Concurrent conditions occur only when the parties to a contract are required to perform
their respective duties simultaneously.
Shareholders have a right to inspect corporate books and records.
Normally, a court of law will not question the adequacy of consideration.
Federal law encourages private lenders to modify mortgages so as to lower the monthly
payments of borrowers who are in default.
Business ethics focuses on ethical behavior in the business world.
In the United States, a patent is given to the first person to file for it.
Each bank in a collection chain must pass a check on before midnight of the day of its
receipt.
The first security interest to be perfected is the last in priority over any other perfected
security interests.
Only the manufacturer of a defective product can be strictly liable for an injury or
damage caused by the product.
The term cure refers to the right of the seller to reject, adjust, or replace nonconforming
goods.
An installment contract is breached if a seller tenders any nonconforming goods.
A merger involves the legal combination of two or more corporations, only one of
which continues to exist.
When the drawee of an unaccepted draft or check pays to a holder the amount due in
full, all parties to the instrument are discharged.
Lenders are required to charge prepayment penalties on most subprime mortgages and
home equity loans.
The implied warranty of habitability does not apply to substantial physical defects that a
landlord has had a reasonable time to repair.
Under the covenant of quiet enjoyment, a landlord promises that a tenant will not be
disturbed in the possession of the premises.
An accountant can avoid liability by proving that his or her negligence was only the
proximate cause of the client’s loss.
A time draft is payable at a definite future time.
Reliance on a misrepresentation is justified if the misrepresentation is an obviously
extravagant statement.
Interrogatories are written questions for which written answers are prepared and signed
under oath.
An individual debtor is allowed to exempt certain property from the bankruptcy.
A subprime mortgage is a loan made to a borrower who does not qualify for a standard
mortgage.
If the parties to a sales contract state that a certain remedy is exclusive, then it is the
sole remedy.
A seller with voidable title can transfer good title to a good faith purchaser for value.
“Blue sky laws” regulate securities data stored in cloud computing servers.
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.
A restriction on commercial speech that implements a substantial government interest
may be valid.
Anyone who writes a book has automatic copyright protection in every country in the
world.
Personal property that is most often exempt from satisfaction of judgment debts does
not include livestock.
A limited liability company must be managed by non-member managers.
If no harm results from an allegedly negligent act, there is no liability.
A tenant cannot withhold rent for any reason.
Estray statutes determine ownership rights in fungible goods that have “strayed.”
Even after a tenant sublets leased premises, the tenant may be obligated to pay rent.
Negotiation is the most complex form of alternative dispute resolution.
Nina and Owen enter into an oral contract for Nina’s sale to Owen of a laser printer for
$400. Before Owen takes possession of the printer, the contract is enforceable by
A.either party.
B.Nina only.
C.neither party.
D.Owen only.
AgriEquip Service & Supply, Inc., sends Merilyn an e-mail in which AgriEquip offers
to employ her for certain hours and a specific amount of money over a limited period of
time. She responds with a counteroffer that reduces the hours and increases the money.
AgriEquip e-mails an acceptance. Merilyn performs, but AgriEquip refuses to pay. She
files a suit against AgriEquip for breach of contract. The court is most likely to rule that
the e-mail
A.showed only an agreement to agree.
B.was an agreement to the essential terms of an employment contract.
C.constituted an unenforceable, non-existent contract.
D.contained a contract but is unenforceable because it is electronic.
Hubert borrows $100,000 from Integrity Mortgage Mart to buy a home. Soon after
obtaining the mortgage, Integrity convinces Hubert to refinance. This is
A.a short sale.
B.a subprime mortgage.
C.loan flipping.
D.steering and targeting.
Fact Pattern 26-3
Dhani, an accountant for Eureka, Inc., learns of undisclosed company plans to market a
new laptop. Dhani buys 1,000 shares of Eureka stock. He reveals the company plans to
Fay, who buys 500 shares. Fay tells Geoff, who tells Hu. Both Geoff and Hu buy 100
shares. They know that Fay got her information from Dhani. When Eureka publicly
announces its new laptop, Dhani, Fay, Geoff, and Hu sell their stock for a profit.
Refer to Fact Pattern 26-3. Under the Securities Exchange Act of 1934, Fay is most
likely
A.liable for insider trading.
B.not liable because Fay did not prevent others from profiting.
C.not liable because Fay did not solicit information from Dhani.
D.not liable because Fay does not work for Eureka.
Idaho Farms mistakenly puts its potatoes in Jackson Co-op’s storage bin, which already
contains Kelly Spud Farm’s potatoes. It is impossible to tell which potatoes originally
belonged to which party. This is
A.a bailment.
B.accession.
C.confusion.
D.production.
Hemisphere Financial Corporation, a U.S. firm, files a suit against Italy in a U.S. court.
Italy claims foreign sovereign immunity. Under the Foreign Sovereign Immunities Act,
this claim is determined by
A.a neutral third-party court.
B.an international law court.
C.an Italian court.
D.the U.S. court in which the suit is filed.
Federal law requires new car labels to state fuel economy estimates. California state law
proscribes deceptive advertising. Angie buys a new car from Beltline Motors in
California. Later, Angie files a suit against the car’s manufacturer, claiming that the car
does not attain the fuel economy estimate and thus its maker engaged in deceptive
advertising in violation of state law. In the opinion of the majority in Paduano v.
American Honda Motor Co., the court should hold that
A.the federal law does not preempt Angie’s state law claim.
B.the federal law preempts Angie’s state law claim.
C.California’s state law preempts the federal fuel economy law.
D.the federal and state laws preempt each other.
Lexy, a salesperson for My-T-Fine Corporation, learns that My-T-Fine will increase the
dividend it pays to shareholders. Lexy buys 10,000 shares of My-T-Fine stock. When
the price increases, Lexy sells the shares for a profit. Lexy would not be liable for
insider trading if the information about the dividend was
A.material when she sold the stock.
B.public after she bought the stock.
C.public before she bought the stock.
D.speculative when she bought the stock.
Root & Branch Lumber Company obtains a fire insurance policy from Statistical
Insurers, Inc., on a $400,000 warehouse. The policy includes an 80-percent coinsurance
clause. Root & Branch insures the property for $320,000. In a fire, the warehouse
suffers $200,000 in damage. Root & Branch can recover
A.$400,000.
B.$320,000.
C.$200,000.
D.$80,000.
Location! Realty LLC is a limited liability company (LLC). Like other LLCs, for
federal jurisdictional purposes, Location! Realty is most likely a citizen of
A.all states.
B.every state in which its members are citizens.
C.no state.
D.only the state in which it was formed.
Livewire Company and Kitchen Products, Inc., sign a document that states Livewire
agrees to design a Web site for Kitchen Products, which agrees to pay for the service.
Livewire and Kitchen Products have made
A.an express contract.
B.an implied contract.
C.a quasi contract.
D.no contract.
Kenyon files a petition for bankruptcy. Kenyon must include with the petition
A.a plan to turn over his future income to the trustee.
B.a certificate proving attendance at a credit-counseling briefing.
C.a provision of adequate means for the petition’s execution.
D.a statement of preference for one creditor over another.
Gigi, a twenty-year-old, wants to execute a will before she undertakes a
mountain-climbing trip on a peak in the Himalaya Mountains. In most states, the legal
age for executing a will is
A.sixteen years of age.
B.eighteen years of age.
C.twenty-one years of age.
D.twenty-five years of age.
Fact Pattern 31-1
First State Bank issues a letter of credit in favor of Oboe Company, an American firm,
to facilitate an international sales contract to buy resources from Lapland Mining, Ltd.,
a Finnish company.
Refer to Fact Pattern 31-1. In a letter of credit, the beneficiary is
A.Lapland.
B.Oboe.
C.First State Bank.
D.none of these choices.
Rita borrows $30,000 from South State Credit Union. South State accepts Rita’s equity
in her home as collateral, which can be seized if the loan is not repaid on time. This is
A.a home equity loan.
B.a hybrid mortgage.
C.a reverse mortgage.
D.a violation of the law.
Ira orally agrees to buy a unique collection of sports memorabilia for $1,000 from Jane
and sends her $250 as a down payment. When Ira sends her the rest of the price, Jane
refuses to ship Ira the collection. Ira should seek
A.damages.
B.reformation.
C.rescission.
D.specific performance.
Glen and Heidi are married. Later, Heidi’s parents invest their savings in certificates of
deposit (CDs) in the names of Heidi and her sister Irene. Their parents keep the CDs.
When Glen files for divorce from Heidi, he lists the CDs as marital assets. Before the
court divides the assets, Irene cashes in the CDs at her parents’ instruction without
sharing the proceeds with Heidi. Under the reasoning of the majority in Kovarik v.
Kovarik, the court will most likely rule that, with respect to Glen and Heidi’s marital
estate, the CDs are
A.not included because Heidi’s parents did not intend to give them to her.
B.not included because Irene cashed them without sharing the proceeds.
C.included because Glen and Heidi were married when the CDs were acquired.
D.included because Heidi’s parents gave up control when the CDs were placed in the
names of Heidi and Irene.
Phil invents “PhutureNow,” new Web site design software, and applies for a patent. If
Phil is granted a patent, his invention will be protected
A.for ten years.
B.for twenty years.
C.for the life of the inventor plus seventy years.
D.forever.
Rural Utility, Inc., enters into a contract with Shovel Excavation Service to dig up,
replace, and rebury Rural’s cables in a certain location. Rural advances Shovel 10
percent of its cost. If the parties rescind the contract, Shovel’s refund of the payment
would be
A.a penalty.
B.liquidated damages.
C.restitution.
D.specific performance.
Fact Pattern 24-1
Mountaintop Clearview Corporation authorizes Niles, its employee, to oversee its
timber operation. In the course of his employment, Niles disposes of the operation’s
waste illegally. Orson is a Mountaintop shareholder.
Refer to Fact Pattern 24-1. With respect to Mountaintop and Niles, liability for this
crime most likely rests with
A.neither Mountaintop nor Niles.
B.Mountaintop and Niles.
C.Mountaintop only.
D.Niles only.
Expert Stitching Corporation enters into a contract to sell denim clothing to Fine
Fashion Company, which in turn sells a pair of jeans to Grady, a consumer. In contrast
to standards that apply to consumers, the UCC imposes on merchants
A.less strict legal standards.
B.special business standards.
C.stricter ethical standards.
D.the same overall standards.
Theo and Uma orally agree on the sale of Theo’s Fitness Center to Uma and note the
terms on a sheet of the center’s stationery, which includes the Center’s letterhead but
which neither party signs. This agreement is most likely enforceable against
A.neither Theo nor Uma.
B.Theo and Uma.
C.Theo only.
D.Uma only.
Lost in a canyon near Gila, Arizona, Hester writes her will in crayon, on a paper bag,
while Ivan states orally how he wants his estate distributed. Most states do not permit
A.an olographic will.
B.a nuncupative will.
C.a will written on a paper bag.
D.a will written in crayon.
Call Center Corporation, a U.S. firm, owns property in India. The government of India
seizes the property for a proper public purpose and pays Call Center just compensation.
This is
A.confiscation.
B.defalcation.
C.dumping.
D.expropriation.
Squeaky Clean Corporation wants to make an offering of securities to the public. This
offering is not exempt from registration under the Securities Act of 1933. Before
Squeaky sells its securities, it must provide investors with
A.a forward-looking financial forecast.
B.an investment contract.
C.a prospectus.
D.samples of its products.
VuTech Company agrees to sell digital video equipment to Home & Business Stores,
Inc., for Home & Business to market to its customers. Their contract will not be
enforceable unless it includes
A.the duration of the deal.
B.the price of the goods.
C.the quantity of the goods.
D.the requirements of Home & Business’s customers.
Hybrid Corporation enters into a contract with Insure Service, Inc. (ISI), to obtain
health insurance for Hybrid employees. If ISI breaches the contract and Hybrid is
awarded compensatory damages, the purpose would be to
A.establish, as a matter of principle, that ISI acted wrongfully.
B.provide Hybrid with funds for a foreseeable loss beyond the contract.
C.provide Hybrid with funds for its loss of the bargain.
D.punish ISI and set an example to deter others from similar acts.
Fact Pattern 2-1
Java Cafes, Inc., and Kaffe Import Corporation dispute a term in their contract.
Refer to Fact Pattern 2-1. Resolving the dispute between Java and Kaffe by having a
neutral third party render a binding decision is one of the advantages of
A.arbitration.
B.conciliation.
C.intervention.
D.mediation.
Lou and Mira want to rescind their contract under which Lou sold an MP3 player to
Mira for $50. To rescind the contract
A.Lou must return the $50 and Mira must return the player.
B.Lou must return the $50 only.
C.Mira must return the player only.
D.the parties can keep the “benefits” of their bargain.
Sid induces Ty to enter into a contract for the sale of a warehouse about which Sid
fraudulently misrepresents a number of material facts. Sid also tells Ty that his
commission is 6 percent, but their signed, written contract states “12 percent.” The parol
evidence rule 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.