Clifton is a director of Dri-Cleaning Corporation. In this capacity, Clifton has a right of
a. accounting.
b. loyalty.
c. participation.
d. service.
Rig Heli-Pads, Inc., enters into a contract to employ Scott as an on-site project manager
for two years. If Rig breaches the contract, Scott has a duty to
a. do nothing.
b. reduce the damages that Scott might otherwise suffer.
c. rescind the contract with Rig.
d. punish Rig and set an example to deter others from similar acts.
Dino and Elle engage in a transaction that involves e-documents. The E-SIGN Act
applies if those documents include
a. a divorce decree or a prenuptial agreement.
b. a health-insurance termination.
c. an agreement subject to Article 2 of the Uniform Commercial Code.
d. an eviction or a foreclosure.
Chocolate Chip Cookie Corporation (4C) obtains, and gives its employees, a list of the
customers of Sugar & Spice Sales, Inc. (3S). Under the law that applies to trade secrets,
4C’s conduct is actionable provided
a. consumers are confused.
b. 4C’s conduct is intentional.
c. 4C uses the list.
d. 4C does not have 3S’s permission to use the list.
Parsley, a world-famous chef, signs a contract to give lessons in French cooking to
Curry. Parsley wants to transfer his duties under the contract to Relish, the operator of a
hot dog concession. The transfer is
a. valid because the performance required is of a nonpersonal nature.
b. valid if Relish is a highly regarded vendor.
c. not valid because performance depends on Parsley’s personal skills.
d. not valid if Curry does not hold Relish in high regard.
Rafi, a director of Super Service Station Corporation, does not attend a board meeting
for three years. During that time, Twyla, Super’s president, makes improper loans that
cost the company $100,000. Rafi is most likely
a. liable for negligence or mismanagement.
b. liable for violation of the business judgment rule.
c. not liable because missing meetings is an honest mistake.
d. not liable because missing meetings is only poor judgment.
Kris presents an instrument that states “pay to the order of Liv” to Metro Bank for
payment. This is a special type of draft drawn on a bank, ordering the bank to pay a
fixed amount of money on demand. This is
a. a certificate of deposit.
b. a check.
c. a debit card transaction receipt.
d. a trade acceptance.
Without a permit from the U.S. Army Corps of Engineers, Holiday Timeshares, Inc.,
fills a wetlands area that it owns before constructing a residential resort. Under the
Clean Water Act, this is most likely
a. a violation.
b. not a violation because a permit is not needed to fill wetlands.
c. not a violation because the area was filled before construction.
d. not a violation because there was no discharge of pollution.
To qualify as a professional corporation, Medical Clinic, P.C.,
a. must be a corporation formed by professionals.
b. must grant all shareholders voting rights.
c. must have at least thirty-five shareholders.
d. all of the choices.
Kris transfers a note, on which Liu is the maker, to Mia, who takes it for value and in
good faith. Mia knows that Kris breached the contract underlying the note, giving Liu a
defense against payment. With respect to this note, Mia is
a. a knowledgeable holder in due course.
b. an ordinary holder.
c. an ordinary holder in due course.
d. an ordinary note taker.
On behalf of Bay Oyster Company, Celia types her name at the bottom of an e-mail
purchase order and submits the order to Deepwater Parts Company. Under the UETA,
qualifying Celia’s name as her ‘signature” is
a. attribution.
b. cybernotarization.
c. acceptance.
d. agreement.
Les is indicted. Madge, the arresting officer, advises Les of his right to counsel. Les
waives the right and confesses to the crime. Later, Les claims that his confession should
be excluded as evidence from his trial. The statement will most likely be
a. admitted because Les knew he did the crime and confessed.
b. admitted because Les made it after being advised of his rights.
c. excluded because a confession is not admissible in a criminal trial.
d. excluded because it was elicited before Les was advised of his rights.
Jill believes that she should file a plan for a Chapter 13 discharge in bankruptcy. A
Chapter 13 bankruptcy plan must provide for
a. the completion of all payments to all creditors within six years.
b. the payment of 100 percent of all obligations in full.
c. the surrender of all collateral to the creditors.
d. the turnover of the debtor’s future income to the trustee as necessary for the execution
of the plan.
Quik Collection Agency calls Pat several times a day, and sometimes in the middle of
the night, about an overdue bill that Regal Sporting Goods turned over to Quik for
collection. This is a violation of
a. no federal law.
b. the Fair and Accurate Credit Transactions Act.
c. the Fair Debt Collection Practices Act.
d. the Truth-in-Lending Act.
Vela and other farmers in Washington County form a business organization to provide,
without profit, an economic service to its members. This is
a. a business trust.
b. a cooperative.
c. a corporation.
d. a joint stock company.
Berkie’s bicycle is damaged in an accident caused by Imogene. Berkie agrees not to sue
Imogene if she will pay for the damage. If she fails to pay, Berkie can bring an action
for breach of contract. This is
a. a covenant not to sue.
b. an accord and satisfaction.
c. an illusory promise.
d. a release.
Mango Corporation believes that Melon Corporation engages in anticompetitive
behavior in an attempt to drive Mango and its other competitors out of the market.
Antitrust laws can be enforced against Melon by
a. Mango and its competitors only.
b. Mango, its competitors, and the Federal Trade Commission only.
c. Mango, its competitors, the Federal Trade Commission, and the U.S. Department of
Justice.
d. the Federal Trade Commission and U.S. Department of Justice only.
Daisy Daycare, Inc., files a suit against Eldon, its former accountant, alleging
constructive fraud. Eldon may be held liable
a. if Daisy cannot prove actual fraud.
b. if Eldon was grossly negligent in the performance of his duties.
c. only if Eldon acted with fraudulent intent.
d. only if the court adopts the Ultramares rule.
GR8 Stores, Inc., hires Haul-Way Company, a common carrier, to transport fifty
large-screen HDTVs from San Diego to Phoenix. En route, a pothole causes the truck to
crash, damaging the goods. Liability for the damage most likely rests with
a. GR8 Stores and Haul-Way.
b. GR8 Stores only.
c. Haul-Way only.
d. neither GR8 Stores nor Haul-Way.
As a judge, Potter applies common law rules. These rules develop from
a. administrative regulations.
b. court decisions.
c. federal and state statutes.
d. proposed uniform laws.
Todd indorses a check, “Pay to Interstate Trucking if they deliver the lumber by May 1,
2010.” This is
a. a blank indorsement.
b. a qualified indorsement.
c. a restrictive indorsement.
d. a special indorsement.
Dru, a U.S. citizen, is the owner of Egret, Inc. Egret’s competitors include Feathered
Friends Company (FFC), which is owned by Greg and Huey. The Bill of Rights embod-
ies a series of protections for Dru against types of interference by
a. FFC and its other competitors only.
b. FFC, Greg, Huey, others, and the government.
c. Greg, Huey, and other private individuals only.
d. the government only.
Fact Pattern 1-1
The Texas Supreme Court decides the case of Livewire Co. v. Power Corp. Of nine
justices, five believe the judgment should be in Livewire’s favor. Justice Bellamy, one
of the five, writes a separate opinion. The four justices who believe the judgment should
be in Power’s favor join in a third separate opinion.
Refer to Fact Pattern 1-1. These opinions are collected and published in volumes called
a. citations.
b. codes.
c. regulations.
d. reporters.
Suki is a registered agent for Trans-state Trucking, Inc. (TTI), which incorporated in
Utah. As a registered agent, Suki
a. agreed to buy stock in TTI before it existed.
b. applied to Utah on behalf of TTI to obtain its corporate charter.
c. does business for TTI in Utah.
d. receives legal documents on behalf of TTI.
Bob is arrested at his home, after the police search it and seize certain property to be
used as evidence. A judge sets Bob’s bail, as required by a state statute, and Bob is put
on trial. The U.S. Constitution provides safeguards against all of the following except
a. arrests without probable cause.
b. excessive bail.
c. trying someone for a criminal offense.
d. unreasonable searches and seizures.
Housemate, Inc., makes and sells a variety of household products. With a fair amount of
certainty, Housemate’s decision makers can predict whether a given business action
would be legal in
a. all situations.
b. many situations.
c. no situations.
d. practically no situations.
Vehicle Leasing Agency (VLA) and Wander Trucking Company enter into a contract
for a lease of eight cargo vans. VLA delivers eight vans, but they are not cargo-sized.
Wander
a. cannot reject the entire shipment.
b. can reject the entire shipment.
c. must accept the entire shipment.
d. must reject the entire shipment.
Network Corporation files a suit against Omega, Inc., alleging that Omega breached a
contract to sell Network a computer system. Network is
a. the appellant.
b. the appellee.
c. the defendant.
d. the plaintiff.
Recreation Supplies, Inc. (RSI), and Sam, the owner of Tourist Time Shop, orally agree
to a sale of beach balls and seashells for $1,000. Sam gives RSI a check for $400 as a
partial payment. This contract is
a. enforceable to the extent of $400.
b. fully enforceable because it is for specially made goods.
c. fully enforceable because it is oral.
d. not enforceable.
Kip writes a check for $1,000 drawn on Local Bank and presents it to Mira. Mira
presents the check for payment to Local Bank, which dishonors it. The party most likely
liable to Mira is
a. Kip in a civil suit.
b. Kip in a criminal prosecution.
c. Local Bank in an administrative proceeding.
d. neither Kip nor Local Bank.
Jody owns KuppaJava Kiosks, a sole proprietorship. Jody’s liability is
a. limited by state statute and varies from state to state.
b. limited to the extent of capital expenditures.
c. limited to the extent of his or her original investment.
d. unlimited.
Bob writes a check on his account at County Bank to Dona, a famous singer. The
person claiming to be Dona is an imposter, however, named Edy. Edy indorses the
check to Frank, for whom County Bank cashes it. Ultimately, the loss will most likely
fall on
a. Bob.
b. County Bank.
c. Dona.
d. Frank.
Owen, in Pennsylvania, and Quik Jobs, Inc., in Maryland agree to have their dispute
resolved in arbitration according to the law of Virginia. This is a ground for a court to
a. do nothing.
b. review the merits of the dispute.
c. review the sufficiency of the evidence.
d. set aside the award.
Bailey, the president of Carmichael Commodities Company, claims that certain actions
by the federal government and by the state of Delaware infringe on rights guaranteed by
the Bill of Rights. All of these rights limit
a. neither Delaware nor the federal government.
b. the federal government only.
c. Delaware and the federal government.
d. Delaware only.
Java Bean Company imports coffee beans and sells them under two-year contracts to
Mellow Roast, Inc., and other coffeemakers. The contracts require that during the
two-year term a coffeemaker not buy beans from Java Bean’s competitors. The
contracts do not limit the coffeemakers’ purchase of tea or other beverage ingredients
from other suppliers, however. In the second year of the contract, Mellow Roast
protests that this arrangement violates antitrust law. Is Mellow Roast correct? If not,
why not? If so, under which antitrust statute, or statutes, could these contracts be held
illegal?
Eminent domain is the right of an owner in fee simple absolute to use his or her
property in whatever way he or she wishes.
Under rules of professional misconduct, an attorney should not engage in conduct
involving dishonesty.
For action to be taken during a shareholders’ meeting, a forum must be present.
Each state establishes rules that govern the conduct of attorneys
A manufacturer’s license to an outside dealer to sell a product is a distributorship.
Contracts that are executory on both sides can be rescinded by agreement.
Forcing someone to enter into a contract through fear created by threats is duress.
Some U.S. bribery laws are directed toward accountants.
Normally, a franchisee determines the territory that it will serve.
The Age Discrimination in Employment Act of 1967 prohibits employment discrimi-
nation on the basis of age against persons over eighteen.
An employer may campaign among its workers against a union during a union election
campaign.
Bonds represent the purchase of ownership in a business firm.
Financial institutions that exchange digital images of checks do not have to exchange
the original paper checks.
Conditioning the sale of one product on the purchase of another is a tying arrangement.
Digital pirates may be prosecuted under state, but not federal, law.
A sale of growing crops is a sale of goods.
A tenant is not responsible for any damage to leased premises.
Kino sees a DVD player on the porch of Lulu’s house, takes the player to his home, and
tells everyone he owns it. Maya, holding a knife, forces Nick to give her his boom box,
and runs away with it. Ollie breaks into Pam’s apartment, takes a computer, and leaves.
Which of these acts are crimes, and what are the differences among them?
A contract for a sale of goods priced at $499 or less does not need to be in writing to be
enforceable.