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.
Elmores offer was terminated by
a. Elmore.
b. Ford.
c. Grace.
d. no oneElmores offer is still open.
Drake pushes Evon into the path of an oncoming car driven by Flip. Gina tries to rescue
Evon. Drake is liable for any injuries to
a. Evon and Flip but not Gina.
b. Evon and Gina but not Flip.
c. Evon, Flip, and Gina.
d. none of the parties.
Quik Sales Corporation orders goods from Re Stock Company. Re plans to market the
goods to consumers generally. Re identifies the goods. Before they are shipped to Quik,
an insurable interest in the goods exists in
a. Quik and Re, but not consumers generally.
b. Quik only.
c. Quik, Re, and consumers generally.
d. Re only.
Fiona invents a new deep-sea fishing net, which she names “Great Catch. She also
writes the operating manual to be included with each net. Fiona could obtain copyright
protection for
a. the net.
b. the “newness of the net.
c. the name.
d. the operating manual.
Gina induces Hugh to enter into a contract for the purchase of a condominium about
which Gina knowingly misrepresents a number of material features. When Hugh
discovers the truth, he can
a. not rescind the contract.
b. rescind the contract on the basis of fraud.
c. rescind the contract on the basis of mistake.
d. rescind the contract on the basis of undue influence.
Rick manages an illegal gambling operation in his Sushi Bar & Grill. Rick reports the
profits of the gambling operation as income from Sushis legitimate activities on its tax
returns. This is
a. embezzlement.
b. larceny.
c. money laundering.
d. no crime.
Vernon claims that his contract with Ulani is voidable. If their contract is avoided
a. both parties are released from it.
b. both parties must fully perform their obligations under it.
c. a wholly different contract is agreed to.
d. a wholly different contract is imposed “as if the parties had agreed.
Orin enters into a contract with Natalie. Later, Orin is adjudged mentally incompetent
and Moseby is appointed Orins guardian. Lila, Orins daughter, attempts to void Orins
contract with Natalie on the ground of Orins incompetency. The contract is
a. enforceable if Orin does not attempt to disaffirm it.
b. enforceable if Natalie is also incompetent.
c. enforceable if Moseby knew of the contract when he was appointed.
d. void.
Donney takes the trade secrets of Effervescent Soda Company without Effervescents
consent. Donney gives the secrets to Fruity Drinks Corporation, an Effervescent
competitor, without compensation. Fruity knows that the secrets were acquired without
Effervescents consent. Under federal law, Fruity has committed
a. a crime only if Fruity uses the secrets.
b. a crime only if Effervescent later discovers the theft.
c. not a crime.
d. a crime.
Seth files a petition for bankruptcy. Seth must include with the petition
a. proof of each creditors claim.
b. a list of creditors and the amount of the debt owed to each.
c. all of his debit and credit cards to be disposed of by the court.
d an affidavit testifying to his having read the Bankruptcy Code.
Jody owns KuppaJoe Kiosks, a sole proprietorship. Jodys liability is
a. limited by state statute and varies from state to state.
b. limited to the extent of her capital expenditures.
c. limited to the extent of her original investment.
d. unlimited.
E-Bank, an online financial institution, gives financial information about Paula and
other customers to a federal agency without the customers permission. E-Bank may be
liable under
a. the Federal Trade Commission Act.
b. the Financial Services Modernization Act.
c. the Right to Financial Privacy Act.
d. the Uniform Electronic Transactions Act.
Winston applies to the U.S. Patent and Trademark Office for a patent on a process that
uses transactions to hedge the risk in securitiies (stocks and bonds) trading. The
patentability of business processes is controversial because business process patent
applications involve
a. computer programs.
b. ideas.
c. machines.
d. transformations of particular articles into different states or objects.
Wilbur signs a note that includes a clause under which the notes holder can delay the
date of its payment indefinitely. This is
a. an acceleration clause.
b. an extension clause.
c. an immaturity clause.
d. a stop-payment clause.
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.
In the facts in the previous question, if the CDs are seen as the property of Heidi and
Irene, the sisters are most likely
a. joint tenants.
b. tenants at sufferance.
c. tenants by the entirety.
d. tenants in common.
Prime Property Investments, Inc., files a financing statement to provide notice of its
security interest in the property of Qwik Breakfast Restaurant. The initial effective term
of a financing statement is a period of
a. five days.
b. five months.
c. five weeks.
d. five years.
Gary threatens physical harm to force Hugh to sell his business, Imported Goods, Inc.,
to Gary for a below-market price. This is
a. duress.
b. fraud.
c. puffery.
d. undue influence.
Diners Café orders five gallons of transfat-free cooking oil from Restaurant Supply, Inc.
The seller mistakenly ships the wrong oil, which the buyer keeps, despite the
nonconformity. The oil is destroyed in a kitchen fire. The loss is suffered by
a. Diners and Restaurant Supply, but not Dinerss customers.
b. Diners, Restaurant Supply, and Dinerss customers.
c. Diners only.
d. Restaurant Supply only.
Tomato Farms (TF) offers to sell United Grocers, Inc., a boxcar load of tomatoes. The
offer is sent via fax. An acceptance is required urgently. It would be most reasonable for
United to accept via
a. a fax, a letter, or a phone call to TF within two weeks.
b. a fax sent to TF as soon as the offer is received.
c. a letter mailed to TF within two days.
d. a phone call to TF within five business days.
Bigg Business Corporation, a U.S. firm, and Comercial Grande, S.A., a Mexican firm,
are parties to a contract that does not specify a choice of law. The governing law is that
of
a. any third country.
b. Spain.
c. the buyers place of business.
d. the sellers place of business.
Jen signs a check “pay to the order of Kev drawn on Jens account in Little Bank to buy
Kevs car. Jen asks Little Bank to indicate on the face of the check that it will accept it
when Kev presents it for payment. If the bank agrees, this will be
a. a cashiers check.
b. a certified check.
c. a trade acceptance.
d. a travelers check.
Dru, a U.S. citizen, is the owner of Egret, Inc. Egrets 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.
Farm Equip, Inc., makes farming machinery. Gail discovers that her Farm Equip tractor
is defective and sues the maker for product liability based on negligence. To win, Gail
must show that
a. Farm Equip sold the tractor to Gail.
b. Gail knew and appreciated the risk caused by the defect.
c. Gail suffered an injury caused by the defect.
d. the “defect was a commonly known danger.
Flynn, an accountant, helps Grange Supply Company prepare and file a false federal
corporate income tax return. Under the Internal Revenue Code, this is
a. a felony punishable by a fine and imprisonment.
b. a felony punishable only by a fine.
c. a misdemeanor punishable only by a fine.
d. a civil violation subject to a liability suit but not a crime.
Property Management Corporation (PMC) owns several apartment buildings in two
states. Regarding standards for maintenance of the buildings, PMC should consult
a. the applicable city ordinances and state statutes.
b. the previous owners.
c. the long-term tenants.
d. the Uniform Landlords Maintenance Manual.
Jim is an appliance salesperson. To make a sale, he asserts that a certain model of a
Kitchen Helper refrigerator is the “best one ever made. This is
a. fraud if the statement is the truth.
b. fraud if Jim believes that this statement is not true.
c. fraud if Jim is stating his opinion, not the facts.
d. not fraud.
In deciding questions of corporate social responsibility, Valley Disposal & Recycling,
Inc., is concerned with
a. how the corporation can best fulfill any ethical duty to society.
b. the effect on corporate profits of ignoring any ethical duty to society.
c. whether the corporation owes any ethical duty to society.
d. all of the choices.
To adjust debts and institute a repayment plan that is less expensive and less
complicated than other options, Brunch & Lunch Café, a small business, may file a
petition in bankruptcy for relief through
a. a liquidation.
b. a reorganization.
c. a repayment plan.
d. a family-farmer bankruptcy plan.
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.
Fact Pattern 27-1
Town Transport Company (TTC) agrees to pick up two containers for Unlimited Sales,
Inc., and store their contents, to be delivered later. While TTC unloads one container,
the other disappears from TTCs loading dock.
Refer to Fact Pattern 27-1. These facts give rise to
a. a presumption of intentional or negligent conversion by TTC.
b. a presumption of theft by a third party.
c. a presumption of theft by TTC.
d. Unlimited Saless liability for the containers loss.
Ceramic Tile Company designs and makes floor tiles. In a product liability suit based
on negligence, Ceramic could be liable for violating its duty of care with respect to
a. neither the design nor the making of the tiles.
b. the design and the making of the tiles.
c. the design of the tiles only.
d. the making of the tiles only.
Reynaldo is a director of Quantum Mechanix Corporation. Reynaldos rights, as a di-
rector, do not include a right to
a. indemnification.
b. inspection.
c. participation.
d. self-dealing.
Business Properties, Inc. (BPI), offers to sell a warehouse to Corporate Investments.
Corporate says that it will pay BPI $100 to hold the offer open for three business days.
This
a. creates an illegal contract by adding a clause to BPIs offer.
b. makes the offer irrevocable for three days if BPI accepts.
c. negates BPIs offer by changing the price term.
d. voids BPIs offer by extending the time term.
Jon agrees to sell his K9 Sports Equipment store to Lacy. As part of the sale, Jon
promises never to open a similar, competing store anywhere. Jons promise is most
likely
a. invalid because it is part of a sale of an ongoing business.
b. invalid because of the unreasonable terms of area and time.
c. valid because it is part of a sale of an ongoing business.
d. valid because Jon and Lacy apparently have the capacity to contract.
Unless a contract provides otherwise, it is assumed to be a destination contract.
A holder takes an instrument for value by performing the promise for which the
instrument was issued.
A loss sustained between the time of application and the delivery of an insurance policy
may not be covered.
The verdict in a summary jury trial is binding.
Ethics is the branch of philosophy that focuses on what constitutes right and wrong
behavior.
In a bailment, possession of the property is transferred to the bailee.
A partner always has the power and the right to dissociate from the partnership.
The First Amendment protects commercial speech more extensively than
noncommercial speech.
Eppie gives a check to Fund Investments to buy 100 shares of stock in GR8 Tech
Corporation for Eppie. The price of the shares is constantly fluctuating. Fund
Investments asks Eppie to leave the amount of the check blank and allow it to fill in the
price when making the purchase. Eppie agrees. Fund Investments buys the stock when
the price is $4,000, but fills in the check for $5,000. The check is negotiated as payment
for a $5,000 debt to Hasty Accounting Services, which takes the check in good faith and
without notice of Fund Investmentss act. Hasty later learns that Fund Investments was
not authorized to fill in the check for $1,000 over the price. Is Hasty an HDC? If so, for
how much?
Penalties for aiding or assisting in the preparation of false tax returns are limited to one
penalty per taxpayer per tax year.
The possession of land without right is a tenancy at will.
A partys oral agreement to pay anothers debt is never enforceable.
The most common reason that ethical problems occur in business is an overemphasis on
long-run profit maximization.
If an actors conduct creates no risk, there is no negligence.
A director is a fiduciary of a corporation.