Milo files a suit against Neighbors Insurance Corporation under the doctrine of prom-
issory estoppel. Milo must show that
a. Milo justifiably refused to fulfill a promise to Neighbors.
b. Milo justifiably relied on Neighbors’s promise to his detriment.
c. Neighbors justifiably refused to fulfill a promise to Milo.
d. Neighbors justifiably relied on Milo’s promise to its detriment.
Harvey puts up a guitar for bids on eWay, a Web auction site. Faith makes the highest
bid and sends the payment, which Harvey receives, but he does not send the guitar to
her. This is online
a. auction fraud.
b. puffery.
c. retail fraud.
d. frustration but not fraud.
Development Associates (DA) agrees to buy five acres of land from Eastside Properties
for $15,000. Eastside sells the acreage to Fealty Realty, and fails to go through with
DA’s deal on the agreed date, when the market price of the land is $17,000. DA may
recover
a. $17,000.
b. $15,000.
c. $2,000.
d. $0.
Fact Pattern 11-3
Cut-Rate Construction Company (CCC) begins building a restaurant for Diners
Restaurants, Inc., but after two months demands an extra $100,000. Diners agrees to
pay.
Refer to Fact Pattern 11-3. If CCC offers, as a reason for the extra $100,000, that
ordinary business expenses have increased, the agreement is
a. enforceable as an accord and satisfaction.
b. enforceable because of unforeseen difficulties.
c. unenforceable as an illusory promise.
d. unenforceable due to the preexisting duty rule.
Fact Pattern 25-1
Dina asks Edie to co-sign a credit application so that she can borrow money and buy a
truck from Finest Quality Motors.Refer to Fact Pattern 25-1. If Edie signs the
application but fails to stipulate that Finest must pursue its legal remedies against Dina
before looking to her, then Edie is
a. a guarantor and a surety.
b. a guarantor only.
c. a surety only.
d. neither a guarantor nor a surety.
Giant Lift Corporation purchases all of the assets of Heavy Hydraulics Corporation.
With respect to Heavy Hydraulics’s liabilities, Giant Lift is
a. automatically responsible.
b. not responsible under any circumstances.
c. responsible if Heavy Hydraulics is a competitor of Giant Lift.
d. responsible if the sale is actually a merger or consolidation.
Frank’s farm is to be sold at a foreclosure sale. For Frank to keep the farm by paying the
full amount of the debt, plus any interest and costs that have accrued, is
a. the equity of redemption.
b. the exercise of exemption.
c. the right of contribution.
d. the right of subrogation.
Chocolate Bites, Inc., and Delite Distribution, Inc., sign a written contract for a sale of
goods. To be enforceable, this written contract must include
a. a correct title, such as “Purchase Order” or “Sales Invoice.”
b. a declaration of the subject matter.
c. a quantity term.
d. the parties’ names.
Bob, research manager for CornAgri Products, Inc., applies utilitarian ethics to
determine that an action is morally correct when it produces the greatest good for
a. Bob.
b. CornAgri.
c. the fewest people.
d. the most people.
Fact Pattern 13-4
Flo enters into a contract under Gail’s threats. Later, Flo refuses to perform, claiming
that she acted under duress.
Refer to Fact Pattern 13-4. Gail sues to enforce the contract. To be guilty of duress, Gail
must have threatened
a. a civil suit.
b. a lost opportunity.
c. a social snubbing.
d. a wrongful act.
Klondike and Leola own 10,000 shares of stock in My-T Gro Corporation. On the death
of ether owner, that owner’s interest in the stock passes to the surviving owner. This is
a. a joint tenancy.
b. a tenancy by the entirety.
c. a tenancy in common.
d. ownership in fee simple absolute.
In studying the legal environment of business, Professor Dooley’s students also review
ethics in a business context. Ethics includes the study of what constitutes
a. fair or just behavior.
b. financially rewarding behavior.
c. legal behavior.
d. religious behavior.
Fairway Products, Inc., and Golly Golf Clubs Corporation lobby Congress to pass a law
banning a competitor’s product. This joint effort is probably
a. a violation of antitrust statutes.
b. exempt from antitrust enforcement.
c. not subject to antitrust law.
d. subject only to antitrust common law.
Ray signs a promissory note for $10,000 in favor of State University (SU). The note
does not specify the date of its payment. Ray defaults. In SU’s suit to collect on the
note, the court will most likely rule in favor of
a. Ray, because SU assumed the risk that the note would not be paid.
b. Ray, because the note is not payable at a definite time or on demand.
c. SU, because the note is an unconditional promise to pay the holder.
d. SU, because there is a uniform “default time” for repayment when a date is not
specified.
Quibble Game Company’s liabilities exceed its assets. Quibble hires Roo & Slay, an
accounting firm, to prepare a balance sheet. Through Roo & Slay’s negligent omissions,
the sheet shows a positive net worth. Town Bank relies on the balance sheet to make a
loan to Quibble. When Quibble defaults, Town files a suit against Roo & Slay. Under
the Restatement rule, Roo & Slay is most likely
a. liable because Roo & Slay owed a duty of care to Quibble.
b. liable because Roo & Slay owed a duty to any foreseeable user.
c. liable if Roo & Slay knew that Town would rely on the balance sheet.
d. not liable because Roo & Slay and Town were not in privity.
Owen takes a Paisley-made pinball machine to Quality Games, Inc., for repair. Lacking
certain parts, Quality ships the game to Regal Repair Company. While in Regal’s
possession, the game is damaged. Quality can recover for the damage from
a. no one.
b. Owen.
c. Paisley.
d. Regal.
Ridgeway Sand & Gravel Corporation and Quick-Set Paving Company combine so that
all that remains after the papers have been signed is Ridgeway. This is
a. a consolidation.
b. a merger.
c. a purchase of assets.
d. a share exchange.
Consumer Shops, Inc., signs a lease for a storefront owned by Downtown Building
Company. Unlike a purchaser of real property, Consumer Shops
a. acquires only temporary possession of the premises.
b. enjoys exclusive possession of the premises.
c. holds only temporary title to the premises.
d. retains temporary, exclusive possession and title to the premises.
Fact Pattern 37-3
Dhani, an accountant for Eureka, Inc., learns of undisclosed company plans to market a
new laptop. Dhani buys 1,000 shares of Eureka stock. He reveals the company plans to
Fay, who buys 500 shares. Fay tells Geoff, who tells Hu. Both Geoff and Hu buy 100
shares. They know that Fay got her information from Dhani. When Eureka publicly an-
nounces its new laptop, Dhani, Fay, Geoff, and Hu sell their stock for a profit.
Refer to Fact Pattern 37-3. Under the Securities Exchange Act of 1934, Geoff is most
likely
a. liable for insider trading.
b. not liable because Geoff did not prevent others from profiting.
c. not liable because Geoff did not solicit information from Dhani.
d. not liable because Geoff does not work for Eureka.
Bud approves on behalf of Codybut without authorizationa contract with Dik to build a
new silo. Cody does not ratify the contract. Later, Dik tries to enforce the deal. This
attempt will be
a. partly successful.
b. partly unsuccessful.
c. totally successful.
d. totally unsuccessful.
Midwest Power Corporation wants to build a nuclear power plant on private land, for
which a federal permit is required. For this action, an environmental impact statement is
a. prohibited.
b. required.
c. unnecessary.
d. voluntary.
Clu serves in a representative capacity for Digger. Elmo is injured through Clu’s
negligence. Digger may be liable to Elmo if Clu’s conduct occurred
a. due to a propensity Digger was not and could not have been aware of.
b. during normal working hours.
c. in the course and scope of Clu’s employment.
d. outside the parties’ employment relationship.
Moby leases from National Theater Corporation a theater in which to stage a series of
concerts. Ollie buys a ticket to the series. What distinguishes Moby, a tenant, from
Ollie, a licensee, is
a. the exclusivity of possession.
b. the quiet enjoyment of rights.
c. the temporary nature of possession.
d. the title to the property.
Capital Diversified Corporation (CDC) owns assets in Dagistan, a new country in Asia.
The government of Dagistan wants to nationalize all assets owned by foreign firms and
investors. What can CDC do? Can it at least obtain payment for the assets?
Ian’s mortgage debt to Jeff is past due. Jeff brings a legal action against Ian to collect
the debt. Jeff asks the court to order the sale of the mortgaged property and the payment
of a portion of the proceeds to Jeff. This is a request for
a. a deficiency judgment.
b. a foreclosure.
c. a right of reimbursement.
d. redemption.
Southwestern Foods Corporation operates a packaging plant near the border between
the United States and Mexico. Due to the location, it would be easier for Southwestern
to employ noncitizens. It is legal for a U.S. employer to
a. hire persons not authorized to work in the United States.
b. recruit persons not authorized to work in the United States.
c. refer for a fee persons not authorized to work in the United States.
d. none of the choices.
A contract between Fresh Fruit Corporation and Green Grocer, Inc., requires Fresh Fruit
to deliver goods to Green Grocer’s place of business. This is
a. a bill of lading.
b. a destination contract.
c. a shipment contract.
d. a warehouse receipt.
Sandy, a businessperson, is convicted of RICO offenses. Sandy’s penalties may include
a. closing down a business, but not forfeiting its assets or selling it.
b. forfeiting business assets, but not closing it down or selling it.
c. selling a business, but not closing it down or forfeiting its assets.
d. closing down a business, forfeiting its assets, or selling it.
Naomi, a businessperson, is charged with RICO offenses. Naomi may be subject to
penalties under RICO only if she
a. committed two or more certain federal or state crimes.
b. has never been convicted of a crime.
c. intends to commit future RICO offenses.
d. was previously convicted of a crime.
The U.S. Mine Safety Administration conducts searches of certain businesses. This
agency and other administrative agencies can conduct warrantless searches in
a. all industries.
b. highly regulated industries.
c. no industries.
d. newly regulated industries only.
Under the Constitution, Congress
a. administers the laws.
b. enforces the laws.
c. interprets the laws.
d. makes the laws.
Mena applies for a homeowners’ insurance policy on her house with Neighbors
Insurance Company through Obie, an agent who works for Neighbors. In this
transaction, Obie is
a. an agent for both parties.
b. Mena’s agent, and not Neighbors’s agent.
c. Neighbors’s agent, and not Mena’s agent.
d. not an agent.
Ceramic Tile Company designs and makes floor tiles. In a product liability suit based
on negligence, Ceramic could be liable for violating its duty of care with respect to
a. neither the design nor the making of the tiles.
b. the design and the making of the tiles.
c. the design of the tiles only.
d. the making of the tiles only.
Diamond Camera Shop receives lenses from Eye Optical, Inc., under a sale or return
agreement. While the lenses are in Diamond’s possession, title is held by
a. Diamond and Eye jointly.
b. Diamond only.
c. Diamond’s creditors only.
d. Eye only.
Celfone Corporation is required to file a registration statement with the Securities and
Exchange Commission. This statement must contain
a. a copy of prospectuses to be provided to investors.
b. a description of securities being offered for sale.
c. a record of pre-registration sales in securities.
d. a sample of advertising to be used to attract investments in Celfone.
A trademark must be registered to support a trademark infringement action.
An intentional variation from a contract prevents substantial performance.
The courts can decide whether the other branches of government have acted within the
scope of their constitutional authority.
Businesspersons who would choose to act unethically may be deterred from doing so
because of public opinion.
An assignment of an insurance policy cannot be prohibited.
When Looking Glass Corporation wishes to issue certain securities, it must provide
sufficient information for Alice, and other unsophisticated investors, to evaluate the fi-
nancial risk involved. Specifically, the law imposes liability for making a false
statement or omission that is “material.” What sort of information would Alice consider
material?
Size alone determines whether a firm is a monopoly.
If a buyer repudiates a contract, the seller cannot recover damages.
Monopoly power may be proved by evidence that a firm used its power to control
prices.
Corporate directors and officers are insurers of business success.
An action may be legal but not ethical.
A sale of “things attached” to realty is always considered a sale of goods.
The most common way to discharge a contract is by performance.
A generic term is not protected under trademark law unless it acquires a secondary
meaning.
A guaranty contract must be in writing to be enforceable.
Starting a sole proprietorship is easier and less costly than starting any other form of
business.
A summary judgment is granted only if there is no genuine question of law.
Overestimating the value of an object is a mistake for which a court will normally
provide relief.