Pat, the manager of Quik Mart, deposits the stores receipts in its account at Regional
Bank. As to the receipts, the relationship between Quik Mart and the bank is
a. attorney and client.
b. creditor and debtor.
c. guardian and ward.
d. trustee and beneficiary.
Sam is a judge hearing the case of Local Co. v. National Corp. Applying the relevant
rule of law to the facts of the case requires Sam to find previously decided cases that, in
relation to the case under consideration, are
a. as different as possible.
b. as similar as possible.
c. at odds.
d. exactly identical.
RingTone Corporation is a public company whose securities are traded among
investors. Under the Securities Act of 1933, a security is
a. almost any stake in the ownership or debt of a company.
b. an investment that is guaranteed to make a profit.
c. only such common forms of debt and equity as bonds and stocks.
d. whatever a company represents to the public as a security.
Fact Pattern 9-3
Dex and Carmen are in an auto accident. Dex offers Carmen $2,000 if she promises not
to pursue her potential legal claim against Dex. Carmen agrees. Later, Carmen
discovers that it will cost $1,500 to repair her car and $4,000 to cover the medical
expenses for a latent injury.
Refer to Fact Pattern 9-3. The agreement between Dex and Carmen is
a. a covenant not to sue.
b. an accord and satisfaction.
c. a release.
d. promissory estoppel.
Boyd is a minor. As a minor, Boyd has the capacity to enter into
a. an invalid contract.
b. an unavoidable contract.
c. a valid contract.
d. no contract.
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.
Home Products Company and House & Yard, Inc., use the mark “Good Housekeeping
Seal of Approval to certify the quality of their products. Home Products and House &
Yard are not in business together and do not own this mark. This mark is
a. a certification mark.
b. a collective mark.
c. a service mark.
d. trade dress.
Reconstruction Building Services receives a discharge in bankruptcy, even though some
creditors hold judgments on overdue debts against it and others filed actions to collect
on overdue debts before the bankruptcy. Reconstructions discharge will
a. absolve the liability of any co-debtors.
b. permit the debtor to enter into reaffirmation agreements.
c. allow the debtor to file a petition for a reorganization.
d. prohibit actions and void judgments regarding overdue debts.
E-Shopping Corporation inserts Fiesta Mall, Inc.s trademark as a meta tag in
E-Shoppings Web sites key-words field without Fiestas permission in a manner that
suggests Fiesta authorized the use. This is
a. copyright infringement.
b. patent infringement.
c. trademark infringement.
d. no infringement.
Pola wants to transfer a check to Quin. The check is defective if it
a. has been previously dishonored.
b. has no irregularities on its face.
c. is not overdue.
d. is so complete that no element of negotiability is lacking.
Jamal signs a lease with Kelvin to occupy a house on Leech Lake in Minnesota for the
summer. Jamals tenancy is
a. a fixed-term tenancy.
b. a periodic tenancy.
c. a restrictive covenant.
d. a tenancy at will.
Money Mortgage Mart makes a short-term loan to Natalie to allow her to make a down
payment on a new home before selling her current home. This is
a. a bridge loan
b. a home equity loan.
c. an equitable right of redemption.
d. a violation of federal law.
Pluto accuses Quark, an accountant, of committing defalcation. This is
a. embezzlement.
b. general misconduct.
c. professional negligence.
d. throwing something out of a window.
Picabo drives a truck as an employee for Quik Delivery, Inc. Picabo would most likely
be considered acting outside the scope of her employment if she
a. crashed into a car at the airport while off duty.
b. hit a pedestrian in a parking lot during a “working lunch.
c. ran over an attendant at a gas station while refueling the truck.
d. smashed into a store-front while intoxicated on-duty.
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.
Dag is an employee of Eagle Mining Company. Under federal labor law, Dag and other
employees have the right to
a. bargain collectively with Eagle through their representatives.
b. insist that Eagle require union membership as a condition of work.
c. interfere with the efforts of others to form labor organizations.
d. refuse to bargain with Eagle through their representatives.
Link and Meryl are employees of Natural Resources, Inc. (NRI). When Odel, the
president of NRI, learns that Link and Meryl are active in union activities, he discharges
them. Link and Meryl may bring an action against NRI under
a. federal labor law.
b. federal or state unemployment law.
c. state workers compensation law.
d. the employment at-will doctrine.
Fact Pattern 15-1
Bret, a representative of Concrete Products, Inc. assures Dependable Construction
Company (DCC) that Concretes cement will not crack within a certain range of
temperatures. DCC uses the product. When cracks develop within the stated
temperature range, DCC files a suit against Concrete.
Refer to Fact Pattern 15-1. Suppose that the court rules against Concrete. The
manufacturer might have avoided that result by
a. making its cement fit for its particular purpose.
b. making its cement merchantable for its intended use.
c. not allowing Bret to express an opinion.
d. not permitting Bret to make an express warranty.
Clyde enters Desert Decathlon, an athletic competition in which Clyde has often
competed. Regarding the risk of injury, Clyde assumes the risks
a. attributable to the Decathlon in any way.
b. different from the risks normally associated with the Decathlon.
c. greater than the risks normally associated with the Decathlon.
d. normally associated with the Decathlon.
Glen and Heidi are married. Later, Heidis 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 Heidis marital
estate, the CDs are
a. not included because Heidis 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 Heidis parents gave up control when the CDs were placed in the
names of Heidi and Irene.
Thalia is an employee of Universal Insurance Company. Universals employee manual
states that workers will be dismissed only for good cause. With respect to the
employment-at-will doctrine, this is
a. an example of the doctrine.
b. an exception based on contract theory.
c. an exception based on public policy.
d. an exception based on tort theory.
Ernies Good Eatin Cafe uses a distinctive decor, layout, menu, and style of service. This
restaurants image and overall appearance is
a. a certification mark.
b. a collective mark.
c. a service mark.
d. trade dress.
Housemate, Inc., makes and sells a variety of household products. With a fair amount of
certainty, Housemates decision makers can predict whether a given business action
would be legal in
a. all situations.
b. many situations.
c. no situations.
d. practically no situations.
Lather Up Soap Products Company grants its agent Kathy an exclusive territory in
which to sell Lather Up products. The firm cannot compete with Kathy in that territory
under the principals duty of
a. avoidance.
b. cooperation.
c. indemnification.
d. reimbursement.
New York enacts a statute that requires a label on a video game to warn parents when
“the range of options available to a player include dismembering or sexually assaulting
the image of a human being. On appeal from a challenge by gamemakers, the state asks
a federal court to enforce the statute. Based on the decisions of other federal courts in
cases involving similar statutes, the court in this case is most likely to
a. refuse to extend restrictions on sex-based content to violence in video games.
b. expand the labels warning to include other forms of violence.
c. impose market-share liability on makers of violent video games.
d. replace the voluntary rating system currently in use.
Transnational Corporation and United Shipping, Inc., agree to a contract that includes
an arbitration clause. If a dispute arises, a court having jurisdiction may
a. monitor any arbitration until it concludes.
b. order an arbitrator to rule in a particular way.
c. order a party to bring the dispute to court.
d. order a party to submit to arbitration.
Joey reproduces Minas copyrighted work without paying royalties. Joey is most likely
excepted from liability for copyright infringement under the “fair use doctrine if
a. Joey copies the entire work.
b. Joey distributes the copies freely to the public.
c. Joeys use has no effect on the market for Minas work.
d. Joeys use is for a commercial purpose.
Consumer Shops, Inc., signs a lease for a storefront owned by Downtown Building
Company. Unlike a purchaser of real property, Consumer Shops
a. acquires only temporary possession of the premises.
b. enjoys exclusive possession of the premises.
c. holds only temporary title to the premises.
d. retains temporary, exclusive possession and title to the premises.
County Bank wants to perfect its security interest in collateral owned by Direct Sales
Company. Most likely, a financing statement should be filed with
a. the local chamber of commerce.
b. the county clerk.
c. the federal loan officer.
d. the secretary of states office.
In making decisions for United Merchandising Company, Vance uses a cost-benefit
analysis. This is part of
a. duty-based ethics.
b. Kantian ethics.
c. the principle of rights.
d. utilitarianism.
A seller with voidable title can transfer good title to a good faith purchaser for value.
Publishing false information about anothers product is conversion.
Bonds represent the purchase of ownership in a business firm.
A bank is subject to a civil suit if its customer writes a bad check.
A tax preparer that fails to give a taxpayer a copy of his or her tax return may be subject
to a penalty under the Internal Revenue Code.
A security interest is not enforceable after the creditors rights have attached to the
collateral.
Restitution involves one partys recapture of a benefit through which another party has
been unjustly enriched.
To pierce the corporate veil means to ignore the corporate structure, exposing the
shareholders to personal liability.
All employees are entitled to overtime pay.
A bankruptcy estate consists of all the debtors interests in property currently held,
wherever located.
To determine whether a duty of care has been breached, a judge asks how he or she
would have acted in the same circumstances.
A purchase-money security interest arises only when a seller provides a buyer with the
“purchase money to buy goods.
An inadequate warning is not a product defect that will support the imposition of
liability on a strict product liability basis.
A subprime mortgage is a loan made to a borrower who does not qualify for a standard
mortgage.
A gift causa mortis is effective only if the donor dies and the donee lives.
Punitive damages are never awarded in breach of contract actions.