First Design Corporation, a business firm, and Glen, a consumer, make a deal over the
Internet that involves e-signatures. Under the E-SIGN Act, the e-signatures
a. are as valid as signatures on a paper document.
b. must be encrypted to be enforceable.
c. must have been inscribed on a digital tablet to be authenticated.
d. must relate to a partnering agreement.
Julia owns and operates Collectable Dolls without creating a separate business
organization. She receives all the profits from the doll sales. Collectable Dolls is most
likely a
a. a corporation.
b. a limited liability company.
c. a partnership.
d. a sole proprietorship.
Imperio Caffeine Corporation makes and sells coffee under a variety of brand names.
Imperio wants to merge with Java Company, its main competitor. In weighing a
challenge to the deal, a court looks at the relevant product market. This most likely
includes coffee and
a. no other products.
b. products that are not identical but are related, such as spin-offs.
c. products that are sometimes substituted for coffee.
d. products with identical attributes only.
Megan is charged with jaywalking, which is classified as
a. a misdemeanor.
b. a felony.
c. a petty offense.
d. no crime.
North Mining Company and South Excavation Company agree to abide by the
decisions of East Coast Financial Corporation as to their respective levels of
production, markets, and prices, effectively reducing competition and increasing profits.
This is most likely
a. a common, legal, time-honored type of business arrangement.
b. an illegal restraint on trade.
c. an innovative, legally efficient approach to doing business.
d. an outdated, but legal business trust.
The Financial Institutions Association would like a certain law enacted, administered,
interpreted, and enforced in the best interest of its members, which include banks.
Under the Constitution, Congress
a. administers the laws.
b. enforces the laws.
c. interprets the laws.
d. makes the laws.
Stan rents a safe-deposit box at Main Street Bank under a contract that gives Stan
exclusive knowledge and control over its contents. This is
a. a bailment.
b. accession.
c. production.
d. confusion.
Jeff’s grandmother is the payee of a promissory note for $7,500. Jeff’s grandmother
gives Jeff the note for his sixteenth birthday. Jeff is
a. an HDC.
b. not an HDC, because he received the note as a gift.
c. not an HDC, because he is a minor.
d. not an HDC, because the note was for less than $10,000.
Real World Sports Corporation (RWSC) is a U.S. firm with a workplace in Switzerland.
Generally, RWSC must abide by U.S. anti-discrimination laws in Switzerland
a. under any circumstances.
b. under no circumstances.
c. unless to do so would contravene the cultural norms of Switzerland.
d. unless to do so would violate the law of Switzerland.
Fact Pattern 19-1
Echo takes her car to Fix-It, Inc., which repairs the car and bills Echo for $500. Echo
writes out a check drawn on Capital Bank, but later, believing that Fix-It did not repair
the car properly, issues a stop-payment order.
Refer to Fact Pattern 19-1. Capital Bank pays the check. Capital
a. can sue Echo for a wrongful stop-payment order.
b. can sue Fix-It for breach of contract.
c. can sue no one because it paid a check that was not properly payable.
d. is liable for Echo’s loss due to the wrongful payment.
Fact Pattern 13-1
Four-Square Construction Company enters into a contract with Ben to remodel Carol’s
Home Store, using products from Delta Building Supplies. Eatery Café is next to
Carol’s Home Store. The remodeling is a gift from Ben to Carol.
Refer to Fact Pattern 13-1. The value of Eatery’s property will increase after Carol’s
store is remodeled. Eatery is
a. a delegatee.
b. an assignee.
c. an incidental beneficiary.
d. an intended beneficiary.
The primary purpose of the Uniform Electronic Transactions Act (UETA) is to remove
barriers to e-commerce.
Martha brings a suit against SafeCars, Inc. claiming that she was injured during a car
crash due to defects in the car she had purchased from SafeCars. There is no evidence
that Martha was injured in the accident, but the trial court awards her $1 million in
damages. SafeCars appeals the decision. The appellate court will most likely
a. not modify the trial court’s finding of fact because appellate courts are forbidden to
look at questions of fact.
b. modify the trial court’s finding of fact because the finding was clearly erroneous.
c. modify the trial court’s finding of fact because the award amount was more than
$25,000.
d. modify the trial court’s finding of fact because the award amount was less than $5
million.
Lucy, a minor, disaffirms a contract for necessaries without returning the goods. To
Manny’s Food Mart, the seller, Lucy is required to pay
a. nothing.
b. the reasonable value of the goods.
c. the sales price of the goods.
d. the ultimate worth of the goods.
Otis is interested in buying a franchise from Plentiful Inc. This transaction, like other
franchise deals, is regulated to protect
a. certain types of anticompetitive agreements.
b. franchisors from dishonest prospective franchisees.
c. prospective franchisees from dishonest franchisors.
d. the government’s power to restrict freedom of contract.
Livewire Company and McCoy’s Candy, Inc., sign a document that states Livewire
agrees to design a Web page for McCoy’s, which agrees to pay for the service. This is
a. an actual contract.
b. a fictional contract.
c. an implied contract.
d. a quasi contract.
Green Grocers, Inc., enters into a contract with Hiway Transport Company for the
delivery of a shipment of fresh produce. In a later dispute between these parties over the
delivery, the doctrine of quasi contract cannot be used because
a. both of the parties involved are businesses.
b. at least one of the parties had greater bargaining power.
c. the subject of the contract was a service.
d. there is an actual contract covering the subject in dispute.
Kelly signs an instrument in favor of Leo that states it is ‘subject to a certain agreement
between Kelly and Mona.” This instrument is
a. negotiable.
b. nonnegotiable, because it is made subject to a separate agreement.
c. nonnegotiable, because it refers to a separate agreement.
d. nonnegotiable, because Kelly and Mona are not the same persons.
Roald writes a check for $700 to Savannah. Savannah indorses the check in blank and
transfers it to Twitchell, who alters the check to read $7,000 and presents it to Union
Bank, the drawee, for payment. The bank cashes it. Roald discovers the alteration and
files a suit against the bank. Roald can recover
a. $7,000.
b. $6,300.
c. $700.
d. 0.
A Massachusetts state statute imposes a prison term, without a trial, on all street
performers who operate in certain areas. A court would likely review this statute under
the principles of
a. the commerce clause.
b. the equal protection clause.
c. the due process clause.
d. the First Amendment.
A barge owned by Oceanic Shipping Company discharges some of the oil contained in
its hold into the sea and onto the shore. Under the Oil Pollution Act, this is most likely
a. a violation.
b. not a violation because an oil discharge is not pollution.
c. not a violation because a floating barge is not a stationary source.
d. not a violation because a ship’s hold is not a point source.
Megan goes to visit her friend Kathleen. While visiting, Megan downloads Kathleen’s
copy of Photoshop onto her computer’s random access memory without Kathleen’s
permission. Megan is guilty of
a. copyright infringement.
b. patent infringement.
c. cybersquatting.
d. trademark dilution.
Olga, a salesperson for Pre-owned Cars & Trucks, Inc., tells Quincy, “This is the best
car Ive ever seen.” This statement is
a. an express warranty.
b. an implied warranty.
c. a warranty of title.
d. puffery.
Ruth contracts to provide Stan with fifty hours of telepathic personal coaching. The
state legislature subsequently passes a law making telepathic personal coaching illegal.
This law will
a. discharge the contract.
b. fulfill the contract.
c. not affect the contract.
d. require immediate performance of the contract.
Craig is an accountant whose clients include Digby Excavation Corporation. Elbert is
Craig’s attorney. Under the common law and by statute in many states, working papers
that Craig develops when preparing financial reports for Digby are owned by
a. Craig.
b. Digby.
c. Elbert.
d. no onethe papers must be destroyed immediately after use.
Dirk, an employee of Ergonomic Elevators, Inc., pays Ferbie, an employeeof
Ergonomic’ competitor G-Force Risers Company, for a secret G-Forcepricing schedule.
This is
a. an effective marketing strategy.
b. commercial bribery.
c. creative legal bookkeeping.
d. money laundering.
To fall under the Sherman Act, an activity must
a. substantially affect interstate commerce.
b. involve monopolization.
c. promote competition.
d. involve international trade.
Garden Tool Company makes hedge trimmers. Troy is injured while using a Garden
Tool trimmer and sues the company for product liability based on negligence. To win,
Troy must show that
a. Garden Tool did not use due care with respect to the trimmer.
b. Garden Tool misrepresented a material fact regarding the trimmer.
c. Troy was experienced in the use of trimmers.
d. Troy was in privity of contract with Garden Tool.
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.
Property Management Corporation (PMC) owns several apartment buildings in two
states. Regarding standards for maintenance of the buildings, PMC should consult
a. the applicable city ordinances and state statutes.
b. the previous owners.
c. the long-term tenants.
d. the Uniform Landlord’ Maintenance Manual.
Boutique Corporation would like to change its corporate status to that of an S
corporation to avoid income taxes at the corporate level. To qualify, the shareholders
must not be
a. corporations.
b. estates.
c. individuals.
d. partnerships.
Pat, an accountant, includes a false statement in a report for Quantity Overstock, Inc.,
that is filed with the Securities and Exchange Commission. Quantity publishes a
misleading ad about its future prospects. Rita sees the ad and calls Stan, who buys stock
in Quantity. Under Section 18 of the Securities Exchange Act of 1934, liability may
attach to
a. Pat’s report.
b. Quantity’s ad.
c. Rita’s call.
d. Stan’s purchase.
Smitty, driving while intoxicated, causes a car accident that results in the death of
Tiffany. Smitty is arrested and charged with a felony. A felony is a crime punishable by
death or imprisonment for
a. any period of time.
b. more than one year.
c. more than six months.
d. more than ten days.
Checkerboard Pizza, Inc. (CPI), files for bankruptcy under Chapter 11. CPI’s Chapter
11 plan must contain
a. a plan to turn over its future income to the trustee.
b. a certificate proving attendance at a credit-counseling briefing.
c. a provision of adequate means for the plan’s execution.
d a statement of preference for one creditor over another.
A recording statute allows deeds to be recorded to give notice to the public.
A borrower has the right to purchase the property after default by paying the full
amount of the debt, plus any interest and costs that have accrued.
Generally, a tenant must pay agreed-to rent even if the tenant moves out.
The ownership right to stock exists independently of a stock certificate.
Under the doctrine of comparative negligence, only the plaintiff’s negligence is taken
into consideration.
Concurrent jurisdiction exists when both federal and state courts have the power to hear
a particular case.
It is illegal for two parties to mutually agree to rescind a valid contract.
Concealing assets from a bankruptcy court is a crime.
Any lawful contract can potentially form the basis for an action based on wrongful in-
terference with a contractual relationship.
An employer may not hire an illegal immigrant under any circumstances.
If a contract specifies a certain carrier, a substitution of a different carrier for any reason
breaches the contract.
The UCC requires that the mirror image rule be followed for all acceptances.
According to the Foreign Sovereign Immunities Act, a foreign state that waived its
immunity by implication is subject to the jurisdiction of the U.S. courts.
The categorical imperative cannot be applied to many business actions.
In some states, a judgment creditor must obtain a separate order of garnishment to cover
each of the debtor’s pay periods.
In defense against payment, an insurance company can raise any of the defenses that
would be valid in an ordinary action on a contract.