The words used in an insurance contract are interpreted against the party who applied
for the policy.
a. True
b. False
A de jure corporation is one that is not properly formed.
a. True
b. False
Dale files a suit against Evelyn, alleging her fraud in entering into a con-tract with him.
Proof of an injury is required
a. to recover damages.
b. to rescind the contract.
c. to undo Evelyns influence.
d. under no circumstances.
Rangle contracts with Siena to buy a certain horse for her. Rangle makes a deal with
Timberline Stables, the owner of the horse, and makes a down payment. Siena fails to
pay the rest of the price. Timberline sues Rangle for breach of contract. His right to
hold Siena liable for any damages that he has to pay is the right of
a. avoidance.
b. cooperation.
c. indemnification.
d. reimbursement.
Ethics is concerned with the fairness or justness of an action.
a. True
b. False
Ray is a shareholder of Small Biz Company (SBC). When the direc-tors fail to
undertake an action to redress a wrong suffered by SBC, Ray files a suit on the firms
behalf.
Refer to Fact Pattern 25-1. Rays suit is a shareholders
a. business-judgment rule suit.
b. derivative suit.
c. duty-of-care suit.
d. duty-of-loyalty suit.
Utility Power Company has the right to run its power lines across Velmas land. This is
a. a license.
b. an easement.
c. a profit.
d. a tenancy at sufferance.
An offer made in obvious anger is still an effective offer.
a. True
b. False
Kris presents an instrument that states “pay to the order of Kris to Metro Bank for
payment. This is a special type of draft drawn on a bank, ordering the bank to pay a
fixed amount of money on demand. This is
a. a commercial wire transfer.
b. a check.
c. a debit card transaction receipt.
d. a cash transaction
Dylan enters into a contract to manage the operations of Cashs accounting office for
one year, renewable for subsequent one-year terms. If this contract is discharged like
most contracts, it will be
a. breached.
b. rescinded.
c. altered.
d. performed.
Confusion of fungible goods results in the owners loss of their rights in the property.
a. True
b. False
Under the Check Clearing in the 21st Century Act, a bank has to credit a customers
account as soon as the bank receives the funds.
a. True
b. False
Pursuing a new product line is a decision that would be made by shareholders.
a. True
b. False
Only a board of directors can initiate the dissolution of a corporation.
a. True
b. False
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.
Even-Flo Hydraulics enters into a contract to repair valves and fittings in Fiesta
Companys plant. If Even-Flo breaches the contract, Fiesta can
a. do nothing but make a deal with .a different service provider.
b. do nothing but temporarily suspend operations and wait.
c. file a criminal complaint against Even-Flo.
d. sue Even-Flo for damages.
Odina signs a covenant not to compete with her employer, Penultimate Sales
Corporation. A court decides that the covenant is overly restrictive. The court will likely
a. enforce it as written so as not to undercut the freedom of contract.
b. enforce it but evaluate its effects over time.
c. reform its terms to prevent any undue burden.
d. refuse to enforce it unless Penultimate pays additional consideration.
Liability insurance protects against liability imposed on the insured as a result of
injuries to the person or property of another.
a. True
b. False
Drummond wants to make a federal case out of his dispute with Elena. Federal cases
originate in
a. federal courts of appeals.
b. federal district courts.
c. state trial courts.
d. the United States Supreme Court.
The incompetence of a customer revokes a banks authority to pay an item.
a. True
b. False
Restitution involves one partys recapture of a benefit through which another party has
been unjustly enriched.
a. True
b. False
Federal wiretapping law covers electronic forms of communication.
a. True
b. False
Office Suppliers, Inc. and Little Office Shop enter into a contract for a sale of office
supplies. Office Suppliers is the seller. Under a shipment contract, the Office Suppliers
does not have to
a. obtain and promptly deliver or tender to the buyer any documentsnecessary to enable
the buyer to obtain the goods.
b. deliver the goods to a particular destination.
c. put the goods in the hands of the carrier.
d. promptly notify the buyer when the shipment has been made.
Employers that fall under the provisions of the Federal Unemployment Tax Act of 1935
are taxed at regular intervals.
a. True
b. False
Nero and Olav each buy certain quantities of oil to sell to Petro Refinery, and agree to
share storage costs until Petro can take delivery. The oil is commingled so that Neros oil
cannot be distinguished from Olavs. This is
a. accession
b. confusion.
c. conversion
d. irresolution
Kelly transfers shares of stock that she owns in Lone Starz Company to Max. A
shareholders meeting takes place before Maxs ownership is entered in Lone Starzs
stock book. A vote at the meeting can be cast by
a. Kelly and Max.
b. Kelly only.
c. Max only.
d. neither Kelly nor Max.
In a bailment, possession of the property is transferred to the bailee.
a. True
b. False
A sellers failure to disclose a serious defect about a product for sale may give rise to an
action for fraud.
a. True
b. False
Bill orders 1,000 nails from Super Hardware, Inc. Super Hardware keeps its nails in
packages of 100,000. Bill and the agent for Super Hardware both sign the contract for
the sale of the nails on Monday. The agent separates 1,000 nails on Wednesday. The
agent delivers the nails to Bill on Thursday morning, and Bill pays for the nails on
Friday. Identification of the nails took place on
a. Monday.
b. Wednesday.
c. Thursday.
d. Friday.
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.
Under the Age Discrimination in Employment Act of 1967, a plaintiff must prove that
he or she was replaced by a person “outside the protected class.
a. True
b. False
The federal government and the states have the same constitution.
a. True
b. False
Wilson buys a promissory note from Oli. The note is due on December 5. December 5
is a Sunday. The note is
a. payable anytime the week of December 6.
b. payable December 6.
c. payable on December 5 only.
d. defective.
Sela agrees to act on Thoms behalf, subject to Thoms control, and Thom trusts Sela to
so act. They set out the terms in a written document, which they both sign. This is
a. an agency by agreement.
b. an agency by estoppel.
c. anagency by ratification.
d. not the creation of an agency relationship.