Delite Candy Company hires Elton to sell Delite’s products in a certain area. Delite
agrees to pay Elton a salary, plus commission, for a trial period. They also agree that
Elton can sell using any methods and during any hours that seem appropriate. The most
important factor in whether Elton is Delite’s employee is
a. the amount of Elton’s salary.
b. the control Delite has over the details of the work.
c. the length of the trial period.
d. the title that designates Elton’s position.
Selena buys a cell phone for $350 and an air hockey table for $1,500, and signs a
one-year employment contract for a $4,000 monthly salary to start at the beginning of
the next month. The Statute of Frauds covers
a. the employment contract, and the game table and phone purchases.
b. the employment contract and the game table purchase only.
c. the employment contract only.
d. the game table and phone purchases only.
Bakri owns a house. In the house, on a tile floor is a throw rug. Most likely to meet the
definition of a fixture is
a. the house.
b. the throw rug.
c. the tile floor.
d. none of these choices.
Principal Resources Corporation contracts with Quality Construction to build an
addition to Principal’s corporate office building. Quality contracts with Rite Supply
Company for materials for the addition but refuses to pick up the materials. Meanwhile,
Principal hires Skye, a certified public accountant, to work in its cost-accounting
division as an employee, with no authority to hire or supervise others. Skye asks Theo,
an outside experienced accountant, to advise her on certain accounting procedures but
fails to pay Theo for the service. Principal also contracts with Uma, a salesperson, to
solicit orders for its products in a designated territory. Uma obtains an order from Verity
Industries, Inc., which is assured the order will be filled soon. But Uma does not follow
through with the paperwork and fails to submit the order to Principal. Verity suffers a
loss. Rite Supply, Theo, and Verity Industries claim Principal is liable under agency law.
Discuss fully whether an agency relationship was created by Principal with Quality
Construction, Skye, or Uma.
Robert owns Textbooks Plus, a sole proprietorship that sells textbooks. When Robert
dies, Textbooks Plus will
a. be automatically dissolved.
b. pass directly to his oldest child.
c. pass directly to the state.
d. be evenly divided among all Robert’s heirs.
Peak & Vale Accountants provides other firms with accounting services. Questions of
what is ethical involve the extent to which Peak & Vale has
a. a legal duty beyond those duties mandated by ethics.
b. an ethical duty beyond those duties mandated by law.
c. any duty beyond those mandated by both ethics and the law.
d. any duty when it is uncertain whether a legal duty exists.
OK Dry-Cleaning advertises so effectively that the regular customers of its competitor
Purity Cleaners patronize OK instead of Purity. This is
a. appropriation.
b. conversion.
c. wrongful interference with a contractual relationship.
d. no tort.
Cow Country Corporation (CCC) sells half of its land to the Double R Ranch. On the
land is a reservoir. In the deed, CCC retains the right to remove a limited amount of
water per day from the reservoir. This right is
a. a tenancy at sufferance.
b. a license.
c. an easement.
d. a profit.
Mike is arrested at a warehouse in North Industrial Park and is charged with the crime
of theft. Mike will be prosecuted by
a. the owner of the warehouse.
b. the owner of the property that Mike is charged with stealing.
c. a public official.
d. any third party unrelated to Mike, the property, or the crime.
Beth is a victim of Carl’s violation of a criminal law. Criminal law is concerned with
a. the prosecution of private individuals by other private individuals.
b. the prosecution of public officials by private individuals.
c. the relief available when a person’s rights are violated.
d. wrongs committed against the public as a whole.
Sparky offers Teodora $1,000 for her collection of rare coins. She accepts. If a dispute
arises, a court would likely
a. enforce the deal after questioning the adequacy of consideration.
b. not question the adequacy of the consideration.
c. rewrite the deal after questioning the adequacy of consideration.
d. set aside the deal after questioning the adequacy of consideration.
Sayers is very clever and spends lots of time creating new things. Which of the
following is not copyrightable?
a. A sculpture of Sayers’s horse
b. A book about Sayers’s life
c. A movie about Sayers’s life
d. Sayers’s idea for a new way to play the guitar
Nika owns land in Ohio. Her ownership rights include the right to sell or give away the
property without restriction, and the right to commit waste, if she chooses.
Refer to Fact Pattern 24-1. Nika’s ownership interest is
a. a fee simple absolute.
b. a fixed-term tenancy.
c. a life estate.
d. an easement.
Rangle contracts with Siena to buy a certain horse for her. Rangle makes a deal with
Timberline Stables, the owner of the horse, and makes a down payment. Siena fails to
pay the rest of the price. Timberline sues Rangle for breach of contract. His right to
hold Siena liable for any damages that he has to pay is the right of
a. avoidance.
b. cooperation.
c. indemnification.
d. reimbursement.
Grace applies for a homeowners’ insurance policy on her house with Heroic Insurance
Company through Ian, a broker. In this transaction, Ian is
a. an agent for both parties.
b. Grace’s agent, and not Heroic’s agent.
c. Heroic’s agent, and not Grace’s agent.
d. not an agent.
Sudan seizes the assets of Triage Medical, Inc., a U.S. firm. Triage’s recovery from
Sudan in a U.S. court may be prevented by
a. the act of state doctrine.
b. the doctrine of sovereign immunity.
c. the Foreign Corrupt Practices Act.
d. the principle of comity.
Travis sends Suri what purports to be a link to an e-birthday card, but when she clicks
on the link, software is downloaded to her computer to record her keystrokes and send
the data to Travis. He uses the data to obtain her personal information and access her
financial resources. This is
a. identity theft.
b. cyberterrorism.
c. entrapment.
d. no crime.
Justin wants to file a suit against Mikayla. For a court to hear the case
a. Mikayla must agree.
b. the court must have jurisdiction.
c. the court must issue a deposition.
d. the parties must own property.
Pastry Dough, Inc., sends its catalogue to Octavio and includes a “personalized” letter
inviting him to buy any item in it at the advertised price. This is
a. an offer because of the “personalized” letter.
b. an offer because there is no room for price negotiation.
c. an offer only if Octavio previously bought items from Pastry Dough.
d. not an offer.
Frugal Insurance Company sells a policy to Grover Company, insuring the life of one of
Grover’s key executives. When the executive dies, Frugal refuses to pay, noting that it
was not licensed to sell insurance in Grover’s state and arguing that thus, its policy
cannot be enforced. Grover can recover
a. the amount of the policy from Frugal in full.
b. the amount of the premiums that Grover paid to Frugal.
c. as much of the amount of the policy from Frugal as will cover Grover’s costs.
d. nothing.
Jackie inserts a debit card issued by her bank into a machine and keys in her personal
identification number. She is then able to withdraw $500 in cash. Jackie is using
a. an automated teller machine.
b. a point-of-sale system.
c. a direct deposit system.
d. an Internet payment system.
Kelly files a suit against Lewis in a state court. The case proceeds to trial, after which
the court renders a verdict. The case is appealed to an appellate court. After its review
of Kelly v. Lewis, the appellate court upholds the lower court’s verdict. The appellate
court has
a. affirmed the case.
b. reversed the case.
c. remanded the case.
d. reversed and remanded the case.
Gourmet Foods, Inc., requires all distributors of its products to sell them at a specified
minimum price. Under the Sherman Act, this is a violation
a. if the anticompetitive effects outweigh the competitive benefits.
b. if the competitive benefits outweigh the anticompetitive effects.
c. under any circumstances.
d. under no circumstances.
California enacts a statute to ban advertising in “bad taste.” This statute would likely be
held by a court to be
a. an unconstitutional restriction of speech.
b. constitutional under the First Amendment.
c. justified by the need to protect individual rights.
d. necessary to protect national interests.
Luminescent Silicon Corporation, which controls 40 percent of the computer-chip
market in the United States, merges with Micro Processors, Inc., which controls 15
percent of the same market. This merger is a violation
a. only if the result more clearly concentrates the market.
b. only if the result makes it more difficult for potential competitors to enter the market.
c. if the result more clearly concentrates the market and makes it more difficult for
potential competitors to enter the market.
d. under no circumstances.
On April 1 Richard arranges to buy a sixteen-speed bike from his neighbor Phil for
$500. Phil agrees to deliver the bike on May 1. Richard writes a draft for $500 payable
to Phil on May 1. In this situation, the draft is a
a. certificate of deposit.
b. time draft.
c. sight draft.
d. promissory note.
Ginny obtains a health-insurance policy for her family from Hope Insurance Company.
The policy includes an incontestability clause. Under such a clause, after a policy has
been in force for a specified period or time, such as two or three years
a. Ginny cannot contest Hope’s insurable interest.
b. Ginny cannot contest Hope’s refusal to pay a claim under the policy.
c. Hope cannot contest Ginny’s eligibility for continued coverage.
d. Hope cannot contest Ginny’s statements in the application.
Sigrud buys spiked mountain-climbing shoes from Rockridge Gear store. The spikes
come out of the shoes when Sigrud is on the side of a mountain, causing her to be
injured in a fall. Rockridge breached
a. an express warranty.
b. an implied warranty of fitness for a particular purpose.
c. an implied warranty of merchantability.
d. a warranty of title.
Beans Coffee & Cocoa Company makes and sells a chocolate-flavored coffee drink
under the name “CoCoCafe.” Darkroast Java, Inc., later markets a similar drink under
the name “KoKoKafe.” This is most likely
a. copyright infringement.
b. patent infringement.
c. trademark infringement.
d. a theft of trade secrets.
Good Food Corporation buys from Home Farms, Inc., a rice crop that Home Farms
plans to plant and harvest during the next growing season. Good Food plans to sell the
rice to Interstate Grocery Stores. After the rice is planted, but before it is harvested, an
insurable interest in the rice exists in
a. Good Food and Home Farms, but not Interstate Grocery.
b. Good Food, Home Farms, and Interstate Grocery.
c. Good Food only.
d. Home Farms only.
Glen falsely accuses Hu of stealing from Island Tours, Inc., their employer. Glen’s
statement is NOT defamatory if
a. only Hu hears it.
b. a third party hears it.
c. the statement is published.
d. the statement is a lie.
A seller’s price list is not an offer.
A sole proprietor has unlimited liability for all obligations that arise in doing business.
Statutory law includes state statutes and ordinances passed by cities and counties.
Lenders are required to charge prepayment penalties on most subprime mortgages and
home equity loans.
An employee who is fired outside of the terms of an implied employment contract may
succeed in an action for breach of contract.
Felonies are punishable by imprisonment for more than a year or death.
Commercial Credit Company has in its possession an instrument dated May 1, 2012.
The instrument is payable to the order of Alpha Company “on June 1, 2013,” for
$5,000. In the upper left corner is an address for Beta Corporation10 Corporate Park
Avenue, Chicago, Illinoisand in the lower right corner is the signature of “Delta, Inc.,
By Eve, President.” In the lower left corner is stamped “ACCEPTED: Beta Corporation
by Frank, President, May 5, 2012.” On the back is the signature of “Alpha Company By
Gail, President.” Who, if anyone, is primarily liable on this instrument on May 1? On
May 5? Who, if anyone, is secondarily liable on this instrument?
Universal defenses are good against all holders except HDCs and holders through
HDCs.
An ethics program can clarify what a company considers to be unacceptable conduct.
The purpose of the exclusionary rule is to deter police from misconduct.
One purpose of criminal sanctions is to deter others from committing similar crimes in
the future.
An environmental impact statement is required for every major federal action that
significantly affects the quality of the environment.
Only a statement made after a contract is entered into can be an express warranty.
The annual percentage rate is the actual cost of a loan on a yearly basis.
In choosing a form of business organization for a new enterprise, important factors
include the ease of creation.
Duty-based ethical standards often come from religious precepts or through
philosophical reasoning.
No person may be a director for two competing corporations at the same time.