Mark, a power tool salesman, promises Jill, a customer, that the Turbo Power Hedge
Trimmer 1000 will easily cut through bamboo up to 3 inches thick. Mark’s statement
constitutes an express warranty if Jill purchases the hedge trimmer.
a. True
b. False
A director violates the corporate opportunity doctrine if he or she competes with the
corporation, unless the disinterested directors approve of the director’s actions.
a. True
b. False
Ralph is a professional football player. He signs a valid contract with the Jets. Later, he
claims that he was also promised free use of the Jets private jet, but this was not in the
contract. What type of clause in his contract would prevent him from flying away with
this claim?
a. A complete agreement clause.
b. A “no additional terms clause.
c. An integration clause.
d. A severability clause.
Company policy of PushOne, Inc. is to block the company name and telephone number
on potential customers Caller ID systems so they wont know the call is from a
telemarketer. This policy violates FTC rules.
a. True
b. False
Monic, a college professor, makes 30 photocopies of a magazine article and passes the
article out to her students. The students are assigned to read the article and write an
opinion paper about it. Has Monic violated copyright law?
a. Yes. Though the author will probably not enforce his or her rights under this
situation, Monic has technically violated federal copyright law.
b. Yes. Though educators have a right under the “fair use doctrine” to make limited use
of copyrighted materials, Monic violated the law when she made photocopies of an
entire article and distributed them to her students.
c. No. Monic has acted within the fair use doctrine.
d. No, as up to 50 photocopies of articles are always permissible.
A requirements contract is a contract:
a. in restraint of trade.
b. in which the seller provides all of the goods that the buyer needs.
c. in which the buyer purchases all of the goods that the seller produces.
d. in which a party must buy a product it does not want in order to be allowed to buy a
product it requires.
Kathleen filed for voluntary bankruptcy and the automatic stay went into effect. The
automatic stay:
a. acts to automatically discharge Kathleen’s debts.
b. stops any and all acts to collect, assess, or recover a claim against Kathleen that arose
before she filed bankruptcy.
c. stops only secured creditors from taking any act to collect, assess, or recover a claim
against Kathleen that arose before she filed bankruptcy.
d. stops creditors from trying to collect from Kathleen, but it does not stop them from
filing lawsuits against her.
The Uniform Electronic Transmission Act (UETA):
a. declares that a contract or signature may not be denied enforceability just because it
is in electronic form.
b. was passed by Congress in 2002.
c. creates a safe cyberspace environment in which business communications cannot be
intercepted or fraudulently altered.
d. All of the above.
Which of the following is TRUE in cases based on claims of disparate treatment?
a. The plaintiff must prove that the defendant intentionally discriminated.
b. The defendant must have made a disparaging remark about the plaintiff.
c. The defendant must prove that the plaintiff is not qualified for the position.
d. The plaintiff must prove that he or she was discriminated against because of his or
her education level.
Bert had his driver’s license suspended by the state department of transportation. He
believes his constitutional due process rights were violated by the administrative
agency. Can he immediately file a court action to have the agency’s actions reviewed?
a. Yes. A court has the jurisdiction to immediately review an agency’s alleged
unconstitutional action.
b. Yes. Bert must specifically allege his constitutional rights have been violated and file
a court action in federal court – not a state court.
c. No. Bert must first utilize the administrative agency’s procedures to review the
suspension before he seeks judicial review by a court.
d. No. A court of law does not have jurisdiction to review an administrative agency’s
actions.
If a trademarked name acquires a generic meaning, the owner of the trademark loses
protection.
a. True
b. False
Congress enacted legislation in 1933 to regulate the securities industry and prohibit
various forms of fraud with securities. The Securities Exchange Act of 1934 was passed
a year later. This law created the Securities and Exchange Commission (SEC) as an
independent regulatory entity whose function is to enforce the two laws. The SEC has
generated rules and regulations to fulfill this purpose. These rules and regulations are:
a. statutes.
b. administrative law.
c. executive orders.
d. common law.
Micky, a mechanic, repaired Daphane’s Dodge. Daphane failed to pay the repair bill of
$595. Since Micky was still storing the car, he could therefore claim a landlords lien on
the car.
a. True
b. False
A misdemeanor is distinguished from a felony based upon:
a. the rules of evidence.
b. the length and place of possible imprisonment.
c. the burden of proof.
d. the type of intent.
Pastor Tom was employed by the First Church for 40 years. On Pastor Tom’s retirement
there was no adequate pension plan. Two months after the retirement, a wealthy
parishioner, in consideration for Pastor Tom’s 40 years of faithful service and for being
such a ‘sweet” man, promised to pay him $500 per month for the rest of his life. This
promise probably is not enforceable.
a. True
b. False
First Bank has agreed to loan Teresa $10,000 for use in her cosmetics business. If
Teresa sells the business to Melissa before the loan is disbursed, Teresa can assign her
right to the loan to Melissa.
a. True
b. False
The management and union representatives of Prime Manufacturing are bargaining a
new CBA. Management:
a. may use a lockout at any time to pressure the union into compromise.
b. may never use a lockout as a tactic to pressure the union.
c. may use a lockout if the parties have reached an impasse in their bargaining and
management notifies the union before locking the employees out.
d. may use a lockout only as a retaliatory measure if and when the union has threatened
a strike.
In order to be considered sexual harassment, the questionable behavior must be directed
at a co-worker of the opposite gender.
a. True
b. False
The Plaza Hotel contracts with EZ Lawn to have EZ mow the grass on the Plaza
grounds for the next 10 years. However, there is a clause in the contract that states if the
hotel chooses, the contract may be terminated provided Plaza pays EZ $2,000 on
termination. Which of the following is correct?
a. The contract is unenforceable because the option to cancel clause makes the contract
an illusory promise.
b. The contract is unenforceable because the $2,000 is past consideration.
c. The contract is unenforceable because only one party has the option to cancel.
d. The contract is enforceable because the option to cancel clause is supported by
consideration.
“Course of dealing” refers to prior commercial transactions between the same parties.
a. True
b. False
Revocation is the withdrawal of an offer by the offeror.
a. True
b. False
The name “Johnson Garage Doors cannot be a trademark because a surname is already
being used and other people have the right to continue to use the name.
a. True
b. False
If the agent is disloyal to the principal:
a. the agency agreement automatically terminates and the principal may rescind the
transaction.
b. the principal has the right to collect any actual damages sustained as a result of the
agent’s disloyalty.
c. the principal has a right to recover any profits earned as a result of his agent’s disloyal
conduct.
d. All the above are correct.
Companies with substantial assets must notify the FTC before consummating a merger.
a. True
b. False
Assume that in December 2006, the Environmental Protection Agency (EPA) filed an
administrative complaint against Marlin Firearms Co. alleging that the company
exceeded chromium emissions limits. The EPA proposed a $257,162 fine. Which
statement is correct concerning the administrative agency adjudication?
a. A jury decides the matter.
b. The Federal Rules of Criminal Procedure govern the admissibility of evidence.
c. The losing party has a right to appeal.
d. The parties are not represented by attorneys.
All but which of the following may be used as collateral in a secured transaction under
UCC Revised Article 9?
a. Bank deposit accounts.
b. Personal injury tort claims of individuals.
c. Tort claims of a corporation.
d. A computer program if, by purchasing a computer, the buyer of the computer
acquires the right to use that embedded program.
e. Both b and c.
Collector Carl displays his beer can collection at the local swap meet. Mary sees the
collection and is interested in buying it. Carl says he will sell the collection for $1,500.
Mary says she really likes the collection but is only willing to pay $1,000. Which of the
following is correct?
a. Mary’s counteroffer terminates Carl’s offer of $1,500.
b. If Carl rejects Mary’s counteroffer, she can still accept Carl’s offer of $1,500.
c. Neither offer is valid. Who would ever pay $1,000 or $1,500 for a beer can
collection?
d. Mary’s offer is a firm offer. Carl has an exclusive right to consider her offer for a
reasonable period of time.
A defendant who engages in setting off fireworks at a fully licensed Fourth of July
show is liable for harm that results from the activity only if the plaintiff proves the harm
was foreseeable.
a. True
b. False
Which of the following statements express the purpose of the Truth-in-Lending Act?
a. To require lenders to charge a “reasonable” rate of interest.
b. To help small business.
c. To provide consumers with information necessary to make the best credit decision.
d. To help lenders limit state laws.
Under the “fair use doctrine,” instructors cannot be liable for copyright violations.
a. True
b. False
Unlike a tenant, a licensee:
a. is not entitled to the exclusive possession of the property.
b. is entitled to the exclusive possession of the property.
c. has control of the property.
d. has only a month-to-month right to use the property.
Barnett was orally hired by Paula to locate desirable real estate that she could use for
rental property. She stated she wanted to find a four-plex that could be purchased for
under $200,000 that could be rented for at least $1,000 per month per unit (which
equates to $4,000 rental per month for the property). Barnett located a four-plex that
could be purchased for $160,000 and was renting for $1,200 per unit. It was such a
good deal that he purchased it for himself. About two months later he found a second
property that was listed for $199,000 and rented for $1,000 per unit. Paula purchased
the property. Afterwards, she learned that Barnett had bought the $160,000 four-plex for
himself without telling her about it. Paula believes that Barnett has acted improperly.
Barnett claims that he did what she asked — he found a property for under $200,000 that
rented for $1,000 per unit. He also claims that since their agreement was oral, he has a
legal defense if she pursues the matter in court. Does Paula have any legal recourse
against Barnett? Explain.
What elements are necessary for an offer to be valid? Give two examples of nonoffers.
Tianhui was recently hired as a sales representative by Oxtron, Inc. Before leaving on
his first sales trip, a number of the other sales representatives take Tianhui aside and tell
him that it is customary for the sales representatives to “pad” (increase) their expense
reports each month by 20%. Use utilitarian ethics to decide what Tianhui should do
about the expense report he submits to Oxtron.
Jones contracts to buy a computer from Martin for $1500. The contract calls for Martin
to service the computer quarterly for the first year and to tutor Jones on how to use the
software. Is this contract covered by the UCC or common law?
What is the definition of the business judgment rule? Discuss its purposes.
Grant is a delivery person for Watkins Furniture. One day, after delivering a chair to
Nadines house, he stopped at a fast food restaurant to get a sandwich at the
drive-through window. As he was leaving the parking lot, he accidentally hit the rear of
Blanches car. Discuss the possible liability of Watkins for Grants accident. Would there
be any difference in the potential liability of Watkins if Grant had the accident after
driving 30 miles away to visit a friend?
The city of Richmond needs land owned by the Neelans to expand a middle school. The
Neelans do not want to sell. Discuss what course of action the city can take and the
basis for this action.
Hammer bought a tool set from Weekend Projects, Inc. and signed a consumer credit
contract promising to pay for the tool set in 12 monthly installments. Weekend
promptly negotiated the instrument to its affiliate Easy Finance Co. in exchange for a
discounted payment. Easy Finance gave value for the instrument, in good faith, and
without knowledge of any defects or claims against the instrument. The tool set was
defective and therefore Hammer stopped making the monthly payments. Easy Finance
sues Hammer for the balance due on the instrument. Can Hammer raise this personal
defense (breach of implied warranty of merchantability) against Easy Finance? Discuss.
Identify six possible remedies for a seller when the buyer breaches a contract.
Zach sold a restaurant to Shane for $295,000. As part of the agreement, Zach promised
not to open another restaurant business for three years within a 50-mile radius of the
one sold. Is this agreement enforceable against Zach?
Andrew has been hired to do some work for Rossi Enterprises. What factors would a
court consider in determining if Andrew is an employee or an independent contractor?
Why does the designation matter?
Explain the difference between a debit and a credit card and discuss the potential
liability for a lost or stolen card.
Discuss the concept of insurable interests.
Daniel went onto an Internet message board and found that his ex-wife, Faye, had
posted a message calling him a fat, insensitive jerk who only cared about watching
sports on TV. Does Daniel have any protection against Fayes making such statements to
a potentially large number of readers, some of whom may know Daniel and some of
whom may not?
Discuss the importance of the UCC to the law of sales. Include who created the UCC,
how it becomes law, and the stated purposes of the statute.
Mary was suspicious of her neighbor, whom she thought was involved in selling illegal
drugs. One day Mary arrived at her apartment and saw a large paper sack tied up with
string in front of her neighbor’s door. She took the bundle into her apartment, opened it,
and discovered it was full of cocaine. She called the police and the neighbor was
arrested. The neighbor’s lawyer claimed the evidence had been illegally obtained since
no probable cause existed to justify opening up the paper bundle.
Tiny Tim Toy Company (TTT) entered into a contract with the manufacturing firm of
Charles, Dickens, and Scrooge (C,D&S) to purchase Christmas toys. The shipment was
due to arrive on September 1, in time for the Christmas sales. By August 15, after
hearing from other toy companies that C,D&S were falling far behind on meeting
delivery dates, TTT wrote a letter demanding assurances that the goods would arrive as
scheduled. The only response received was a letter on C,D&S letterhead that said, “Bah
Humbug! You’ll get the shipment by November 1.” Discuss TTT’s possible remedies at
this point.
What two exceptions did the UCC create for accord and satisfaction check cases?
Oceanside entered into a contract with the seller Old Tennessee, for the purchase of
$6,431 worth of plants. The terms were sale and delivery C.O.D. with the express
provision of “No Risk to Supplier,” and a large logo at the top of papers stating:
“NOTICE: ALL SHIPMENTS TRAVEL AT RISK AND COST OF PURCHASER.”
The plants were shipped by an experienced truck common carrier. Upon arrival in New
York, it appeared as though some plants were in a poor state because of excessive heat.
Although the carrier on its own marked the bill of lading to indicate that the
temperature in the truck should be 50 degrees, this was not done for at least a portion of
the journey. Oceanside rejected the shipment by writing “rejected” on the back of the
trucker’s bill of lading. However, the plants were retained “on consignment” at
Oceanside’s premises. There were no other formal written rejections or official notices
of breach or defects given by the buyer to seller at any point prior to trial. Discuss who
has the risk of loss.