Solomon breaches his contract with Neal to purchase the 500 pairs of socks he had
promised to buy. Neal is able to sell the 500 pairs to Renny for a much lower amount.
Neal then sues Solomon for damages. Neal will be able to recover:
a. the amount in the liquidated damages clause.
b. the difference between Solomon’s contract price and the amount paid by Renny.
c. Solomon’s contract price.
d. an amount which depends on whether Solomon intentionally breached because he
found cheaper socks somewhere else.
The distinction between a condition precedent and a condition subsequent:
a. is important because it determines whether the burden of proof is beyond a
reasonable doubt or preponderance of the evidence.
b. seldom arises in insurance cases.
c. determines who has the burden of proof.
d. is important because it determines whether the condition must be express or whether
it can be implied.
Family Time Restaurant has a contract with Prime Meats for Prime to deliver 100
pounds of ground sirloin twice a week for the next three months. If, on one delivery,
Prime brings 95 pounds of ground chuck instead of 100 pounds of ground sirloin:
a. Family Time may unquestionably reject the non-conforming goods because they vary
in both quantity and quality.
b. Family Time may reject the non-conforming installment only if it substantially
impairs the value of that installment and cannot be cured.
c. Prime has no right to cure.
d. the perfect tender rule applies.
Which of the following is not an example of a trial court of limited jurisdiction?
a. A probate court.
b. A juvenile court.
c. A small claims court.
d. A general civil division court.
A landlord’s substantial interference with a tenant’s use of the property is considered:
a. a constructive eviction.
b. a tort.
c. a violation of federal housing law.
d. permissible in a periodic tenancy.
Before filing a derivative lawsuit, shareholders must:
a. notify the board that the corporation has been wronged and ask the board to bring suit
in the name of the corporation directly.
b. notify the Secretary of State that the corporation has been wronged and ask the
Attorney General to file the lawsuit on behalf of the corporation.
c. hold a special meeting, and a majority of the shareholders must vote to file the
lawsuit.
d. place the lawsuit on the company’s proxy statement, and the proposal must receive a
majority vote.
Under the Electronic Communications Privacy Act:
a. violators are subject to both criminal and civil penalties.
b. violators may be subject to civil, but not criminal, penalties.
c. only the unauthorized disclosure of e-mail messages constitutes a violation.
d. only the unauthorized interception of e-mail messages by the government or an ISP
constitutes a violation.
Clint is auditing MegaCorp. In reviewing the sales ledger, Clint saw that MegaCorp had
sold 3,000 disk drives to CompSales, Inc. Clint reviewed the original invoice of this
sale to ensure that the date, price, quantity, and customer’s name all match. He then
verified each step along the paper trail until the disk drives left the warehouse. This
illustrates:
a. tracing.
b. vouching.
c. following.
d. monitoring.
George’s Wholesale agrees to purchase 1,000 pounds of bananas from Chickadee
Exports at 39 cents per pound. George’s does not have the money for the bananas now,
but promises to pay in two months. Chickadee Exports wants to make the sale, but is
worried about waiting for the payment, knowing the bananas are not “appealing
collateral. So, Chickadee prepares an instrument claiming Georges $400 sorting
machine as collateral. George’s never signs the agreement, but accepts the shipment of
bananas. This is an example of a:
a. check.
b. security interest.
c. promissory note.
d. None of the above.
Peter Dementas helped Jack Tallas with numerous personal and business chores
towards the end of his life. Two months before his death, Tallas dictated a memorandum
to Dementas, in Greek, stating: PETER K. DEMENTAS is my best friend I have in this
country, … he treats me like a father and I think of him as my own son. …For all the
services Peter has given me all these years, I owe to him the amount of $50,000 (Fifty
Thousand Dollars). I will shortly change my will to include him as my heir. Tallas
signed the memorandum, but he did not in fact alter his will to include Dementas.
This was a real case. The Utah appeals court would rule:
a. there was no consideration to support Tallass promise.
b. there is a “moral obligation exception to the requirement of consideration, and
therefore Tallass promise was supported by consideration.
c. because Utah does not recognize the “moral obligation exception to the requirement
of consideration, Dementas prevails.
d. the trial courts finding that the services rendered by Dementas to Tallas were
performed gratuitously was erroneous.
A Chapter 7 debtor’s agreement to pay a creditor on a debt after receiving a discharge in
bankruptcy is called a:
a. voidable preference.
b. reaffirmation.
c. fresh start.
d. redemption.
Which of the following is not required of an agency relationship?
a. Consideration.
b. Fiduciary relationship.
c. Consent of the parties to act as agent or principal.
d. Control of principal over agent’s conduct.
Jim was a mechanic. One day when he attempted to weld a car’s gasoline tank, it
exploded and he was hurt. He filed to collect workers’ compensation. His employer
resisted on grounds that Jim had been negligent and had also violated the express
regulations of the company when he attempted to weld a gasoline tank. Which
statement is correct?
a. Jim cannot recover if it is shown that his negligent conduct caused the explosion.
b. Jim cannot recover if it is shown that he violated the express regulations of his
employer.
c. Workers’ compensation doesn’t apply in situations like this.
d. Jim can recover even if he was negligent and violated the employer’s rules.
Two universities located within 30 miles of each other agree to divide their market so as
to help them both. The two schools draw a line down a map and each university agrees
to accept students only on their side of the line.
Cooperative strategies include all EXCEPT:
a. horizontal agreements.
b. vertical agreements.
c. mergers.
d. spin-offs.
In the case of Worldwide Insurance v. Klopp, the Supreme Court of Delaware found
that:
a. a contract provision requiring arbitration and then permitting appeal by either party
was void as unconscionable.
b. the contract provision requiring arbitration was clear, unambiguous, and fair to both
parties.
c. the arbitration clause in Klopps auto insurance contract was valid because it furthered
the state policy favoring the use of arbitration to resolve disputes.
d. the automobile insurance policy was governed by UCC, Article 3.
Frank is a controlling shareholder in E-prise, Inc. Frank:
a. may not enter into unfair business transactions with the corporation.
b. has a fiduciary duty to minority shareholders.
c. may not exclude minority shareholders from beneficial arrangements involving stock.
d. All of the above are correct.
The common law governs contracts for:
a. services.
b. real estate.
c. employment.
d. All of the above.
Brahma entered into an oral agreement to sell 50 jet skis to Summer Sports. Brahma
delivered 20 of the skis on May 1. On June 1, Summer Sports notified Brahma that it
will not honor the agreement. Which statement is correct?
a. The contract is void since it was oral.
b. The contract is enforceable for 20 jet skis.
c. The contract is enforceable for the 50 jet skis
d. The contract is obsolete.
To be successful in a court challenge regarding an executive’s compensation,
shareholders must prove that:
a. the board was grossly uninformed before it set the compensation amount.
b. the executive’s performance caused the business to become unprofitable.
c. the amount of the executive’s compensation was too high in relation to the
compensation of the typical employee within the company.
d. the compensation level is not in the company’s best interests.
Jaime offered to buy Kevin’s bike. Jamie is the:
a. offeree.
b. offeror.
c. mortgagor.
d. trustee.
Holt and Collins decide to have their dispute arbitrated by Corrales. Which of the
following will NOT be a result of the arbitration?
a. Corrales will render a binding decision.
b. Holt and Collins retain the right to a class action.
c. Holt and Collins give up the right to discovery.
d. Corrales need not give reasons for the decision.
The notion of civil disobedience is founded on what principle?
a. Legal Positivism.
b. Natural Law.
c. Legal Realism.
d. Foreseeability.
A bailee always has a right:
a. to possession of the bailed property. Anyone who interferes with this right is liable to
the bailee. Even the bailor himself is liable for wrongful interference with the bailees
possession.
b. to use the bailed property.
c. to compensation.
d. All of the answers are correct.
MajorLine offered travel packages, including airfare and hotel accommodations, at a
discounted price on their website. However, after Jason charged MajorLine’s fees to his
credit card, he did not receive the promised airline tickets or the coupons for a reduced
hotel rate. He found that other customers had been similarly defrauded. MajorLine:
a. can be prosecuted under state law.
b. can be prosecuted under the Computer Fraud and Abuse Act.
c. Both a and b.
d. cannot be prosecuted because fraud over the Internet is not yet defined as a crime in
any statutes.
Unlike a tenant, a licensee:
a. is not entitled to the exclusive possession of the property.
b. is entitled to the exclusive possession of the property.
c. has control of the property.
d. has only a month-to-month right to use the property.
A sales representative at Oxtren, Inc orally told the purchasing agent at Wety, Inc. that
its industrial saw is exceptional. Which statement is correct concerning the claim that
the saw is exceptional?
a. The claim is an express warranty.
b. The claim is an implied warranty of merchantability.
c. The claim is not a warranty because it is not in writing.
d. The claim is not a warranty because it is sales puffery.
In breach of the partnership agreement, Trimble, a partner in the partnership of Morris,
Newt, and Oppie, Ltd. quits the partnership and goes to work for a competitor. The
former partners may ask the court for:
a. specific performance requiring Trimble to return to work for Morris, Newt, and
Oppie, Ltd.
b. an injunction to prevent Trimble from working in competition with the former
partners.
c. special damages under the rule of Hadley v. Baxendale.
d. liquidated damages as compensation for the breach.
When a party to a contract notifies the other party that it will not perform the contract as
agreed, this conduct is referred to as:
a. specific performance.
b. cover.
c. repudiation.
d. assurance.
What level of owners liability does a trespassing adult have
a. lowest level
b. mid level
c. higher level
d. highest level
Bruce tells his son, “You can have my 1990 truck, but if your grades fall, Im taking it
back. Bruce:
a. has made no gift.
b. has made a “revocable gift, which is effective as a gift as long as the stated condition
is met.
c. intended to transfer ownership.
d. has made a constructive gift.
Which of the following would be evidence that two people intend to be partners?
a. An agreement to share profits of a business.
b. Referring to each other as “partners.”
c. Agreeing to share in the business’s losses.
d. All of the above are evidence of a partnership.
Iris received a discharge under a Chapter 7 bankruptcy. She cannot receive another
discharge under Chapter 7 for at least:
a. six years after the prior filing.
b. eight years after the prior filing.
c. ten years after the prior discharge.
d. She cannot file another Chapter 7, but could file a Chapter 11 or 13 bankruptcy.
Compare and contrast the following forms of business organization: sole proprietorship,
general partnership, limited partnership, limited liability company, and corporation as to
ease of formation, liability of owners, management, and tax implications.
Employers must have written permission from job applicants to request a credit report.
A director violates the corporate opportunity doctrine if he or she competes with the
corporation, unless the disinterested directors approve of the director’s actions.
When you surf the Internet, information, much of which is anonymous, is collected
about you.
In a tort case, the statute of limitations runs from the time the defect was discovered.
The legal term for a promise in a contract is “provision.
Common law is a body of cases decided by legislatures.
Claims for personal injury are generally assignable.
Faith owns a copyright in a book she recently wrote. She applies for a $10,000 loan
through Cumberland Bank and wants to use the copyright as collateral. Explain if and
how the bank can perfect a security interest in such collateral.
When establishing takeover defenses, shareholder welfare must be the board’s primary
concern.
Even if a statutes words have ordinary, everyday significance, the court will look at the
legislative history of the law and public policy in order to interpret the statute.
To be negotiated, bearer paper must simply be delivered to the recipient.
A closed shop means the employer must hire only union members. Federal law
expressly allows closed shops.
A party may make either an assignment or a delegation, but cannot make both an
assignment and a delegation simultaneously.
If the court awards a partition to co-tenants, the court will normally attempt a partition
by kind. If partition by kind is impossible, because there is no fair way to divide the
property, the court will order the real estate sold, and the proceeds equally divided.
Valerie promises Teresa that she will pay Teresa $75 if Teresa will clean Valerie’s house
by noon on Saturday. If Teresa cleans the house by noon on Saturday and Valerie pays
the $75, then this is an implied, bilateral, executory contract.
A vertical merger involves companies at different stages of the production process.