Wings2Go Corporation fails to hold an organizational meeting. In this circumstance, at
common law Wings2Go is most likely
a. a corporation by estoppel.
b. a de facto corporation.
c. a de jure corporation.
d. ultra vires.
Willy deposits $5,000 with Home State Bank on July 1, 2012. Home State Bank
promises to repay Willy the $5,000 plus 3 percent annual interest on July 1, 2017.
Home State Bank has issued Willy a
a. certificate of deposit.
b. cashier’s check.
c. trade acceptance.
d. draft.
Beef Burgers, Inc. contracts to buy five hundred steers from Fattening Feedlots. Before
Fattening Feedlots can deliver the steers, there is an outbreak of disease in the feedlot,
and all the cattle are quarantined. In this case the perfect tender rule
a. applies to both parties.
b. does not apply.
c. applies only to Beef Burgers.
d. applies only to Fattening Feedlots.
Fact Pattern 31-2
Sid, a director of Tech Software Company, learns that a Tech engineer has developed a
new, exciting video game. Sid buys Tech stock and tells his friend Uri, who also buys
Tech stock. When the new game is released three weeks later, Sid and Uri sell their
stock for a big profit.
Refer to Fact Pattern 31-2. Regarding Sid’s profits on the purchase and sale of Tech
stock, under Section 16(b) of the Securities Exchange Act of 1934 Tech may recapture
a. all of Sid’s profits.
b. half of Sid’s profits.
c. 10 percent of Sid’s profits.
d. none of Sid’s profits.
Bob, research manager for CornAgri Products, Inc., applies utilitarian ethics to
determine that an action is morally correct when it produces the greatest good for
a. Bob.
b. CornAgri.
c. the fewest people.
d. the most people.
Miklos employs Nathalie to handle a list of financial transactions on Miklos’s behalf.
This power will terminate on
a. any transaction causing a loss to Miklos.
b. Miklos’s death or incapacity.
c. Miklos’s sixty-fifth birthday.
d. Nathalie’s handling of one of each stipulated transaction.
During a union election campaign, Sapphire Blue Finance Company prohibits on-site
solicitations by Credit Workers Union, which is seeking the worker’ unionization, while
permitting charities to solicit the same workers. This violates
a. federal labor law.
b. federal elections law.
c. federal employment discrimination law.
d. no federal law.
GR8 Vision, Inc., hires Haul-Way Company to transport fifty large-screen HDTVs from
GR8’s warehouse in San Diego to an Ideal Electronics retail store in Phoenix. The
bailee is
a. GR8 Vision.
b. Haul-Way.
c. Ideal Electronics.
d. no one.
Friendly Credit Corporation (FCC) believes that Gary may dispose of the assets that
FCC expects to receive as payment for Gary’s debt before FCC can obtain a judgment.
FCC may ask a court to issue a writ of
a. attachment.
b. contribution.
c. execution.
d. redemption.
Margaret is the top manager of Pecans, Inc. She sets strict ethical standards for all
employees. Margaret, however, often takes some of the company’s best nuts and sells
them from her house. The ethical tone at Pecans, Inc. is
a. likely to be good because Margaret has set such strict standards for her employees.
b. not likely to be good because although Margaret sets strict ethical standards for the
other employees, she does not follow them.
c. not related to either Margaret’s ethical standards or her own unethical behavior.
d. not likely to be good because employees tend to resent strict ethical standards.
Yves is an accountant charged with negligence by Zesty Soup Company, a client. Yves
may successfully defend against the claim if he can show that
a. scienter was lacking.
b. he complied with all International Financial Reporting Standards.
c. the negligence was not the proximate cause of the client’s losses.
d. the negligence was only contributory.
To buy a stuffed cow, Ken executes a check “pay to Laura or bearer” and gives it to
Laura, who does not own a stuffed cow. This check is
a. negotiable.
b. nonnegotiable, because it does not indicate a specific payee.
c. nonnegotiable, because it may be a joke.
d. nonnegotiable, because Laura does not own a stuffed cow.
Lyn files a suit against Karl. Karl denies Lyn’s charges and sets forth his own claim that
Lyn breached their contract and owes Karl money for the breach. Karl’s claim is
a. a contrary charge.
b. a counterclaim.
c. a counterpoint.
d. a cross complaint.
Leah gains access to government records and alters certain dates and amounts in her
favor. This is
a. embezzlement.
b. forgery.
c. larceny.
d. no crime.
Shingle & Tile Roofing Contractor, LLC, obtains an insurance policy against liability
for injuries or losses sustained by employees during the course of their employment.
The policy covers claims not covered by worker’ compensation insurance. This is
a. casualty insurance.
b. fidelity or guaranty insurance.
c. key-person life insurance.
d. employer’s liability insurance.
Bean Vendors, Inc., and Java Bistros Corporation dispute a term in their contract.
Refer to Fact Pattern 3-1. If Bean and Java have a long-standing business relationship
that they would like to continue, they may prefer to settle their dispute through
mediation because
a. the case will be heard by a mini-jury.
b. the dispute will eventually go to trial.
c. the process is not adversarial.
d. the resolution of the dispute will be decided an expert.
Rosa and Sean are directors of Tech, Inc. Rosa’s written authorization to Sean to vote
Rosa’s shares at a Tech shareholder’ meeting is
a. a violation of the duty of care.
b. a preemptive right.
c. a proxy.
d. a quorum.
Wilson owes Shelby $5,000 for repairs on Wilson’s Bobcat Skidsteer. Wilson has
financial troubles and he and Shelby sign an accord, in which Wilson promises to pay
$4,000 and give Shelby his mountain bike within thirty days instead of the $5,000.
Wilson’s delivery of the bike and $4,000 to Shelby is
a. an accord.
b. satisfaction.
c. substantial performance.
d. novation.
In newspaper ads, Lo-Price Autos falsely accuses Hi-Value Vehicles, a competitor, of
selling stolen cars. Hi-Value’s sales decrease. Lo-Price has most likely committed
a. slander of quality.
b. slander of title.
c. wrongful interference with a business relationship.
d. none of the choices.
ValuRich Tools, Inc., sells tools, tool parts, and related supplies under “full” warranties.
Under the Magnuson-Moss Warranty Act, this means that ValuRich must provide
a. a choice between a refund or replacement if a product cannot be fixed and repair or
replacement of defective parts.
b. neither a choice of a refund or replacement, or repair of defective parts.
c. only a choice of a refund or replacement if a product cannot be fixed.
d. only repair or replacement of defective parts.
Posing as Platinum Bank, Oswald e-mails Nadia, asking her to update her personal
banking information through a link in the e-mail. She clicks on the link and types in the
data, which Oswald promptly sells to Moe. This is
a. hacking.
b. identity theft.
c. cyberterrorism.
d. bribery.
Mark is creating a Web site through which he will enter into contracts over the Internet.
Important terms to include in his offers include
a. provisions specifying the remedies if the contract is breached.
b. a detailed history of his business.
c. glowing reviews from former customers.
d. his educational background.
Steel Tool Company makes and sells tools. One of the tools is believed to be hazardous.
The appropriate government agency may require Steel to
a. export the tool and sell it only abroad.
b. increase the price to cover the cost of any injuries or damage.
c. reduce the price to indicate the hazard to consumers.
d. remove the tool from the market.
Mineral Resource Company contracts to provide several manufacturers with tin. When
a cartel of tin-producing countries suddenly embargoes future shipments of tin to
Mineral Resource so that it cannot fulfill its contracts, the distributor
a. can substitute some other material for the tin.
b. is excused from the performance of its contracts.
c. is liable for breach of contract.
d. must still supply the tin needs of its customers.
Fact Pattern 32-1
Cardio, Inc., makes and sells Drawdown, the most prescribed name-brand heart
medication. Emitate Corporation has the potential to make a generic version of the
same drug.
Refer to Fact Pattern 32-1. A court would most likely rule that the agreement between
Cardio and Emitate is
a. a deal that neither restrains trade or harms competition.
b. a legal restraint of trade.
c. a per se violation of the Sherman Act.
d. subject to analysis under the rule of reason.
Energy Unlimited, LP, is a limited partnership to which its partners, including Fink,
have contributed capital. Energy’s creditors include Graves Engineering, Inc. On
Energy’s dissolution, its assets will be distributed to pay
a. Fink and Graves proportionately.
b. Fink first.
c. Graves first.
d. neither Fink nor Graves.
The idea for “On Your Mark,” a computer game featuring world-class athletic
competition in extreme and unique contests, is protected by
a. copyright law.
b. patent law.
c. trademark law.
d. trade secrets law.
Katie buys a car when she is seventeen. When she is twenty-five, Katie tries to
disaffirm the contract and recover all her car payments. A court will likely find that the
contract was
a. ratified and Katie cannot recover her payments.
b. not ratified and Katie can recover her payments.
c. not a valid contract because Katie was a minor when she entered into it and she can
recover her payments.
d. ratified, but Katie can still recover her payments because she was a minor when she
entered into the contract.
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.
Jack promises to buy Lizette’s used textbook for $60. Jack is
a. an executor.
b. an offeree.
c. a promisee.
d. a promisor.
Go! is a handheld video game featuring races between imaginary creatures and
vehicles. The graphics used in the game are protected by
a. copyright law.
b. patent law.
c. trademark law.
d. trade secrets law.
CPA Accounting, LLC, is a limited liability company. If the law in CPA’s state is like
the law in most states, unless the members have agreed otherwise, participants in the
firm’s management will be considered to include
a. all members.
b. no member.
c. one member.
d. two members, including at least one general partner.
An express contract does not need to be in writing.
Plant life is not considered to be real property.
When there is a direct conflict between a federal and a state law, the state law is
rendered invalid.
The failure of one party to perform a contract entitles the other party to rescind it.
Savory Cooking Sauces, Inc., a U.S. business firm, makes and sells distinctively
flavored cooking sauces. Although the recipes are secret, the ingredients could be
revealed and the sauces could be reconstructed with diligent efforts. What can Savory
do to prevent its products from being “decoded” and pirated abroad?
An installment contract is breached if a buyer accepts any nonconforming goods.
Generally, contract doctrines apply to a landlord-tenant relationship.
Normally, when a nonbreaching party has been damaged by a breach of contract, he or
she does not have a duty to mitigate those damages.
Every shareholder is entitled to inspect corporate records for a proper purpose.
Bait-and-switch advertising occurs when an ad appears to be based on factual evidence
but in fact is not reasonably supported by evidence.
If a minor disaffirms a contract, he or she must disaffirm the entire contract.
A law that has any impact on religion is unconstitutional.
It is basic tenet of agency law that notice to the agent is notice to the principal.
A home equity loan starts as a fixed-rate mortgage and then converts into an
adjustable-rate mortgage.
The key to liability under Section 10(b) of the Securities Exchange Act of 1934 and
SEC Rule 10b-5 is whether undisclosed inside information is material.
A joint tenant’s sale of his or her interest terminates the joint tenancy.
A contract entered into under undue influence is voidable.
Bankruptcy law is state law.
For a tort to be considered intentional, the tortfeasor must have an evil or harmful
motive.
Only outsiders who would ordinarily be deemed fiduciaries of the corporations in
whose stock they trade can be liable for insider trading.