JD 89322 | Course Paper

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A sole proprietor is considered a separate legal entity.

Case law is another name for common law.

Identification of when the risk of loss attaches is important in regards to the right of

indemnification for damaged goods.

In a dispute between a secured perfected creditor and a secured unperfected creditor, the

secured unperfected creditor would be the prevailing party.

Someone who unknowingly purchases stolen goods has good title.

Trade-secret protection is lost if another business discovers the trade secret in a lawful

manner.

The National Conference of Commissioners urges states to enact model laws to provide

greater uniformity throughout the country.

An intended beneficiary is a third party to a contract whom the contracting parties

intended to benefit directly from their contract.

A person who is hired to perform a task for another but who is not the other’s employee

is called an independent contractor.

A tombstone advertisement announces a forthcoming sale of securities in a format

similar to that of a tombstone.

Consideration that was provided before the promise was made, known as past

consideration, qualifies as consideration.

Stare decisis is a legal principle that rulings made by higher courts are binding on lower

courts in the same jurisdiction.

Ethical conversation is primarily about finding the one and only right thing to do.

Express warranties may be found in advertisements.

Course of dealing is the history of dealings between the parties in the particular contract

at issue.

The U.S. Constitution establishes a system of government based on the principle of

federalism.

Under a quasi-contract is imposed the amount of damages for a breach which may be

awarded is based upon the fair market value of any service provided to the defendant.

The practice of advertising with claims that mislead or could mislead a reasonable

consumer is deceptive advertising.

The Americans with Disabilities Act is enforced by the Equal Employment Opportunity

Commission in the same way that Title VII is enforced.

A business in which one person is in control of the management and profits is a

partnership.

An agent’s obligation to act in the interest of the principal is known as a duty of

performance.

European courts permit rescission of a contract for a mistake of value when the mistake

involves more than 40 percent of the value at the time of the contract.

Only federal laws prohibit discrimination on the basis of sexual orientation.

Courts will not void contracts for reason of mutual mistake.

An invention may be considered a trade secret.

Concurrent federal jurisdiction means that both state and federal courts have

jurisdiction over a case.

Under UCC sections 2-301 and 2A-516(1), the basic obligation of the buyers and

lessees is to accept and pay for conforming goods in accordance to the contract.

Partial payment of a debt is usually valid consideration, for a liquidated debt.

All property that is not land or permanently affixed to land is personal property.

A person must be a lawyer in order to serve as an arbitrator.

The universalization test provides that people should interact with others the way they

would like to be treated.

Business law consists of the suggested rules of conduct that govern commercial

relationships.

As a general rule, parents are not liable for contracts entered into by their minor

children.

When perfection by possession occurs, the parties do not have to create a written

security agreement.

Contract law is based upon federal statutes.

A court must have several types of jurisdiction to decide any particular case.

Negotiation is the transfer of possession to a third party who becomes the holder of the

negotiable instrument.

In a pure comparative negligence defense, the defendant must be more than 50 percent

at fault for the plaintiff to recover.

The sole proprietor has complete control of the management of the business and keeps

all the profits from the business.

If a pet store dumps waste from its business behind its building, it is a violation of a

private law.

When duress is at issue, the _____ needed for legal consent has been removed by the

specifics of the threat.

A. free will

B. knowledge

C. specifics

D. consideration

E. realization

Which of the following was recognized by the U.S. Supreme Court in Oncale v.

Sundowner Offshore Services, Inc., the case in the text addressing whether a plaintiff

could prevail in a sexual harassment when the harassers were of the same sex?

A. That same sex harassment states a claim under Title VII only if the harasser is a

homosexual.

B. That same sex harassment may never state a claim under Title VII.

C. That same sex harassment may state a claim in the male-to-male context but not in

the female-to-female context.

D. That same sex harassment may state a claim under Title VII.

E. That same sex harassment may state a claim only if there was also involvement by at

least one person of the opposite sex in the harassment.

What does the term “political speech” refer to?

A. Speech that occurs when corporations support political candidates or referenda.

B. Speech that occurs when a corporation advertises products.

C. Speech by elected officials regarding other elected officials.

D. Speech by individuals involving politicians.

E. None of these.

Yard Mowing. Paula agreed to mow John’s yard once a week for $50 per week

throughout the summer. Paula, however, was having trouble getting her money from

John. On one occasion, he in handwriting gave her an IOU stating “I, John Jones, owe

Paula Smith $50″ which he signed at the end. A couple of weeks later, John did not

have the money with which to pay Paula for additional mowing, and he handwrote the

following on a piece of paper and gave it to her: “I, John Jones, promise to pay Paula

Smith or to bearer, the sum of $100 on Monday, July 22, 2012.” Paula quit mowing

John’s yard, and disgusted with John, Paula assigned both documents to Vince. When

Vince presented the documents to John, John refused to pay on the basis that after

inspecting the yard, he decided that Paula was doing a poor job. Vince told him the

documents constituted negotiable instruments, but John disagreed. What is the effect of

the instruments being written by hand?

A. Handwriting does not prevent the instruments from being considered negotiable only

because neither Paula nor John would be considered merchants in the transactions at

issue.

B. Handwriting does not prevent the instruments from being considered negotiable only

because John would not be considered a merchant in the transaction at issue, and

Paula’s status as a merchant is irrelevant.

C. Handwriting does not prevent the instrument from being considered negotiable only

because Paula would not be considered a merchant in the transaction at issue, and

John’s status as a merchant is irrelevant.

D. Handwriting does not prevent the IOU instrument from being negotiable, but it does

prevent the other instrument from being negotiable.

E. The issue of the instruments being handwritten does not prevent either from being

considered negotiable.

How much must a shareholder who signs a stock subscription pay for no-par shares?

A. The depreciated value

B. At least the value on the last sale

C. The value as set by the board of directors

D. The value as voted upon by shareholders

E. The fair market value

A promise or set of promises for the breach of which the law gives a remedy or the

performance of which the law in some way recognizes a duty is known as a(n) _____.

A. contract

B. offer

C. consideration

D. acceptance

E. legal object

Which of the following satisfies the currency requirement for negotiability in the

United States?

A. U.S. dollars only

B. U.S. dollars or English pounds

C. U.S. dollars, English pounds, or euros

D. U.S. dollars, English pounds, euros, and Japanese yen

E. U.S. dollars, English pounds, euros, Japanese yen, and gold

Which of the following is needed in order for the implied warranty of fitness for a

particular purpose to be applied?

A. Both parties must be merchants and a sale must be involved.

B. Both parties must be merchants, and either a sale or lease may be involved.

C. The seller must be a merchant and a sale must be involved.

D. The seller or lessor must be a merchant, and either a sale or lease may be involved.

E. None of these.

Claims to Funds. Paul had a great job as a bank executive. Unfortunately, his bank

came under scrutiny by federal regulators and while Paul had done nothing illegal, he

ended up being fired. Unfortunately for Paul, he had a number of debts. Among his

assets were a house worth $250,000 on which he owed $150,000 to a bank that held a

security interest; three vehicles; an expensive watch worth $5,000; and $120,000 in an

Individual Retirement Account “IRA”. He owed $900 per month in child support to his

ex-wife Suzy and was behind on payments in the amount of $1,800. He also owed

$2,000 in wages consisting of four months of back pay to Bob who took care of Paul’s

landscaping needs and swimming pool care. Unable to find a job and believing that he

had no other option, Paul filed for Chapter 7 bankruptcy. All debtors angrily demanded

payment from liquidation of Paul’s assets. Paul, on the other hand, claims that he needs

all the above-mentioned assets and that he should not have to give up anything. Only

federal bankruptcy exemptions apply to Paul’s case. Which of the following is true in

regard to the claims of Suzy and Bob in reference to their status as unsecured creditors?

A. Suzy’s claims have priority.

B. Bob’s claims have priority.

C. Suzy and Bob are on equal footing and will receive the same percentage of funds.

D. Suzy’s claims have priority only up to $1,000 and after that amount is satisfied, Suzy

and Bob are on equal footing and will receive the same percentage of funds.

E. Bob’s claims have priority only up to $1,000 and after that amount is satisfied, Suzy

and Bob are on equal footing and will receive the same percentage of funds.

All states except ______ adhere to the admission exception to the statute of frauds.

A. Hawaii and Alaska

B. Louisiana and New York

C. Louisiana and California

D. Kentucky and Florida

E. North Carolina and Montana

If a trademark is registered, what may the owner obtain in the event of infringement

from a person who used the trademark to pass off goods as being those of the mark

owner?

A. Damages

B. An injunction prohibiting the infringer from using the mark

C. An additional amount of damages computed as a multiplier of 5 times the original

damages

D. Damages, an injunction prohibiting the infringer from using the mark, and additional

damages based on a multiplier of 5 times the original damages

E. Damages and an injunction prohibiting the infringer from using the mark

The transfer of possession of a negotiable instrument to a third party who becomes a

holder of the negotiable instrument is a(n) _____________________.

A. transfer

B. negotiation

C. acknowledgement

D. referral

E. delivery

An error on the part of both parties to an agreement is a(n) _____ mistake.

A. unclear

B. mutual

C. unilateral

D. clear

E. single

Which of the following is a limit on agency power?

A. Political

B. Statutory

C. Informational

D. Political, statutory, and informational

E. Political and statutory, but not informational

Portraits. Belinda, a famous portrait painter, agreed to paint Harry’s portrait for $5,000.

She also agreed to paint the portraits of Michelle’s two Welsh Corgi dogs, Baby and

Bree. Michelle agreed to pay Belinda $12,000 for the portraits. Belinda charged

Michelle more because dogs annoyed her. Belinda met the spoiled dogs, and they really

got on her nerves. Plus, she was behind on finishing Harry’s portrait. Belinda, therefore,

proceeded to assign the right to receive the money for the dog portraits and the duty to

paint the dog portraits to her assistant, Fred. He eagerly accepted and painted the

portraits. As payment for amounts she owed him for various duties, Belinda also

assigned to Fred the right to receive payment from Harry. Neither the contract Belinda

had with Harry nor the contract she had with Michelle expressly prohibited assignment

or delegation of contractual rights and duties. Belinda finished the portrait of Harry and

called him to come and pick it up. Meanwhile, a disgruntled secretary who disliked

Belinda told both Michelle and Harry about the agreements with Fred. Michelle was

furious and refused to pick up the portrait or pay anyone. Harry likewise refused to pay

for his portrait claiming that the right to payment could not be assigned. What would be

the most likely result if Fred sues Michelle for the $12,000 payment?

A. Fred will win only if Fred did a good job on the portraits.

B. Fred will lose because Michelle’s only obligation is to pay Belinda.

C. Fred will win unless Michelle can prove that Fred knew that she did not want him to

do the portraits.

D. Fred will lose unless Fred can prove that he did not know that Michelle did not want

him to do the portraits.

E. Michelle will win because painting the portrait was personal in nature and could not

be delegated.

Environmental Concerns. Connie, the president of a company that makes paper, has a

new interest in the environment. She recently went to a seminar on environmental

dangers and has decided to take steps to clean things up. She started at home and was

also committed to change things at work. Connie had to face the fact that her company

has been cheating and is not in compliance with applicable environmental regulations

due to dumping in a nearby river. Her company has never been cited, however, because

it employs a very large number of people in the community, including the mayor’s wife

and the chief-of-police’s brother. On her mission to clean things up, Connie has decided

to go even further than the law requires and install the very latest environmental

protections. When she announced her plan, the chair of the company’s board of

directors, Brooke, had a meeting with Connie. Brooke told Connie to analyze the

situation carefully because the cost of the additional equipment would mean no

dividend to shareholders and no raise for employees. Furthermore, Brooke told Connie

that installing all the new equipment would result in higher prices for the company’s

paper products and could bankrupt the company because of foreign competition.

Brooke hinted that Connie could be fired if she persisted. Brooke suggested that Connie

just be concerned with a minimal standard of ethics. Connie, however, decides to go

forward with her plan to clean things up under the theory that she wants to treat others

in the same manner that she wants to be treated. Under Connie’s theory, if she did not

understand the importance of the environmental improvements, she would want them to

be thrust upon her. Connie’s idea is best referred to as ______.

A. the Golden Rule

B. the Disclosure Principle

C. the Help Peers Test

D. the Sarbanes-Oxley Rule

E. the Greenhouse Rule

Earthquake. Stewart, the owner of ABC Construction, agreed with Joan, the owner of

XYZ Hotel that he would complete renovations on her upper scale hotel on the beach in

Florida by October 1. The amount due to Stewart under the contract was $250,000. The

contract contained a clause by which Stewart would pay Joan $50,000 for each day he

was late on completing the project. Unfortunately, an unexpected strong earthquake

shook the area; and while the earthquake did not damage the hotel itself, Stewart

encountered significant difficulty in getting supplies due to the high demand for

building material following the earthquake. Because he believed that traveling, himself,

to other states to obtain supplies would be prohibitively expensive, he delayed the

project for two weeks while waiting for local stores to have sufficient supplies

available. Stewart finished renovations six days late. Joan told Stewart that she owed

him nothing but that he owed her $50,000. Stewart told Joan that he was suing for the

entire $250,000 because it was not his fault the earthquake delayed matters. Assuming

the earthquake does not affect Stewart’s liability for damages, which of the following is

true regarding the provision that he will pay $50,000 for each day he is late?

A. It will be upheld based on freedom of contract.

B. It will be upheld because the penalty per day is less than one half the amounts due

for the job.

C. It will be upheld as a stipulated amount.

D. It will be struck because parties are prohibited as a matter of law from specifying

damages.

E. It will be struck as a penalty.

Courtney, who does not keep up with the price of current technology, agrees to buy a

used computer from Jake for $2,500. Later, Brice tells Courtney that she made a really

bad deal and that she could get an even better new computer for no more than $1,000.

Courtney tells Jake that she is not giving him any money because he was not fair with

her. Which of the following is the most likely result if Jake sues Courtney alleging

breach of contract?

A. Brice will win only if he can establish that Brice is wrong and that the deal was

actually reasonable.

B. Brice will win because the court would not weigh whether a good bargain was made.

C. Courtney will win if she can establish that she paid at least 75% more than the

computer was actually worth.

D. Courtney will win if she can establish that she paid at least 50% more than the

computer was actually worth.

E. Courtney will win if she can establish that she made a bad deal and that truly she was

not aware of current prices of computers.

Book Payment. Molly and Pat signed a contract providing that “Pat will furnish the

correct used business law book for use in Molly’s business law class; and in return on

August 15, 2011, Molly promises to pay Pat $50 for the book.” Molly took the book

and planned to pay Pat. Meanwhile, Pat properly assigned the contract Molly had

signed to Jack. When Molly went to class, however, she discovered that the book was

the incorrect book. When Jack asked Molly for payment, Molly refused. Molly told

Jack that the book was useless to her and that she was not paying either him or Pat

anything for it. Jack told Molly that he had an enforceable assignment in the form of a

negotiable instrument and that he could collect regardless of whether the book was

useless. Molly did not believe him. Continuing with her attempt to save money on

books, Molly agreed to buy Tim’s U.S. history book for $40. She had an oral agreement

with Tim that he would give her the book and that she would pay him in three days.

This time Molly got the right book. Tim, in writing, properly assigned the right to the

$40 payment to Richard. Richard asked Molly for the money. Molly admitted her

agreement with Tim but told Richard that she was not going to pay him because he did

not have a negotiable instrument. Molly also purchased a communications book from

Sam promising in writing to give him in return the next day, to his order, a used DVD

player she owned. Which of the following is true regarding Molly’s assertion that

Richard did not have a negotiable instrument?

A. Molly is incorrect, and the document by which Tim assigned the right to Richard is a

negotiable instrument in regard to her duty to pay.

B. Molly is correct because her agreement with Tim was not in a writing containing

words of negotiability or words indicating the presence of a bearer instrument.

C. Molly is correct because Richard was not a party to the original contract.

D. Molly is incorrect because her admission establishes the existence of a negotiable

instrument between her and Tim that could be assigned to Richard.

E. Molly is correct because she did not immediately transfer funds to Tim and also

because her agreement with Tim was not in a writing containing words of negotiability

or words indicating the presence of a bearer instrument.

Under which of the following is a trademark protected under state common law?

A. If it is used interstate

B. If it is used intrastate

C. If it is used commercially

D. If it is used intrastate and commercially

E. A trademark cannot be protected under state common law

Which of the following are considered banks under the UCC?

A. Savings and loans.

B. Credit unions.

C. Trust companies.

D. Savings and loans, credit unions, and trust companies.

E. Savings and loans and credit unions, but not trust companies.

Which of the following is true regarding express warranties?

A. They may be part of a brochure.

B. They may arise from a salesperson’s oral promise.

C. A sample or model may provide an express warranty.

D. They may be part of a brochure, they may arise from a salesperson’s oral promise,

and a sample or model may provide an express warranty.

E. They may be part of a brochure and they may arise from a salesperson’s oral

promise, but a sample or model may not provide an express warranty.

Which of the following is the most likely result if an agent admits to the principal that a

check for the principal was forged and placed into the agent’s bank account, but the

principal does nothing until two months later after the agent leaves town with the

funds?

A. The checks were forged; the principal can receive reimbursement of the funds from

any maker involved or any bank that cashed the checks.

B. The principal can receive reimbursement from makers of the checks only.

C. The principal can receive reimbursement from any bank that cashed the checks only.

D. It is likely that it will be determined that the principal ratified the signatures and that

the principal cannot recover from either makers or banks that cashed the checks.

E. The principal can recover from either the makers or any banks that cashed the checks

only if it can be shown that the agent cannot be located for criminal prosecution.

Which of the following is a type of rule that an agency may enact?

A. Procedural and interpretive

B. Interpretive and legislative

C. Legislative and judicial

D. Procedural, interpretive, and legislative

E. None

Shaky Bicycles. Rhonda, an incorporator who filed the articles of incorporation for

ABC Corporation, a corporation set up to sell bicycles, listed the correct town and street

but incorrectly put the wrong street number in the document. Helen, a manufacturer of

bicycle parts, had sold a number of parts to ABC Corporation. Unfortunately, the

corporation was not making any profit, and Helen was not paid in a timely manner.

Rhonda told her that the corporation was not liable because it was not validly formed

due to the address mistake. Bernice, another creditor of ABC Corporation, also claimed

that a shareholder of Shaky Bicycles, Slick, was personally liable to her. Bernice

alleged that Slick committed fraud against her when he told her that ABC Corporation

was making large amounts of money, that if she would only loan $50,000 to the

corporation he would marry her, and that the corporation would make so much money

that she would be wealthy in six months. She loaned the funds, but the corporation has

been unable to repay her. Slick told her that he is sorry, but that her only avenue of

recovery is through the corporation. Which of the following would a court likely rule

regarding the status of ABC Corporation as a corporation?

A. That the business was a de jure corporation.

B. That the business was a de facto corporation.

C. That the business was a corporation by estoppel.

D. That the business was a veiled corporation.

E. That the business was not a corporation at all.

The termination of the contract is known as __________.

A. rescission

B. reformation

C. restitution

D. injunction

E. compensation

Third-Party Woes. Trudy owed Sam $40 for a book she purchased from him. Trudy

mowed Betty’s yard for $40 and agreed with Betty that Betty would pay Sam for the

book. Sam is not initially aware of the agreement. Betty pays no one. Trudy also

mowed Bob’s yard for $40 in return for Bob’s agreement to give the payment to Sally

representing Trudy’s birthday present to Sally. Bob later refuses to do so saying that

promises to give gifts are not enforceable. He then moves out of town. Trudy tells both

Sam and Sally that she is broke, that Sam needs to get his $40 for the book from Betty,

and that Sally is owed $40 from Bob for her birthday present. Which of the following is

the likely result if Sam sues Betty for the $40 that Trudy owes him for the book?

A. Sam will lose because the attempted delegation was against public policy.

B. Sam will lose because his only right of action is against Trudy.

C. Sam will lose because he was not aware of the assignment before the duties were

completed.

D. Sam will win only if he can prove that Trudy has insufficient funds with which to

pay him.

E. Sam will win.

Garage sale. Richard, who is cleaning out his garage, offers to sell Dawn a used

computer for $200. Dawn replies that “I’ll think about it and buy it if I decide to do so.”

Richard also calls Denise and offers to give Denise a used business law book. She is

excited to receive the book and tells him that she will pick it up the next day. Richard

also agrees to sell a communications book for $50 to Jill who promises to pick it up the

next day. Meanwhile, Sam comes to visit, offers Richard $20 for the business law book

and Richard sells it to him. Sam also offers Richard $50 for the used computer. Richard

sells it to Sam because he does not expect to hear from Dawn. Sam sees the

communications book and offers Richard $60 for it. Richard decides to forget about Jill

and proceeds to sell the book to Sam for $60. Denise is very angry because Richard did

not save the book for her and claims that he breached a contract because she had

accepted his offer. Jill is also angry because Richard sold the communications book and

informs him that he breached the contract he had with her. Exactly 31 days later, Dawn

tells Richard that she would like the computer. She tells him that her response

constituted consideration in that it bound him to an option contract and that he should

have awaited her final decision. Richard tells Sam that he needs to return everything for

a full refund. Sam refuses. Which of the following is true regarding the dispute between

Richard and Sam regarding whether Sam must return anything?

A. Sam must return the computer only.

B. Sam must return the business law book only.

C. Sam must return the communications book only.

D. Sam must return the computer, the business law book, and the communications

book.

E. Sam does not legally have to return anything.