Judith is a CPA with an excellent reputation and client base. She sells her tax
preparation business to Shawn, and the sales contract includes a noncompete clause
restricting Judith from opening a similar business for two years within a 10-mile radius
of her former office. If she opens a tax preparation office five miles away after one year,
a court would probably:
a. grant an injunction barring her from operating the new office.
b. order confiscation of all of her new client files and turn them over to Shawn.
c. refuse to become involved, as the noncompete clause was illegal.
d. refuse to enforce the noncompete clause, as it is unreasonable regarding time and
geographic area.
The SEC has enforcement powers, including the power to issue cease and desist orders,
to levy fines, and to confiscate profits from illegal transactions.
a. True
b. False
By definition, a sale under Article 2 of the UCC requires:
a. that the parties involved be merchants.
b. that the product involved be goods, services, or a mixture; that the sale be between or
among merchants; and that the sale take place in the normal course of business for that
industry.
c. that title to the goods pass between the seller and the buyer and that a price be paid
for the goods.
d. that the service being sold cannot be a gift or a bailment.
The corporate form of business:
a. was first known and used by the Greeks and then spread through the Romans to
England.
b. was not known until about 1737 when Sir Francis LaRue developed the concept.
c. was first allowed in the State of New York around 1811 and is considered to be an
American creation.
d. None of the above.
M & E sold a lathe “ASIS” to Brenna. M & E has disclaimed:
a. strict liability.
b. liability for negligence.
c. all implied warranties.
d. all of the above.
In many states it is illegal to lend money to help someone gamble.
a. True
b. False
The requirements for a patent include all EXCEPT:
a. the invention must be novel.
b. the invention must be nonobvious.
c. the invention must be commercially valuable.
d. the invention must be useful.
On impulse, you purchase a travel trailer and ask your acquaintance, Max, if you can
leave the trailer at the edge of his restaurants parking lot until you can have a concrete
pad built to store the trailer on your property. Max agrees. When you return for the
trailer the next week, it is gone and you find out that Max sold it. You can:
a. recover the trailer because Max did not have any ownership interest to pass.
b. recover, but only if Max bought insurance to cover the trailer while it was on his
property.
c. not recover because you “entrusted the trailer to Max, who then had a right to sell it.
d. not recover because Max had only a voidable title to transfer.
If a company has violated antitrust laws:
a. the Justice Department can initiate only noncriminal charges against the violator.
b. the Federal Trade Commission may file criminal proceedings against the violator.
c. any private person or company that has been harmed by the violator can file a lawsuit
to recover damages.
d. All the above.
Oxtron, Inc. sent the following price list to its customers.
Dispensers
SBC-500J $670.00
True TDD-1 $875.00
True TDD-2 $1,465.00
True TDD-3 $1,515.00
CO2 Tank and Regulator $150.00
Which statement is correct?
a. These price quotes would generally be considered offers.
b. These price quotes would generally not be considered offers.
c. These price quotes would generally be considered output contracts.
d. These price quotes would generally be considered requirements contracts.
Angela sued Tom for battery. Angela was awarded $30,000 for future medical expenses.
Five years after the award, Angela realizes that her medical expenses will far exceed
$30,000. Under the single recovery principle:
a. Angela will be able to submit the additional medical bills to the court for payment.
b. Tom will have to pay the additional medical bills.
c. Tom will have a qualified privilege and only have to pay a portion of the additional
medical expenses.
d. Angela will have no recourse against Tom or the court for the medical expenses as
long as the original award was reasonable.
Jaime offered to buy Kevin’s bike. Jamie is the:
a. offeree.
b. offeror.
c. mortgagor.
d. trustee.
Esmeralda is a debtor in a Chapter 7 bankruptcy proceeding. Which of the following is
not a duty of Esmeralda under Chapter 7?
a. To undergo credit counseling with an approved agency before filing.
b. To provide a repayment schedule for the debt owed to each creditor listed on the
creditor list.
c. To provide a list of all her assets and debts.
d. To provide a schedule of all her income and expenditures.
Which of the following is correct?
a. A copyright can be renewed once it expires.
b. A patent can be renewed once it expires.
c. A trademark can be renewed as long as the mark is still in use.
d. None of the above.
Rachel and Cyndi started a retail business called Zebra Toy Company. The business is
operated as a partnership. Under partnership law:
a. Rachel is personally liable for any business contracts entered into by Cyndi.
b. Rachel is personally liable for any business debts, regardless of whether she or Cyndi
created the obligation.
c. Cyndi is personally liable for any negligent act committed by Rachel in the scope of
the business activity.
d. All the above.
Marco agrees to sell Clowns R Us some balloons. The contract states that Clowns may
buy as many balloons as it wishes. This agreement is:
a. a requirements contract.
b. an output contract.
c. an illusory contract.
d. an enforceable contract.
For the purposes of the statute of frauds, an interest in land includes:
a. a house.
b. a real estate mortgage.
c. an easement.
d. All of the above.
Lorene, an artist, orally agrees to sell Sabrina a painting for $600. While Lorene is busy
talking on the phone, Sabrina writes her a note on the back of an envelope she finds in
her purse. The signed note states that she will stop by the studio to pick up the painting
within the week. Sabrina changes her mind about the painting, and when Lorene sues to
enforce the contract, Sabrina defends on the basis of the statute of frauds. Sabrina will
succeed with this defense.
a. True
b. False
Specific performance is available when the subject matter of the contract is unique.
a. True
b. False
Which of the following is NOT one of the three ways to amend a written contract?
a. write and sign an amendment document.
b. verbally agreeing to the changes and shaking hands on the deal.
c. crossing out the mistakes and writing in the corrections.
d. writing a totally new contract with the correct provisions.
Expectation interest can best be described as money spent in reliance upon the
agreement.
a. True
b. False
Tom, the production manager at Esday, was told by his supervisor to hire Elton, a 15-
year-old, to operate an industrial machine. Hiring the 15-year-old violates the child
labor laws. Tom:
a. should hire Elton. Tom has a duty to obey Esday’s instructions.
b. should hire Elton. Tom has a duty of care to ensure that the government does not
discover that Elton is 15 years old.
c. should not hire Elton. Tom has a duty of care and he would not be caring for Elton.
d. should not hire Elton. Tom has a duty to obey Esday’s instructions only if they are
legal and ethical.
Ernest invents a novel, useful, nonobvious product. He:
a. must apply for a patent within one year of selling the product commercially.
b. is entitled to a patent over someone else who invents the same product if he is the
first to get a company to produce it commercially.
c. may receive patent protection for two years by filing a simpler, shorter, cheaper
provisional patent application while he is working on his complex, regular patent
application.
d. may sell his product for up to five years to see how well it sells before going through
the complex process of filing a patent application with the PTO Office.
Vivian goes to an auction and sees a rare antique lamp that is an identical match to one
she already has. At the proper time she bids on the lamp and is the highest bidder. Even
though she is the highest bidder, the auctioneer refuses to accept her bid and withdraws
the lamp from the auction. Can the auctioneer do that?
a. Unless otherwise stated, the auctioneer had the right to withdraw the item before the
fall of the hammer.
b. Generally, the auctioneer must sell to the highest bidder. Vivian will get the lamp.
c. Generally, the auctioneer is the offeror and the bidders are the offerees so there is a
contract and Vivian will get the lamp.
d. Most auctions are without reserve and therefore the auctioneer cannot withdraw the
lamp.
Wombart Manufacturing sells a machine on credit to Cryslie Printing Co. Wombart
insists on a security interest in the machine to:
a. give itself a legal interest in the machine.
b. give itself a legal interest in all of Cryslies property.
c. establish a priority claim in the machine ahead of other creditors of Cryslie.
d. Both a and c.
A buyer’s material breach gives the seller the right to refuse to deliver the goods.
a. True
b. False
When Congress passed a criminal statute called the “Gun-Free School Zones Act,” the
Supreme Court ruled that:
a. the law was valid as a proper exercise of the power to regulate interstate commerce.
b. the law was void for vagueness; thus, it was not valid.
c. the law was not valid since Congress exceeded its power under the Commerce
Clause.
d. although the law was not a proper exercise of the power to regulate interstate
commerce, Congress had the power to create such legislation on other grounds.
Therefore, the statute was valid.
Roxanne was fired from her job when her employer instituted a new policy that
prohibited employees from smoking cigarettes. This requirement applied to off-duty
time as well as job-related time. Roxanne claimed that she could not quit smoking and
that she was wrongfully fired since she did not smoke in the workplace — only when
she was outside the building and during off-duty time.
a. The company has wrongfully fired Roxanne and is liable to her for damages.
b. The company would be liable to Roxanne only if there is a state statute prohibiting
employers from passing such job-related requirements.
c. The company is not liable to Roxanne since the nonsmoking requirement is
reasonable given the high cost of treating smoking-related illness.
d. The company is not liable to Roxanne since the United States Supreme Court has
expressly ruled such a company policy does not violate the worker’s right to privacy.
The intentional tort of battery involves conduct in which:
a. the defendant intended to harm the plaintiff.
b. the defendant intended a certain physical act which ends up injuring someone.
c. injuries are caused to someone because of the defendants neglect or oversight.
d. there is resulting punishment, including prison, for the defendant.
Insider trading is illegal only if the person with secret information has a duty to disclose
to those with whom he trades, thus in Chiarella v US, Mr. Chiarella was found
innocent.
a. True
b. False
Ron operates a garbage pickup business. He contracts to pick up garbage from an
apartment complex for the next 52 weeks at a price of $150 per week. Unexpectedly,
the landfill center where Ron takes the garbage to dispose of it, files for bankruptcy. As
a result, Ron must travel an additional 100 miles to the nearest landfill center, turning
Ron’s expected profit into a loss of $40 per week. Ron’s best argument in support of his
petition to be discharged from the contract is:
a. the mail box rule.
b. commercial impracticability.
c. frustration of purpose.
d. true impossibility.
Wimble ordered 1,000 pro-quality luminescent orange tennis balls from Sports
Unlimited at a cost of $800. On June 1, Sports Unlimited shipped standard white tennis
balls, but Wimble rejected them. Wimble bought the same number of pro-quality
luminescent orange balls from another supplier the same day for $650. In a suit against
Sports Unlimited, Wimble may recover $800.
a. True
b. False
The majority of work done by legislative bodies is performed in committees.
a. True
b. False
In order to obtain limited liability, Tom and Doris formed an LLC to operate their
catering business. They sometimes deposited the proceeds from catering jobs into their
personal checking accounts and if they needed to pay personal bills and were short of
funds, they used the business account. If creditors of the business cannot get payment
for their invoices, is there anything a court can do to help the creditors?
The Rameys are selling their home. They did not set forth in the sales agreement
whether the washer and dryer, the draperies, and a cherry corner cabinet which was in
the dining room were to be included in the sale or whether they were planning to take
these items with them. The buyers are claiming these items are fixtures and should stay
with the house. The Rameys are claiming they are movable goods and they should not
be part of the real estate which was sold. Define “fixtures, identify the tests used to
determine whether an item is a fixture, and explain whether you think each of the
contested items is a fixture and why or why not.
Derrick buys a CD, but after listening to it, decides he doesnt like the music. May he
legally sell the CD to someone else? If he thinks his cousin would enjoy the music, may
he legally copy the CD for her?
Mark and Cynthia work for Bryson Supply Co. If the company files for Chapter 7
bankruptcy before paying their last month of wages and benefits, will they be able to
recover anything from the company?
Peggy Lou filed a lawsuit against “We Fix ‘Em Rite,” an auto body shop, for the sloppy
paint job it did on her 1998 car. Once the lawsuit was filed with the appropriate clerk of
court, Peggy Lou personally dropped a copy of the lawsuit in the mail. “We Fix ‘Em”
says it never received notice of the lawsuit. Local court rules require that a lawsuit be
served by an independent process server or by the sheriff’s department. Is this an
example of substantive law or procedural law? Explain the difference.
What are three general defenses an employer can raise if sued for violating Title VII of
the Civil Rights Act?
Marcy and Elliot are both sophisticated merchants who deal in diamonds. Marcy
contracted to purchase a diamond for $20,000. The day after the purchase, Marcy took
the diamond to a jeweler’s show but the highest offer for the diamond was only
$10,000. Is Marcy’s contract for purchase of the diamond for $20,000 unconscionable?
List and discuss the elements necessary to establish negligence.
Jackie purchased a condominium. When she bought it, she realized the homeowner’s
association had a variety of rules and regulations that she would need to follow. One
regulation was that no children were allowed to live in the complex. Two years after
buying the condominium, Jackie gave birth to a child. She was immediately served with
papers notifying her to move out of the complex. Discuss the constitutionality of the
homeowner association’s action.
Jerry knows that Lucy has coveted his classic car for quite some time. Finally willing to
sell it, he sends a letter to Lucy offering to sell the car for $15,000. Lucy responds by
saying she needs time to arrange financing. Lucy offers Jerry $100 to keep the offer
open for two weeks. Jerry agrees, taking the $100. Three days later, Roberta contacts
Jerry saying she is interested in buying the car and has the cash to buy it outright. Jerry
is concerned that if he doesn’t sell the car to Roberta now, she may not be interested
later. Furthermore, Lucy may never be able to arrange financing. Jerry is afraid he may
end up with no buyer at all. He comes to you for advice. What do you advise?
Andrew Durham was injured in a job-related accident that resulted in a workers’
compensation settlement agreement with the employer’s insurance carrier, Traveler’s
Indemnity Company. The settlement agreement required Traveler’s to pay Durham
$2500 per month for the rest of his life. To finance its obligation, Traveler’s purchased
an annuity in its name. The settlement agreement required Traveler’s approval or
consent prior to an assignment of the annuity payments. Durham later decided to open a
business and went to a credit union for a $214,000 loan. The credit union loaned the
money, taking a security interest in Durham’s monthly annuity payments. Traveler’s
consent was never secured. Was this a valid assignment?
Explain the reason behind having a statute of frauds and give arguments for and against
having such a statute.
Explain the concept and significance of identification of goods. Discuss how
identification takes place.
Identify and discuss the primary sources of contemporary U.S. law.
Patsy is shopping for a used car. She finds a car she likes at Morley Motors. Discuss the
standard of conduct the UCC imposes on the parties in performing the sales transaction.
Brooke uses her credit card to purchase a lawn mower at the local “big box hardware
store, but when she tries to use the mower for the first time, she finds it is not
self-propelled as advertised. Does she have any recourse?
Discuss the two categories of sexual harassment.