Elizabeth buys a car from Silas, who is sixteen years old. Elizabeth then wants to sell
the car to her neighbor, John. Elizabeth’s title to the car is
a. valid.
b. voidable.
c. void.
d. good.
SurgeStop Company makes electrical cords and other connectors for electronic devices.
Rollo files a product liability suit against SurgeStop, alleging a warning defect. In
deciding whether to hold SurgeStop liable, the court may consider
a. consumers’ general lack of desire to read the product’s warnings.
b. the plaintiff’s specific lack of desire to read the product warnings.
c. the obvious risks of other products.
d. the obvious risks of this product.
Barbara is selling her car. She knows that the brakes do not work. When a potential
buyer asks Barbara if there are any problems with the car, Barbara assures the buyer
that there are no problems. The buyer purchases the car based on the assurance that
there is nothing wrong with it. The buyer may be able to sue Barbara for
a. assault.
b. defamation.
c. fraudulent misrepresentation.
d. appropriation.
Dorothy files a petition for bankruptcy under Chapter 13. If she is granted a discharge,
debts that will most likely be discharged include
a. claims not provided for by the plan.
b. payments on retirement accounts.
c. claims for domestic support obligations.
d. credit-card debt incurred more than one year before filing.
Root & Branch Lumber Company obtains a fire insurance policy from Statistical
Insurers, Inc., on a $400,000 warehouse. The policy includes an 80-percent coinsurance
clause. Root & Branch insures the property for $320,000. In a fire, the warehouse
suffers $200,000 in damage. Root & Branch can recover
a. $400,000.
b. $320,000.
c. $200,000.
d. $80,000.
To drive its competitors out of a certain geographic segment of its market, Fryin”
Potatoes, Inc., sets the prices of its products below cost for the buyers in that area. This
is
a. a refusal to deal.
b. business acumen.
c. predatory bidding.
d. price discrimination.
Gerald files a bankruptcy petition. The resulting automatic stay will apply to Gerald’s
a. alimony debts.
b. child-support debts.
c. spousal maintenance debts.
d. car payment debts.
Violet negotiates with Urban Credit Corporation to obtain a loan for $85,000 to buy a
home. During the negotiations, Urban Credit orally misrepresents the terms, but
provides the required documents, which accurately state the terms. Violet does not read
the documents. The party or parties most likely liable for a violation of the law is
a. neither party.
b. Urban Credit.
c. Urban Credit and Violet.
d. Violet.
Telfonix Corporation, a U.S. firm, and Adex, Inc., a British firm, are parties to a
contract with a forum-selection clause. The forum specified in the clause
a. must be within the geographic boundaries of the United States.
b. must be within the geographic boundaries of Britain.
c. need not be within the geographic boundaries of either party.
d. must be within the geographic boundaries of either the United States or Britain.
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.
Dirk, an employee of Ergonomic Elevators, Inc., pays Ferbie, an employee
of Ergonomics’ competitor G-Force Risers Company, for a secret G-Force
pricing schedule. This is
a. an effective marketing strategy.
b. commercial bribery.
c. creative legal bookkeeping.
d. money laundering.
Ewa is Diamond Financial Planners’ most productive employee. She is dissatisfied with
the commission structure, however, so she quits to work for Feldstar Investments, Inc.
When she leaves Diamond’s employ, she takes her list of Diamond’s clients so that she
can induce them to switch to Feldstar. Trade secrets law covers
a. Diamond’s list of clients.
b. Ewa’s performance.
c. Feldstar’s commission structure.
d. none of the choices.
Bette backs out of City Parking Garage, colliding with Dill’s car. Dill may recover
$7,500 to cover the cost of the repairs if Bette failed to act as
a. a blameless person.
b a faultless person.
c. a holistic person.
d. a reasonable person.
To buy a stuffed cow, Ken executes a check “pay to Laura or bearer” and gives it to
Laura, who does not own a stuffed cow. This check is
a. negotiable.
b. nonnegotiable, because it does not indicate a specific payee.
c. nonnegotiable, because it may be a joke.
d. nonnegotiable, because Laura does not own a stuffed cow.
Joli, acting within the scope of her authority for the Cake Bake Shop, contracts with
Valley View Berry Farms to buy an assortment of fruit. Cake Bake is liable on the
contract, and Joli is not, if Cake Bake is
a. a disclosed principal.
b. a partially disclosed principal.
c. an undisclosed principal.
d. an apparent agent.
Reed borrows $150,000 from Suburban Credit Union to buy a home, which secures the
loan. Three years later, Reed stops making payments on the loan. After Suburban Credit
repossesses and auctions off the property to Tyler, equity remains. This amount most
likely belongs to
a. Reed.
b. Suburban Credit Union.
c. Tyler.
d. the county in which the property is located.
T.J. owns a red sports car. T.J. can use the car as he wishes and he can also dispose of it
if he wishes. When T.J. dies, the car will descend to his son. With respect to the car, T.J.
is
a. a joint tenant.
b. a tenant in common.
c. an owner in fee simple.
d. an owner of community property.
Etta is a director of Trendy Stuff Corporation. Without informing Trendy, Etta goes into
business with GR8 Things, Inc., in competition with Trendy. Etta is liable for breach of
a. no duty or rule
b. the business judgment rule.
c. the duty of care.
d. the duty of loyalty.
Ruthie, a minor, charges the cost of an expensive leather jacket at a Girl’s Trend store.
Two nights later, Ruthie loses the jacket at Minors Only Club. She disaffirms the
jacket’s purchase. Ruthie owes Girl’s Trend the reasonable value of the jacket
a. if it is deemed a “necessary.”
b. if it is deemed unnecessary.
c. under any circumstances.
d. under no circumstances.
Mountain Bikes, Inc. (MBI), and Nero enter into a contract for a sale of a mountain
bike. MBI, a merchant who deals in goods of the kind sold, makes implied and express
warranties in connection with the sale. The Magnuson-Moss Warranty Act attempts to
prevent deception in warranties by
a. displacing the UCC as the primary source of warranty rules.
b. making warranties easier to understand.
c. prohibiting disclaimers of warranties.
d. requiring sellers to give written warranties for consumer goods.
Consumer Credit, Inc. (CCI), lends $1,000 to Joe. Kay acts as Joe’s surety. If Kay pays
the loan, she gets
a. any right that CCI had against Joe, but not a right to be reimbursed by Joe.
b. a right to be reimbursed by Joe, but not any right that CCI had against Joe.
c. any right that CCI had against Joe and a right to be reimbursed by Joe.
d. none of the choices.
Lou and Mira want to rescind their contract under which Lou sold an MP3 player to
Mira for $50. To rescind the contract
a. Lou must return the $50 and Mira must return the player.
b. Lou must return the $50 only.
c. Mira must return the player only.
d. the parties can keep the “benefits” of their bargain.
On January 10, Winchester Pet Supplies orders fifty small dog collars from Quality
Collars, Inc. to be delivered by January 15. On January 13, Quality Collars tenders fifty
large dog collars. Winchester Pet Supplies rejects the shipment. Quality Collars has
a. no right to cure.
b. until January 15 to cure.
c. until the end of the business day on January 13 to cure.
d. unlimited time to cure.
Fact Pattern 21-1
Fresh Cream, Inc., wants to make an initial public offering of securities. Fresh believes
that it qualifies for an exemption under Regulation A from the full registration
requirement of the federal Securities Act of 1933.
Refer to Fact Pattern 21-1. If Fresh is exempt from the federal registration requirement,
Fresh is
a. automatically exempt from any state registration requirement.
b. not subject to any state securities laws.
c. not necessarily exempt under a state registration requirement.
d. automatically subject to all state registration requirements.
Stature Loan Company has notice that a promissory note is overdue if the note is a
demand instrument and Stature takes it
a. an unreasonable time after its due date.
b. before its due date.
c. on its due date.
d. without noticing its due date.
Ira is declared mentally incompetent. Jay, Ira’s son, is named his guardian. At Jay’s
insistence, Ira transfers his assets to Jay “for safekeeping.” This gift may not be
effective on the ground that there was no
a. acceptance.
b. delivery.
c. donative intent.
d. donor’s acknowledgment.
Digital Products Company includes a shrink-wrap agreement in a transaction with
Eagle Engineering Corporation. A shrink-wrap agreement is an agreement whose terms
are expressed
a. in code at the end of a computer program .
b. inside a box in which goods are packaged.
c. in small print at the end of a paper contract signed by both parties.
d. on a computer screen.
Bernard is an expert on exotic flowers. Fine Floral Fixtures, Inc. (FFF) hires Bernard to
order exotic flowers from various greenhouses. Bernard does not bother to examine the
quality of the flowers he purchases on behalf of FFF. Bernard has breached
a. the duty of performance.
b. the duty of loyalty.
c. no duty.
d. the duty of notification.
Gena borrows $350,000 from Fish Island Bank to buy a home, which secures the
mortgage. In the seventh year of the loan, Gena stops making payments. After the bank
repossesses the property but before it is sold, Gena may buy it by paying
a. an amount that equals the potential proceeds from the property’s sale.
b an amount that exceeds the potential proceeds from the property’s sale.
c. the amount of the missed payments, but not more.
d. the full amount of the debt, plus any interest and costs.
Dwayne, an electrician, files a suit against Electro Mechanix, Inc., alleging that its
circuit breakers are unreasonably dangerous due to the possibility of electrical shock.
Dwayne’s suit is most likely to
a. fail, because Dwayne assumes the risk if he uses an Electro product.
b. fail, because Dwayne is a knowledgeable user.
c. succeed, because the danger is open and obvious.
d. succeed, because Electro’s products are not safe for all uses.
Maggie and Nate enter into a contract for the sale of a car, but Nate later refuses to
deliver the car. Maggie asks a court to order Nate to perform as promised. Ordering a
party to perform what was promised is
a. specific performance.
b. damages.
c. rescission.
d. beyond the court’s authority.
George burns an American flag in his backyard. He films his actions and posts the video
on YouTube.com. George’s actions are
a. expressly prohibited by the U.S. Constitution.
b. protected by the First Amendment of the U.S. Constitution.
c. considered to be a form of treason.
d. illegal in some states.
Quinn enters into a series of agreements with Reba involving a sale of a Suite Dreams
Motel, including the land, building, furnishings, shares of stock in Suite Dreams
Company, and a contract with Trudy to create an ad campaign. Reba suspects that
Quinn may be misrepresenting the facts. The UCC Statute of Frauds governs
a. the sale of any of the property evidenced by a writing.
b. the entire deal, including the marketer’s services.
c. the sale of the furnishings priced at $500 or more.
d. the sale of the land and the building.
Under the covenant of quiet enjoyment, a landlord promises that a tenant will not be
disturbed in the possession of the premises.
Public officials prosecute criminal defendants.
SEC Rule 10b-5 applies to almost all cases involving the trading of securities.
A recording statute allows deeds to be recorded to give notice to the public.
An instrument “payable to bearer” is negotiated by delivery.
The chief aim of the World Trade Organization and other trade agreements is to
maximize trade barriers among their members.
An exculpatory clause in an employment contract is not enforceable if it removes the
employer’s potential liability for injuries to employees.
When a document of title is required, title passes to a buyer when and where the
document is delivered.
Puffery creates an express warranty.
The United States Supreme Court has original jurisdiction in some situations.
Under the UCC, an agreement modifying a contract needs no consideration to be
binding.
A writ of execution is a writ that puts in force a court decree or judgment.
All adsboth online and offlinemust be truthful.
Under the perfect tender rule, if tender is not perfect, the seller is obligated to try again.
Defense of others is a defense to an allegation of battery, but not assault.
Bylaws are the internal rules of management for a corporation.