With a bill of lading, Cartage Common Carrier Company acknowledges possession of
certain goods and contracts to deliver them. Cartage is
a. a bailee.
b. a buyer in the ordinary course of business.
c. a good faith purchaser for value.
d. an F.O.B.
Jean is playing a computer game on a bad disk that melts in her drive, starting a fire that
injures her hands. Jean files a suit against K-Tech, Inc., the game’s manufacturer.
K-Tech is held liable under the doctrine of strict liability. A significant application of
this doctrine is in the area of
a. cyber torts.
b. intentional torts.
c. product liability.
d. unintentional torts.
Sally’s Sofamart runs an ad in the local paper. The ad will be considered deceptive if
a. a reasonable consumer would be deceived by one of its claims.
b. it contains puffery.
c. it contains obvious exaggerations.
d. it contains scientific terms.
Gina induces Hugh to enter into a contract for the purchase of a condominium about
which Gina knowingly misrepresents its size. When Hugh discovers the truth, he can
a. not rescind the contract.
b. rescind the contract on the basis of fraud.
c. rescind the contract on the basis of mistake.
d. rescind the contract on the basis of undue influence.
Willy deposits $5,000 with Home State Bank on July 1, 2012. Home State Bank
promises to repay Willy the $5,000 plus 3 percent annual interest on July 1, 2017.
Home State Bank has issued Willy a
a. certificate of deposit.
b. cashier’s check.
c. nonnegotiable instrument.
d. mortgage note.
Cross-Country Trucking Company contracts with Baldwin to transport crated goods to a
certain destination for $5,000. Cross-Country delivers the crates, but Baldwin does not
pay. Cross-Country learns that the crates contained stolen goods. Cross-Country can
a. do nothing with respect to the contract.
b. recover $5,000 from Baldwin.
c. recover the goods but not the $5,000 from Baldwin.
d. recover the goods and the $5,000 from Baldwin.
Jackie inserts a debit card issued by her bank into a machine and keys in her personal
identification number. She is then able to withdraw $500 in cash. Jackie is using a
a. automated teller machine.
b. point-of-sale system.
c. direct deposit system.
d. Internet payment system.
Jason files a suit against Maybelline. If Maybelline fails to respond, Jason
a. must appeal the case to a different court.
b. must refile the suit in the same court.
c. will be awarded the remedy sought.
d. will have a default judgment entered against him.
Bob convinces his parents to permit him to become an emancipated minor. On
emancipation, Bob will acquire the right to
a. buy alcoholic beverages.
b. vote.
c. disaffirm any contract.
d. control his own care, custody, and earnings.
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.
Elegant Carpets, Inc., and Fantastic Floors Stores enter into a contract for a sale of
carpeting. 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.
Khali’s debt to Lew is past due. Lew obtains a judgment against Khali to collect the
debt, but Khali refuses to pay. Lew asks the court to order Khali’s employer to pay a
portion of Khali’s paycheck to Lew. This is a request for
a. an exemption from most federal limits on creditors’ actions.
b. an order of garnishment.
c. an order that would violate most state laws.
d. a right of contribution.
Mac files a petition for a discharge in bankruptcy. Mac’s failure to appear at a meeting
of the creditors listed in Mac’s schedules may result in Mac being
a. denied a discharge of bankruptcy.
b. fined.
c. held in contempt.
d. imprisoned.
Which of the following is NOT enforceable by a court?
a. A quasi contract
b. An implied contract
c. An informal contract
d. All of the other choices are enforceable by a court
Retail Sales Company and Standard Purchasing Corporation enter into a contract for a
sale of goods. To be enforceable, the contract should be in writing if the goods are
valued at more than
a. $5.
b. $15.
c. $50.
d. $500.
InterComp normally sells $50,000 worth of software to Power Source, a retail
electronics store, each summer on terms requiring payment in sixty days. One year,
InterComp wants cash, but Power Source wants the usual sixty days. To meet both
needs, the parties can arrange
a. a certificate of deposit.
b. a bearer bond.
c. a trade acceptance.
d. an international letter of credit.
Musica Production Company and Nora enter into a contract for Nora to write six songs
for which Musica agrees to pay her. Nora transfers her right to payment under the
contract to Omni Entertainment Agency. Nora is
a. a delegator.
b. an assignor.
c. a payor.
d. a third party beneficiary.
Via the Internet, Rocky sabotages the computer system of Quik Chik”n Company, a
food manufacturer, with the purpose of altering the levels of ingredients of the
company’s products so that consumers of the food become ill. Rocky is
a. a cyberterrorist.
b. a network employee.
c. an entrapper.
d. a prosecutor.
Call Center Corporation, a U.S. firm, owns property in India. The government of India
seizes the property for a proper public purpose and pays Call Center just compensation.
This is
a. confiscation.
b. defalcation.
c. dumping.
d. expropriation.
Big Red Drinks, Inc. contracts to buy two tons of cranberries from Super Fruits, Inc.
The contract states that Super Fruits is required to ship the cranberries to Big Red
Drinks by Speedy Wind Air Freight. The contract is
a. a bill of lading.
b. a destination contract.
c. a shipment contract.
d. a warehouse receipt.
Mara wishes to appeal a decision from a federal bankruptcy court. Mara must appeal to
a. a county court.
b. a federal district court.
c. the U.S. Supreme Court.
d. a state court.
Roy, the owner of Standard Business Company (SBC), sells SBC to Tim for a note
payable to Roy for $100,000. Tim does not pay the note and files for bankruptcy under
Chapter 7. The debt represented by the note is
a. dischargeable if $100,000 now seems to be a high price for SBC.
b. dischargeable under any circumstances.
c. not dischargeable if Tim concealed assets to defraud Roy.
d. not dischargeable under any circumstances.
The U.S. corporation Fun Toys, Inc. sets up a firm in China. The parent company
remains in the United States and retains complete ownership of the China branch as
well as complete authority and control over all phases of the operation. This is
a. a franchise.
b. a wholly owned subsidiary.
c. a joint venture.
d. direct exporting.
Pruit performs a contract with Quint to reshingle the roof on Quint’s house, but Quint
does not pay. Pruit notifies Quint that Pruit will foreclose on the house and sell it to
satisfy the debt. This is
a. a judicial lien.
b. a mechanic’s lien.
c. an artisan’s lien.
d. a violation of most state laws.
Jeannie has a mortgage that allows her to pay only the interest portion of the monthly
payments for three years. After three years, Jeannie will have to make payments on both
the principal and the interest. Jeannie’s mortgage is
a. a balloon mortgage.
b. an interest-only mortgage.
c. a subprime mortgage.
d. a fixed-rate mortgage.
Dina takes out a student loan from Earnest Bank. When she fails to make the scheduled
payments for six months, Earnest advises her of further action that it will take. 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.
Carly is a minor. Without her parents’ knowledge, she signs a contract to buy an
airplane ticket to Hawaii for spring break. Carly’s parents are
a. liable for the contract.
b. not liable for the contract.
c. liable for up to half the value of the goods in the contract.
d. liable for up to one third of the value of the goods in the contract.
On behalf of RiteNow Collection Agency, Sid poses as a police officer in an attempt to
collect payment from Tylo for a shipment of scuba equipment that she returned to
Undersea Company two months earlier. This violates
a. no federal law.
b. the Fair Credit Reporting Act.
c. the Fair Debt Collection Practices Act.
d. the Truth-in-Lending Act.
A federal law regarding the labeling of pesticides directly conflicts with a state law. The
state law will be rendered invalid due to the
a. supremacy clause.
b. commerce clause.
c. federal spending power.
d. First Amendment.
Leo opens a credit card account with Macro Credit, Inc. Nina steals Leo’s identity and
makes unauthorized charges on the card. Under the Fair and Accurate Credit
Transactions Act, Macro must
a. expunge all information about Leo from its records.
b. issue a new identity to Leo as an opportunity for a fresh start.
c. maintain the charges on Leo’s records for seven years.
d. provide Leo with copies of its records that help to prove the theft.
Fred and Joanne are married. Joanne purchases a car. Fred and Joanne each technically
own an undivided one-half interest in the car. This is
a. a joint tenancy.
b. fee simple ownership.
c. community property.
d. illegal.
Everyday Loans, Inc., issues a line of credit in Glade Electronics Corporation under a
security agreement. Later, Glade buys new HD-TVs to add to its inventory. Everyday
has a security interest in the new inventory
a. if the security agreement included an after-acquired property clause.
b. if Everyday has not yet filed a financing statement.
c. if Glade bought the inventory with Everyday funds.
d. under no circumstances.
Applied Methods Corporation promises to give stock options to Belden, a production
designer, for processes he has already designed. This promise is
a. enforceable because it is a new contract.
b. enforceable because it is an illusory promise.
c. enforceable because it is supported by past consideration.
d. unenforceable.
A bank that pays a customer’s check with a forged drawer’s signature can generally pass
the loss onto the customer.
The debts of a decedent must be satisfied out of his or her estate.
The presence of fraud does NOT affect the authenticity of an innocent party’s consent to
a contract.
Laws relating to employees’ right to privacy on the job vary from state to state.
Executive agencies are NOT subject to the authority of the president.
Timeliness is one of the most crucial criteria for proper presentment.
The Children’s Internet Protection Act requires public schools and libraries to use
filtering software to block children’s access to adult contact on Web sites.
The maximum amount of money at risk by a limited partner is the amount of his or her
contribution to the limited partnership.
Precise Engineering Corporation has a contract with Quik Mart Stores to provide
customized software for Quik’s inventory control system. Retail Outlets, Inc., Quik’s
competitor, induces Sam, a Precise subcontractor who is writing code for the Quik
software, to delay delivery of the code for one week. As a result, Precise’s delivery of
the software is delayed, and Quik sustains $500,000 in lost profits. On what ground
could Quik recover damages from Retail Outlets?
Intent to deceive is NOT an element of fraud.
There is at least one federal district court in every state.
Failure to live up to a standard of care may be an act or an omission.
As long as both parties agree, it is legal to charge any interest rate for an ordinary loan.
Using radio transmissions to defraud is a federal crime.
Before any interest in specific goods can pass from the seller to the buyer, the goods
must exist and be identified to the contract.
A conditional promise to pay is a negotiable instrument.
An unconscionable contract is a contract so one-sided and unfair at the time it is made
that enforcing it would be unreasonable.
EthicsPoint is an organization through which employees can report unethical behavior
as long as they are willing to identify themselves.
A single seller acting unilaterally is free to deal, or not to deal, with anyone it chooses.
A deficiency judgment is a judgment against a borrower for the amount of a debt
remaining unpaid after the collateral is sold.