Star Resorts Corporation wants to terminate its franchise arrangement with Tony. Their
contract does not provide for notice of termination or set a time for winding up the
business. This means that to wind up, Tony
a. has a reasonable time, with notice.
b. has whatever time A determines, with or without notice.
c. is entitled to notice, but nothing more.
d. must close immediately.
Fact Pattern 25-2
Rico signs a lease on behalf of Start-Up Games, Inc., with Tower Office Suites. As part
of the lease, Rico signs a document titled “GUARANTY,” which states that it is “an
absolute guaranty” of the lease’s performance.
Refer to Fact Pattern 25-2. The reason for the result in the previous question is that
a. Rico signed a “GUARANTY.”
b. Tower Office Suites owns the property and can re-rent the premises.
c. the other tenants can equitably absorb a slight increase in rent.
d. Start-Up will likely move out when it stops paying the rent.
Venture Capital, LP, is a limited partnership. A Venture limited partner loses his or her
limited liability if he or she
a. acts as the firm’s manager.
b. has full awareness of the firm’s business activities.
c. invests in the firm’s competitor.
d. votes on the firm’s sale or dissolution.
Cody and Debora enter into an oral contract under which Cody agrees to work on
Debora’s ranch for not less than ten days. This contract is enforceable by
a. Cody only.
b. Debora only.
c. either party.
d. neither party.
Bertha is an accountant with Chocolate Shoppes Corporation. Doral buys Chocolate
stock and loses money on the investment. To recover from Bertha under Section 10(b)
of the Securities Exchange Act of 1934 and Rule 10b-5 of the Securities and Exchange
Commission, Doral must prove
a. nothing.
b. scienter, fraud, and reliance only.
c. scienter, fraud, reliance, and materiality only.
d. scienter, fraud, reliance, materiality, and causation.
Employment Sources, Inc., enters into a contract with Fred. If Fred is a minor, this
contract is most likely
a. enforceable.
b. unenforceable.
c. void.
d. voidable.
Flite-Craft Corporation makes and sells aircraft parts. In most states, the minimum
number of directors that must be present before Flite-Craft’s board can transact its
business is
a. all of the directors authorized in the articles or bylaws.
b. a majority of the number authorized in the articles or bylaws.
c. any odd number.
d. one.
Mari buys 500 shares of common stock in National Livestock Traders, Inc. As a
shareholder of record, Mari owns a proportionate interest in terms of
a. control, earnings, and net assets.
b. control only.
c. earnings and net assets only.
d. neither control nor earnings and net assets.
Primo Pools Company and Aquatic Recreation, Inc., enter into a contract for a sale of
prefabricated swimming pools. Under either a shipment contract or a destination
contract, the seller must
a. allow the buyer to reject the goods for any reason.
b. deliver the goods to a particular destination.
c. place the goods into the hands of a carrier.
d. provide the buyer with any necessary documents of title.
Madison is the chief executive officer of Nitro Medico, Inc., which is required to file
certain financial reports with the Securities and Exchange Commission (SEC). Under
the Sarbanes-Oxley Act of 2002, Madison must
a. certify that the reports are complete and accurate.
b. designate a corporate official to assume liability for inaccuracies.
c. do nothing.
d. read the reports and be prepared to answer questions about them.
Lenore is the sole proprietor of Mall Kiosks. With respect to contracting for her own
business interests, Lenore is
a. an agent and has the authority.
b. an agent but does not have the authority.
c. not an agent and does not have the authority.
d. not an agent but does have the authority.
Ansel owns Bar-B Ranch. Ansel’s only son Cy owns Double-D Ranch in the same
county. Ansel gives 90 percent of the Bar-B to Etta, a short-term employee. This gift
a. may lack the required element of “donative intent.”
b. may lack the required element of “donor’s acknowledgement.”
c. may lack the required element of “heir’s acquiescence.”
d. meets all of the requirements for an effective gift.
Bruno is a businessperson with investments in legal and illegal operations. Bruno may
be subject to penalties under RICO
a. for making an unprofitable, but legal, investment.
b. for the commission of any business fraud.
c. only in a case involving a “racket.”
d. only in a case involving organized crime.
Posing as a representative of Global Games Company, Ferris e-mails Evan, a job
seeker, asking him to forward personal banking information so that if he is hired,
payroll checks can be deposited directly into his account. Evan supplies the data, which
Ferris promptly sells to Dixie. This is
a. cyber stalking.
b. employment fraud.
c. phishing.
d. vishing.
Made4U Goods, Inc., asks its employees, many of whom are members of the National
Machinists Union, to apply the utilitarian theory of ethics. This theory does not require
a. a choice among alternatives to produce the maximum societal utility.
b. a determination of whom an action will affect.
c. an assessment of the effects of alternatives on those affected.
d. the acquiring of the means of production by workers.
Opie buys a franchise from Paradise Clothing Corporation. Because this franchise
relationship is, like all other franchise relationships, primarily of a certain type, it is
governed by
a. contract law.
b. the federal service-station franchise termination law.
c. the Federal Trade Commission’s Franchise Rule.
d. the Illinois Franchise Disclosure Act.
Merchant Supply Company and National Discount Stores enter into a contract for a
lease of cash registers. Merchant assures National that it has valid title to the goods.
Under the UCC, a warranty of title arises
a. automatically in most lease contracts.
b. only if the lessee asks for such a warranty.
c. only if the lessor expresses such a warranty.
d. only in conjunction with sales contracts, not lease contracts.
Handee Hardware, Inc., grants a franchise to Ivan to open and operate a Handee
Hardware store. Handee will likely charge Ivan
a. a license fee and a price for supplies.
b. a license fee only.
c. a price for supplies only.
d. neither a license fee nor a price for supplies.
A firm named Scientific Discovery Corporation (SDC) makes an attempt to incorporate
for a purpose other than making a profit. SDC is
a. a foreign corporation.
b. an alien corporation.
c. a nonprofit corporation.
d. not a corporation.
A franchise agreement between Simple Software Company and Total Game, Inc., is
silent on a time for termination of the franchise. Simple may
a. never terminate.
b. terminate at any time.
c. terminate on reasonable notice.
d. terminate on three days notice.
Bren leases an apartment from Cris for one year. After two months, she sublets the
premises for the next six months to Dee, without obtaining Cris’s consent. Dee pays the
rent for only four months. For the last two months of Dee’s six-month term, Bren is
a. liable for the rent, because Dee defaulted.
b. liable for the rent, because the sublease lacked Cris’s consent.
c. not liable for the rent, because Bren does not own the apartment.
d. not liable for the rent, because Bren sublet the premises to Dee.
Ross and Sally agree to guarantee Tim’s debt. Ross’s maximum liability is $30,000, and
Sally’s is $20,000. Tim owes $20,000 and is in default. Ross pays the creditor the entire
amount. In the absence of an agreement to the contrary, Ross can recover from Sally
a. $8,000.
b. $10,000.
c. $20,000.
d. nothing.
Elmer can write checks on his account at Finance Bank. Gina steals the checks, forges
Elmer’s signature, and cashes the checks at Finance. The bank is excused from any
liability if, after receipt of the first forged check, Elmer fails to report the forgeries
within
a. five business days.
b. fourteen consecutive days.
c. one year.
d. three years.
Cory enters into a contract with Dian to act as her personal sports trainer. If they later
dispute the meaning, and the contract contains unclear terms, the rules of contract
interpretation will give effect to
a. the parties’ intent as expressed in their contract.
b. what the defendant claims was the parties’ intent.
c. what the plaintiff claims was the parties’ intent.
d. what the parties now agree they intended.
Kelly, the owner of Llama Farms, a sole proprietorship, wants to obtain additional busi-
ness capital but to maintain control. This can best be accomplished by
a. borrowing funds.
b. bringing in partners.
c. issuing stock.
d. selling the business.
International Software, Inc., conditions the sale of one of its products on Nationwide
Office System’s agreeing to buy another of International’s products. This deal is
a. legal, depending on its purpose and the effect on competition.
b. legal, depending on production and transportation costs.
c. legal under any circumstances.
d. not legal under any circumstances.
Pure Water Company is subject to a decision by the Environmental Protection Agency.
Pure Water appeals the decision, arguing that it is arbitrary and capricious. This could
mean that the decision
a. changed the agency’s prior policy without justification.
b. followed a consideration of all relevant factors.
c. was accompanied by a rational explanation.
d. was plainly warranted by the evidence.
Euro Autos & Trucks, Inc., licenses Fancy Vehicles Corporation, an automobile
dealership, to sell its products. This is
a. a chain-style franchise.
b. a distributorship franchise.
c. a manufacturing franchise.
d. no franchise.
RockStar Software, Inc., develops a new series of performance-related video games.
This software is most likely protected by
a. copyright law.
b. patent law.
c. trademark law.
d. trade secrets law.
Delia refuses to pay Ewing $500 in cash on their contract to repair certain theater sets,
which Ewing still possesses. Ewing’s lien on the sets will terminate
a. if Ewing continues to maintain possession.
b. if Ewing does not file a written notice of lien within thirty days.
c. if Ewing surrenders possession.
d. within thirty days.
Michelle gives out a business card with an e-mail address on it. According to the
comments that accompany the UETA, it may be reasonable to infer that Michelle has
consented to
a. transact business electronically.
b. submit to the jurisdiction of any selected forum.
c. accept and respond to any correspondence sent to that address.
d. nothing.
Oceanic Vessels, Inc., and Pacific Harbor Company enter into a contract for a sale of a
boat. Oceanic is a merchant who deals in goods of the kind sold. The goods are
defective. Under the UCC, the implied warranty of merchantability is breached
a. only if Oceanic did not know about and could not have discovered the defect.
b. only if Oceanic did not know about the defect.
c. only if Oceanic knew about or could have discovered the defect.
d. regardless of what Oceanic knew or could have discovered.
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.
Persons who favor the creation of a National Biotech Agency to regulate the production
of genetically altered agricultural products should concentrate their lobbying efforts on
a. Congress.
b. federal administrative agencies that oversee agricultural products.
c. the United States Supreme Court.
d. the president of the United States.
When a condition operates to terminate a party’s absolute promise to perform, it is a
condition precedent.
Interrogatories are written questions for which written answers are prepared and signed
under oath.
A consumer lease is exempted from coverage under the UCC.
The First Amendment does not protect commercial speech as extensively as
noncommercial speech.
During a storm on Blue Lake, a boat sinks, but its owner Cappy survives. Cappy plans
to return to the site of wreck to salvage its equipment and his possessions, but he
delays. Meanwhile, Dick, an amateur diver, discovers the wreck and strips it clean of
useful items. Cappy learns of the recovery and files a suit against Dick, claiming that
the items are his. Dick responds that the sunken boat was abandoned and therefore he
has good title to everything to which he took possession. What is the court likely to
rule, and why?
An oral contract for a sale of land may be enforceable if the contract has been partially
performed.
Larceny relies on stealth while robbery relies on fear and force.
An implied warranty of merchantability arises in every sale or lease by a merchant who
deals in goods of the kind sold or leased.
Interpretive rules simply declare policy and do not affect legal rights or obligations.
A fiduciary relationship allows parties to avoid obligations without liability.
A corporation that is selling all of its assets must obtain approval only from its board of
directors.
Article 2 of the UCC governs contracts for sales of services.
In a bailment, possession of the property is transferred to the bailee.
Ordinarily, a minor who affirmatively misrepresents his or her age cannot disaffirm a
contract.
A bank that pays a customer’s check with a forged drawer’s signature can generally pass
the loss onto the customer.
Two parties’ course of dealing may be considered to resolve an ambiguity in a contract
between them.
The extent of implied authority is generally broader for agents than for partners.