Commerce & Business Insurance, Inc., has a valid reason to cancel a policy issued to
DIY Auto & Truck Parts Company. In most states, Commerce & Business could cancel
the policy
a. on advance oral or written notice.
b. on oral or written notice but only after arbitration.
c. without notice.
d. on advance writtennot oralnotice.
Rooster Red, LLC, grants a franchise to Qiana to open and operate a Rooster Red
restaurant. Rooster Red will likely charge Qiana
a. an initial fee or lump sum price for the franchise license.
b. a percentage of Qiana’s weekly payroll expense.
c. an amount of Qiana’s monthly overhead savings, if any.
d. none of the choices.
Without authorization, Lars contracts on behalf of Mina to have Nemo paint the interior
and exterior of Mina’s house. If Mina decides to ratify the contract, she must affirm
a. all of the contract.
b. any part of the contract, with Lars liable to Nemo for the difference.
c. any part of the contract before performance begins.
d. any part of the contract at any time.
Helene, a disabled person, applies for a job at Industrial Engineering Applications, Inc.,
for which she is well qualified, but for which she is rejected. Industrial Engineering
continues to seek applicants and eventually fills the position with a person who is not
disabled. Helene is most likely to succeed in a suit against Industrial Engineering for
discrimination under the Americans with Disabilities Act if she can show that
a. she was not hired solely because of her disability.
b. she can function well with corrective devices or on medication.
c. her disability causes her undue hardship.
d. she could not perform the job even with reasonable accommodation.
Bailey is an agent for Culinary Delites Company. In the course of Bailey’s performance
for Culinary Delites, she pays Drivers’ Repair Service for certain vehicle maintenance
and repair work. Bailey’s right to obtain the amount of the payments from Culinary
Delites arises under the principal’s duty of
a. avoidance.
b. cooperation.
c. indemnification.
d. reimbursement.
Evermore Bank is both the drawer and the drawee with regard to a draft issued to
Fernando. The draft is
a. a certificate of deposit.
b. a cashier’s check.
c. a nonnegotiable instrument.
d. a promissory note.
Global Games Corporation employs Hyacinth as an agent. Global Games gives her an
exclusive territory in which to sell its products. Global Games cannot compete with her
in that territory under the duty of
a. compensation.
b. cooperation.
c. indemnification.
d. reimbursement.
Fact Pattern 12-1B
Thalia signs an instrument unconditionally promising to pay to “Union Bank” $7500
with interest in installments with the final payment due June 1, 2017.
Refer to Fact Pattern 12-1B. The instrument that Thalia signed is most likely
a. a certificate of deposit.
b. a draft.
c. an order to pay.
d. a promissory note.
Region Construction Company has a right to drive its trucks across Staple Business,
Inc.’s property, which is adjacent to Region’s office. This right is
a. a license.
b. an easement.
c. a profit.
d. the power of eminent domain.
Business Rental Corporation (BRC) and Cartage Trucking Company enter into a
contract for a lease of ten hydraulic lifts. Under the perfect tender rule, BRC must ship
or tender goods to the lessee that
a. approximately conform to the contract description.
b. entirely conform to the contract description except in one or two details.
c. conform to the contract description in every way.
d. substantially conform to the contract description in most details.
Debt & Loan Collection Agency calls Ethel several times a day, and sometimes in the
middle of the night, about an overdue bill that a Furniture4U store turned over to Debt
& Loan for collection. This is a violation of
a. no federal law.
b. the Fair and Accurate Credit Transactions Act.
c. the Fair Debt Collection Practices Act.
d. the Truth-in-Lending Act.
Conrad and Delilah are employees of EcoCrop Feed & Seed Corporation. Under the
Equal Pay Act, EcoCrop can legitimately pay different wages on the basis of
a. seniority.
b. job descriptions.
c. substantial equality of skill, effort, and responsibility.
d. gender.
A merger between Blended Coffee Corporation and Cowland Creamery Inc. can be
expressed as Blended Coffee + Cowland Creamery =
a. Cowland Creamery.
b. Delite Dairy Corporation.
c. Delite Dairy Corporation + EZ Stir & Sip Inc.
d. EZ Stir & Sip Inc.
Nikki and Orlando are limited partners in Port City Exports, a limited partnership. To
avoid personal liability for partnership obligations, they must not
a. acquire an interest in the firm.
b. contribute property to the firm.
c. engage in activities independent of the firm’s business.
d. participate in the firm’s management.
Beck is an accountant who prepares her clients’ tax returns. Cole is not an accountant,
but he also prepares tax returns for clients. Under the Internal Revenue Code, liability
for preparing a false return may be imposed on
a. Beck and Cole.
b. Beck only.
c. Cole only.
d. none of the choices.
Lucas, a dairy farmer in Minnesota, and Northland Dairy Products, Inc., enter into a
contract for the sale of a certain quantity of fresh milk. Although not expressly stated, a
concept that is read into this contract is the concept of
a. good faith.
b. impracticability.
c. square dealing.
d. unconscionability.
Bank Professionals Union represents the workers of Commerce Bank. The bank refuses
to bargain with the union over the economic consequences to the employees of
management’s decision to shut down some facilities. This most likely violates
a. federal labor law.
b. state right-to-work laws.
c. federal wage-and-hour laws.
d. no federal or state law.
The Securities and Exchange Commission decides to create a new rule relating to the
dissemination of material nonpublic information through corporate Web sites. This
process begins with
a. an on-site inspection.
b. the filing of a complaint against a charged party.
c. the publication of a notice of proposed rulemaking.
d. the solicitation of public comments.
Dirk transfers a note by signing it and delivering it to Edwina. Dirk is
a. an indorser.
b. an indorsee.
c. a promisee.
d. a promisor.
Qatar Global Investments is a foreign entitya firm owned and operated by investors in a
foreign country. With respect to a limited liability company in the United States, Qatar
Global can
a. act as a creditor, but cannot otherwise invest or participate.
b. become a member.
c. not become a member, but can participate in its operations.
d. not become a member or otherwise participate in its operations.
Quade is an expert in twentieth-century art. Rachel visits Quade’s gallery, seeking to
buy artwork as an investment. Quade shows her a painting that in his opinion is by
Picasso. Quade’s statement is
a. an express warranty.
b. an implied warranty.
c. an opinion.
d. puffery.
Gas & Wood Stove Shop receives Hearthwarm-brand stoves from Independent Dealer,
Inc., under a sale or return agreement. While the stoves are in Gas & Wood’s
possession, title is held by
a. Independent Dealer.
b. Gas & Wood.
c. Gas & Wood’s creditors.
d. Hearthwarm.
The operations of Commercial Concrete, Inc., are major sources of air pollution. These
operations must use
a. the absolutely cleanest air technology.
b. the best available filter technology.
c. the maximum achievable control technology.
d. the most affordable scrubbing technology.
Tucker is a director of USA Auto Parts, Inc. Under the standard of due care owed by di-
rectors of a corporation, Tucker’s decisions must be
a. unwavering and unquestionable.
b. arguable and defensible.
c. informed and reasonable.
d. perfect and unassailable.
Mouth & Gums, Inc. (CSI), engages in deceptive advertising when it markets its
product Oral Rinse as able to kill germs over long periods of time. In an action against
Mouth & Gums, the firm is ordered to stop its false advertising of Oral Rinse and other
products. This is
a. a counteradvertising order.
b. a multiple product order.
c. a “cooling-off” law.
d. a validation notice.
Badal is an employee of Cloud Computing Corporation. The federal government raids
the firm and determines that Badal and many of his co-workers are illegal immigrants,
whom are then detained and later deported. Derry, Badal’s manager, is imprisoned for
federal law violations related to the immigrants’ hiring. Unable to attract replacement
workers at a competitive wage, Cloud Computing shuts its doors. Reasons for
reforming U.S. immigration laws include
a. the disruption of business caused by federal raids on employers.
b. the economic conditions prompting immigration to the United States.
c. the imprisonment of those who violate U.S. laws.
d. the low wages offered by employers for jobs that should pay more.
Raphaelle employs a variety of will substitutes to transfer her assets, which consist
principally of cash and investments in mutual funds, outside the probate process. In this
situation, the most important consideration is to
a. avoid the cost of probate.
b. ensure that the arrangements benefit the intended persons.
c. establish grounds for a court’s review of the arrangements.
d. follow the same principles as apply to testamentary transfers.
Myles obtains a property insurance policy from Nova Insurance Company for Myles’s
restored 1957 Chevy. Nova can cancel the policy
a. if Myles increases the risk assumed by the Nova.
b. if Myles files a claim under the policy.
c. if Myles appears as a witness in a case brought against Nova.
d. under no circumstances.
GR8 Daze Products, Inc., and Hot Springs Spas Stores enter into a contract for a sale of
hot tubs. Under a shipment 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 shipping them.
d. place the goods into the hands of a carrier.
Farrah and Grant are shareholders of Hong Kong Restaurants, Inc. As shareholders,
they must approve
a. conducting a merger.
b. deciding to pursue new business opportunities.
c. none of the choices.
d. negotiating a contract between management and labor.
The U.S. Patent and Trademark Office (USPTO) wants to review certain records of
Omni App Corporation. The USPTO can legitimately gain access to the records through
a. agency coercion.
b. infiltrating Omni App’s computers without the firm’s knowledge.
c. public comment.
d. Omni App’s voluntary compliance.
As part of a stock offering for Designer Studio Corporation, the firm’s accountant
Evelyn intentionally misrepresents material facts in the prospectus. Flores buys the
stock unaware of the misrepresentation and suffers a loss. Evelyn may be subject to
a. a fine and damages only.
b. a fine and imprisonment only.
c. a fine, imprisonment, and damages.
d. damages only.
Baxter obtains a check payable to his order from Chanel. For Baxter to negotiate this
order instrument to Darlene requires
a. indorsement and delivery.
b. assignment and a promise to pay.
c. presentment and dishonor.
d. good faith and value.
Securities offerings in unlimited amounts can be exempt from the registration
requirements in certain circumstances.
A quitclaim deed offers the most protection against defects in the title.
The laws governing franchising are primarily designed to protect franchisors from
dishonest franchisees.
An employer is charged with the knowledge of any dangerous condition discovered by
an employee and pertinent to the employment situation.
The right to cure is the right of a party who tenders nonconforming performance to
correct his or her performance within the contract period.
An absolute defense against payment exists if the insurer can show that the insured
lacked an insurable interest.
All debts are dischargeable in bankruptcy.
A price-fixing agreement that is reasonable does not violate antitrust law.
The most common exception to the employment-at-will doctrine is made on the basis
that the employer’s reason for firing the employee violates fundamental common sense.
Before a loss has occurred, a fire insurance policy is assignable without the consent of
the insurer.
The debtor has the right to request a confirmation of the unpaid debt or list of collateral
without charge every six months.
To be effective, a gift causa mortis must meet only two requirements: intent and
acceptance.
The protection of an individual’s right to his or her property has become one of our
most important rights.
Mucho Tacos, Inc., sells franchises. Mucho Tacos imposes on its franchisees standards
of operation and personnel training methods. What is the potential pitfall to Mucho
Tacos if it exercises too much control over its franchisees?
There is one set of ambient standardsmaximum permissible levels of certain
pollutantsand the Environmental Protection Agency formulates plans to achieve them.
The United Nations Convention on Contracts for the International Sale of Goods
(CISG) is the uniform international sales law of countries that account for more than
two-thirds of all global trade.