Discount Mart, Inc., is an East Coast-based firm that does business throughout the
United States. With respect to this circumstance, the UCC has been adopted by, and
applies in,
a. all of the states, in whole or in part.
b. most of the states on the Atlantic and Pacific coasts.
c. none of the states, to date.
d. only the states on the Mississippi, Missouri, and Ohio Rivers.
Frothy Beverage Corporation is a public company whose shares are traded in the public
securities markets. Under the Securities Act of 1933, Frothy is required to
a. contribute to the operations of national stock exchanges.
b. disclose financial and other information about its securities.
c. engage in market surveillance to deter undesirable practices.
d. solicit proxies for voting.
Opal files a complaint in a suit against Phil, and he files an answer. The case may now
be
a. dismissed only after a trial begins.
b. dismissed or settled at this point.
c. resolved only after a trial ends.
d. settled only during a trial.
Fact Pattern 42-1A
Fresh Fruits & Veggies, 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 42-1A. 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.
Doug is an accountant whose clients include Everyday Products, Inc. (EPI). Under the
Ultramares rule, if Doug is negligent in his work for EPI, he could be liable to
a. EPI and any third party.
b. EPI and third parties who are foreseen users of his work.
c. EPI and third parties who are reasonably foreseeable users of his work.
d. EPI only.
Before dying from injuries suffered in an auto accident, Beamer tells his relatives that
on his death, Clotilde is to have all of his possessions. Beamer has made
a. a codicil.
b. a constructive will.
c. an inter vivos will.
d. a nuncupative will.
A court adjudicates Huck mentally incompetent and appoints Inez to be his guardian.
Later, without Inezs knowledge, Huck signs a contract to sell his farm to Galen for its
real market value. The contract is
a. enforceable if Huck comprehended the consequences.
b. enforceable if Huck knew the market value of the farm.
c. enforceable if Huck was the record owner of the farm.
d. void.
E-Business, Inc. files a suit against Federated Financial Corporation, asking the court to
enforce an oral contract between the parties under the doctrine of promissory estoppel.
This doctrine applies in
a. all states.
b. no states.
c. one state.
d. some states.
Concrete Products, Inc., assures Deepwater Construction Company (DCC) that
Concretes cement will not crack within a certain range of pressure. DCC uses the
product. When cracks develop within the stated range, DCC files a suit against
Concrete. The court is most likely to rule in favor of
a. Concrete, because its statement was an expression of opinion.
b. Concrete, because DCC chose Concretes product voluntarily.
c. DCC, because Concretes statement was an express warranty.
d. DCC, because Concretes statement constituted puffery.
Experienced Capital Company and First Street Bank are secured parties with security
interests in property owned by Grande Oil Corporation. Between these security
interests, the first to be filed or perfected has priority over other filed or perfected
security interests in
a. most circumstances.
b. no circumstances.
c. states that have not adopted Article 9 of the UCC.
d. states that require a security agreement to be signed and dated by the creditor.
Harleys Home Store buys furniture from Relax-a-by Furniture, Inc. The parties agree
that the furniture will be shipped “F.O.B. Relax-a-bys warehouse to Harleys via Jiffy
Shipping Corporation. The furniture is lost in transit. The loss is suffered by
a. Jiffy Shipping.
b. Relax-a-by Furniture.
c. Harleys Home Store.
d. F.O.B.
Jack, a minor, takes out an automobile insurance policy and pays a $1,000 premium. If
Jack disaffirms the contract, he can most likely recover
a. $500.
b. $1,000.
c. $1,500.
d. nothing.
On behalf of RiteNow Collection Agency, Sid poses as a police officer in an attempt to
collect payment from Tylo for a shipment of scuba equipment that she returned to
Undersea Company two months earlier. This violates
a. no federal law.
b. the Fair Credit Reporting Act.
c. the Fair Debt Collection Practices Act.
d. the Truth-in-Lending Act.
Vicky contracts with Rashad for the delivery of hospice services to benefit Sigmund.
This is
a. a delegation.
b. an assignment.
c. a third party beneficiary contract.
d. an alienation.
Clear Creek Corporation enters into a contract with Brightside Management Associates
to manage and maintain Clear Creeks apartment complex. Their contract provides that
neither party can recover damages for a non-fraudulent or unintentional breach. This is
a. a limitation-of-liability clause.
b. an exculpatory clause.
c. a liquidated damages clause.
d. a quasi contract.
Tab stores video equipment with U-Store-It, Inc., under a contract that excuses the
warehouser from liability for any damage. A fire due to U-Store-Its negligence destroys
the equipment. The loss is most likely to be imposed on
a. neither Tab nor U-Store-It.
b. Tab and U-Store-It.
c. Tab only.
d. U-Store-It only.
Fact Pattern 24-2B
Ewa signs an instrument unconditionally promising to pay to “Sunny State Bank $5,000
with interest in installments with the final payment due June 1, 2013.
Refer to Fact Pattern 24-2B. The instrument that Ewa signed is most likely
a. a certificate of deposit.
b. a draft.
c. an order to pay.
d. a promissory note.
Cole drives into Dinos Service Station and asks Erin, the attendant, to fill the tank in
Coles sport utility vehicle. After Erin fills the tank, but before Cole pays for the gas, any
contract between Cole and Dinos is
a. executed.
b. executory.
c. quasi.
d. unenforceable.
Under the Marine Protection, Research, and Sanctuaries Act (the Ocean Dumping Act),
Bayside Chemical Company may dump its chemical waste into the ocean
a. after obtaining a permit.
b. before obtaining a permit.
c. without a permit.
d. not at all.
Jen questions whether there is consideration for her contract with Isaac to exchange her
catering services for his payment of a certain amount. To constitute consideration, the
value of whatever is exchanged must be
a. objectively worthy.
b. grossly inadequate.
c. legally sufficient.
d. practically sound.
Vince files a suit against Will. Vince and Will meet, and each partys attorney argues the
partys case before a judge and jury. The jury presents an advisory verdict, after which
the judge meets with the parties to encourage them to settle their dispute. This is
a. court-ordered arbitration.
b. early neutral case evaluation.
c. a mini-trial.
d. a summary jury trial.
Dot, a real estate agent, tells Elbert, a home seller, that her commission is 12 percent.
Elbert agrees that Dot can sell his house but refuses to sign a contract unless the amount
of the commission is reduced. After Dot sells the house, Elbert refuses to pay 12
percent. Dot is most likely to recover
a. nothing.
b. on a theory of an express contract.
c. on a theory of an implied contract.
d. on a theory of a quasi contract.
Josh and Kya form Longview Associates, a limited partnership, to invest in real estate.
Compared to a sole proprietorship and a general partnership, a limited partnership has
limited
a. business purposes.
b. investment opportunities.
c. personal liability.
d. requirements.
Jared uses his computer to secretly install software on thousands of personal computers
without their owners knowledge. The program can reproduce itself and spread from one
computer to another via any USB port. This program is
a. a hacker.
b. a bot.
c. a virus.
d. a worm.
Rand offers Quade the amount of a down payment on a house if Quade marries Rands
daughter Pepper. This promise is enforceable
a. only if it is in writing.
b. only if the price of the house includes the land.
c. only if Pepper agrees to marry Quade.
d. under no circumstances.
Bagels n Coffee Café issues an instrument in favor of Eatery Supplies, Inc. For the
instrument to be negotiable, it must
a. be a conditional promise or order to pay.
b. be payable on demand or at a specific time.
c. be signed by the payee.
d. recite the consideration given in exchange for it.
Fact Pattern 2-A1
Java Cafes, Inc., and Kaffe Import Corporation dispute a term in their contract. Refer to
Fact Pattern 2- If Java and Kaffe have a long-standing business relationship that they
would like to continue, a preferred method of settling their dispute may be mediation
because
a. the case will be heard by a mini-jury.
b. the dispute will eventually go to trial.
c. the process is not adversarial.
d. the resolution of the dispute will be decided an expert.
Owen, in Pennsylvania, and Quonset Structures, Inc., in Maryland agree to have their
dispute resolved in arbitration according to the law of Virginia. This is a ground for a
court to
a. do nothing.
b. review the merits of the dispute.
c. review the sufficiency of the evidence.
d. set aside the award.
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 the sale of
a. any of the property evidenced by a writing.
b. any of the property that may involve fraud.
c. the furnishings priced at $500 or more.
d. the land and the building.
Puck signs a check “pay to the order of Quik Mart drawn on Pucks account in Regional
Bank. Puck shows the check to Silky, who agrees that the signature is Pucks and that
Quik Mart is owed the amount that the check represents. Quik Mart signs the back of
the check. Liability on this check extends to
a. Puck, Quik Mart, and Regional Bank.
b. Puck and Quik Mart only.
c. Puck and Silky only.
d. Silky only.
Jims Jewelry Store orders Sho-Off-brand display racks from Kinos Merchandise
Presentation, Inc. Kinos mistakenly ships racks of the wrong size and color, which Jims
rejects and returns via Longroad Shipping Company. During the return, the racks are
lost. The loss is suffered by
a. Jims.
b. Longroad.
c. Sho-Off.
d. Kinos.
Mona, an accountant, prepares for NuTech Corporation a financial statement that omits
a material fact. The financial statement is included in NuTechs registration statement,
which Pam reads. Pam buys NuTech stock. Under Section 11 of the Securities Act of
1933, for Mona to be liable for the omission, Pam must show that
a. Pam relied on the omission.
b. Pam suffered a loss on the stock.
c. Pam knew about the omission before making her purchase.
d. the omission had no causal connection to her loss.
Paolo has cerebral palsy, Quincy has kleptomania, and both work for Reality Insurance
Company. Considered disabled under the Americans with Disabilities Act
a. are Paolo and Quincy.
b. is Paolo only.
c. is Quincy only.
d. is neither Paolo nor Quincy.
Cleaners & Solvents, Inc. (CSI), engages in deceptive advertising when it markets its
product Dirt Remover as able to kill germs over long periods of time. In an action
against CSI regarding Dirt Remover, the firm is ordered to stop its false advertising of
Dirt Remover and other products. This is
a. a counteradvertising order.
b. a multiple product order.
c. a “cooling-off law.
d. a validation notice.
Most private, small-business, noninvestment company offers of securities are not
exempt from the registration requirements.
The states can regulate any activity that substantially affects interstate commerce.
There are no exceptions to zoning laws.
An unauthorized scan of a bank account can be an invasion of privacy.
A franchisor can require a franchisee to purchase certain supplies from the franchisor at
an established price.
Labels must be accurate.
A check is a time instrument because it is payable in due time.
Most limited liability company statutes have no provisions regarding members
meetings.
Most securities can not be resold without registration.
Personal property that is most often exempt from satisfaction of judgment debts does
not include livestock.
If there is no limited liability company (LLC) agreement covering a topic under dispute,
the state LLC statute will govern the outcome.
UCC Articles 3 and 4 govern issues relating to checks.
If goods or tender of delivery fail in any respect to conform to a contract, the buyer or
lessee loses the right to accept the goods.
Browse-wrap terms are often unenforceable.
The vesting of contractual rights in a third party terminates the right of the original
parties to change the contract.
The duty owed under the mitigation of damages doctrine depends on the nature of the
contract.