Grady enters into a contract to buy 440 acres from Hollis to expand Grady’s ranch.
Hollis breaches the contract. Grady’s normal remedy is
a. damages.
b. reformation.
c. rescission.
d. specific performance.
Law enforcement officers suspect Chris of drug trafficking. Without a warrant, the
officers install a tracking device on a vehicle belonging to Chris’s mother. Tracking the
vehicle with the device produces incriminating evidence, and Chris is charged with
trafficking. He argues that the government’s use of the device violated his Fourth
Amendment rights by subjecting him to an unlawful ‘search.” Under the principles
discussed in “A Sample Court Case,” United States v. Jones, the court is most likely to
rule that the officer’ installation of the device was
a. a search and an unlawful trespass.
b. not a search because incriminating evidence was produced.
c. not a search because the officers did not obtain a warrant.
d. not a search because only the officers knew about the device.
Jim and Kyle are partners in J&K Sales, which exports technical equipment under a
three-year partnership agreement. The U.S. government declares that the equipment can
no longer be exported. J&K
a. dissolves as soon as the stated term expires.
b. dissolves as soon as the partners agree to dissolve it.
c. dissolves immediately unless the partners change its business.
d. does not dissolve.
Bailey, the president of Carmichael Commodities Company, claims that certain actions
by the federal government and by the state of Delaware infringe on rights guaranteed by
the Bill of Rights. All of these rights limit
a. neither Delaware nor the federal government.
b. the federal government only.
c. Delaware and the federal government.
d. Delaware only.
Fact Pattern 26-1
Jumbo Juice Inc. offers entrepreneurs the opportunity to operate a franchise under the
Jumbo Juice trade name as a member of a select group of dealers that engage in retail
juice sales.
Refer to Fact Pattern 26-1. To potential investors, Jumbo Juice must provide
a. actual earnings figures.
b. hypothetical earnings figures.
c. projected earnings figures.
d. none of the choices.
Ralph contracts to sell his Double-R Ranch to Samantha on May 1. On April 20, Ralph
tells Samantha that he will not go through with the deal. Samantha can recover
a. the cost of any property that Samantha would find suitable.
b. the cost of a similar, nearby ranch.
c. the Double-R Ranch.
d. nothing.
Rubin writes a check drawn on his account at Clearwater Bank and payable to the order
of Gwyn. The bank does not pay the check. Rubin is
a. absolved of liability on the check.
b. liable to Gwyn for the amount of the check.
c. liable to the bank for the amount of the check.
d. entitled to payment of the amount of the check from Gwyn.
Jo files a suit against Lara in a Missouri state court. Lara’s only connection to Missouri
is an ad on the Web originating in Nebraska. For Missouri to exercise jurisdiction, the
issue is whether Lara, through her ad, has
a. a commercial cyber presence in Missouri.
b. conducted substantial business with Missouri residents.
c. general maximum contact with Missouri.
d. solicited virtual business in Missouri.
Doug agrees with Elinor to sell methamphetamine to patrons of Elinor’s nightclub
Garden of Eden for 25 percent of the take. Doug sells the drugs but keeps all of the
money. Elinor can
a. recover her share of the money only if she did not aid in the crime.
b. not enforce the deal.
c. recover the total amount of the sales.
d. recover her costs but none of the illegal profit.
Inez and Jason are the shareholders and directors of Kleen Kustodial Corporation. Lily
and Moe are Kleen’s officers. As in other corporations, the responsibility for the overall
management of Kleen rests with
a. the board of directors.
b. the officers.
c. the owners.
d. the shareholders.
Lucy is a limited partner in Metro Contractors, a limited partnership, which cannot pay
its debts. Lucy is personally liable for the debts
a. in proportion to the number of partners in the firm.
b. to no extent.
c. to the extent of her capital contribution.
d. to the full extent.
Fact Pattern 11-1 (Questions 67 apply)
Sally contracts with Tasty Pizza Company to deliver its products. Both parties change
their minds, however, and inform each other that they would like to cancel the contract.
Refer to Fact Pattern 11-1. Sally and Tasty
a. may rescind their entire contract.
b. may rescind their contract to the extent that it is executory.
c. must perform their entire contract.
d. must perform the part of their contract that is executory.
The operations of Metal Refining Industries, Inc., are major sources of air pollution.
These operations must use
a. the absolutely cleanest air technology.
b. the best available filter technology.
c. the maximum achievable control technology.
d. the most affordable scrubbing technology.
Jack contracts to provide lawn-mowing services to Lee. Jack cannot delegate this duty
a. because it is a personal service contract.
b. without continuing to be liable.
c. without Lee’s consent.
d. without providing lawn-mowing services to Kim.
Neverend Music Company and Monotonous Metronome Corporation form a joint stock
company. A joint stock company can be formed for, at the most,
a. an implied duration of not more than six months.
b. a perpetual existence.
c. a single activity or transaction.
d. a stated duration of not more than one year.
Byron agrees to sell to Charity, for $1,500, a remote parcel of land. They believe the
land to be worthless, but beneath it is a gold mine. A court would
a. cancel the contract due to Byron’s failure to know the land’s value.
b. cancel the contract due to Charity’s failure to know the land’s price.
c. cancel the contract due to the difference between the contract price and the market
price.
d. enforce the contract.
Drew contracts to sell a residential duplex to Evan. The contract provides that if Drew
does not close the deal by September 15, he must pay Evan one-half of the contract
price. This provision is not enforceable because it is
a. a liquidated damages clause.
b. a mitigation clause.
c. a nominal damages clause.
d. a penalty clause.
Marta buys a candy bar for $5 and signs a contract for delivery of fresh flowers to her
mother’s nursing home every week for the rest of her mother’s life. She then enters into
a contract to assume George’s debt to FastCars Dealership. Marta receives no personal
benefit from assuming George’s debt. The Statute of Frauds covers
a. the candy purchase only.
b. the candy purchase and the delivery contract only.
c. the contract to assume George’s debt only.
d. the contract to assume George’s debt and the delivery contract only.
Bean Vendors, Inc., and Java Bistros Corporation dispute a term in their contract.
Refer to Fact Pattern 3-1. If Bean and Java resolve their dispute by having a neutral
third party render a binding decision, they will have used the method of
a. arbitration.
b. conciliation.
c. intervention.
d. mediation.
Recycled Sales Company and Standard Purchasing Corporation enter into a contract for
a sale of goods. To be enforceable, the contract should be in writing if the goods are
valued at more than
a. $5.
b. $15.
c. $50.
d. $500.
Pat, a world famous musician and composer, agrees to give ten piano lessons to Quinn
in exchange for $1,000. Pat’s attempt to delegate his contract to Ruth, an inexperienced
pianist, will probably be
a. permitted because contracts may be freely delegated.
b. permitted because the contract is concerned with music lessons.
c. prohibited because contracts may not be freely delegated.
d. prohibited because Pat and Ruth have very different skill levels.
Kelly files a suit against Lewis in a state court. The case proceeds to trial, after which
the court renders a verdict. The case is appealed to an appellate court. After its review
of Kelly v. Lewis, the appellate court upholds the lower court’s verdict. The appellate
court has
a. affirmed the case.
b. reversed the case.
c. remanded the case.
d. reversed and remanded the case.
To obtain a business license, Bess writes a check to a certain state agency. Bess is
a. the drawee.
b. the drawer.
c. the indorser.
d. the payee.
Housemate, Inc., makes and sells a variety of household products. With a fair amount of
certainty, Housemate’s decision makers can predict whether a given business action
would be legal in
a. all situations.
b. many situations.
c. no situations.
d. practically no situations.
E-Shopping Corporation inserts Fiesta Mall, Inc.’s trademark as a meta tag in
E-Shopping’s Web site’s key-words field without Fiesta’s permission in a manner that
suggests Fiesta authorized the use. This is
a. copyright infringement.
b. patent infringement.
c. trademark infringement.
d. no infringement.
Joan borrows money from Jake under a security agreement. After borrowing the money,
Joan buys a new kayak. The kayak is considered
a. a floating lien.
b. after-acquired property.
c. a future advance.
d. proceeds.
To obtain a contract with the Chinese government, Bammo Engineering Corporation, a
U.S. firm, gives a Chinese official a sport utility vehicle. This may violate
a. the act of state doctrine.
b. the doctrine of sovereign immunity.
c. the Foreign Corrupt Practices Act.
d. the principle of comity.
North American Properties, Inc., and its officers, directors, and shareholders, buy and
sell securities. Section 16(b) of the Securities Exchange Act of 1934 covers
a. all purchases and sales of securities.
b. only purchases and sales of securities involving misappropriation.
c. only purchases and sales of securities involving short-swing profits.
d. only purchases and sales of securities involving tippers and tippees.
Julie orally agrees to assume Carlyle’s debt to FunGames, Inc. Julie gets a substantial
personal benefit from the agreementCarlyle agrees to work for Julie’s landscaping
service for six months. Julie’s oral assumption of the debt is enforceable by
a. Julie or Carlyle only.
b. FunGames only.
c. any of the parties.
d. no one.
Fact Pattern 20-1
General Leasing Company (GLC) buys equipment for use as inventory, borrowing $1
million from Helpful Finance Corporation for a security interest in the equipment. The
next day, GLC borrows $500,000 from Interstate Bank, also for a security interest in the
equipment. GLC defaults on the loans.
Refer to Fact Pattern 20-1. Suppose that two weeks after GLC takes possession of the
equipment, Helpful and Interstate file financing statements, with Interstate filing first.
In that circumstance, the party with priority to the equipment is
a. GLC.
b. Helpful and Interstate proportionately.
c. Helpful only.
d. Interstate only.
Phillipa is the sole proprietor of Fun Floral Arrangements. As a sole proprietor, on Fun
Floral Arrangement’ profits, Phillipa
a. does not pay income taxes.
b. pays only personal income taxes.
c. is taxed twice.
d. pays both personal and sole proprietor income taxes.
Star Resorts Corporation wants to terminate its franchise arrangement with Tony. Their
contract does not provide for notice of termination or set a time for winding up the
business. This means that to wind up, Tony
a. has a reasonable time, with notice.
b. has whatever time A determines, with or without notice.
c. is entitled to notice, but nothing more.
d. must close immediately.
Kelly transfers shares of stock that she owns in Lone Starz Company to Max. A
shareholder’ meeting takes place before Max’s ownership is entered in Lone Starz’s
stock book. A vote at the meeting can be cast by
a. Kelly and Max.
b. Kelly only.
c. Max only.
d. neither Kelly nor Max.
A unilateral mistake always gives the mistaken party a right to relief from the contract.
An easement can be created by prescription.
A click-on agreement is an agreement whose terms are expressed inside a box in which
the goods are packaged.
A buyer and a seller cannot normally have an insurable interest in identical goods at the
same time.
Performance can be accomplished by tender.
After two years of research and the investment of considerable funds, Coast-to-Coast
Company (CC) develops a new product that it hopes will produce substantial profits.
CC learns that a competitor, National Sales, Inc., has made and begun to sell a nearly
identical product. CC learns from a reliable source that National paid a CC employee to
obtain the plans for CC’s product while it was in development. What legal recourse does
CC have against National?
Ethical reasoning is the process through which an individual links his or her moral
convictions or ethical standards to the particular situation at hand.
A trade name can be protected if it is unusual or fanciful.
Self-defense is a defense to negligence.
An accountant’s liability under the Section 10(b) and Rule 10b-5 of the Securities
Exchange Act of 1934 requires privity of contract.
Discount Mart, Inc., files a suit in a state court against Elements Computer Corporation,
alleging that Elements breached a contract to sell 500 notebook computers to Discount.
During the course of the suit, Discount files a motion for judgment on the pleadings,
Elements files a motion for a directed verdict, and both parties file motions for
summary judgment. When and for what purpose are each of these motions made?
The consideration paid to an insurer to obtain an insurance policy is the premium.
A gift causa mortis is effective only if the donor dies and the donee lives.
Andy leases to Burgertown Franchise Corporation a 10,000 square-foot building under
a written lease with a twenty-year term, rent payable annually. The lease includes a
clause stating that Burgertown is responsible for making all necessary repairs, including
rebuilding the structure after its destruction by any cause beyond Andy’s control. The
lease does not include a clause concerning its assignment. One day after the tenth rental
payment, Burgertown, without Andy’s knowledge or consent, assigns its interest in the
lease to Chicken Hut Restaurants, Inc. Meanwhile, Andy dies and Dotty inherits Andy’s
interest in the building. Without the knowledge or consent of either Burgertown or
Chicken Hut, Dotty sells the building to Earnest Investments, Inc. The next month, the
building is destroyed in the flood of a nearby river. Burgertown rebuilds it and files a
suit against Earnest for the expense. Earnest responds that the lease has terminated. Is
Earnest correct? If so, when did the lease terminate? If not, is Earnest liable for the cost
of rebuilding the structure? Why or why not?
The 1995 Federal Trademark Dilution Act allowed trademark owners to bring suit in
federal court for trademark dilution.