Skyla and Terry want to form and do business as Unique Boutique Corporation. The
state statute governing the formation and operation of their corporation is most likely
guided by
a. city or county corporate codes.
b. the Entrepreneur’s Corporate Handbook.
c. the federal Administrative Procedure Act.
d. the Revised Model Business Corporation Act.
Edie files a suit against Frank. If this suit is like most cases, it will be
a. dismissed during a trial.
b. dismissed or settled before a trial.
c. resolved only after a trial.
d. settled at a trial.
During the last years of her life, Barb’s chief companion was Sylvia. Barb told Sylvia
that she could have a certain painting when Barb died. Barb died without a valid will.
Her family refused to give the painting to Sylvia, however, who filed a suit to obtain its
possession. Based on the decision in Case 43.1, In re Estate of Piper, the court will most
likely rule in favor of
a. Barb’s family, because the painting was never delivered to Sylvia.
b. Sylvia, because Barb intended to give the painting to Sylvia.
c. Barb’s family, because there was no will.
d. Sylvia, because Barb’s family never cared about Barbara.
Fact Pattern 32-2
Brad, Carlos, and Dora are general partners in Eastside Physicians, a medical clinic.
Refer to Fact Pattern 32-2. Brad, Carlos, and Dora decide to admit Faisal as a new
partner in Eastside Physicians. Faisal’s liability for partnership debts incurred before his
admission is
a. limited to his capital contribution to the firm.
b. limited to his personal assets.
c. nothing.
d. unlimited.
Elmore offers to sell a Ford F-150 for $7,500 to Grace. Before Grace can respond,
Elmore refers to the prices for similar Fords and says, “Forget it. I changed my mind.”
Elmore’s offer was terminated by
a. Elmore.
b. Ford.
c. Grace.
d. no oneElmore’s offer is still open.
Fact Pattern 26-1
Eve sells her motorcycle to her brother Floyd for $1,000. Twelve days later, Eve files
for bankruptcy under Chapter 7.
Refer to Fact Pattern 26-1. Floyd dies while riding the cycle. Eve is Floyd’s only heir.
With respect to the bankruptcy estate, the inheritance is
a. exempt property.
b. part of the estate if Floyd died more than 180 days after Eve’s filing.
c. part of the estate if Floyd died within 180 days after Eve’s filing.
d. part of the estate if the accident was in some way Eve’s fault.
Fern and Gray want to form a limited partnership to manage two restaurants: Café Latte
and Deli Delite. In most states, a limited partnership will be created when
a. a certificate of limited partnership is filed.
b. a partnership agreement is executed.
c. the business for which the firm is formed actually begins.
d. the partners make their capital contributions.
Studious Review Guides, Inc., has the power to control the market for its product.
Antitrust law regulates
a. how Studious acquired its power and what it does with it.
b. neither how Studious acquired its power nor what it does with it.
c. only how Studious acquired its power.
d. only what Studious does with its power.
Pola and Quincey want to form and do business as River Tours Corporation. A
corporation can consist of
a. no natural persons.
b. one natural person but not more.
c. one or more natural persons.
d. only more than one natural person.
Lyra induces Moe to enter into a contract for the sale of an apartment about which Lyra
fraudulently misrepresents a number of material facts. Lyra tells Moe that her
commission is 6 percent, but their signed, written contract states “12 percent.” The
Statute of Frauds governs
a. contracts that are induced by fraud.
b. contracts that must be in writing to be enforceable.
c. the admissibility in court of oral evidence.
d. the reformation of oral and written statements into one contract.
Utility Power Company has the right to run its power lines across Velma’s land. This is
a. a license.
b. an easement.
c. a profit.
d. a tenancy at sufferance.
Instead of setting up a business to market her own products, Krissy considers entering
into a distributorship franchise with Little Breweries Corporation. This involves the
transfer of
a. a license.
b. a trade name.
c. the formula to make a certain product.
d. the ownership of the business.
Luminescent Silicon Corporation, which controls 40 percent of the computer-chip mar-
ket in the United States, merges with Micro Processors, Inc., which controls 15 percent
of the same market. This merger is
a. a violation only if the result more clearly concentrates the market.
b. a violation only if the result makes it more difficult for potential competitors to enter
the market.
c. a violation if the result more clearly concentrates the market and makes it more
difficult for potential competitors to enter the market.
d. not a violation.
Mona contracts to repair a computer for NuData, Inc. (NDI). Mona knows that without
the computer, NDI will lose a sale. Mona does not perform as promised. NDI files a suit
against Mona. As consequential damages, NDI can recover
a. the cost of a new computer.
b. the difference between Mona’s price and the actual cost of repair.
c. the loss of profit from the lost sale.
d. nothing.
Handy Hardware Store agrees to hire Ilsa for one year at a salary of $500 per week.
When Handy cancels the contract, Ilsa spends $100 to obtain a similar job that pays
$450 per week for a year. Ilsa is entitled to recover
a. the amount of the wages that Handy promised only.
b. the difference between the wages at the two jobs only.
c. the difference between the wages at the two jobs plus $100.
d. $100 only.
Sid rents an apartment from Town Properties, Inc. The lease, which ends on May 31,
does not include an option for renewal, and Sid and Town do not discuss whether Sid
can stay on at the end of the term. On June 1, Sid has
a. an implied option to renew the term.
b. a right to remain contingent on notice from Town.
c. a right to remain subject to notice to Town.
d. no right to remain.
Tippi believes that she needs to obtain a discharge in bankruptcy through an individual’s
repayment plan. This proceeding can be initiated by a filing of a petition by
a. a creditor.
b. a debtor.
c. a corporation.
d. a partnership.
In Export Co. v. Imports, Inc., there is no precedent on which the court can base a
decision. The court can consider
a. neither public policy nor social customs and values.
b. public policy only.
c. public policy or social customs and values.
d. social customs and values only.
Jane and Kelly want Lucy to replace Kelly as a party to their contract. They can best
accomplish this by
a. a mutual agreement to rescind.
b. an accord and satisfaction.
c. a novation.
d. an alteration of the contract.
Kady, an agent for Lebron, enters into a contract on Lebron’s behalf with Madge that
must be in writing to be enforceable under the Statute of Frauds. Kady’s authority to
enter into this contract is not in writing. Under the equal dignity rule, this contract is
a. enforceable.
b. void.
c. voidable at Lebron’s option.
d. voidable at Madge’s option.
Nugget’s Chick”n Shack orders chicken from Outlet Food Supplier, but Outlet does not
deliver. Nugget’s will probably be unable to enforce the agreement if the parties
a. did not limit the duration of the deal.
b. did not specify a payment term.
c. did not specify a quantity term.
d. have not begun to perform.
Dag and Elke are holders of common stock in Fragrances, Inc. (FI). Like other holders
of common stock, they have a residual position in the overall financial structure of FI,
because they
a. are guaranteed to receive more than the amount of their investment.
b. are the last to receive payment for their investment.
c. have priority to FI’s assets if FI becomes insolvent.
d. reside in the state of FI’s incorporation.
Mona offers Ned, a building inspector, money to overlook the violations in her new
warehouse. Ned accepts the money and overlooks the violations. Mona is charged with
the crime of bribery. The crime occurred when
a. Mona decided to offer the bribe.
b. Mona offered the bribe.
c. Ned accepted the bribe.
d. Ned overlooked the violations.
Bella owns a farm in Colorado. Doyle drives his sport utility vehicle off a highway and
onto Bella’s land. Doyle commits trespass if he
a. does not have Bella’s permission to drive on the property.
b. drives onto the property for recreational purposes.
c. harms the property in a material way.
d. harms the property in any way.
Lou claims that he and Myra entered into an implied-in-fact contract. To establish this
contract, it is not necessary to show that
a. a court imposed a promise in the interest of fairness.
b. Lou expected to be paid for providing services or property.
c. Lou provided Myra with services or property.
d. Myra failed to reject services or property provided by Lou.
Esther and Faisal agree that Esther will fix Faisal’s car in exchange for his paying a
preexisting debt owed by Esther to Gladys. Gladys is
a. an assignee.
b. an intended beneficiary.
c. an incidental beneficiary.
d. a delegatee.
Kirk is the chief financial officer of Lemon Corporation, which is required to file
certain financial statements with the Securities and Exchange Commission (SEC).
Under the Sarbanes-Oxley Act of 2002, Kirk must personally
a. certify that the statements are accurate.
b. delegate the responsibility for preparing the statements.
c. deliver the statements to the appropriate SEC officer.
d. prepare the statements.
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.
Fact Pattern 11-4
Sal contracts with Tasty Pizza Company to deliver its frozen pizza and pasta products to
U-Chuse Market and other grocery stores. Both parties change their minds, however,
and inform each other that they would like to cancel the contract.
Refer to Fact Pattern 11-4. The next day, Sal changes her mind again and once more
offers to deliver Tasty’s products. Tasty is willing to deal, but for a new price. Sal and
Tasty
a. may agree to a new contract, but it cannot include a new price.
b. may agree to a new contract that includes the new price.
c. must perform their original contract.
d. must perform the part of their original contract that is executory.
Kelly, Lars, and Mona agree to be partners in Neighborhood Delivery Service (NDS),
splitting the profits equally. Kelly contributes 67 percent of the capital. When NDS is
dissolved, its liabilities are greater than its assets. The losses are paid by
a. all of the partners in proportion to their capital contributions.
b. all of the partners in proportion to their shares of the profits.
c. Kelly because she contributed most of the capital.
d. Lars and Mona because they contributed the least of the capital.
Building Restoration, Inc. (BRI), enters into a contract to refurbish an old train depot
for Casual Dining, Inc., which plans to open Eat Up Restaurant in that location. If BRI
completes most of the work promised in the contract, its performance will be
a. absolute.
b. complete.
c. material.
d. substantial.
Eminent Properties, Inc., wants to fill its wetlands to build Fieldview Homes, a
residential subdivision. The Clean Water Act prohibits the filling of wetlands unless
a. any displaced wildlife is accommodated elsewhere.
b. the Army Corps of Engineers issues a permit.
c. the local community obtains a benefit.
d. the party doing the filling realizes an economic profit.
Thelma signs a check “pay to the order of Uri” drawn on Thelma’s account in Verity
Bank. Thelma has $400 in her account but the amount of the check is $500, which the
bank pays. This is
a. a dishonored check.
b. an overdraft.
c. a postdated check.
d. a stale check.
Any creditor listed in the schedules filed by the debtor must file a proof of claim.
The only defense to criminal liability that justifies the use of force is self-defense.
Equal protection means that the government must treat similarly situated individuals in
a similar manner.
A minor’s failure to perform an executory contract within a reasonable time after
reaching the age of majority implies disaffirmance.
SEC Rule 10b-5 prohibits the commission of fraud in connection with the purchase or
sale of any security
A business firm may have an insurable interest in the life of a key employee.
Counterfeiting is forgery.
Promissory estoppel requires reliance of a substantial and definite character.
On a partner’s dissociation, his or her right to participate in the management and
conduct of the business terminates.
In the distribution of the debtor’s estate, secured creditors take priority over unsecured
creditors.
A release does not require consideration to be legally binding.
A corporation is liable for the torts committed by its officers within the course and
scope of their employment.
Stare decisis is a doctrine obligating judges to help persons who have failed to protect
their own rights.
The public disclosure of private facts about a person is not an invasion of privacy if it is
done without the person’s knowledge or consent.
An offer must be practical to be effective.