Corner Market sells groceries. Delite Food & Drug Store sells groceries and fills
prescriptions. The chief responsibility to prevent unsafe food and drugs from being sold
rests with
a. the Consumer Product Safety Commission.
b. no single federal agency.
c. the Federal Trade Commission.
d. the Food and Drug Administration.
James buys a copy of the book Downpour. Later, after reading the book, James sells it
to his sister. Under the first sale doctrine, James’s sale of the book is
a. legal.
b. legal only if the copyright has expired.
c. legal only if he sells it for less than he paid for it.
d. illegal.
Jolie signs a contract with Keaton, an unlicensed physician, to perform a medical
procedure. This contract is enforceable by
a. Jolie.
b. Jolie’s medical insurance company.
c. Keaton.
d. no one.
Mythic Games Company employs two hundred workers full-time. If Mythic Games
plans to have a mass layoff, it must provide its employees with at least
a. thirty days of notice.
b. sixty days of notice.
c. ninety days of notice.
d. one year of notice.
Creditworthy Loan Company extends credit in the ordinary course of its business.
Under the Truth-in-Lending Act, Creditworthy must inform potential borrowers of
a. credit terms offered by other lenders.
b. comparative prices for goods to be bought with the borrowed funds.
c. Creditworthy’s credit terms.
d. the borrowers’ credit scores.
Jumbo Juice Inc. offers entrepreneurs the opportunity to operate a franchise under the
Jumbo Juice trade name. For any projected earnings figures Jumbo Juice provides to
potential franchisees, the franchisor must have
a. a hypothetical basis.
b. a reasonable basis.
c. an actual basis.
d. no basis.
Julia is an agent who purchases wool for Kara’s Knitting Company. In the course of her
performance for Kara’s Knitting Company, Julia pays for the gas for the company car
and for some storage boxes for the wool. Kara’s Knitting Company must reimburse
Julia because of the principal’s
a. duty of performance.
b. duty of loyalty.
c. duty of compensation.
d. duty of reimbursement.
Rikki signs a check “pay to the order of Scholar University” drawn on Rikki’s account
in Town Bank to pay her tuition. Rikki is
a. the certifier.
b. the drawee.
c. the drawer.
d. the payee.
Efron transfers an instrument to First Citizens Bank. This is not a negotiation unless
a. the parties bargained over the amount paid for the instrument.
b. the transfer is an assignment.
c. the instrument is a negotiable instrument.
d. the transfer includes rights under a contract.
Natural Foods, Inc., orders “Grade A” oil from Olive Grove Farms to process and sell to
Pic “N Pay Grocers. Olive Grove ships “Grade B” oil, which Natural Foods accepts. To
recover damages for the nonconformity, Natural Foods must give notice of the breach
within a reasonable time to
a. Olive Grove only.
b. Olive Grove, Pic “N Pay, and the appropriate government agency.
c. Pic “N Pay only.
d. the appropriate government agency only.
Valley Bank retains the cancelled checks of its customers. Valley must be able to
provide customers with legible copies of checks paid for
a. one year.
b. five years.
c. seven years.
d. nine years.
Jane develops a new color of lipstick. To market her lipstick, Jane uses a computer
design program to show a famous model using Jane’s lipstick. Jane does not ask the
model’s permission. The model can sue Jane for
a. battery.
b. fraudulent misrepresentation.
c. defamation.
d. appropriation.
Smitty, driving while intoxicated, causes a car accident that results in the death of
Tiffany. Smitty is arrested and charged with a felony. A felony is a crime punishable by
death or imprisonment for
a. any period of time.
b. more than one year.
c. more than six months.
d. more than ten days.
Eagle Financial Corporation merges with First Bank Corporation, with Eagle Financial
absorbing First Bank. After the merger
a. a different, new corporation is the surviving corporation.
b. Eagle Financial and First Bank are both surviving corporations.
c. Eagle Financial is the surviving corporation.
d. First Bank is the surviving corporation.
A Montana state court can exercise jurisdiction over Endurance Insurance Corporation,
an out-of-state defendant, but the defendant must have
a. minimum contacts with the state.
b. maximum contacts with the state.
c. legitimate contacts with the state.
d. legal contacts with the state.
Will owes Jenny $1,000. Brad owes Will $1,000. Will unconditionally assigns his rights
to Jenny. Will’s right to the $1,000 is then
a. unchanged.
b. extinguished.
c. incidental.
d. assigned to a court.
Elsa participates in a Title VII investigation at the firm where she works. As a result,
Elsa’s employer demotes her. Elsa can file a
a. harassment complaint.
b. retaliation claim.
c. constructive discharge claim.
d. disparate-impact discrimination claim.
Main Street Lenders, Inc., attempts to coerce Nolanwho specializes in determining the
value of real and personal propertyinto misstating the value of a property on which a
loan is to be issued. This is
a. a legal and ethicalbut morally arguablefinancial ploy.
b. a legalbut unethicalbusiness practice.
c. a necessary tactic to generate a profitable loan in today’s market.
d. a violation of the law.
To raise $12 million to expand operations, Star Corporation makes a stock offering
directly to sixty accredited investors and twenty sophisticated, but unaccredited
investors. Star plans to notify the SEC of sales. Under the Securities Act of 1933, this
issue may qualify as an “exempt” transaction
a. as is.
b. if all of the investors are also given certain material information.
c. if the offering is also made available to the general public.
d. under no circumstances.
Sparkling Gem Corporation agrees to sell Jewel Outlets, Inc. (JOI), fifty new diamonds,
but the contract does not specify a place of delivery. JOI is expected to pick up the
goods. The place of delivery is
a. Sparkling’s place of business.
b. JOI’s place of business.
c. the Annual Gems and Jewels Convention in New York City.
d. the U.S. Postal Service office nearest to JOI’s place of business.
Rite Contractors, Inc., agrees to build a motel for Sleep Inn Corporation. The project
proceeds according to plan, but before it is done, Sleep tells Rite to quit. Rite may
recover
a. the contract price less costs of materials and labor.
b. the contract price.
c. the costs needed to complete construction.
d. profits plus the costs incurred up to the time of the breach.
Handy Hardware Store agrees to hire Ilsa for one year at a salary of $500 per week.
When Handy cancels the contract, Ilsa spends $100 to obtain a similar job that pays
$450 per week for a year. Ilsa is entitled to recover
a. the amount of the wages that Handy promised only.
b. the difference between the wages at the two jobs only.
c. the difference between the wages at the two jobs plus $100.
d. $100 only.
Pine Mills Corporation and Ur-Choice Lumberyards enter into a contract for a sale of
plywood. Under 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. inspect the goods before tendering their delivery.
d. place the goods into the hands of a carrier.
Isabel obtains a fire insurance policy on her home from Justice Insurance Company.
The home is lost in a fire, but the parties dispute the amount of Justice’s liability under
an ambiguous clause in the policy. A court would most likely
a. interpret the clause against Isabel.
b. interpret the clause against Justice.
c. rewrite the clause and apply it as rewritten.
d. strike the clause from the policy.
Dylan enters into a contract to manage the operations of Cash’s accounting office for
one year, renewable for subsequent one-year terms. If this contract is discharged like
most contracts, it will be
a. breached.
b. rescinded.
c. altered.
d. performed.
Jen files a suit against Kopper Kettle Company. While the suit is pending, Kopper
Kettle merges with Luminous Pans, Inc., with Luminous absorbing Kopper Kettle.
Now, liability in the suit, if any, rests with
a. Jen.
b. Kopper Kettle.
c. Luminous.
d. no one.
Property Financial Corporation makes loans that qualify, under a Federal Reserve
Board amendment to Regulation Z, as Higher-Priced Mortgage Loans (HPMLs). Quinn
applies to Property Financial for an HPML. To make the loan, the lender must
a. convince an appraiser to inflate the value of the property.
b. impose a prepayment penalty for the duration of the loan.
c. structure the loan to specifically evade the HPML protections.
d. verify the borrower’s ability to repay the loan.
Cotton Products Corporation is a public company whose shares are traded in the public
securities markets. The Securities Act of 1933 requires Cotton to disclose financial and
other significant information concerning its securities in order to
a. increase corporate accountability by imposing responsibility on chief corporate
executives.
b. prevent insiders from trading among themselves.
c. protect investors.
d. provide a ‘safe harbor” for companies that make forward-looking statements.
Via the Internet, Rocky sabotages the computer system of Quik Chik”n Company, a
food manufacturer, to alter the levels of ingredients in the company’s products so that
consumers of the food become ill. Rocky is a
a. cyberterrorist.
b. botnet.
c. virus.
d. worm.
Clutch Auto Parts enters into a contract with Bio Health Club for discounted
memberships for Clutch’s employees. Bio breaches the contract and Clutch enters into a
contract with Apex Fitness for the same service at a lower price. Clutch might be
awarded nominal damages to
a. establish, as a matter of principle, that Bio acted wrongfully.
b. provide Clutch with funds for a foreseeable loss beyond the contract.
c. provide Clutch with funds for its loss of the bargain.
d. punish Bio and set an example to deter others from similar acts.
When applying the rule of reason to determine whether an agreement violates Section 1
of the Sherman Act, a court will not consider
a. the purpose of the agreement.
b. the parties’ market ability to implement the agreement.
c. the effect of the agreement on international trade.
d. the potential effect of the agreement on competition.
The Class Action Fairness Act of 2005
a. shifted jurisdiction over certain class-action lawsuits from the state courts to the
federal courts.
b. shifted jurisdiction over certain class-action lawsuits from the federal courts to the
state courts.
c. made forum shopping punishable by large fines.
d. limited the amount of damages that could be awarded in a medical malpractice suit.
Food Packaging, Inc., agrees to sell 50,000 6-ounce yogurt containers to Golden Dairy
Company. Food can obtain only 20,000 of the 6-ounce containers, but also ships 30,000
more expensive 8-ounce containers for the same price. Under these circumstances,
Golden
a. cannot reject delivery, and Food cannot later replace the containers.
b. cannot reject delivery, but Food can later replace the containers.
c. may reject delivery, and notice to Golden of Food’s intent to cure will give Food a
reasonable time to replace the containers.
d. may reject delivery, but Food cannot later replace the containers.
Loomis Weaving Company contracts to sell sweaters to Style Mart stores. Before the
sweaters are delivered, Style Mart indicates that it will not be able to pay. Loomis can
resell the goods
a. either after finishing the job (and identifying the goods), or after stopping the job.
b. only after finishing the job and identifying the goods.
c. only if Loomis immediately stops the job.
d. under no circumstances.
A U.S. citizen can bring a civil suit in a U.S. court against a U.S. entity for a tort
allegedly committed overseas.
A life insurance contract involves an intended beneficiary.
Foreclosure is the postponement, for a limited time, of part or all of the payments on a
loan in jeopardy of repossession and sale.
Disparate-impact discrimination occurs when a protected class of individuals is
adversely affected by an employer’s practices, even though they do not appear to be
discriminatory.
Some states require franchisors to provide presale disclosures to prospective
franchisees.
A prenuptial agreement must be in writing to be enforceable.
A customer list is not a trade secret.
Predatory pricing involves selling a product at prices substantially above the fair market
value.
The key to liability under Section 10(b) of the Securities Exchange Act of 1934 and
SEC Rule 10b-5 is whether undisclosed inside information is material.
Restrictions on imports may include quotas.
Generally, a state court’s power is limited to the territorial boundaries of the state in
which it is located and the immediately adjacent states.
A deposition is a sworn testimony by a party to a lawsuit or any witness.
State laws regarding corporations are uniform.
A certification mark distinguishes products approved, or “certified,” by the government.
The Fifth Amendment prohibits unreasonable searches and seizures of persons or
property.