A spendthrift trust provides for a beneficiary’s transfer of his or her right to future
payments of trust funds.
A certificate of deposit is a type of draft.
The holder of an artisan’s lien can foreclose and sell the property subject to the lien to
satisfy the debt.
An illusory promise is a promise that is enforceable without consideration.
A buyer has an insurable interest in identified goods.
Equitable remedies include injunctions.
To be ethical is to “do the right thing” but it does not otherwise “pay.”
Private parties cannot sue violators of Section 10(b) and Rule 10b-5.
An incidental beneficiary can sue directly to enforce a promisee’s promise.
Patent infringement occurs only if an invention is copied in its entirety.
In a general partnership, all partners have equal rights in managing the partnership.
If a third party will be affected by a contract, the parties to the contract are in privity
with the third party.
For a creditor to have an enforceable security interest, the debtor must have title to the
collateral.
Ethical codes of conduct can set the ethical tone of a firm.
An involuntary bankruptcy occurs when the debtor’s credit does not cover all of his or
her debts.
A bilateral mistake is a mutual misunderstanding.
No special form is required to create a delegation of duties.
A right to receive damages on a breach of a contract for a sale of goods cannot be
assigned.
Self-defense is a defense to negligence.
A reorganization plan is a plan to conserve and administer the debtor’s assets in the
hope that all of the creditors will eventually be paid in full.
An effective offer requires a reasonable price related to market value.
An unconscionable contract is a contract so one-sided and unfair at the time it is made
that enforcing it would be unreasonable.
A conditional promise to pay is not a negotiable instrument.
Generally, a bank has no obligation to pay a customer’s overdrafts.
Shareholders own a corporation.
Acting in good faith gives a business firm a better chance of defending its actions in
court.
A corporate director is the owner of the corporation.
Property voluntarily placed somewhere by its owner and inadvertently forgotten is
abandoned property.
In a repayment plan case, after the debtor has completed all payments, the court grants a
discharge of all debts provided for by the plan.
A licensed professional can employ an unlicensed agent to perform professional
actions.
A sharing of profits from the ownership of property creates a presumption that a
partnership exists.
An event must be certain to occur to constitute a contract condition.
A principal is not liable for an agent’s fraud unless the agent has the apparent authority
to commit torts.
Recording a mortgage protects the creditor’s security interest in the property.
A counterclaim is raised by a plaintiff against a defendant’s response to a complaint.
An international custom is a general practice accepted in the international arena as law.
Federal law governs garnishment actions.
A business firm can sometimes predict whether a given action is legal.
Jamal signs a lease with Kelvin to occupy a house on Leech Lake in Minnesota for the
summer. Jamal’s tenancy is
A.a fixed-term tenancy.
B.a periodic tenancy.
C.a restrictive covenant.
D.a tenancy at will.
The Association of Southeast Asian Nations is a regional trade association that was
created through
A.a bilateral agreement.
B.a lateral agreement.
C.a multilateral agreement.
D.a unilateral agreement.
Mona asserts that a contract she entered into with Nate is unenforceable. Defenses to
the enforcement of a contract include
A.a desire not to perform.
B.adverse economic consequences.
C.results that do not match expectations.
D.the lack of a party’s genuine assent.
Craig is an accountant whose clients include Digby Excavation Corporation. Elbert is
Craig’s attorney. Under the common law and by statute in many states, working papers
that Craig develops when preparing financial reports for Digby are owned by
A.Craig.
B.Digby.
C.Elbert.
D.no one-the papers must be destroyed immediately after use.
World Investment & Trading, Inc. (WIT), encourages its employees to build trust with
its customers and other companies. Unfounded complaints and exaggerated charges
leveled against WIT online would most likely be regarded by a court as
A.an expression of fact.
B.a form of speech protected by the First Amendment.
C.an inappropriate online disclosure.
D.libelous.
Fact Pattern 23-2
Luann and Mace are partners in Networx, a computer peripherals firm.
Refer to Fact Pattern 23-2. Luann signs a contract with Oleo Chips, a retail component
supplier, apparently on Networx’s behalf. The contract is binding on
A.Luann, Mace, and Networx.
B.Luann only.
C.Networx only.
D.Oleo only.
Rewind Investments Inc. owns 90 percent of Swift Blades Inc. (SBI). Rewind’s majority
shareholders are also its directors and the directors of SBI. SBI’s business is the design
and assembly of wind-driven turbines. SBI is offered the opportunity to buy Typhoon
Turbines, Inc., a competitor, but SBI’s board turns it down. Within six months, Rewind
buys Typhoon. Based on the court’s reasoning in Notz v. Everett Smith Group, Ltd., a
minority SBI shareholder could bring
A.a claim against Typhoon’s former directors.
B.a direct claim against SBI’s majority shareholders.
C.a shareholder’s derivative suit against Rewind.
D.no claim.
Fact Pattern 17-3
Mike loses his National Bank access card. He realizes his loss the next day but waits a
week to call National. Meanwhile, Opal finds and uses Mike’s card to withdraw $3,000
from Mike’s account.
Refer to Fact Pattern 17-3. Mike is responsible for
A.$0.
B.$50.
C.$500.
D.$3,000.
Checkerboard Pizza, Inc. (CPI), files a petition in bankruptcy for relief through a
reorganization. CPI’s reorganization plan must contain
A.a plan to turn over its future income to the trustee.
B.a certificate proving attendance at a credit-counseling briefing.
C.a provision of adequate means for the plan’s execution.
D.a statement of preference for one creditor over another.
On May 1, City Auto & Truck Sales agrees to sell a car to Dino. Five days later, Dino
refuses delivery and cancels the contract. City is entitled to
A.force Dino to accept the car.
B.recover any damages from Dino but not resell the car.
C.resell the car and recover any damages from Dino.
D.resell the car but not recover any damages from Dino.
Domino causes a disturbance at El Nino Cafe. He is arrested and charged with
disorderly conduct, a misdemeanor. A misdemeanor is a crime punishable by
A.a fine only.
B.imprisonment up to one year.
C.imprisonment up to six months.
D.imprisonment up to ten days.
Commercial Shipping, Inc., and Dock Services Corporation enter into a contract for
Dock to load Commercial’s trucks for which Commercial agrees to pay Dock. Dock
transfers its duty to load the trucks to East Harbor Transport Company. Dock is
A.a delegator.
B.an assignor.
C.a payor.
D.a righter.
Rural Holding Company (RHC) possesses farmland. RHC has the right to use the
property, including harvesting the crops, for ten years. RHC does not have the right to
extract the coal under the land. This is
A.a fee simple absolute.
B.a leasehold estate.
C.a life estate.
D.an easement.
Jo files a suit against Lara in a Missouri state court. Lara’s only connection to Missouri
is an ad on the Web originating in Nebraska. For Missouri to exercise jurisdiction, the
issue is whether Lara, through her ad, has
A.a commercial cyber presence in Missouri.
B.conducted substantial business with Missouri residents.
C.general maximum contact with Missouri.
D.solicited virtual business in Missouri.
Safe-T Guard Services enters into a contract to secure Taylor’s Business Park from
vandalism and theft between 6 p.m. and 6 a.m. nightly for six months. At the end of the
term, if there has been no vandalism or theft in the Park, Safe-T’s performance will have
been
A.absolute.
B.complete.
C.conditional.
D.substantial.
Mineral Products Corporation, which owns no land, has a right to mine the copper from
Natural Resource Company’s land. Mineral’s right is
A.a leasehold estate.
B.a license.
C.an easement.
D.a profit.
Cecilia’s Day Spa, LLC, is a member-managed limited liability company. If the law in
Cecilia’s state is like the law in most states, unless the members have agreed otherwise,
voting rights are apportioned according to
A.capital contributions.
B.participation in management.
C.the number of members.
D.transactions with the firm.
Dhani signs a check “pay to the order of Etan” drawn on Dhani’s account in First State
Bank and dates the check “May 1.” Etan presents the check to the bank for payment on
December 15. This is
A.a dishonored check.
B.an overdraft.
C.a postdated check.
D.a stale check.
Consumer Payments Processing Corporation (CPPC) and Mall Kiosk Company make a
deal for CPPC’s services, via e-records. Under the UETA, an e-record is considered
received when
A.it enters the recipient’s processing system in a readable form.
B.the recipient is aware of its receipt.
C.the recipient is aware that it has been sent.
D.it leaves the sender’s control.
In newspaper ads, Lo-Price Autos falsely accuses My-T Value Vehicles, a competitor, of
selling stolen cars. My-T’s sales decrease. Lo-Price has most likely committed
A.slander of quality.
B.slander of title.
C.wrongful interference with a business relationship.
D.none of the choices.
The board of directors of Integral Components Corporation consists of Frida, Gayla,
and Hart. A quorum is the minimum number of these directors
A.who must be at odds in a dispute to call for its resolution.
B.who must be present to validly transact business.
C.that the shareholders may remove from office at any one time.
D.whose positions must be vacant to warrant an election.
Ula wants to initiate a suit against Valley Farms by filing a complaint. The complaint
should include
A.an explanation to refute any defense the defendant might assert.
B.a motion for summary judgment.
C.a motion to dismiss.
D.a statement of the facts necessary to show Ula is entitled to relief.
Fact Pattern 15-1
Bret, a representative of Concrete Products, Inc. assures Dependable Construction
Company (DCC) that Concrete’s cement will not crack within a certain range of
temperatures. DCC uses the product. When cracks develop within the stated
temperature range, DCC files a suit against Concrete.
Refer to Fact Pattern 15-1. Suppose that the court rules against Concrete. The
manufacturer might have avoided that result by
A.making its cement fit for its particular purpose.
B.making its cement merchantable for its intended use.
C.not allowing Bret to express an opinion.
D.not permitting Bret to make an express warranty.
Master Metals Corporation is publicly held. Under the Securities and Exchange
Commission’s “notice and access” e-proxy rules, Master’s dissemination of proxy
materials to its shareholders by posting them on a publicly accessible Web site is
A.allowed in any circumstance but not required.
B.allowed only if warranted.
C.prohibited.
D.required.
The brakes on a Coastal Railroad train malfunction and it rolls towards maintenance
workers on the tracks. Everyone gets out of the way except Dick, who wants to show
off. The train hits Dick, who sues Everest, Inc., the brakes’ manufacturer. Everest can
raise the defense of
A.a component-part manufacturer.
B.assumption of risk.
C.consumer participation.
D.product misuse.
Silky Material Corporation in New Jersey sells fifty tons of fabric to Tattered Clothing,
Inc., in Ohio, “F.O.B. New Jersey.” The cost of transporting the fabric to Ohio will be
paid by
A.Silky Material.
B.Tattered Clothing.
C.New Jersey.
D.Ohio.
Expert Capital Company and Frugal Financial Bank are secured parties with security
interests in property owned by Grande Corporation. Between these security interests,
the first to be filed or perfected has priority over other filed or perfected security
interests in
A.most circumstances.
B.no circumstances.
C.states that have not adopted Article 9 of the UCC.
D.states that require a security agreement to be signed and dated by the creditor.
Ceramic Tile Company designs and makes floor tiles. In a product liability suit based
on negligence, Ceramic could be liable for violating its duty of care with respect to
A.neither the design nor the making of the tiles.
B.the design and the making of the tiles.
C.the design of the tiles only.
D.the making of the tiles only.
Helen owns heavy construction equipment and the tools to service it, as well as office
furniture, including computers. Ilya owns a number of patents, trademarks that identify
the products made under those patents, and stock in the company that sells those
products. Personal property includes the items owned by
A.Helen and Ilya.
B.Helen only.
C.Ilya only.
D.neither Helen nor Ilya.
Jaqy distributes a handbill among her neighbors accusing one of them-Ked-of being a
convicted sex offender. The statement is defamatory only if
A.a neighbor repeats it.
B.Ked suffers emotional distress.
C.the statement is TRUE.
D.the statement is false.
Mold & Dye Corporation is a private employer involved in a Title VII employment
discrimination suit. Punitive damages may be recovered against Mold & Dye only if the
employer
A.acted with malice or reckless indifference.
B.can easily afford to pay the amount.
C.has one hundred or more employees.
D.none of the choices.
Flem, a user of GameCenter.com’s Web site, can download gaming software for free if
he first clicks on “I accept” after viewing certain terms. This is
A.a contract that does not include the terms.
B.a contract that includes the terms.
C.not a contract but the terms are enforceable.
D.unenforceable.