Adding value to a piece of personal property by labor or materials is accession.
a. True
b. False
Quasi contracts are often used by courts, even in cases where there is an actual contract
that covers the area in controversy.
a. True
b. False
The commerce clause includes an express grant of exclusive authority to regulate
commerce that substantially affects trade and commerce among states. This is referred
to as
a. thedormant aspect of the commerce clause.
b. thepositive aspect of the commerce clause.
c. thenegative aspect of the commerce clause.
d. theexclusive aspect of the commerce clause.
Cynthia tells Darryl that she will deliver his boxes of Paradise Cookies as he directs. A
declaration that one will do something in the future is part of the defini-tion of
a. a prediction.
b. a premise.
c. a principle.
d. a promise.
If a principal cannot be contacted in an emergency situation, an agent cannot deviate
from previously given instructions.
a. True
b. False
Tender of delivery requires that the seller or lessor hold the goods at the buyers or
lessees disposal, but not that the goods be conforming.
a. True
b. False
If a job applicant or an employee with a disability, with reasonable accommodation, can
perform essential job functions, the employer must make the accommodation.
a. True
b. False
In making business decisions,Glenda, personnel manager for HVAC Maintenance, Inc.,
applies her belief that all persons have fundamental rights. This is
a. a religious rule.
b. the categorical imperative.
c. the principle of rights.
d. utilitarianism.
Ramblin Country Stables contracts to buy 1,000 horseshoes from Blacksmith, Inc., for
$1 per shoe. When the market price decreases to 50 cents per shoe, Ramblin refuses to
go through with the deal. Blacksmith can recover
a. $1,500.
b. $1,000.
c. $500.
d. $0.
Maya, a police officer, wants to search the offices of Niles Corporation.Maya asks
Judge Orion to issue a warrant. Under the Fourth Amendment,no warrants for a search
or an arrest can be issued without
a. double jeopardy.
b. probable cause.
c. reasonable doubt.
d. immunity.
The equal dignity rule requires that a principal and agent treat each other with “equal
dignity.
a. True
b. False
Rite Contractors, Inc., agrees to build a motel for Sleep Inn Corporation. The project
proceeds according to plan, but before it is done, Sleep tells Rite to quit. Rite may
recover
a. the contract price less costs of materials and labor.
b. the contract price.
c. the costs needed to complete construction.
d. profits plus the costs incurred up to the time of the breach.
State securities laws apply mainly to intrastate transactions
a. True
b. False
A director is a fiduciary of a corporation.
a. True
b. False
An illusory promise is unenforceable.
a. True
b. False
U.S. laws that prohibit discrimination in employment apply to U.S. em-ployees working
for U.S. firms located abroad.
a. True
b. False
Natalie is a shareholder of Off-Road Vehicle Company. As a share-holder, Natalie does
not have
a. a right to compensation.
b. dividend rights.
c. inspection rights.
d. preemptive rights.
A bailment must be in writing to be valid.
a. True
b. False
An offer that astatute makes illegal terminates only af-ter a rea-sonable time.
a. True
b. False
An oral contract may be enforceable if enforcing the promise is the only way to avoid
injustice.
a. True
b. False
Silas Paving Co. contracts to buy some construction machinery from Massive
Earthmovers, Inc. Before either party performs, Massive sells its assets to Phoenix
Equipment Corp. On learning of the sale, Silas is concerned about its contract with
Massive. Silas should
a. demand assurances of performance from Massive.
b. consider the contract repudiated and sue Massive for breach.
c. buy the machinery from a different supplier and bill Massive for the price.
d. buy the machinery from a different supplier and bill Phoenix for the price.
Dondi contracts to buy a custom espresso maker from Caffee Specialties, Inc., for
$4,500, but Caffee fails to deliver. Dondi buys the appliance else-where for $5,500.
Dondis measure of damages is
a. $1,000.
b. $1,000 plus incidental damages.
c. incidental damages only.
d. $0.
In order of priority, the claims of all unsecured creditors in a class must be satisfied
before any re-maining amounts can be distributed to the next class.
a. True
b. False
A key employee is defined as an employee whose pay falls within the top 10 percent of
the firms workforce.
a. True
b. False
Far & Wide Corporation uses the trademark of Google Inc. in a meta tag without
Googles permission. This is
a. cybersquatting.
b. typosquatting.
c. trademark infringement.
d. trademark dilution.
In its ads for athletic shoes, Sleek Feet LLC uses a trademark that is similar, but not
identical, to the famous, registered mark of Trend Flash, Ltd. Sleek Feets unauthorized
use of the mark constitutes trademark dilution, provided that
a. consumers are confused.
b. Sleek Feet and Trend Flash are competitors.
c. Sleek Feets use is intentional.
d. Sleek Feets use is likely to impair the distinctiveness of Trend Flashs mark.
Ira is declared mentally incompetent. Jay, Iras son, is named his guard-ian. At Jays
insistence, Ira transfers his assets to Jay “for safekeeping. A court might conclude that
this gift is not effective on the ground that there was no
a. acceptance.
b. delivery.
c. donative intent.
d. donors acknowledgment.
A written stop payment order is valid for only thirty days.
a. True
b. False
Kelsey obtains a business liability insurance policy from Loyal Insurance Company for
Kelseys Framing & Art Supplies store. When an event occurs that gives rise to a claim,
Loyal has a duty to
a. investigate to determine the facts.
b. file a suit against Kelsey so that a court can settle the claim.
c. find a third party on whom to impose liability.
d. refund any unearned amount of the premium.
Screen Perfect, Inc., and TV Stores enter into a contract for a sale of high-definition
television sets. Screen Perfect ships goods that do not exactly conform to the contract in
some details. TV Stores
a. cannot reject the entire shipment.
b. can reject the entire shipment.
c. must accept the entire shipment.
d. must reject the entire shipment.
Copious Bounty, LLC, and other companies operate social media Web sites, issue apps
for mobile devices, obtain ad revenue from search engines, and sell directly to
consumers from other sites. The privacy rights of the users of these products are
frequently defined, not by the courts or legislatures, but by
a. he companies that own the sites and the apps.
b. retailers who have had to change their procedures to compete.
c. spammers, cybersquatters, and typosquatters.
d. Internet service providers.
If a contract specifies a certain carrier, a substitution of a different carrier for any reason
breaches the contract.
a. True
b. False
Myles obtains a property insurance policy from Nova Insurance Company for Myless
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.
A tenant has a duty to maintain in a reasonably safe condition those ar-eas under his or
her control.
a. True
b. False
The management of Sport Shoes Corporation, a U.S. firm, wants to expand into foreign
investment and employment markets. They are considering ei-ther opening their own
production facility in a foreign country or enter-ing into a licensing agreement with a
foreign firm. What are the advan-tages and disadvantages of each of these courses of
action?
Frenchs Fast Fries (3F) requires that its employees wear uniforms and protective
clothing while on the job. 3F provides a locker room for the employees to leave their
street clothes and personal items while working. A sign on the back of the locker room
door states, “Frenchs is not re-sponsible for the loss of any property in the locker room.
Grant, a 3F employee, changes his clothes in the locker room before starting work and
leaves his wallet and watch in a pocket of his jacket hanging in his locker. When he
returns after his shift, the wallet and watch are gone. Does Grants leaving personal
items in the locker room constitute a bailment? If so, what type of bailment? If not,
what legal relationship is it? Does 3Fs sign exculpate the com-pany for Grants loss?
Why or why not?
Recreation & Sports Equipment Corporation sells a product that is capable of seriously
injuring consumers who misuse it in a foreseeable way. Does the firm owe an ethical
duty to take this product off the market? What con-flicts might arise if the firm stops
selling this product?
Savory Cooking Sauces, Inc., a U.S. business firm, makes and sells distinc-tively
flavored cooking sauces. Although the recipes are secret, the ingre-di-ents could be
revealed and the sauces could be reconstructed with dili-gent efforts. What can Savory
do to prevent its products from being “decoded and pirated abroad?
National Drilling Company ships its only pump to American Hydraulics Corporation,
the manufacturer, for repair. National hires Overland Transport, Inc., to take the pump
to American Hydraulics and to return it to National as soon as the repair is complete.
National is forced to sus-pend operations without a pump, but Overland does not know
this. National expects to be without the pump for five days and to lose profits of $5,000.
When the pump is not returned by the end of the fifth day, National rents a pump at a
cost of $100 per day. Overland delays five more days before returning the pump.
National files a suit against Overland, asking for compensatory, consequential, and
punitive damages. Will National recover?
Norwest Trucking Corporation files a suit in a state court against Bobs Service
Company (BSC), and wins. BSC appeals the courts decision, as-sert-ing that the
evidence presented at trial to support Norwests claim was so scanty that no reasonable
jury could have found for the plaintiff. There-fore, argues BSC, the appellate court
should reverse the trial courts de-ci-sion. Is the appellate court likely to reverse the trial
courts findings with re-spect to the facts? If not, why not? What are an appellate courts
options after re-viewing a case?
Multi Investments, Inc., offers to buy Nano Toy Corporation. On May 1, Nano provides
copies of its financial statements for the pre-vious year, showing an inventory of $10
million. On May 15, Nano discovers that the previous years inventory is overstated by
$5 million, but does not inform Multi. On June 1, Multi, relying on the fi-nancial
statements, buys Nano. On June 10, the buyer discovers the inven-tory over-statement.
Can Multi succeed in a suit against Nano for fraud?
Creative Solutions Corporation (CSC) sells business application softwareaccounting
and book-keeping programs, blank business forms, inventory control functions, and the
likein different combinations, in different packages, at different prices, downloadable
online. To complete a deal, a purchaser clicks on a button that, with reference to certain
terms, states, “I agree. What is this sort of agreement called? Do the parties have a
binding, enforceable contract that includes the terms? Explain.
International Exports, L.P., is a limited partnership, with $100,000 in de-clared but
unpaid profits. Internationals creditors include Friendly Credit Corporation for $5,000
and Gwen, one of Internationals limited partners, also for $5,000. When Harry, one of
Internationals general partners, de-cides to retire, the other general partners vote to
liquidate and dissolve the firm. The limited partners, who are not asked their opinions,
want Interna-tional to continue in business and file a suit against the general partners to
compel this result. Can the court order International to continue? If not, what is the
priority of the distribution of Internationals assets on its dissolution?
In May 2013, National Biotech Corporation generally advertises that it will make a $4
million offering of stock in June. National makes the offer-ing as advertised and, ten
days after the first sale, notifies the Securities and Exchange Commission (SEC). All
buyers of the stock are given mate-rial information about the company, its business, and
the stock. Before the end of the year, the offering is completely sold out. The buyers
include forty unaccredited investors and fifty accredited investors. National does not
register the offering. The SEC files a suit against National, seeking civil sanctions on
the ground that this offering was not exempt from reg-istration. National argues that the
applicable exemption is Rule 505 of Regulation D of the Securities Act of 1933 and that
because of this exemp-tion, any resale of the stock is also exempt. Who is correct?
General Equity Corporation enters into a contract with Honi, who agrees to create
artwork for Generals main office building. Honi delays and eventually refuses to
perform. Meanwhile, General contracts to sell the building to Ideal Investments, Inc.,
but before the transaction is complete, Jewel Funds Company offers to pay a higher
price. General re-fuses to transfer the building to Ideal. In separate suits by General
against Honi and by Ideal against General, each plaintiff seeks specific performance.
How might the court rule in each case, and why?
Americans with a Better Cause (ABC), a nonprofit organization, files a suit against the
U.S. Department of Justice (DOJ), claiming that a cer-tain federal statute the DOJ is
empowered to enforce conflicts with the U.S. Constitution and with a state constitution.
In each situation, which source of law has priority?
Precise Engineering Corporation has a contract with Quik Mart Stores to provide
customized software for Quiks inventory control system. Retail Outlets, Inc., Quiks
competitor, induces Sam, a Precise subcon-trac-tor who is writing code for the Quik
software, to delay delivery of the code for one week. As a result, Precises delivery of
the software is delayed, and Quik sustains $500,000 in lost profits. On what ground
could Quik recover damages from Retail Outlets?
Owen plans to open Owens Pets Store, a pet sales and pet supplies outlet, and to hire
Quimby and Ruth. Owen will invest only his own money. He does not ex-pect to make
any profit for at least two years and to make almost no profit for the first three years,
but he hopes to expand eventually. Which form of business organization would be most
appropriate? What are the chief characteristics, advantages, and disadvantages of this
form of busi-ness organization? If Owen wants to obtain additional capital to expand
the business, but does not want to lose control of the firm, what is his best option?
After two years of research and the investment of considerable funds, Coast-to-Coast
Company (CC) develops a new product that it hopes will produce substantial profits.
CC learns that a competitor, National Sales, Inc., has made and begun to sell a nearly
identical prod-uct. CC learns from a reliable source that National paid a CC employee
to obtain the plans for CCs product while it was in development. What legal re-course
does CC have against National?
Brock is a shareholder of Competent Homebuilders Corporation (CHC). For the last
few years, business has not been profitable for CHC. The firm has lost money on its
operations. There has been some profit through sales of company assets, but the board
of directors has refused to declare a dividend. This last year, the firms accountants
failed to file fed-eral in-come tax returns and the board refused to pay the tax. Brock
takes a close look at the firm and protests to the board, in particular over the fail-ure to
declare a dividend, but the board ignores the complaint. Which of these events, if any,
would form a ground for a court to order the dissolu-tion of CHC, on Brocks petition?
If the court denies the petition, could Brock and the other shareholders dissolve CHC?
“Dawn is a song included in the sound track of “eDay, a movie produced and distributed
by FasTrac Corporation. The song features a digital sampling of a few seconds of the
guitar solo of one of George Harrisons copyrighted sound recordings without
permission. Does this digital sampling constitute copyright infringement on the part of
FasTrac? Explain.
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?
Signal Sets Company contracts to deliver one hundred 52-inch plasma high-definition
television sets to a new retail customer, Tuner TV Store, on May 1, with payment to be
made on delivery. Signal tenders delivery in its own truck. Tuners manager notices that
some of the cartons have scrape marks. Tuners owner phones Signals office and asks
whether the sets might have been damaged as they were being loaded. Signal assures
Tuner that the sets are in perfect condition. Tuner tenders Signal a check, which Signal
refuses, claiming that the first delivery to new customers is always for cash. Tuner
promises to pay the cash within two days. Signal leaves the sets with Tuner, which
stores them in its warehouse pending its “Grand Opening Sale” on May 15. Two days
later, Tuners stocker opens some of the cartons and discovers that a number of the sets
are damaged beyond ordinary repair. Signal claims Tuner has accepted the sets and is in
breach by not paying on delivery. Will Signal succeed on these claims? Explain.
In a dispute between Cosmic Games Corporation and Mythic Engineering Associates,
Inc., the court applies the doctrine of stare decisis.What is this doctrine? What does this
doctrine have to do with the American le-gal system?