Bobbie claims that Carl breached their contract. Carl responds that he never intended to
enter into a contract with Bobbie. The intent to enter into a contract is determined with
reference to
a. the conscious theory of contracts.
b. the objective theory of contracts.
c. the personal theory of contracts.
d. the subjective theory of contracts.
Mason creates a trust to prevent his son, Newt, the beneficiary, from assigning his rights
to future payments of income from the trust. This is
a. a charitable trust.
b. a constructive trust.
c. a spendthrift trust.
d. an illegal trust.
Nero and Oona negotiate a contract. Nero prints out a hard copy to review before both
parties sign the electronic form of the contract. Neither party signs the hard copy. Under
the Electronic Signatures in Global and National Commerce Act (E-SIGN Act), the
signatures can
a. be denied effect because they are in electronic form.
b. be denied effect because Nero has not signed a hard copy.
c. be denied effect because Oona has not signed a hard copy.
d. not be denied effect because they are in electronic form.
Iggy hires Joy to act as his agent to purchase Kup-a-Koffee Kompany. Iggy tells Joy to
reveal only that she is buying the firm on behalf of a third party, without telling
Kup-a-Koffees seller who that third party is. Iggy is
a. a disclosed principal.
b. an implied principal.
c. an undisclosed principal.
d. a partially disclosed principal.
Caffeine Café, Inc., files its articles of incorporation with the appropriate government
agency. Least likely to appear in the articles is the name of
a. each of the corporations incorporators.
b. each of the corporations shareholders.
c. the corporation.
d. the corporations initial registered agent.
Toby is an accountant whose clients include U-All Company. If Toby is negligent in his
work for U-All, most courts would hold him liable to U-All and
a. any third party.
b. no third party.
c. third parties who are foreseen users of the work.
d. third parties who are reasonably foreseeable users of the work.
In business deals, Felipe, the chief executive officer of Glazed Donuts, Inc., follows
duty-based ethical standards. These are most likely derived from
a. a corporate ethics code.
b. a cost-benefit analysis.
c. philosophical reasoning.
d. the law.
Caleb is driving a car in which Dotty is a passenger when an accident occurs. Caleb and
Dotty are emotionally rattled, but neither is physically hurt. Caleb is not liable to Dotty
on a negligence theory because
a. both parties were emotionally rattled.
b. Caleb did not apparently intend to cause an accident.
c. Dotty must have been comparatively negligent.
d. Dotty was not injured.
Fact Pattern 16-2
Jake is the maker of a $2,000 promissory note payable to Kim. Kim indorses the note to
Lou who, in turn, indorses it to Mona, who then indorses it to Nat, the present holder.
Refer to Fact Pattern 16-2. Suppose that Mona pays Nat on the note. With timely notice
to the proper parties, Mona may collect payment on the note from
a. Jake, Kim, or Lou.
b. Jake or Kim only.
c. Lou only.
d. no one.
Lacy is an accountant who prepares her clients tax returns. Muff 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. Lacy and Muff.
b. Lacy only.
c. Muff only.
d. neither Lacy nor Muff.
Tippi believes that she needs to obtain a discharge in bankruptcy through an individuals
repayment plan. This proceeding can be initiated by a filing of a petition by
a. a creditor.
b. a debtor.
c. a corporation.
d. a partnership.
Dora writes a check for $100 drawn on Eastern Bank and presents it to Fast Cash, Inc.,
for payment. If the check is not backed by sufficient funds, Dora may be prosecuted for
a. forgery.
b. fraud.
c. negligence.
d. robbery.
Fact Pattern 19-2
Marys home is in a state that has a $30,000 homestead exemption. Mary defaults on a
$60,000 debt that she owes to Nina. Marys home is sold at auction for $80,000.
Refer to Fact Pattern 19-2. Mary will receive
a. 0.
b. $30,000.
c. $50,000.
d. $60,000.
Flem, a user of GameCenter.coms Web site, can download gaming software for free if
he first clicks on “I accept after viewing certain terms. This is
a. a contract that does not include the terms.
b. a contract that includes the terms.
c. not a contract but the terms are enforceable.
d. unenforceable.
Kit loses her suit against Lou in a Minnesota state trial court. Kit appeals to the state
court of appeals and loses again. Kit would appeal next to
a. a U.S. district court.
b. the Minnesota Supreme Court.
c. the United States Supreme Court.
d. the U.S. Court of Appeals for the Eighth Circuit.
Bakri owns a house. In the house, on a tile floor is a throw rug. Most likely to meet the
definition of a fixture is
a. the house.
b. the throw rug.
c. the tile floor.
d. none of these choices.
In relation to Edies solicitation of investors in a nonexistent business, she is charged
with “mail fraud. This requires, among other things,
a. claiming that an item is “in the mail when it is not.
b. deceiving postal authorities as to the content of an item of mail.
c. depositing items in the postal system without proper postage.
d. mailing or causing someone else to mail a writing.
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.
On May 1, Dooley signs a check that is payable to the order of Extra Credit Corporation
and that is dated July 1. This check is
a. negotiable.
b. nonnegotiable, because it is payable to Extra Credit Corporation.
c. nonnegotiable, because it is postdated.
d. nonnegotiable, because it is signed by Dooley.
Vladimir is a “payday lender charged with filing false claims in bankruptcy proceedings
against his customer-debtors. The standard of proof to find a defendant who has been
charged with a crime guilty is
a. a preponderance of the evidence.
b. beyond all doubt.
c. beyond a reasonable doubt.
d. clear and convincing evidence.
Eden, the chief executive officer of Flo-Thru Piping Corporation, wants to ensure that
Flo-Thrus activities are legal and ethical. The best course for Eden and Flo-Thru is to
act in
a. good faith.
b. ignorance of the law.
c. regard for the firms shareholders only.
d. their own self interest.
Sherman dies without a will, survived by his granddaughter Roxy and Roxys brother
Pio. Roxy and Pio are Shermans
a. collateral heirs.
b. settlors.
c. trustees.
d. lineal descendants.
Fact Pattern 20-2
24-Hour Credit Corporation issues high-cost and high-fee mortgage products to people,
including Benny, who could not easily obtain credit under other loan programs.
Refer to Fact Pattern 20-2. Under federal law, disclosures with respect to one of
24-Hour Credits loans must be provided
a. a certain number of days after the loan is finalized.
b. a certain number of days before the loan is finalized.
c. at the same time at which the loan is finalized.
d. at whatever time is most rational and appropriate.
B2B, LLC, is a limited liability company. Among its members, a dispute arises that the
operating agreement does not cover. The dispute is governed by
a. the applicable state LLC statute.
b. the federal Uniform LLC Law.
c. the principles of partnership law.
d. the state corporation statute.
Fact Pattern 10-3
Odell and Paula sign a contract for the sale of Odells Pizza Parlor to Paula. The parties
intend their written contract to be a final statement of most, but not all, of the terms of
their agreementOdell must first buy the building from Quin, after which Odell and
Paula will negotiate a final price.
Refer to Fact Pattern 10-3. The writing that Odell and Paula signed is
a. a completely integrated contract.
b. a conditionally integrated contract.
c. a partially integrated contract.
d. a supplementally integrated contract.
Speedy Shipping Corporation applies to TransInsurance Company for a fire insurance
policy on Speedys warehouse. On the application, Speedy misrepresents the age of the
property to obtain a lower premium. When a fire soon destroys the warehouse,
TransInsurance can
a. deny payment, because a fire destroyed Speedys warehouse.
b. deny payment, because of Speedys fraud in the application.
c. not deny payment, because a fire destroyed Speedys warehouse.
d. not deny payment, because the application is not part of the policy.
Tom and Sydney enter into a contract for the sale of Toms house for which Sydney
agrees to pay $350,000. Sydney wants to transfer her right to the ownership of the
house to Rena, her niece. This transfer generally
a. cannot be prohibited.
b. cannot be allowed.
c. can be prevented.
d. can be circumvented.
Rocco gives Sequoia a computer as a gift. Using the computer, Sequoia develops a new
computer game, for which she obtains intellectual property protection, and forms Titan
Games, LLC, to make and market the game. Sequoias acquisition of the game is by
a. gift.
b. accession.
c. confusion.
d. production.
Imported Carpets Store and Jill enter into a contract for a sale of an Oriental rug.
Imported Carpets, a merchant who deals in goods of the kind sold, generally describes
the goods, details technical specifications, and shows a sample. Under the UCC, if these
are inconsistent
a. the general description displaces the sample.
b. the general description displaces the technical specifications.
c. the sample takes precedence over the general description.
d. the sample takes precedence over the technical specifications.
The United States and other members of a certain organization agree to grant normal
trade relations status on each other with regard to imports and exports. This organi-
zation is
a. the Convention on Contracts for the International Sale of Goods.
b. the International Export-Import Bank.
c. the United Nations.
d. the World Trade Organization.
To resolve a dispute, Amy in Boston and Chris in Denver utilize E-Solution, an online
dispute resolution (ODR) service. This limits these parties recourse to the courts
a. not at all.
b. until the ODR service has issued a decision.
c. with respect to any dispute arising between them.
d. with respect to this dispute only.
Tyro has the right to drive across Ulas land, which is next to Tyros property, to reach an
access road. Tyros right is
a. an easement appurtenant.
b. an easement in gross.
c. a profit appurtenant.
d. a profit in gross.
Bubbly Soda Company hires Carlo to work on Bubblys shipping dock, checking
outgoing loads and dispatching Bubblys drivers. With respect to Carlo, Bubbly is most
likely
a. an employee.
b. an agent.
c. an independent contractor.
d. a principal.
Domino causes a disturbance at El Nino Cafe. He is arrested and charged with
disorderly conduct, a misdemeanor. A misdemeanor is a crime punishable by
a. a fine only.
b. imprisonment up to one year.
c. imprisonment up to six months.
d. imprisonment up to ten days.
Lloyd and Milly are employees of NuTech Corporation. They have the same job. Under
the Equal Pay Act, NuTech can legitimately pay Lloyd more than Milly on the basis of
a. Lloyds greater production only.
b. Lloyds greater production or seniority.
c. Lloyds greater seniority only.
d. neither Lloyds greater production nor his greater seniority.
A federal case typically originates in a federal district court.
The intent to return the embezzled property is a defense to the crime of embezzlement.
National Drilling Company ships its only pump to American Hydraulics Corporation,
the manufacturer, for repair. National hires Overland Transport, Inc., to take the pump
to American Hydraulics and to return it to National as soon as the repair is complete.
National is forced to suspend operations without a pump, but Overland does not know
this. National expects to be without the pump for five days and to lose profits of $5,000.
When the pump is not returned by the end of the fifth day, National rents a pump at a
cost of $100 per day. Overland delays five more days before returning the pump.
National files a suit against Overland, asking for compensatory, consequential, and
punitive damages. Will National recover?
The dishonor of an instrument relieves secondary parties of liability.
A minor may disaffirm a contract only after attaining the age of majority.
Shareholders meetings do not have to occur on any regular basis.
Reliance on a misrepresentation is justified if the misrepresentation is an obviously
extravagant statement.
A buyer has an insurable interest in identified goods.
To succeed in a strict product liability suit, an injured plaintiff must show that a
products defect was the proximate cause of the injury.
Shareholder appraisal rights do not usually extend to short-form mergers.
Stare decisis is a doctrine obligating judges to help persons who have failed to protect
their own rights.
A bill of lading serves as a contract for the transportation of goods.
Procedural due process requires that any taking of a persons life, liberty, or property by
government must be made fairly.
A director cannot be elected by the other members of the board.
There are no registration requirements for trade secrets.