In general, courts consider the fairness of a contract when deciding if the contract is
binding.
a. True
b. False
For an agents implied authority to be effective, aprincipal must ratify it.
a. True
b. False
Dhani, an accountant for Eureka, Inc., learns of undisclosed com-pany plan-s to market
a new laptop. Dhani buys 1,000 shares of Eureka stock. He re-veals 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 informa-tion from Dhani. When Eureka publicly
an-nounces its new laptop, Dhani, Fay, Geoff, and Hu sell their stock for a profit.
Refer to Fact Pattern 26-3. Under the Securities Ex-change Act of 1934, Fay is most
likely
a. liable for insider trading.
b. not liable because Fay did not prevent others from profiting.
c. not liable because Fay did not solicit information from Dhani.
d. not liable because Fay does not work for Eureka.
Reds Plumbing Service substantially performs its contract with Shady Grove
Condominiums, Inc. Shady Grove is entitled to
a. damages.
b. nothing more.
c. repudiation.
d. alteration.
The payment of Johns debt to Kirsten is guaranteed by Johns personal property. Kirsten
is most likely to perfect her interest by
a. attaching a bright label to Johns property.
b. calculating the precise amount of Johns debt.
c. correcting grammatical errors in the parties written agreement.
d. filing a financing statement with the appropriate authority.
Franzea is injured in an accident caused by Gentry. Gentry agrees to pay Franzea
$2,500 if she agrees to release him from further liability. She agrees. If Franzeas
damages ultimately exceed $2,500, she can collect
a. the balance from Gentry in a breach-of-contract suit.
b. the balance from Gentry in a tort suit.
c. the balance from Gentry on the ground of unforeseen difficulties.
d. nothing more from Gentry.
Promises of fact made during the bargaining process are express warranties.
a. True
b. False
Some promises create moral, but not legal, obligations.
a. True
b. False
Making out a prima facie case of discrimination means that a plaintiff has met his or her
initial burden of proof.
a. True
b. False
Setting realistic workplace goals can increase the probability that employ-ees will act
unethically.
a. True
b. False
Haya obtains an insurance policy from Inviolable Insurance Corporation (IIC). IIC may
cancel, or refuse to renew, the policy because of
a. Hayas appearance as a witness against IIC.
b. Hayas gender.
c. Hayas national origin.
d. none of the choices.
Mona, an accountant, prepares for NuTech Corporation a financial statement that omits
a material fact. The financial statement is included in NuTechs registration statement,
which Pam reads. Pam buys NuTech stock. Under Section 11 of the Securities Act of
1933, for Mona to be liable for the omission, Pam must show that
a. Pam relied on the omission.
b. Pam suffered a loss on the stock.
c. Pam knew about the omission before making her purchase.
d. the omission had no causal connection to her loss.
Ruth is a supervisor for Subs & Suds, a restaurant. Tim is a Subs employee. The owner
announces that some em-ployees will be discharged. Ruth tells Tim that if he has sex
with her, he can keep his job. This is
a. harassment on the basis of sexual orientation.
b. not harassment.
c. quid pro quo harassment.
d. same-gender harassment.
In making decisions for Smartt Investments, Rita uses a cost-benefit analysis. This is a
part of
a. duty-based ethics.
b. Kantian ethics.
c. rights-based ethics.
d. utilitarian ethics.
Puffery creates an express warranty.
a. True
b. False
According to German philosopher Immanuel Kant, individuals should evaluate their
actions in light of the consequences that would follow if they were the only members of
society that acted in that way.
a. True
b. False
Mark is creating a Web site through which he will enter into contracts over the Internet.
Important terms to include in his offers include
a. provisions specifying the remedies if the contract is breached.
b. a detailed history of his business.
c. glowing reviews from former customers.
d. his educational background.
A copyright is tangible personal property.
a. True
b. False
To qualify as a commercially reasonable sale, a secured partys sale of col-lateral, after
default and repossession, must be private.
a. True
b. False
In all contracts, absolute promises are expressly conditioned.
a. True
b. False
An insurance policy is an example of a right that can be assigned.
a. True
b. False
Rural Utility, Inc., enters into a contract with Shovel Excavation Service to dig up,
replace, and rebury Rurals cables in a certain location. Rural advances Shovel 10
percent of its cost. If the parties rescind the contract, Shovels refund of the payment
would be
a. a penalty.
b. liquidated damages.
c. restitution.
d. specific performance.
Criminal law spells out the duties that exist between persons or between citizens and
their governments.
a. True
b. False
Sights Unseen, Inc., (SUI) sells telescopes with distinctively designed lenses and
mirrors. Later, without SUIs permission, Telescopes Etc. Corporation begins to sell
scopes with identical structures of lenses and mirrors. This is most likely
a. copyright infringement.
b. patent infringement.
c. trademark infringement.
d. not infringement.
Marys home is in a state that has a $30,000 homestead exemption. Mary de-faults on a
$60,000 debt that she owes to Nina. Marys home is sold at auc-tion for $80,000.
Refer to Fact Pattern 20-1. Mary will receive
a. $0.
b. $30,000.
c. $50,000.
d. $60,000.
Ethical standards would most likely be considered violated if Team Logos
Merchandising Corporation deals with a company in a developing nation that
a. agrees to produce goods at Team Logoss desired price.
b. goes unnoticed by “corporate watch groups.
c. routinely violates labor and environmental standards.
d. pays its workers less than the U.S. minimum wage.
To be patentable, an invention, discovery, or design must benovel, useful and not
obvious in light of current technology.
a. True
b. False
Vehicle Leasing Agency (VLA) and Wander Trucking Company enter into a contract
for a lease of eight cargo vans. VLA delivers eight vans, but they are not cargo-sized.
Wander
a. cannot reject the entire shipment.
b. can reject the entire shipment.
c. must accept the entire shipment.
d. must reject the entire shipment.
App Developers, Inc. (ADI), enters into a contract with Carmen, the chief executive
officer of SalesCorp, to create an app for the firm. To fulfill the contract, ADI hires Max
and ten other student interns. With respect to the contract, Max is
a. an intended beneficiary.
b. an incidental beneficiary.
c. a delegatee.
d. an assignee.
Ian buys a cell phone in Jiffy Mart, using the means that accounts for more retail
payments than any other. This means of payment is
a. a commercial check.
b. a debit card.
c. a personal check.
d. a cash.
Fashion Retail Center enters into a contract with Great Promotions, Inc., to provide
Fashion with a plan to retool its merchandising strategy. If Great Promotions breaches
the contract, Fashion has a duty to
a. reduce the damages that Fashion might otherwise suffer.
b. reduce the loss that Great Promotions might otherwise suffer.
c. punish Great Promotions and deter others from similar acts.
d. take no action.