Business Law 84093

Type

Quiz

Book Title

Business Law with UCC Applications 14th Edition

ISBN 13

978-0077733735

March 1, 2019

A credit cardholder is liable for all unauthorized charges if he or she does not report the

unauthorized charges within twenty days of receiving a statement on which the

unauthorized charges appear.

Carl is tall and looks like he is 21 years old. Carl lies about his age to purchase a home

entertainment system for $1,000. In most states, Carl may disaffirm his purchase.

Statutory law regulates the social system by telling people what they can and cannot do.

A right-to-work law outlaws only the union shop, but not the closed shop.

Originally, the Bill of Rights was not included in the Constitution because many

founders believed that the power to regulate and protect rights, if it existed at all, was

the responsibility of the states, not the national government.

Ethical rules of conduct developed by various professions are often easy to understand

and follow.

ADR clauses are only beneficial to those parties with the strongest position within a

contractual relationship.

In a bailment, neither the bailor nor the bailee intends that title to the property should

pass.

The (Uniform Commercial Code) UCC is a model code designed to unify statutes

governing almost all commercial transactions.

Tia is severely injured in an auto accident and dies four months later from these

injuries. Her beneficiaries may collect under a double indemnity provision.

Some states authorize landlords to use force to evict tenants.

The party to a note who promises to pay money is called the payee.

A stale check is a check that is presented for payment more than three months after its

date.

Jennifer orally contracts to purchase a television for $450. This contract is legally

unenforceable.

If Xena writes a check in pencil that is subsequently altered by Mutley, Xena has

recourse against her bank that paid the altered check.

A "holder in due course" takes an instrument without notice that anything is wrong with

the underlying transaction.

All business entities are considered "legal persons" under federal and state statutes.

The "scope of employment" involves the range of activities for which the servant is

engaged.

Rational ethics, often referred to as objective ethics, states that people's ethical

decisions can be judged only by understanding their situations.

Under American law, a crime cannot be committed unless some act has occurred.

Sellers always retain an insurable interest in the goods, even if they do not have title to

them.

Jim ran a stop sign hitting Martin's car, and both were injured. Jim is now the injured

party and Martin is the tortfeasor.

An indorser who receives consideration for an instrument is required to provide a

warranty that she has no knowledge of the bankruptcy of the maker, acceptor, or

drawer.

A lockup agreement requires that a friendly suitor is given an option to buy a valuable

piece of property owned by the target corporation should a hostile bidder gain control of

the corporation.

The Gibbons v. Ogden (1824) case held that commercial activity that occurred within a

state was subject to federal regulation if that completely in-state activity affected

interstate commerce.

Only personal property can be used to secure a debt.

The Electronic Fund Transfer Act applies to transactions between banks and businesses.

Miko and Gina enter into a written contract. If Miko assigns her part of the agreement

to Teresa and Teresa tells Gina of the assignment, Miko is bound by an implied

warranty that Gina will respect the assignment.

Big Corp. advertises that "nine out of ten physicians prefer our products" when in fact

the marketing research, done by Independent Research Co., was flawed. Big Corp. may

be charged with false advertising, even if it believes the statement was true.

The Platonic Stabilizing standard refers to a legal balancing act between the various

liability standards and the individualized nature of each case.

Leo offers to sell his ranch to Iris for $500,000, but before Iris accepts, Leo dies. Leo's

heirs have no obligation to honor the contract.

Jackson transfers his business accounts receivable to Friendly Finance Company.

Friendly would be considered the assignee.

Cyber defamation involves false statements communicated through the Internet to

others that in some way casts doubt upon the ownership or the quality of an item of

property or a product offered for sale.

Jacy wants to submit a shareholder proposal and should submit the proposal to

management at least 120 days before the shareholders' meeting.

An oral contract for the sale of specially manufactured goods involving a price of $500

or more is not enforceable unless it is in writing.

Joe signed a promissory note for $5,000 to cover the cost of roofing repairs by Acme

Roofing Company. Acme transferred the note to Big Bank who sued Joe when he failed

to pay the note. Joe believes that Acme did not do the repairs properly. If Joe wants to

bring Acme into court, then Joe's answer should contain a:

A. counterclaim against Acme.

B. cross-claim against Acme.

C. third-party complaint against Acme.

D. new lawsuit against Acme.

A deed becomes effective when:

A. it is recorded in the public records.

B. the signatures are acknowledged.

C. it is delivered to the grantee.

D. it is prepared and signed by the grantor.

On May 1st, Alpha Oil Company sends an electronic offer via the "cloud" to Zeno

Refining Co. as follows: "Offer to sell 10,000 barrels of crude oil at $85 per barrel, will

hold the offer open until July 1st." On July 2nd Zeno responds with an acceptance to

Alpha. But by the time of Zeno's response, the market price of crude oil has risen to $98

per barrel. Alpha says no contract, and Zeno threatens to sue. What result?

Under the 2005 Bankruptcy Act, debtors are required to meet which of the following

conditions file for Chapter 7 bankruptcy?

A. They must provide a federal income tax return for the most recent tax year.

B. Their income should be more than the state median income.

C. They must be involved in a fishing or farming business.

D. They should be commodity brokers or stock brokers.

Star Software Systems and Henry orally agree for Henry to write special accounting

software. This software usually takes three years to complete, but can be done sooner.

Does Henry have an enforceable legal agreement with Star?

A. Yes, the agreement is enforceable because Henry could possibly complete writing

the software within a year.

B. No, the agreement is unenforceable because it is not written and signed.

C. Yes, the agreement is enforceable, but only to the extent of work Henry completes

within the first year of the contract.

D. No, the agreement is unenforceable since the contract involves a tangible work

product.

A union must register its bylaws with the:

A. NLRB.

B. Department of Commerce.

C. Federal district court.

D. Secretary of Labor.

Which of the following contracts should be in writing to be enforceable in courts under

the Statute of Frauds?

A. Contracts that can be completed within one year.

B. Contracts to pay the debt of another.

C. Contracts involving sale of all types of goods.

D. Contracts in consideration to employment.

Cal, an investor, lost $15,000 after purchasing corporate stock based on a false

registration statement. Under the Securities Act of 1933, Cal:

A. can sue the accountant if he can show the registration statement was misleading

about a material matter.

B. may sue the accountant who prepared the registration statement under the Securities

Exchange Act of 1954.

C. may sue the accountant who prepared the registration statement under the Securities

Act of 1933.

D. may sue the corporation of stock fraud under the Securities Exchange Act of 1934.

Which of the following statements about "the wage and hour provisions of the FLSA" is

true?

A. Full-time students cannot be employed.

B. They apply to all people employed in an administrative capacity.

C. Exempt workers are generally identified as those who manage other employees.

D. They require minimum wage for the employment of apprentices.

Which of the following is true of warranties by indorsers?

A. The indorser is not entitled to enforce the instrument.

B. The indorser warrants that the instrument is subject to a defense of any party that can

be asserted against the indorser.

C. The indorser warrants that he or she has knowledge of the bankruptcy of the maker,

acceptor, or drawer.

D. The indorser warrants that there has been no alteration or other irregularity.

Ching keeps a pet snake in her apartment. While Ching is hosting a party at her

apartment, the snake escapes from its cage and bites a guest, seriously injuring the

guest. The guest knew before attending the party that Ching has a pet snake in her

apartment. If the guest sues Ching for the injury resulting from the cobra bite, Ching:

A. will be strictly liable.

B. may defend based on assumption of risk.

C. is liable only if she intentionally released the snake from its cage.

D. has no liability since the incident was unforeseen by her.

Mina does not like the way the Adams Co. Production Union, which represents

employees at her Adams Co. plant, is representing her interests and wants to privately

negotiate her own contract with Adams Co. Which of the following statements is most

likely true?

A. Mina has the right to negotiate her own terms of employment.

B. Production Union represents Mina; hence, she cannot negotiate her own contract.

C. Production Union only represents the workers who want to be represented.

D. Mina must have NLRB approval to negotiate her own contract.

____________ occurs when the dominant party in a special relationship uses excessive

pressure to convince the weaker party to enter into a contract that greatly benefits the

dominant party.

A. Business compulsion

B. Physical duress

C. Undue influence

D. Economic duress

Jason has observed an old car parked in the alley behind his apartment for three months.

It has no license plates on it and the tires are flat. Jason concludes that the car has been

abandoned and takes possession of the car, gets it running, and decides to use it in a

demolition derby. At this point, Alex claims that the car is his. To have title to the car,

Jason must prove:

A. Alex deserted the car.

B. Alex did not intend to return for the car.

C. Alex deserted the car and did not intend to return for it.

D. Alex had promised the car to Jason as a gift.

A limited liability company is best thought of as a cross between a partnership and a:

A. sole proprietorship.

B. governmental institution.

C. limited partnership.

D. corporation.

A meritorious unfair labor practice charge filed with the NLRB first goes to:

A. arbitration.

B. a hearing.

C. federal district court.

D. mediation.

Samantha was looking for a certain shade of thread to complete her needlework on a

tablecloth. At a local shop, however, she was unable to decide which of the five selected

shades would be the closest match to the cloth. The shop owner allows Samantha to

take the selected shades home and decide which one she would want to have. This is an

example of which of the following?

A. Destination contract

B. Sale on approval

C. Sale on acceptation

D. Approval contract

The comprehensive trade coalition involving the United States, Canada, and Mexico is

known as the:

A. Uruguay Round Agreements.

B. North American Free Trade Agreement.

C. Geneva Conventions.

D. United Nations Conventions.

The built-in dishwasher in Fernando's apartment is most like a:

A. courtesy.

B. personal property.

C. trade fixture.

D. fixture.

Starbucks Coffee contracts with Juan Valdez coffee farms to purchase "all the coffee

beans Starbucks needs for the next twelve months." The parties have a(n)

____________ contract.

A. enforceable; open price

B. enforceable; requirements

C. unenforceable; output

D. unenforceable; firm offer

Which of the following is true of oral contracts for the sale of goods of $500 or more?

A. All oral contracts are unenforceable unless they are for the sale of goods of $500 or

more.

B. An oral contract is not enforceable, unless a written confirmation is received and

signed by one party, and sent to the other for approval.

C. An oral contract by a merchant is enforceable if a written confirmation is received by

another merchant who does not object to within 10 days.

D. An admission in court about the terms of the contract does not negate the general

rule.

A(n) ____________ can make a(n) ____________ because it deals in ____________ in

the ordinary course of business or has knowledge or skills peculiar to those goods.

A. obligor; gift; specially manufactured goods

B. merchant; firm offer; goods of the kinds sold

C. merchant; open price contract; goods of the kinds sold

D. seller; firm offer; goods of the kind sold

Local business activity carried on within state boundaries is known as:

A. public commerce.

B. interstate commerce.

C. intrastate commerce.

D. local commerce.

Catherine and Jacob have a written contract to buy and sell "100 cases of widgets." The

100 cases is a typo, so after signing the contract they orally agree to modify the contract

to "1,000 cases of widgets." If later the parties are in litigation concerning the amount

of widgets involved in the contract, can evidence of the oral change be introduced into

evidence?

A. No, since this violates the parol evidence rule.

B. Yes, since both signed the original contract.

C. Yes, since this is an exception to the parol evidence rule.

D. No, since this violates the best evidence rule.

____________ is an ADR technique by which parties hire a retired judge or a

magistrate to hear the dispute, following rules used in an official trial.

A. Partnering

B. A private civil trial

C. Early neutral evaluation

D. Med-arb

Two drivers challenge each other to a drag race on a public highway. This is an example

of acting with:

A. a purpose.

B. knowledge

C. recklessness.

D. negligence.

A nonprofit organization, Save the Tigers, wants to contest Anna's will, since she

promised to leave property to them at the annual Charity Banquet. Save the Tigers has:

A. a right to submit evidence that Anna was of unsound mind.

B. a right to submit evidence that Anna was subjected to undue influence.

C. no right to contest the will.

D. no right to contest the will, but may challenge the ownership of the property in

question.

What type of insurance policy requires the payment of premiums throughout the life of

the insured and pays the beneficiary the face value of the policy upon the insured's

death?

A. Limited-payment life insurance

B. Universal life insurance

C. Straight life insurance

D. Term life insurance

David went to the store to purchase a $15 MP3 player, advertised in the paper. The

salesperson was encouraged by the store not to sell that MP3 player since it created a

loss for the store. Instead, the salesperson told David that although the MP3 player was

on sale, it was an undesirable, bottom-of-the-line product, and that David would be

much happier with an Apple iPod Nano CD player for $250. The store:

A. acted in good faith when it tried to offer a better product.

B. can be sued under the policy of negligence and strict liability.

C. can be held guilty of a bait-and-switch scheme.

D. can be held guilty of fraudulent misrepresentation.

The RUPA has eliminated:

A. all management rights enjoyed by partners.

B. the concept of tenancy in partnership.

C. partnership entity status.

D. each partner's interest in the firm.

Martin Luther King, Jr. refused to obey the injunction in Birmingham in the early

1960's that prohibited King from speaking publicly merely because he was black. He

was jailed for his disobedience. King felt that there was a higher law than the law of the

land. King's actions were most likely based on a(n) ____________ ethical model.

A. positive law

B. natural law

C. utilitarianism

D. social contract

The ___________ Act prohibits contracts, combinations, and conspiracies in restraint of

trade.

A. Robinson-Patman

B. Federal Trade Commission

C. Sherman Antitrust

D. Clayton

Generally, if there are no modern court decisions or statutes dealing with an issue in

dispute, the court hearing the case will:

A. apply common law.

B. inevitably devolve.

C. be unable to decide the case.

D. ask the U.S. Supreme Court for an advisory opinion.

Holly bought a house for $200,000. She put down $40,000 in cash, and took out a

$160,000 loan from the Midland Bank to cover the rest of the cost. However, Holly

found that she could not make her mortgage payments. Midland Bank foreclosed on the

mortgage, sold the house for $150,000, and told Holly that she was liable for the

$10,000 difference between what she paid for it and what the bank sold it for. Did

Midland act within its rights? Explain.

Jill's account with Small Bank is improperly charged with a $3,000 substitute check that

was actually Bob's check drawn on Small Bank. Discuss Jill's legal rights and what she

must do to rectify this situation.

Dreamwork Bank uses the substitute check procedure to rapidly obtain payment of

items deposited by its customers. An employee of the bank fraudulently alters some

substitute checks so that they are for greater amounts than the original paper check and

embezzles the difference. Discuss the bank's warranties in this situation.

Carey was injured when hit by a truck driven recklessly by Steven, an employee of the

American Trucking Company. On what basis may Carey sue the American Trucking

Company when Steven was the individual being reckless?

Taft takes out an insurance policy on his wife, Kathryn, when he learns that she is to be

stationed in another country that is at war. She gets killed while on duty in the war zone.

Can Taft collect on the life insurance policy? Explain.

Cars and Cars sells rebuilt parts to repair shops. Allan is Cars and Cars' agent in

Smallville. He is paid a commission, but also has a quota to meet. Cars and Cars

appoints a second agent, Amanda, in Smallville. This makes it difficult for Allan to

meet his quota and also reduces his commissions. Discuss if Cars and Cars has violated

any duty it owes Allan.

DSK Construction interacts with many contractors and subcontractors, often for

long-term projects. Disputes among the various parties often take a long time to be

settled as different parties have different demands. Which method of ADR will help

DSK and its contractors prevent disputes before they escalate?

Ariel and Titus own adjoining tracts of land divided by a fence that has been in place

since 1978. In order to obtain a bank loan, Ariel has a survey made of his land and

discovers that the fence is twenty feet off the property line. Ariel and Titus cannot agree

to move the fence and end up in litigation. Discuss the likely result of the suit.

Mike and Mickey live at the opposite ends of Texas, some 750 miles apart. They want

to make a contract via computer rather than using paper, since this will be faster and

more convenient. Considering the three current model codes, what steps must Mike and

Mickey take under each to make a legal binding agreement?

NewCo. plans to sell stock to investors with a website offer form. Discuss the federal

securities regulations, if any, with which NewCo. must comply.

Big Co. has made a variety of unsecured, undisclosed, large personal loans to top

management officials. Belinda audits Big and discovers this problem. Discuss what

type of audit opinion Belinda is likely to issue.

The International Criminal Court wants to try a U.S. citizen for alleged war crimes. The

U.S. protests, asserting that the court lacks jurisdiction. Discuss the validity of this

assertion.

Cade, the owner of Cade Body Shop, Inc. is in the habit of paying business expenses

from his personal checking account. One such check to Parts Warehouse, Inc. is

dishonored, and Parts attempts to collect from Cade personally who asserts that only

Cade Body Shop, Inc. is liable. Discuss the legal resolution of this problem.

Justin learns that the air bags that his employer, Excel Auto Corporation, installs in its

new cars can kill or seriously injure young children when the bags deploy in an auto

accident. When he reports this to responsible Excel officials, they redesign and recall

the old airbags at considerable expense since "it is the best thing to do for the driving

public." Name and explain the ethical system Excel used to make this decision.

Rebecca sells Qadir goods that are located in the Matrix Warehouse and gives Qadir a

warehouse receipt at 5 P.M. Matrix closes at 5 P.M. That night, the goods are destroyed

by a fire at the Matrix Warehouse. Have the goods been tendered to Qadir by Rebecca?

Sergie orally agrees to pay Zenith Finance Co. a $300 loan debt that was discharged in

bankruptcy after Zenith told Sergie that repaying the debt would help him "rebuild his

credit", since Zenith would report his payments to credit reporting agencies. Discuss the

case.

On September 1, Isabel contracts with Ned to sing at Ned's restaurant starting on

October 1 and ending on October 15 of the following year. Discuss if this contract must

be written and signed to be legally enforceable.

Fraser entered into a written contract with the Plastica Company to purchase 100 plastic

black bats for a Halloween party he was hosting. The terms of the contract called for

Plastica to deliver all 100 bats by October 25. On October 20, Fraser received from

Plastica 85 plastic bats and 15 paper red bats. A letter accompanying the shipment

stated, "We no longer make plastic black bats. For the inconvenience, we will charge

you 15 percent less than the price we originally agreed upon." Was the contract between

Fraser and Plastica an executed contract? Explain.

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