate a
A. seal
B. informal note
C. mark
D. signature
A ____________ might be used by target management if the target owns an
irreplaceable piece of property, the sale of which would seriously devalue the overall
worth of the target.
A. greenmail option
B. lockup agreement
C. public relations campaign
D. targeted shareholder agreement
Morgan and Flynn owned a partnership business that was facing financial difficulties.
The debts of the business were getting out of hand. However, neither Morgan nor Flynn
wanted to close down the business and felt that, with a few changes, they could turn the
business around and make a profit. Which chapter of the Bankruptcy Code should they
file under? Why?
Mike and Jane contract to purchase and sell $1,000,000 worth of computer chips to be
manufactured in Japan and shipped to San Francisco. The contract is silent about the
method of delivery. Mike asserts that delivery is by ship, which is customary in the
computer chip industry, but Jane insists that delivery is by air, which is what a previous
contract between Mike and Jane provided. Explain how a court will resolve this dispute.
In exchange for some illegal drugs, Popka wrote a $500 check to White. Immediately
thereafter, Popka stopped payment on the check. Can White recover the $500 from
Popka in court? Explain.
Charles, a healthy twenty-five year old, owns a life estate in ten acres of land on the
edge of a growing city. Developers would like to purchase the ten acres, but the holder
of the remainder interest, Doria, does not want to sell. Discuss what rights, if any, the
developers may acquire.
Helen, a 15-year-old citizen of Illinois, was about to go to the doctor for an abortion
when the Supreme Court of Michigan ruled that minors could not receive an abortion
without parental consent. What effect might the Michigan Supreme Court's decision
have on Helen?
Tibbetts left a television with Quick Fix, Inc. for repair. Quick Fix made tests and
diagnosed the problem, but never began the actual repairs. Nothing was done on the set
for more than three months. After repeated telephone calls demanding that the work be
done, Tibbetts asked for the return of the set. Quick Fix refused to give up the set unless
Tibbetts paid for the time spent on making the tests. Discuss the case.
Baker attends a baseball game and is hit by a foul ball while sitting in an unscreened
section of the stadium. The stadium offers both screened and unscreened seats of equal
quality and price. Can Baker successfully sue the stadium, the player who hit the ball,
or the team the player was employed for this incident?
Nolan worked as delivery person for the Super Soap Suds Company. In this capacity, he
would frequently collect money from customers for Super Soap Suds. One week, he
carelessly allowed his son to deposit the money on his behalf. His son deposited the
money in Nolan's personal account. When Nolan tried to retrieve the money, he did not
know how much belonged to Super Soap Suds. What legal remedy does Super Soap
Suds have against Nolan? Explain.
Basic Carpet contracts to install stain-resistant carpet in Alice's house for $6,000. Basic
Carpet then assigns the right to receive payment from Alice to Home Finance Company.
When payment comes due, Alice refuses to pay more than $2,000, asserting that the
installed carpet was not stain-resistant. Home Finance asserts that Alice must pay
$6,000, since Home Finance was not responsible for installing the carpet. Alice decides
to sue Basic Carpet. Discuss the case.
Tom, owner of the Rico Apartment Complex, appoints Alice as "General Manager" of
the Rico Apartment Complex. Alice enters into several contracts in Tom's name: (1)
maintenance agreement with Alpha Enterprises; (2) purchase of cable TV service from
Star Ethics for Rico; (3) purchase of a new Corvette for Alice to drive while on Rico
business. Discuss which of these contracts bind Tom?
Lucky Used Cars, using their contracts form, agree to sell Alvin a truck for $5,000. The
contract provides that it may not be modified—except by a signed writing. After
entering into the contract, Lucky and Alvin orally agree that Lucky will include new
floor mats and a bed liner for an extra $100. At the time of delivery, Lucky refuses to
provide the new floor mats and bed liner unless Alvin pays an extra $250. Discuss the
enforceability of the oral agreement Lucky and Alvin had.
Andrew's neighbor, Charles, is selling drugs from his home. Since Andrew is concerned
about the well-being of his own family, he offers to pay Charles $60,000 to stop selling
drugs. Charles stops, but Andrew refuses to pay. Can Charles successfully sue Andrew
to force him to pay the $60,000? Explain.
A United Nations agency has requested an advisory opinion from the International
Court of Justice concerning the applicability of the Geneva Conventions to a rebellion
within an African nation. No party to the actual conflict has made a request to the
United Nations or the International Court of Justice. Discuss the right of the
International Court of Justice to issue the advisory opinion.
Ten-year old Felicity fell in love with a golden retriever puppy which she saw in the
window of Pet World. She decided to use the money she had saved from her paper route
to buy the dog and wrote a $300 check, payable to Pet World. Does Pet World qualify
as a holder in due course?
Rachel found a bag of money that fell out of an armored car. She decided to keep the
money since she did not have full-time employment and was studying to be a nurse.
Name and explain the ethical system that Rachel used to make her decision.
Lashkar-e-Taiba is one of the largest and most active, militant Islamist terrorist
organizations in South Asia, operating mainly from Pakistan. The organization is
banned as a terrorist organization by India, Pakistan, the United States, the United
Kingdom, and the European Union. Lashkar-e Taiba has attacked civilian and military
targets in India, most notably the 2008 Mumbai attacks and the 2001 Indian Parliament
attack. While discussing the exercise of international power by nongovernmental
international organizations (NIOs), how does one categorize Lashkar-e-Taiba?
Toy Distributors, Inc. had a swing set constructed for customers to examine. It was
anchored to the ground with 20-inch steel pins. Gina purchased one for installation in
her backyard by Toy, but Toy anchored it with 6-inch steel pins that pulled out of the
ground, causing the swing set to tip over and injure Gina's child who was playing on the
swing. Discuss if any warranties have been violated by Toy.