If a buyer does not receive goods by the contract deadline, remedies available include
all of the following EXCEPT
a. incidental and consequential damages.
b. cover.
c. damages for non-delivery.
d. cure.
Chapter 13 bankruptcy
a. is used by businesses to reorganize their financial situations.
b. is an involuntary bankruptcy.
c. can be used only by individuals with a regular source of income.
d. is used by businesses to liquidate their debts.
In Banker v the Estate of Bankerthe court held that
a. it could not intervene in the affairs of a partnership.
b. when proof of an agreement is lacking, a partner cannot receive compensation for
work done.
c. regardless of a written agreement to the contrary, a partner can receive compensation
for work done.
d. all parties doing work for a partnership are entitled to compensation for work done to
further the partnership business.
An accommodation party and a co-maker of a note have the same liability on an
instrument.
a. True
b. False
Which of the following is not a lawmaking body but is so influential that many of its
voluntary rules, such as the Incoterms, are accepted as the global standard in
international business?
a. International Chamber of Commerce
b. International Court of Justice
c. The United Nations General Assembly
d. The World Trade Organization
Wedney, Inc. sold a meat processing machine to Yoro Chickens, taking a security
interest in the machine. Yoro Chickens defaulted on the loan. Wedney repossessed the
machine. Wedney would like to retain the machine to use as a model. Which of the
following statements is correct?
a. Wedney must notify the debtor that it intends to retain the machine and give Yoro 20
days to object.
b. By taking possession, Wedney automatically foreclosed on the collateral. Wedney has
valid title and need do nothing else.
c. Since the machine is equipment, Wedney cannot retain the machine. Wedney must
dispose of the collateral in a commercially reasonable manner.
d. Wedney can retain the machine but must pay Yoro the surplus, the difference between
the fair market value of the machine and the amount of the debt.
The Administrative Procedure Act
a. applies to all federal agencies.
b. applies to executive branch agencies but not to independent agencies.
c. applies to independent agencies but not to executive branch agencies.
d. does not apply to federal agencies.
The United States v. Lopez case demonstrates which of the following?
a. There are no limitations on the federal government’s power pursuant to the Interstate
Commerce Clause.
b. The states have extensive power to regulate interstate commerce.
c. There are limitations on federal power.
d. Gun ownership cannot be regulated.
Vivian goes to an auction and sees a rare antique lamp that is an identical match to one
she already has. At the proper time she bids on the lamp and is the highest bidder. Even
though she is the highest bidder, the auctioneer refuses to accept her bid and withdraws
the lamp from the auction. Can the auctioneer do that?
a. Unless otherwise stated, the auctioneer had the right to withdraw the item before the
fall of the hammer.
b. Generally, the auctioneer must sell to the highest bidder. Vivian will get the lamp.
c. Generally, the auctioneer is the offeror and the bidders are the offerees so there is a
contract and Vivian will get the lamp.
d. Most auctions are without reserve and therefore the auctioneer cannot withdraw the
lamp.
A person injured by an antitrust violation
a. does not have the right to bring suit.
b. has the right to sue for criminal penalties.
c. has the right to sue for triple damages.
d. has the right to sue for administrative remedies.
Tom, the production manager at Esday, was told by his supervisor to hire Elton, a
15-year-old boy, to operate an industrial machine. Hiring the 15 year old violates the
child labor laws. What should Tom do in this situation?
a. Tom should hire Elton; he has a duty to obey Esday’s instructions.
b. Tom should hire Elton; he has a duty of care to ensure that the government does not
discover that Elton is 15 years old.
c. Tom should not hire Elton; he has a duty of care and he would not be caring for
Elton.
d. Tom should not hire Elton; he has a duty to obey Esday’s instructions only if they are
legal and ethical.
The accidental destruction of a negotiable instrument will not result in its cancellation.
a. True
b. False
Tuan, Inc. contracted to buy 200 monogrammed blankets from Titex, Inc. Before Titex
segregated and monogrammed the blankets, Tuan filed for bankruptcy. Tuan does not
own title to the blankets because
a. Tuan is a merchant.
b. the blankets were not identified to the contract.
c. Tuan became bankrupt after the contract was formed.
d. the goods were specially manufactured.
Jeff was a subcontractor, bidding on a contract for ACE Corp., the general contractor.
When adding up the total of materials and labor, Jeff’s secretary mistakenly moved the
decimal point one place, ending up with a bid of $3500 rather than $35,000. ACE Corp.
accepted Jeff’s bid, mostly because all the other bids were over $30,000. When Jeff
learned of the mistake, he tells ACE Corp. that he cannot do the job for $3500. If ACE
Corp. sues to enforce this contract, what is the most likely result?
a. The contract is enforceable, since there was an offer, acceptance, and consideration.
b. This is a bilateral mistake, so the contract can be rescinded by either party.
c. This is a unilateral mistake, so the contract cannot be rescinded by Jeff.
d. This is a unilateral mistake, but one where ACE Corp. knew that a mistake had been
made. Jeff should be able to rescind the contract.
Gateway sold a big-screen TV and entertainment center to Iris for $2000 on credit. Iris
signed a promissory note and gave Gateway a security interest in the TV and
entertainment center. Gateway filed a financing statement in the appropriate public
office. When Iris defaulted on her monthly payments owing a balance of $1780,
Gateway’s attorney made arrangements to have the TV and entertainment center
repossessed. The attorney then placed classified ads in the local newspaper to sell the
goods. The attorney’s fees are $300, the repo company charged $150, and the
advertising costs are $50.
(A) If Iris chooses to redeem the property, how much must she pay to Gateway to
recover the property?
(B) If Iris does not redeem and the TV and entertainment center are sold for $1750, how
will the money be disbursed?
States are not involved in the regulation of corporate takeovers.
a. True
b. False
Ernest operates an ice cream stand during the months of May, June, July, and August.
Ernest’s ice cream machine is broken and needs a new part to run. He contracts to have
the part shipped to him by special carrier. Ernest emphasizes that the part needs to be
delivered by April 25 and the carrier agrees, knowing that Ernest intends to open his
stand May If the shipper fails to deliver the part on April 25, Ernest will be able to
recover consequential damages caused by the delay.
a. True
b. False
Under the UCC, a modification to a contract for the sale of goods needs no
consideration to be binding.
a. True
b. False
The fastest growing method of dispute resolution in the United States is
a. arbitration.
b. negotiation.
c. mediation.
d. litigation.
Which of the following is an example of an exculpatory clause?
a. Creditor charges 38% interest on a loan
b. Seller is not responsible for property damage regardless of the cause of the injury
c. Buyer agrees to pay any costs of litigation
d. Employee agrees to never work for a competing company
An honest effort to meet both the spirit and letter of the contract is termed
a. reasonable circumstances.
b. sole discretion.
c. honest representation.
d. good faith.
Contract provisions that are enforceable independently are referred to as
a. covenantal promises.
b. conditional promises.
c. reciprocal promises.
d. material promises.
Duress occurs when
a. the enforcement of a contract results in unconscionability.
b. an improper threat is made to force another party to enter into a contract.
c. both parties contract based on the same factual error.
d. a party gives notice of refusal to be bound by an agreement.
Larry purchased a Leisure Lawnmower because the company salesperson intentionally
misled him by assuring him that the mower was self-propelled, had a mulching feature,
and had a five-year unlimited manufacturer’s warranty. When Fred finds out that his
new Leisure Lawnmower is not self-propelled, does not mulch, and has a 90-day
warranty, he may successfully sue for
a. reformation of the contract only.
b. restitution only.
c. restitution and possibly punitive damages.
d. compensatory damages only.
A corporation is required to have at least one class of stock with voting rights.
a. True
b. False
All of the following are shareholder rights EXCEPT
a. the right to manage the firm.
b. the right to vote.
c. the right to information.
d. the right to dissent.
A trust created in a will is
a. an inter vivos trust.
b. a constructive trust.
c. a testamentary trust.
d. a probate trust.
Ted and Alice own their recreational vehicle subject to a security agreement to Third
U.S. Bank to secure the repayment of the purchase money loan. Ted and Alice sell their
RV to Bob and Carol, who agree to take over the loan payments to the bank. There is no
novation with the bank. Under these facts, if Bob and Carol do not make the loan
payments, Third U.S. Bank
a. can sue Bob and Carol only.
b. can sue Ted and Alice only.
c. can sue Bob, Carol, Ted, and Alice.
d. cannot sue anyone but can repossess the RV.
The doctrine of contributory negligence is followed in most states.
a. True
b. False
Wimble ordered 1,000 pro-quality luminescent orange tennis balls from Sports
Unlimited at a cost of $800. On June 1, Sports Unlimited shipped standard white tennis
balls, but Wimble rejected them. Wimble bought the same number of pro-quality
luminescent orange balls from another supplier the same day for $650. In a suit against
Sports Unlimited, Wimble may recover $800.
a. True
b. False
Which of the following takeover defenses is evidenced by the target buying back the
shark’s stock at a premium price?
a. poison pill
b. blank check
c. Supermajority voting
d. greenmail
The federal judicial branch of the U.S. government
a. interprets statutes.
b. passes statutes.
c. issues executive orders.
d. creates administrative agencies.