Credit & Debt Corporation loans Evelyn $25,000 to start a new business. Evelyn does
not pay, but Credit & Debt fails to sue within the time prescribed by the applicable
statute of limitations. Evelyn promises to pay a portion of the debt even though
recovery is barred. Credit & Debt can sue to recover
a. the entire debt.
b. the amount promised.
c. none of the debt.
d. the amount of the consideration for Evelyns later promise.
Nashville Harmonies Inc. and Taylor enter into a contract for Taylor to write six songs
for which Nashville agrees to pay her. Taylor transfers her right to payment under the
contract to Omni Entertainment Agency. In the transfer of rights, Taylor is
a. a delegator.
b. an assignor.
c. an obligor.
d. an alien.
Inferior Company, which is based on South Carolina, makes and sells products that are
poorly made. Jack, who is a resident of North Carolina, buys an Inferior product and
suffers an injury through its use. The diversity of citizenship between these parties
means that
a. federal and state courts have concurrent jurisdiction.
b. federal courts have exclusive jurisdiction.
c. no court has jurisdiction.
d. state courts have exclusive jurisdiction.
Penny Stock Company faxes ads to Quality Personnel Corporation and other businesses
without the recipients permission. This is
a. illegal.
b. legal and smart because such ads are generally cheap.
c. legal but not smart because such ads are generally ineffective.
d. legal but only potentially smart, depending on the response rate.
Ergonomic Corporation convenes its employees for its managers to announce (1) a new
company-wide ethical code of conduct, (2) an ad campaign to publicize the new code,
and (3) the discharge of employees who do not adhere to the code. One of the most
effective ways to set a tone of ethical behavior within a business organization is
a. to create an ethical code of conduct.
b. to discharge employees who do not create the appearance of impropriety.
c. to post a marketing campaign online touting the firms ethical tone.
d. for management to direct employees to “do as we say, not as we do.
Mike casts unwarranted doubts on Nina, a co-worker, to gain a job promotion. This is
unethical
a. only if Mike is caught.
b. only if Mike gets the promotion.
c. under any circumstances.
d. under no circumstances.
EZ Rentals Company wants to insure the equipment that it rents to the public. To obtain
insurance, EZ must have an insurable interest in the equipment
a. at any time.
b. at the time a loss occurs.
c. at the time a policy is obtained.
d. continuously from the time a policy is obtained to the time a loss occurs.
Fact Pattern 28-1B
Chocolate! Chocolate! Corporation is a new company that needs to borrow money to
meet its payroll. Dayna, president and owner of Chocolate! Chocolate!, asks Evermore
Credit Union to loan the funds to Chocolate! Chocolate!
Refer to Fact Pattern 28-1B. Generally, for a contract between Evermore and Dayna
with respect to liability for Chocolate! Chocolate!s loan to be enforceable, it must be in
writing if Dayna is
a. a surety.
b. a lienor.
c. a garnishee.
d. a guarantor.
Patricia commits an act via e-mail against Othman Finance Company, a business in
California, where the act is a cyber crime. Patricia resides in New York where the act is
not a crime. Prosecution of Patricia in California involves questions of
a. jurisdiction.
b. “maximum contacts.
c. the immunity of Internet service providers.
d. encryption.
Darwin borrows $200,000 from Evermore Bank to buy a home. Less than six months
into the term, Darwin stops making payments on the loan. To initiate the process to
repossess and auction off the property securing the loan, Evermore must
a. issue a notice of sale to the borrower.
b. offer the property for sale in an auction on the courthouse steps.
c. record a notice of default with the appropriate county office.
d. resort to litigation to establish clear ownership of the property.
Oven Products Company makes microwave ovens. Pico discovers that his Oven
Products oven is defective and sues the maker for product liability based on strict
liability. To win, Pico must show that
a. Oven Products sold the oven to Pico.
b. Pico knew and appreciated the risk caused by the defect.
c. Pico suffered an injury caused by the defect.
d. the “defect was a commonly known danger.
In negotiations with Diamond Refining Company, Coastal Oil, Inc., insists that their
contract be drafted according to certain plain language laws. These laws concern the
phrasing of
a. contracts that include unfamiliar legal terms.
b. ads that contain vague guaranties.
c. instruction manuals that are difficult to follow.
d. epithets that are too colorful.
Pola files a petition in bankruptcy. Polas non-dischargeable debts include
a. domestic-support obligations.
b. student loans if payment would impose undue hardship.
c. unpaid loans to finance home repairs.
d. unsecured credit-card debt.
Straitway Company encourages its managers to behave ethically, reasoning that the
employees will take their cues from management. One of the most important ways to
create and maintain an ethical behavior workplace is for management to
a. demonstrate a commitment to ethical decision making.
b. discreetly engage in unethical or illegal acts.
c. look the other way when an employee engages in an unethical act.
d. direct employees to “do as we say, not as we do.
The payment of Dylans debt to Ezra is guaranteed by Dylans personal property. This is
governed by
a. the Uniform Commercial Code.
b. the Federal Trade Commission.
c. the U.S. Constitutions commerce clause.
d. the U.S. Chamber of Commerce.
In a suit against Owen over the performance of their contract, Phil obtains specific
performance. This is
a. an order to do or to refrain from doing a particular act.
b. an order to perform what was promised.
c. a payment of money or property as compensation.
d. the cancellation of a contract.
Fact Pattern 41-2B
Mega Corporation wants to gain control of MiniCo, Inc. The companies negotiate for
several months, without coming to terms. Mega decides to pursue a takeover attempt.
MiniCo decides to resist.
Refer to Fact Pattern 41-2B. MiniCo issues shares that its shareholders can exchange
for cash if a takeover is successful, intending to make Megas takeover attempt too
expensive. This is a
a. crown jewel defense.
b. Pac-Man defense.
c. poison pill defense.
d. white knight defense.
Mary promises to pay her assistant Ned $10,000 in consideration of the services he
provided over the years. Mary never pays Ned. Mary is
a. liable for payment of the $10,000.
b. liable only if Ned still works for Mary.
c. not liable, because the consideration is in the past.
d. not liable, because the consideration was unintentional.
Resources Exploitation, Inc. (REI), files a petition in bankruptcy for relief through a
reorganization and assumes the role of a debtor in possession. In this role, REI is simi-
lar to
a. a creditor at a creditors meeting.
b. a farmer after a discharge through family-farmer bankruptcy plan.
c. a secured creditor in possession of collateral.
d. a trustee in a liquidation.
Buster conveys one square block in Center City “to Diana for life, then to Center City.
For Diana, this creates
a. a fee simple absolute.
b. a leasehold estate.
c. a life estate.
d. an easement.
At an auction for the first time, Max bids on an object, believing that it is worth more
than the price asked. When the item proves to be less valuable, Max is
a. liable on the bid.
b. not liable on the bid because Max misestimated the value.
c. not liable on the bid because the auctioneer misstated the value.
d. not liable on the bid because the object was probably overpriced.
Fact Pattern 16-B1
Bayside Construction Company enters into a contract with Clio to remodel
Deweys Home Store, using products from Eagle Building Supplies. Fresh Food
Café is next to Deweys Home Store.
Refer to Fact Pattern 16-1. Eagle will realize a profit from the sale of products to
Bayside to remodel Deweys store. Eagle is
a. a delegatee.
b. an assignee.
c. an incidental beneficiary.
d. an intended beneficiary.
Congress enacts air quality legislation. To implement and enforce this law, as is typical
of other environmental statutes and regulations, the federal government will most likely
rely on
a. all levels of government.
b. local chambers of commerce.
c. local police departments.
d. polluters self-monitoring.
Magic Math Corporation makes business accounting software, which is packaged with
a shrink-wrap agreement. National Distribution Company distributes the software to
retailers, including an Office Stuff store, where Peg buys a package of it. The parties to
the shrink-wrap agreement are
a. Magic Math and National Distribution only.
b. Magic Math and Peg only.
c. Magic Math, National Distribution, Office Stuff, and Peg.
d. Office Stuff and Peg only.
Innovative Manufacturing Company, a U.S. firm, signs a contract with Librador
Corporacion, a Columbian firm, to give Librador the right to use Innovatives
production processes. This is
a. a distribution agreement.
b. a joint venture.
c. direct exporting.
d. licensing.
Mias voluntary petition for bankruptcy is found to be proper. The order for relief is
effective as soon as
a. Mia files the petition.
b. Mia posts a bond to cover the costs of the proceedings.
c. Mias creditors agree to the terms.
d. the trustee collects and distributes the property of Mias estate.
Congress enacts the Advertising Restriction Act (ARA. The ARA will be considered
valid if it directly advances a substantial government interest and
a. goes no further than necessary.
b. without regard to how “far it goes.
c. parties affected by it can elect how “far to apply it.
d. goes further than necessary to ensure full coverage.
Dyan executes her will to give “to my nephew Esau my stock in Fargo, Inc. Later, Dyan
writes separately, with the same formalities required for a will, to leave the stock to her
niece Ginny and cash to Esau. This writing
a. does not affect the wills gift of the stock to Esau.
b. requires a gift of the stock in equal shares to Esau and Ginny.
c. revokes the whole will, which must be redrafted.
d. revokes the wills gift of the stock to Esau.
Ski Resorts, Inc., wants to add a new run to its facility in a national park on federal
land. For this action, an environmental impact statement is
a. prohibited.
b. required.
c. unnecessary.
d. voluntary.
Sunshine Cell Phone Company offers to buy a laser printer, with a case of paper and an
extra cartridge, from Office Products, Inc. (OPI), for $200. Paul, OPIs representative,
says, “Okay, but no paper and no extra cartridge. Paul has
a. accepted the offer.
b. made a counteroffer without rejecting the offer.
c. rejected the offer and made a counteroffer.
d. rejected the offer without making a counteroffer.
International Foods Corporation insures its real and personal property, as well as the
lives of its key employees, to protect its financial interest should some event undermine
its security. This is
a. risk management.
b. risk pooling.
c. risky.
d. risqué.
Max wants to open Maxs Medical Equipment Supply with the assistance of an attorney.
To find an attorney, Max should most likely
a. ask a court to appoint a lawyer to assist him.
b. advertise in the “Help Wanted section of a newspaper or database.
c. review listings in the Martindale-Hubbell Law Directory.
d. audit classes at a local law school.
Article 2 of the UCC governs contracts for sales of goods.
State law may mandate that an incontestability clause be included in an insurance
policy.
Credit provisions associated with sales contracts are not regulated by any federal
agency.
A franchise relationship may be governed by the law covering sales contracts as
expressed in Article 2 of the Uniform Commercial Code.
How the value of the shares of each merging corporation will be determined is stated
after the plan of merger has been approved.
Failure to present an instrument on time is not improper presentment.
Resale price maintenance agreements are subject to analysis under the rule of reason.
Owen buys a used Prius from Quality Motors, Inc., paying $1,000 down and agreeing
to pay off the balance in thirty-six monthly payments of $200 each. The terms of the
agreement call for Owen to make a payment on or before the first of each month,
beginning March During the first six months, Quality receives a $200 payment before
the first of each month. Starting in September, however, and continuing for the
subsequent five months, Owens payment is never made until the fifth of the month.
Quality accepts and cashes the payment check each time. Before the next payment is
due, Quality decides that it is no longer willing to accept late payments. Can Quality
sue Owen immediately for breach? Can Owen continue to make late payments without
liability? Explain.
Under the UCC, a fictitious payees indorsement is not treated as a forgery.
An action may be legal but not ethical.
If a voidable contract is ratified, the parties must fully perform their respective legal
obligations.
Any local check deposited must be available for withdrawal by check or as cash within
one business day from the date of deposit.
International law is a body of law that governs relations among nations.
Thinking about killing someone constitutes the crime of attempted murder.
Work done by a specialist without supervision indicates employee status.
A person who takes a negotiable instrument from a thief may become an HDC.
The completion of an originally incomplete instrument in an unauthorized manner is
not a defense against payment on the instrument to an HDC.
Only offshore oil facilities that discharge oil into navigable waters are liable for the
clean-up costs.
A promise by one party to pay another for refraining from an act is enforceable.
Negligence per se may occur on the violation of a statute.