Roscoe Braun, who lives in Cleveland, receives a mailing from Florida from the
SwampLand and Reclamation Project. It states that the Brauns can purchase one-acre
sites as part of a newly planned development located in Leon County, Florida. The
Brauns contact the company and are given a purchase agreement but no additional
information. They sign the purchase agreement and send it back. Then, a week later
they decide they would prefer to winter in either New Zealand or Australia. Can the
Brauns get out of the contract?
An offer need not take any particular form to have legal validity. To be effective,
however, it must:
a. be spoken directly to the offeree.
b. always contain the price of the product or service offered.
c. always contain the place of delivery.
d. be communicated to the offeree.
The UCC Article 2 statute of frauds provision applies to the sale of goods for the price
of __________ or more.
a. $50
b. $100
c. $500
d. $1,000
Russell and Joe make a contract for Russell to manufacture five leather chairs of a
specified design. Prior to their manufacture, the factory is destroyed in an accidental
fire that is no one’s fault. The chairs are available from other sources. In this case:
a. Russell must supply the chairs, even if he must buy them elsewhere.
b. Russell’s duty to deliver the chairs is discharged by the destruction of the factory.
c. Russell has materially breached the contract if he fails to deliver the chairs.
d. Both (a) and (c).
Mary orders a dress for $1,000. The designer sends the wrong size. Mary doesn’t
inspect the dress on arrival and therefore doesn’t discover the nonconformity until the
day before she is to wear it to her first board meeting as president of Tri-State
Engineering. She calls the designer and sends the dress back, but it is lost in the mail.
Mary’s insurance would cover $400 of the loss. The designer’s insurance would cover
$900. Who is liable?
a. Mary will bear the whole loss because she accepted the goods.
b. The designer will bear the whole loss because Mary returned the nonconforming
goods.
c. Mary will owe $100, the designer $900.
d. The risk is Mary’s to the extent of $400.
An order to pay money drawn on a bank and payable on demand is a:
a. check.
b. trade acceptance.
c. certificate of deposit.
d. promissory note.
Able and Baker are both residents of Iowa, but they have a dispute regarding some land
located in Kansas. Able files a lawsuit in Kansas regarding the land and Baker objects,
claiming the Kansas courts have no jurisdiction. In this case:
a. only the Iowa courts can hear the case.
b. the Iowa federal district court can hear the case based on diversity of citizenship.
c. the Kansas courts have in rem jurisdiction to adjudicate the claim regarding the
property.
d. the Kansas federal district court can hear the case based upon diversity of citizenship.
Most states grant dissenters’ rights:
a. to dissenting shareholders of a corporation leasing substantially all its assets, not in
the usual course of business.
b. only to the last capitalized corporation in a merger.
c. when a plan of compulsory share exchange is being acted on, for the acquiring
corporation only.
d. All of the above.
A bond, which guarantees the performance of the terms of a contract, is a(n):
a. judicial bond.
b. official bond.
c. performance bond.
d. fidelity bond.
Under the UPA, which of the following liabilities of a partnership has the highest
priority for payment out of partnership assets?
a. Amounts owing to partners for profits.
b. Amounts owing to partners for loans or advances.
c. Amounts owing to creditors other than partners.
d. Amounts owing to partners for capital.
Paul is driving a truck delivering goods for his partnership when he negligently backs
into a customer’s new car. The customer sues the partnership and recovers $8,000 in
damages. Under the RUPA:
a. the partnership is liable under the doctrine of respondeat superior.
b. if the partnership is liable, the partners other than Paul have liability up to the amount
of their capital contributions to the partnership.
c. regardless of whether the partnership has assets, all partners must equally share
payment because Paul was an agent of the partnership.
d. Paul has no duty to indemnify the partnership for any payments made because of his
negligent behavior since he was on partnership business.
An accountant can ethically disclose a client’s confidential information if the accountant
complies with:
a. the client’s request.
b. Generally Accepted Auditing Standards requirements.
c. a court order.
d. All of the above.
Seventeen-year-old Brice has just received his driver’s license. He is driving a little too
fast one day and slams into the back of another car, which has just stopped for a stop
sign. Brice is:
a. engaging in an adult activity and will be held to the same standard as an adult.
b. a minor and will have no responsibility for his torts.
c. not responsible, but his parents are responsible for any torts he commits.
d. None of these are correct.
A defense to an action based on untrue statements contained in a registration statement
is:
a. innocent mistake.
b. due diligence.
c. constructive disclosure.
d. reasonable diligence.
Only civil liability may be imposed for violations of the Securities Act of 1933.
Edward’s Excursions Inc. filed for Chapter 7 bankruptcy. It has $100,000 in assets. The
outstanding debts include:
$50,000 to Arthur secured by a boat worth $25,000.
$30,000 to Bradley secured by a truck worth $30,000.
$20,000 to Clarence unsecured.
The month before Edward’s closed and filed for bankruptcy, its employees earned
$10,000 for which they did not get paid. They also should have been credited with
$3,000 for their pension plan. Edward’s owes $4,000 in back taxes. In the process of
administering the estate, the trustee paid $5,000 in attorney fees. In what order will
these claims be paid?
In Cohen v. Disner, the court found that Disner was not liable on the check because he
had no enforceable obligation to pay, the check was drawn by him in a representative
capacity, and the holder had notice that Disner’s signature was in the capacity of an
agent.
A seller has contracted to ship goods to the buyer via overland truck. The trucking
company has been subject to a drivers’ strike. Although the goods could be shipped via
rail at a similar rate and within the agreed time, the Code will excuse the seller from its
performance because delivery in the express way provided in the contract is impossible.
If Russell’s mortgage debt is greater than the amount for which his farm is sold in a
foreclosure action, he is excused from payment of the remainder.