Home Products Store buys furniture from Relax Furniture, Inc. The parties agree that
the furniture will be shipped “F.O.B. Relaxs warehouse to Home Products via Swifty
Shipping Corporation. The furniture is lost in transit. The loss is suffered by
a. Home Products and Relax Furniture, but not Swifty Shipping.
b. Home Products, Relax Furniture, and Swifty Shipping.
c. Home Products only.
d. Relax Furniture only.
Region Bank wants to perfect its security interest in timber owned by Superior Lumber,
Inc. Most likely, a financing statement should be filed with
a. the local chamber of commerce.
b. the county clerk.
c. the federal loan officer.
d. the secretary of states office.
Staffing Solutions Corporation is subject to the Social Security Act, which
a. covers only employees who do not receive employer-paid pensions.
b. governs state unemployment compensation funds.
c. provides retirement, survivors, and disability insurance.
d. regulates disputes between unions and management.
Harley is an employee of ICU Identity Systems Corporation. Harley regularly posts
messages on a company-sponsored blog, which is read by employees, shareholders, and
other stakeholders. According to the Securities and Exchange Commission, Harleys
posts are subject to
a. federal securities laws.
b. international communications regulations.
c. state blog and tweet rules.
d. no law.
USA Oil Corporation signs an instrument that states it is being executed “in accord with
a contract for the purchase of 4,000 barrels of oil dated May 1. This instrument is
a. negotiable.
b. nonnegotiable, because information about the sale must be obtained from another
source.
c. nonnegotiable, because it states an express condition to payment.
d. nonnegotiable, because the terms of the sale are not clear.
Fact Pattern 9-1
Daves Hobby Town and Evas Yarn Shoppe are adjacent stores with adjoining parking
lots. Dave offers Eva a discount on purchases from Daves store if Eva will not tow the
cars of Daves customers who park in Evas lot.
Refer to Fact Pattern 9-1. Daves discount is legally sufficient consideration
a. because it is a promise of something of value.
b. only if Dave adds a cash rebate.
c. only if Eva uses it.
d. under no circumstances.
Greta is the only female employee in the maintenance department of Hydraulics Inc.
Gretas supervisor and co-workers tease and play tricks on her so relentlessly that she
feels compelled to quit. This is
a. a constructive discharge on the basis of gender discrimination.
b. a harassing discharge on the basis of treatment discrimination.
c. a voluntary discharge on the basis of impact discrimination.
d. not a discharge or discrimination.
Lexy and Mort act as the incorporators for NuGame Corporation. After the first board
of directors is chosen, subsequent directors are elected by a vote of NuGames
a. board of directors.
b. employees.
c. officers.
d. shareholders.
Capital Properties. Inc., and Broadview Corporation enter into a contract for a sale of
land. To be enforceable, the contract must be in writing if the land is valued at
a. $50.
b. $500.
c. $5,000.
d. any price.
Superior Company draws a check payable to Ted. Uri makes a note payable to Vital
Finance Corporation. Primarily liable parties include
a. neither Superior nor Uri.
b. Superior and Uri.
c. Superior only.
d. Uri only.
Nick and Roberta contract for the sale of computer equipment, reserving the right to al-
ter a particular provision in the contract. The rights of any third party beneficiary of that
contract are
a. not affected by the reservation.
b. limited to the extent of the reservation.
c. limited only if the beneficiary agrees to the reservation.
d. none of the choices.
Loni and Myra enter into a contract for a sale of clarinets and other wind instruments.
Loni delivers, but Myra does not pay. Loni can normally recover as damages the
difference between
a. any loss avoided and any profit gained.
b. the actual price and the hoped-for price.
c. the contract price and the market price.
d. the current prices in the parties locations.
Fact Pattern 15-1
Bret, a representative of Concrete Products, Inc. assures Dependable Construction
Company (DCC) that Concretes cement will not crack within a certain range of
temperatures. DCC uses the product. When cracks develop within the stated
temperature range, DCC files a suit against Concrete.
Refer to Fact Pattern 15-1. The court is most likely to rule in favor of
a. Concrete, because Brets statement was an expression of opinion.
b. Concrete, because DCC chose Concretes product voluntarily.
c. DCC, because Brets statement was an express warranty.
d. DCC, because Concretes product is not fit for its purpose.
Felipe is a member of Great States Transport LLC. Felipes relationship to Great States
ends, but the firm continues to do business. This is
a. dissociation.
b. dissolution.
c. winding up.
d. wrongful.
EZ Credit Company signs an instrument payable to the order of Flem that states, “The
maker of this note at the date of maturity, May 1, 2013, can extend the time of payment,
but for no more than a reasonable time. This instrument is
a. negotiable.
b. nonnegotiable, because it includes an extension clause.
c. nonnegotiable, because it is not payable at a definite time.
d. nonnegotiable, because it is payable to a specific payee.
Copy Products, Inc., uses, in its ads, a trademark that is similar, but not identical, to the
famous, registered mark of Imitated Goods, Inc. Copys unauthorized use of the mark
constitutes trademark dilution provided
a. consumers are confused.
b. Copy and Imitated are competitors.
c. Copys use is intentional.
d. Copys use reduces the value of Imitateds mark.
Brendan signs a check “pay to the order of City College Bookstore drawn on his
account in Delta Bank to pay for his current semesters textbooks. The bookstore
deposits the check in its account in Eagle Bank. Like most checks, this check is
a. a one-party instrument.
b. a four-party instrument.
c. a three-party instrument.
d. a two-party instrument.
Tiny is an accountant. Tinys violation of generally accepted accounting principles and
generally accepted auditing standards
a. does not indicate that Tiny was negligent.
b. is prima facie evidence that Tiny was negligent.
c. precludes Tiny from raising any defense against a negligence claim.
d. will never subject Tiny to liability.
Trucks & Trailers, Inc. (T&T), and United Delivery Service enter into a contract for a
lease of trucks. T&T is a merchant who deals in goods of the kind leased. Under the
UCC, an implied warranty of merchantability arises
a. automatically in lease contracts.
b. only if the lessee asks for it.
c. only if the lessor does not expressly disclaim it.
d. only in conjunction with sales contracts, not lease contracts.
In the facts of the previous question, according to the reasoning of the dissent in Dole
Food Co. v. Patrickson, parties who would be potentially subject to suit in U.S. courts
would include
a. Amigos and Bueno.
b. neither Amigos nor Bueno.
c. only Amigos.
d. only Bueno.
Hals Hardware store defaults on a debt to Intrastate Bank, which takes possession of the
collateral securing the debt. Intrastate sells the collateral. The proceeds from the sale are
applied first to
a. Hals debt to Intrastate.
b. Hals debts to other creditors.
c. Intrastates fees for the sale.
d. payments Hals made on the debt to Intrastate.
Unicameral Production, Inc., files for bankruptcy. Vance, Unicamerals bankruptcy
trustee, wants to recover a transfer that Unicameral made to Wisconsin State University
(WSU) less than ninety days earlier. WSU asserts its sovereign immunity. Under the
majoritys holding in Central Virginia Community College v. Katz, the party most likely
to prevail in this situation is
a. both Vance and WSU.
b. neither Vance nor WSU.
c. Vance.
d. WSU.
Tasty Pastries, Inc., and other bakers refer to a “bakers dozen as consisting of a
collection of thirteen baked goods. This is an example of
a. course of dealing.
b. course of performance.
c. square dealing.
d. usage of trade.
Rapid Pest Control itself out to others as being a corporation but makes no attempt to
incorporate. Ponce signs a contract with Rapid Pest Control that is not performed.
Ponce files a suit against the firm. The court will likely hold that Rapid Pest Control is
a. a corporation by estoppel.
b. an alien corporation.
c. an S corporation.
d. ultra vires.
Fact Pattern 23-1
Desi starts up eSites, an Internet service, and leases office space in a building owned by
Fred. The lease requires Desi to pay Fred a base rental of $1,250, plus 10 percent of
eSites profits, each month. The term is two years. Desi hires Gwen to work at eSites
tech support desk at an hourly wage of $12.50, plus a commission of 10 percent of the
profits. The term is also two years.
Refer to Fact Pattern 23-1. Desi and Gwen are
a. not partners, because Gwen does not have an ownership interest or management
rights in eSites.
b. not partners, because the pay includes an hourly wage.
c. not partners, because the pay includes only 10 percent of the profits.
d. partners in a partnership for two years.
Fact Pattern 10-4
Kelly and Lucas sign a written contract for the sale of Kellys Koffee Kiosk to Lucas.
The parties intend their written contract to be a final statement of the terms of their
agreement.
Refer to Fact Pattern 10-4. Lucas later disputes some of the provisions of the deal with
Kelly. If the dispute results in litigation, a court will most likely exclude evidence that
a. buttresses the written terms.
b. contradicts the written terms.
c. duplicates the written terms.
d. reinforces the written terms.
Elmo pays First National Bank $1,000 plus a service fee to draw a check on itself made
payable to Go Delivery Service. This is
a. a cashiers check.
b. a certified check.
c. a trade acceptance.
d. a travelers check.
Fact Pattern 26-3
Dhani, an accountant for Eureka, Inc., learns of undisclosed company plans to market a
new laptop. Dhani buys 1,000 shares of Eureka stock. He reveals the company plans to
Fay, who buys 500 shares. Fay tells Geoff, who tells Hu. Both Geoff and Hu buy 100
shares. They know that Fay got her information from Dhani. When Eureka publicly an-
nounces its new laptop, Dhani, Fay, Geoff, and Hu sell their stock for a profit.
Refer to Fact Pattern 26-3. Under the Securities Exchange Act of 1934, Fay is most
likely
a. liable for insider trading.
b. not liable because Fay did not prevent others from profiting.
c. not liable because Fay did not solicit information from Dhani.
d. not liable because Fay does not work for Eureka.
Fact Pattern 17-2
Tom draws a check, on his account in State Bank in New York, payable to Digital
Media, Inc., in San Francisco. Digital deposits the check in its account at First National
Bank. First National deposits the check in the Federal Reserve Bank of San Francisco,
which transfers it to the Federal Reserve Bank of New York. That Federal Reserve Bank
sends the check to State Bank.
Refer to Fact Pattern 23-2. When Digitals bank received the check, it was required to
pass it on
a. before midnight of the next banking day.
b. before midnight of the next day, even if it was not a “banking day.
c. before noon of the next banking day.
d. within five business days.
Middling Credit Corporation asks Little Supply Company to agree to a security
agreement that provides for coverage of the proceeds from the sale of after-acquired
property. This is
a. a first-in, first-out rule.
b. a floating lien.
c. a funds guaranty.
d. in violation of secured transactions law.
Mineral Mining Corporation is a U.S. employer. Mineral, and other U.S. employers,
must perform I-9 verifications for new hires who work under the employers direct
supervision
a. excluding contractors and day workers.
b. excluding contractors but including day workers.
c. excluding day workers but including contractors.
d. including contractors and day workers.
Jaime, an accountant, contracts to perform services for Kase. Jaime acts in good faith
and conforms to generally accepted accounting principles, but makes a mistake in
judgment. Jaime is most likely
a. liable if Jaime failed to discover a defalcation.
b. liable if Jaime failed to discover a fraud.
c. liable if Jaime failed to discover an impropriety.
d. not liable.
Hemisphere Financial Corporation, a U.S. firm, files a suit against Italy in a U.S. court.
Italy claims foreign sovereign immunity. Under the Foreign Sovereign Immunities Act,
this claim is determined by
a. a neutral third-party court.
b. an international law court.
c. an Italian court.
d. the U.S. court in which the suit is filed.
A criminal case must be proved beyond a reasonable doubt.
A personal name is not protected under trademark law unless it acquires a secondary
meaning.
Corporations chief executive officers are directly accountable for the accuracy of
financial statements filed with the Securities and Exchange Commission.
Foreign exchange markets comprise a worldwide system for buying and selling
currency.
Consequential damages are foreseeable damages that arise from a partys breach of a
contract.
Chris promises Dina $40,000 if she graduates from Eagle College. Dina enrolls in
Eagle, attends full-time for four years, and graduates. When Dina asks Chris for
$40,000, Chris says, “I dont remember promising you $40,000. But if there was a
promise, its not enforceable, because we didnt bargain for it. And even if there was a
promise that would otherwise be enforceable, I revoke it now. Can Dina enforce Chriss
“promise? Why or why not?
Jen operates Jens Fruits & Vegetables, a small market stocked entirely with produce
grown on her adjacent farm. Under what clause of the Constitution can the federal
government regulate Jens activities? What is Jens best argument against federal
regulation of her farm and business?
A business organization and its actions cannot be based on trust.
Under the Sarbanes-Oxley Act of 2002, accountants must retain working papers relating
to an audit or review for a certain period of time.
The first security interest to be perfected is the last in priority over any other perfected
security interests.
Oral evidence of the meaning of a contract with incomplete terms can be introduced at a
trial.
The state office in which a financing statement should be filed depends on the creditors
location.
An individuals right to privacy includes the exclusive use of his or her identity.
A copy must be exactly the same as the original to infringe a copyright.
Gaining unauthorized access to an electronic fund transfer system is a felony.
For twenty years, Ozzie works for Players Paradise, a destination for vacationers from
across the United States, maintaining golf carts. After a steady stream of positive job
evaluations and merit pay raises, Ozzie is promoted to the position of supervisor of
golf-cart maintenance at three of Playerss courses. Five years later, a new employee,
Quentin, is hired to oversee operations at all ten of Playerss courses. Quentin demotes
Ozzie, who is now over the age of forty, to running only one of the three cart facilities,
and freezes his salary. Quentin demotes five other employees over the age of forty and
places one of Ozzies former facilities under the supervision of Richie, who is
twenty-three. Ozzie overhears Richie say, “Were going to have to do away with these
old, senile men. Less than a year later, Quentin reconsolidates the three cart facilities
operations under Richies charge. Ozzie quits and files a suit against Players for
employment discrimination. Should he prevail? Explain.
Article 2 of the UCC governs contracts for sales of goods.