May tries to start her new car with no success. She yells that she will sell the car to
anyone for $10. Nick, a passerby who owns Nick’s Pre-owned Autos, hands May $10.
This is
a. a valid acceptance because May is seriously frustrated.
b. a valid acceptance because Nick is a car dealer.
c. not a valid acceptance because May does not seriously intend to sell.
d. not a valid acceptance because Nick is a car dealer.
Laurel borrows $150,000 from Marketplace Mortgage Loans to buy a home. The
financing documents require Laurel to maintain the property, obtain homeowners’
insurance, and pay all property taxes and other assessments through the lender. With
respect to these terms, a court is most likely to
a. enforce them.
b. refuse to enforce them.
c. rescind them.
d. rewrite them.
Farouk uses his computer to break into Global Financial Center’s computer. Farouk is a
a. hacker.
b. phisher.
c. worm.
d. virus.
Holiday Sales Company and Global Distributors, Inc., enter into a contract for the
delivery of imported specialty goods. Until the goods are delivered and paid for, these
parties have
a. an executory contract.
b. no contract.
c. a quasi contract.
d. an informal contract.
Carol files a suit against Andy in a state trial court and loses. Carol
a. cannot take her case any higher in the court system.
b. can insist that the United States Supreme Court hear her case.
c. can plead her case before an appellate court.
d. can plead her case before a small claims court.
Savers Mart, Inc., distributes its merchandise to retail outlets on an interstate basis.
Under the commerce clause, Congress has the power to regulate
a. any commercial activity in the United States.
b. only activities that are in intrastate commerce.
c. only activities that are in local commerce.
d. only activities that are not in commerce.
Coast-to-Coast Distribution, Inc., is a direct-mail distribution company. Like most
corporations, Coast-to-Coast’s employees include its
a. board of directors.
b. incorporators.
c. officers.
d. shareholders.
Vance points a gun at Workman and threatens to shoot him. Workman hits Vance,
causing his death. Charged with homicide, Workman can successfully claim as a
defense
a. nothing.
b. duress.
c. entrapment.
d. self-defense.
Myles obtains a property insurance policy from Nova Insurance Company for Myles’s
restored 1957 Chevy. Nova can cancel the policy
a. if Myles increases the risk assumed by the Nova.
b. if Myles files a claim under the policy.
c. if Myles appears as a witness in a case brought against Nova.
d. under no circumstances.
Mary works in the public relations department of New Trends Sales Company. Her job
includes portraying New Trends’s activities in their best light. In this context, ethics
consist of
a. a different set of principles from those that apply to other activities.
b. the same moral principles that apply to non-business activities.
c. those principles that produce the most favorable financial outcome.
d. whatever saves New Trends’s “face.”
A firm named Scientific Discovery Corporation (SDC) makes an attempt to incorporate
for a purpose other than making a profit. SDC is
a. a foreign corporation.
b. an alien corporation.
c. a nonprofit corporation.
d. not a corporation.
Sights Unseen, Inc., (SUI) sells telescopes with distinctively designed lenses and
mirrors. Later, without SUI’s permission, Telescopes Etc. Corporation begins to sell
scopes with identical structures of lenses and mirrors. This is most likely
a. copyright infringement.
b. patent infringement.
c. trademark infringement.
d. not infringement.
Marshall owns a piece of land, but James owns the mineral rights to Marshall’s land.
James wishes to sell the mineral rights. James
a. cannot sell the mineral rights.
b. can only sell the mineral rights if Marshall agrees.
c. must give Marshall 30 percent of the proceeds of the sale of the mineral rights.
d. can sell the mineral rights without consulting Marshall.
Mall Stores Corporation owns 95 percent of the shares of Niche Retail Corporation.
Mall Stores combines with Niche Retail, but only Mall Stores continues to exist. This
transaction was
a. a consolidation.
b. a tender offer.
c. a short-form merger.
d. a termination.
Jin, Karlo, and other consumers form Metro Purchasing Cooperative. This form of
business organization makes it possible for these individuals to
a. avoid personal liability for the acts of the cooperative.
b. obtain an exemption from state laws governing corporations.
c. pay no taxes on their business income.
d. pool their resources to gain an advantage in the market.
Susan is unhappy with the way her mother has made out her will. Susan has a lawyer
draft a new will and then signs her mother’s name to it without her mother’s consent.
Susan has committed
a. larceny.
b. no crime.
c. robbery.
d. forgery.
KupaJava hires Lola to manage one of KupaJava’s seven drive-through coffee stands.
KupaJava agrees to pay Lola a salary, plus commission. KupaJava stipulates the
standards that should be observed, the goals that should be attained, and the methods
that should be used. Lola is most likely KupaJava’s
a. employee.
b. independent contractor.
c. principal.
d. power of attorney.
Rita, the manager of the State University (SU) soccer team, orally agrees to lease a
certain number of specially made SU banners from Top Banners, Inc. This lease is
enforceable only if Top has made a substantial start on making the banners and
a. Rita agreed to the lease on behalf of the SU soccer team.
b. SU does not have other, similar banners available.
c. the banners are not suitable for others in the course of Top’s business.
d. the soccer season has not ended and SU goes to the finals.
Duffy is a passenger in a car that Caleb is driving when an accident occurs. Both Caleb
and Duffy are emotionally rattled, but neither is physically hurt. Caleb is not liable to
Dufy on a negligence theory because
a. both parties were emotionally rattled.
b. Caleb apparently did not intend to cause an accident.
c. Duffy must have been comparatively negligent.
d. Duffy was not injured.
Genovese Contracting, Inc., agrees to build a warehouse for Hawthorne Distributors.
Genovese runs into the types of difficulties that contractors ordinarily confront, and
Hawthorne agrees to pay extra compensation to overcome them. Regarding the
agreement to pay more, a court would likely
a. enforce it.
b. rescind it.
c. order the parties to renegotiate it.
d. not enforce it.
Rural Utility, Inc., enters into a contract with Shovel Excavation Service to dig up,
replace, and rebury Rural’s cables in a certain location. Rural advances Shovel 10
percent of its cost. If the parties rescind the contract, Shovel’s refund of the payment
would be
a. a penalty.
b. liquidated damages.
c. restitution.
d. specific performance.
Premier Clothing, Inc., a U.S. firm, obtains a judgment in a U.S. court against Quang
Tri, Ltd., a Vietnamese business. Whether the court’s judgment will be enforced by a
court in Vietnam depends on the Vietnamese court’s application of
a. the act of state doctrine.
b. the doctrine of sovereign immunity.
c. the principle of comity.
d. the World Trade Organization.
Bean Vendors, Inc., and Java Bistros Corporation dispute a term in their contract.
Refer to Fact Pattern 3-1. If Bean and Java have a long-standing business relationship
that they would like to continue, they may prefer to settle their dispute through
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.
Jo works for Tall Tales Publishing, Inc. The basis for Jo’s contribution under the Federal
Insurance Contribution Act (FICA) is based on her
a. seniority at Tall Tales.
b. annual wage base.
c. special job skills.
d. county of residence.
Dave’s uncle tells Dave that if “he feels that Dave deserves it,” he will give Dave
$1,000 when Dave graduates from college. Dave’s uncle’s promise is
a. illusory.
b. enforceable.
c. a forbearance.
d. a preexisting duty.
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.
Carly is a minor. Without her parents’ knowledge, she signs a contract to buy an
airplane ticket to Hawaii for spring break. Carly’s parents are
a. liable for the contract.
b. not liable for the contract.
c. liable for up to half the value of the goods in the contract.
d. liable for up to one third of the value of the goods in the contract.
Jean is playing a video game on a defective disk that melts in her game player, starting
a fire that injures her hands. Jean files a suit against K-Tech, Inc., the game’s
manufacturer. K-Tech is held liable under the doctrine of strict liability. A significant
application of this doctrine is in the area of
a. cyber torts.
b. intentional torts.
c. product liability.
d. unintentional torts.
Paula, a disabled person, applies for a job at Quantity Corporation for which she is well
qualified, but for which she is rejected. Quantity continues to seek applicants and
eventually fills the position with a person who is not disabled. Paula is most likely to
succeed in a suit against Quantity for discrimination under the Americans with
Disabilities Act of 1990 if she can show that
a. she was not hired solely because of her disability.
b. she can function well with corrective devices or on medication.
c. her disability causes her undue hardship.
d. she could not perform the job even with reasonable accommodation.
In judging her action as a corporate employee of Music Notes Corporation, Brooke
always lets her conscience be her guide. As an effective alternative, Brooke could
a. ask herself whether she would be happy to be interviewed by the national media
about the action.
b. consider only the benefits that would accrue to her personally.
c. look only at the result, regardless of the means to attain it.
d. consider how she would like to have others treat her in a similar situation.
Julia opens a checking account with Washington Bank and deposits funds into the
account. Julia and Washington Bank
a. do not have a contractual relationship.
b. have a creditor-debtor relationship in which Julia is the creditor and Washington
Bank is the debtor.
c. have a creditor-debtor relationship in which Washington Bank is the creditor and
Julia bank is the debtor.
d. do not have a creditor-debtor relationship.
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.
Kirk receives an unsolicited credit card in the mail and tosses it on his desk. Without
Kirk’s permission, his roommate Leif uses the card to buy a new laptop for $1,800. Kirk
is
a. liable for $1,000.
b. liable for $500.
c. liable for $50.
d. not liable for any amount.
Lava Excavators, Inc., needs a drill to continue its operations and orders one for $3,000
from Mining Supplies Company. Lava tells Mining that it must receive the drill by
Tuesday or it will lose $10,000. Mining ships the drill late. Lava can recover
a. $13,000.
b. $10,000.
c. $3,000.
d. $0.
Southern Distribution, Inc., signs a receipt for goods that will also serve as a contract
for the goods’ transport. This is
a. a bill of lading.
b. a destination contract.
c. a shipment contract.
d. a warehouse receipt.
Shareholder voting agreements are usually held to be invalid and unenforceable.
A buyer may reject a seller’s goods under any circumstances.
Willful violations of the Sarbanes-Oxley Act of 2002 may be subject to harsh penalties.
The articles of corporation cannot exclude or limit shareholders’ voting rights.
A joint tenant’s sale of his or her interest terminates the joint tenancy.
A motion for a directed verdict is also known as a motion for judgment as a matter of
law.
A corporate officer cannot act as an agent of the corporation.
The crime of theft requires the taking of property, without regard to whether the
perpetrator knew it belonged to another.
College Copy Shop (CCS) compiles, copies, and sells reading materials to students. The
compilations are prepared on the instructions of professors, who indicate which parts of
which publications should be included for their students. The copied materials include
texts published by Deep Topics, Inc. CCS does not obtain the permission of Deep
Topics, or any of the other original publishers of the copied materials, and does not pay
royalties on the sales of the compilations. Deep Topics and others file a suit against
CCS, alleging infringement of their intellectual property rights. Which type of
intellectual property is involved in this situation? What is CCS’s likely defense? How is
a court most likely to rule? Explain.
When an instrument has a forged indorsement, the loss usually falls on the party whose
indorsement was forged.
Because the Constitution does not specifically a right to privacy, this right is denied to
people.
Until the time for performance under a contract expires, the seller has a right to cure.
Most bailments are created by agreement, but not necessarily by contract.
A limited liability company is a citizen of every state in which it does business.
There are twelve justices on the United States Supreme Court and they all receive
life-time appointments.
A mistake in value will rarely enable a party to a contract to avoid the contract.
The average prime offer rate is the rate offered to the least qualified borrowers as
established by a survey of potential borrowers.