Bob operated a pet grooming shop under a franchise agreement with Clean Pets Corp
(CPC). The agreement allowed CPC to terminate the franchise if Bob was fined for
cruelty to animals. After an investigation initiated by a customer complaint, Bob was
fined for cruelty. CPC terminated the franchise. Bob filed a suit against CPC for
wrongful termination. The court will most likely rule in favor of
a. Bob, because CPC had no good cause to terminate the franchise.
b. Bob, because the fine for cruelty was based on a customer complaint.
c. CPC, because a franchisor can terminate a franchise at any time.
d. CPC, because the franchise was terminated for good cause.
Location! Realty LLC is a limited liability company. Like other LLCs, for federal
jurisdictional purposes, Location! Realty is most likely a citizen of
a. all states.
b. every state in which its members are citizens.
c. no state.
d. only the state in which it was formed.
Screen Perfect, Inc., and TV Stores enter into a contract for a sale of high-definition
television sets. Screen Perfect ships goods that do not exactly conform to the contract in
some details. TV Stores
a. cannot reject the entire shipment.
b. can reject the entire shipment.
c. must accept the entire shipment.
d. must reject the entire shipment.
Hill & Dale Credit Corporation makes mortgage loans to consumers secured by their
principal homes. For a Hill & Dale loan to qualify as a Higher-Priced Mortgage Loan
(HPML), its annual percentage rate must exceed, by a certain amount,
a. the average prime offer rate for a comparable transaction.
b. the consumer’s income-to-debt ratio.
c. the percentage of income that a consumer can devote to its payment.
d. the projected increase in market value of the consumer’s home.
Pola and Quincey want to form and do business as River Tours Corporation. A
corporation can consist of
a. no natural persons.
b. one natural person but not more.
c. one or more natural persons.
d. only more than one natural person.
Personnel Staffing Corporation meets all of the requirements to be subject to the federal
employment discrimination laws. Among these, the most important statute prohibiting
discrimination against members of protected classes is
a. the Age Discrimination in Employment Act of 1967.
b. the Americans with Disabilities Act of 1990.
c. the National Labor Relations Act of 1935.
d. Title VII of the Civil Rights Act of 1964.
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.
Ida, Jerzy, and Kit are the directors of Liberty Convenience Stores, Inc. Liberty has nine
officers and forty-six shareholders. Dividends are ordered by the firm’s
a. board of directors.
b. incorporators.
c. officers.
d. shareholders.
Sarah believes that she was rejected for a position at Trekking Travel Agency due to her
race. Sarah files a suit against Trekking Travel Agency under Title VII on the basis of
disparate-treatment discrimination. Sarah must show all of the following except that
a. she is a member of a protected class.
b. she applied and was qualified for the job in question.
c. she was rejected by Trekking Travel Agency.
d. other people of her race hold similar positions with other employers.
William owns a field where he grows cotton. When William sells the field to Grace, he
includes the cotton that is growing in the field. This sale is governed by
a. the Uniform Commercial Code.
b. common law.
c. real property law.
d. personal property law.
After notice-and-comment rulemaking, the U.S. Bureau of Land Management (BLM)
issues a new rule and applies it to Clearcut Timber Company. Clearcut appeals the
application to a federal court. The court will most likely defer to the BLM’s
interpretation of
a. the facts and the law.
b. the agency’s authority.
c. procedural requirements.
d. the Constitution.
Much of American law is based on
a. the English legal system.
b. the Spanish legal system.
c. the civil law of the Greeks.
d. Ancient Chinese law.
Jackson pays Phil in good faith for a promissory note. Phil warrants that the draft has
not been altered. This warranty is a
a. presentment warranty.
b. consideration warranty.
c. conditional warranty.
d. fixed warranty.
Craft Engineering, Inc., contracts for a sale of technical instruments to Detail Design
Company. Before the date on which performance is due, Craft notifies Detail that it will
not perform. This is
a. anticipatory repudiation.
b. perfect tender.
c. rejection of performance.
d. revocation of acceptance.
Rex, an accountant, enters into a contract to provide services to Sofi. Rex does not
finish the work within the contract’s deadline. Sofi pays a penalty as a result of the
missed deadline and hires Trey to complete the job. Rex is most likely liable for
a. nothing.
b. Sofi’s penalty and the cost to hire Trey.
c. Sofi’s penalty only.
d. the cost to hire Trey only.
Kelly is injured when she slips and falls on Layla’s sidewalk. To determine whether
Layla owed a duty of care to Kelly, Layla is subject to the standard of
a. a realistic person.
b. a reasonable person.
c. a recognizable person.
d. a reliable person.
Wilson wants to file an ordinary, or straight, bankruptcy. Wilson should file using
a. Chapter 7.
b. Chapter 11.
c. Chapter 13.
d. his state’s bankruptcy code.
Summit Sales Corporation orders goods from OverStock Company. Summit plans to
market the goods to consumers generally. OverStock identifies the goods. Before they
are shipped to Summit, an insurable interest in the goods exists in
a. Summit and OverStock, but not consumers generally.
b. Summit, OverStock, and consumers generally.
c. Summit only.
d. OverStock only.
Uri discovers a boat adrift, and retrieves and anchors it. The boat features a number on
its side and other evidence pointing to its owner, Vera. This is
a. an involuntary bailment.
b. a voluntary bailment.
c. an express bailment.
d. no bailment.
Rosa and Sean are directors of Tech, Inc. Rosa’s written authorization to Sean to vote
Rosa’s shares at a Tech shareholders’ meeting is
a. a violation of the duty of care.
b. a preemptive right.
c. a proxy.
d. a quorum.
Olivia, a minor, signs a contract to buy a bike from Phil, the owner of SuperCycles Bike
Store. Olivia’s right to disaffirm the contract
a. does not change the fact that Phil is bound by the contract.
b. does not yet exist because Olivia is still a minor.
c. gives Phil, an adult, the right to disaffirm the contract.
d. is not valid because a bike is a “necessary.”
Machismo Motor Sales Corporation regularly advertises its off-the-road vehicles,
all-terrain vehicles, and other products. Under the First Amendment, these ads and other
commercial speech are given
a. less extensive protection than noncommercial speech.
b. more extensive protection than symbolic speech.
c. no protection.
d. the same protection as defamatory speech.
Beth, an accountant for Credits & Debits, acquires a negotiable instrument from Ellen
by promising to pay its face value in thirty days. Beth acquires the status of an HDC
when she
a. acquires possession of the negotiable instrument.
b. agrees with Ellen to buy the negotiable instrument.
c. pays the face value due on the instrument.
d. transfers the instrument to another party.
Estes, an accountant, contracts to perform services for Frasier. In performing those
services, Estes uncovers a suspicious financial transaction. Estes is most likely not
liable if he
a. acted negligently in failing to discover the transaction sooner.
b. conceals the discovery and otherwise finishes the work.
c. investigates and reports the discovery to Frasier.
d. obtains restitution from the perpetrator without Frasier’s knowledge.
Dwight believes that a new phone to be sold by Ear Sonic Corporation will become the
most widely bought and used phone in the global market. Dwight enters into a contract
to buy 500 shares of Ear Sonic stock, anticipating an increase in its value. If the price of
the stock does not rise, Dwight can recover
a. nothing.
b. the amount of the purchase price.
c. the amount of the purchase price plus the expected increase.
d. the amount of the purchase price plus the unexpected decrease.
Tundi is a partner in YooHoo! Amusement, a new partnership. A YooHoo! debt comes
due. Tundi is
a. not liable for the debt.
b. only liable for the debt up to the amount of his capital contribution.
c. personally liable only to the extent the other partners do not pay.
d. personally liable to the full extent of the debt.
Wild River Tours Corporation wants to formulate a plan under which it pays a portion
of its debts and is discharged of the remainder while continuing in business. To
accomplish this goal, Wild River should file a petition in bankruptcy for relief through
a. a liquidation.
b. a reorganization.
c. a repayment plan.
d. a family-farmer bankruptcy plan.
Jared downloads some video games from the Internet. There is a page indicating the
terms of use, but nothing that requires Jared to affirmatively indicate his consent before
downloading the games. These terms are
a. a click-on agreement.
b. browse-wrap terms.
c. an attribution agreement.
d. a shrink-wrap agreement.
Pepsi-Cola Bottling Company is
a. a chain-style franchise.
b. a distributorship franchise.
c. a manufacturing franchise.
d. not a franchise.
Avatar, Inc., and Bling Corporation sign a contract in which Avatar agrees to deliver
t-shirts emblazoned with video game characters in exchange for Bling’s promise to pay.
Avatar delivers. The contract is
a. voidable.
b. executed.
c. executive.
d. executory.
Drew and Earl are brothers. They agree to act as guarantors on a loan made by their
sister, Flo. Flo defaults on the payments and Drew refuses to pay. Earl pays the debt.
Earl can recover from
a. Drew and Flo under the right of proportionate liability.
b. Drew and Flo under the right of reimbursement.
c. Drew under the right of contribution and Flo under the right of subrogation.
d. no one, because the parties are brothers and sister.
Business Computer Solutions Education Service enters into a contract to employ
Chandra as an instructor for two years to begin June 1. One month before the term
begins, Business Computer is underbid by a competitor and loses a major client, Debt
Consolidation Corporation. Business Computer now refuses to hire Chandra.
Under the circumstances, with respect to damages, Chandra can
a. bring an action immediately.
b. bring an action only after the contract’s two-year term begins.
c. bring an action only after the contract’s two-year term ends.
d. do nothing.
Fern and Gray want to form a limited partnership to manage two restaurants: Caf Latte
and Deli Delite. In most states, a limited partnership will be created when
a. a certificate of limited partnership is filed.
b. a partnership agreement is executed.
c. the business for which the firm is formed actually begins.
d. the partners make their capital contributions.
Jack offers to sell Ben a new car for $10,000. Ben accepts the offer and sells his old car
so that he will have money for the new one. Jack’s offer is probably
a. revocable because the terms of the offer were not definite.
b. irrevocable because Ben sold his old car because of justifiable reliance on Jack’s offer
to sell him a new car.
c. revocable because any offer is revocable.
d. irrevocable because Jack’s offer represents an opinion contract.
Under the power of eminent domain, the government may take private property only for
private use, not for public benefit.
Consideration in bilateral contracts normally consists of a promise in return for a
performance.
A valid delegation of duties relieves the delegator of the obligation to perform under the
contract.
If a seller is an expert and gives an opinion as an expert, then he or she usually creates
an express warranty.
No state has passed an antitakeover statute.
Bait-and-switch advertising occurs when an ad appears to be based on factual evidence
but in fact is not reasonably supported by evidence.
Patty, who is divorced, owns a house. She has no reasonable expectation of benefit from
the life of Quinn, her ex-spouse, but she applies for insurance on his life anyway. She
also obtains a fire insurance policy on the house, which she later sells. Five years later,
Quinn dies and the house is destroyed in a fire. Can Patty obtain payment on either the
death of Quinn or the loss of the house? Explain.
The owner of a fee simple absolute has the right to use property for whatever purpose
he or she sees fit.
Counteradvertising requires a company to advertise the products of its competitor to
counter its own false claims.
In most cases, an offeror can revoke an offer as long as the revocation is communicated
before the offeree accepts.
Under federal law, an e-signature is enforceable only if the contracting parties have
agreed to use e-signatures.
The judicial branch has the power to hold actions of the other branches of government
unconstitutional.
The Uniform Commercial Code governs checks.
A corporation is an artificial being.
An accountant is not liable for a misleading statement that affects the price of a security
if the accountant acted in good faith.