1) Phoenix, a salesperson for Quality Fruit, Inc., shows Robert, a buyer for Sweet Home
Fruit Company, samples of peaches, stating that any shipment will match the samples.
This statement is
a.an express warranty.
b.an implied warranty.
c.a warranty of title.
d.puffery.
2) Bayou Development Corporation hires Coastal Brokerage Associates to sell the
condominiums in a building at Bayou Development’s resort. The agency will terminate
a.after the condos have been sold.
b.if the prices of the condos must be reduced to sell them.
c.once Bayou Development obtains insurance to cover the property.
d.when Bayou Development pays Coastal Brokerage its first commission.
3) Nero and Omar agree to buy natural gas to sell to Power Fuel Refinery and to share
storage costs until Power Fuel can take delivery. The gas is commingled so that Nero’s
cannot be distinguished from Omar’s. This is
a.a bailment.
b.production.
c.confusion.
d.in violation of the law.
4) Fact Pattern 32-1B
Margo works as an administrator and receptionist in Neon’s Garage Door Store. Neon
withholds federal taxes from Margo’s pay, and controls the methods and details of the
performance of her work. Margo is not authorized to modify the prices or other terms of
a sale at the store. Omar installs Neon’s Garage Door products at the buyers’ locations.
Refer to Fact Pattern 32-1B. Neon hires Professional Janitorial Company to clean the
store. Neon gives Professional Janitorial instructions as to what needs to be cleaned and
when. Professional Janitorial is
a.an independent contractor.
b.Neon’s employee only.
c.Neon’s employee and agent.
d.Neon’s principal.
5) Mango Corporation believes that Melon Corporation engages in anticompetitive
behavior in an attempt to drive Mango and its other competitors out of the market.
Antitrust laws can be enforced against Melon by
a.Mango and Melon′s other competitors.
b.Mango and Melon′s customers.
c.any federal government agency.
d.any business with a significant impact on interstate commerce.
6) Food Packagers Union represents the workers of Garden Variety, Inc. The company
does not require its new hires to join the union as a prerequisite to obtaining
employment. Food Packagers would like Garden Variety to require the workers to join
after a specified amount of time on the job. This would violate
a.federal labor law.
b.federal immigration law.
c.federal wage and hour laws.
d.no federal law.
7) Dalmira dies without a will. A court appoints Estee to handle the probate of
Dalmira’s estate. Dalmira’s closest blood relative is Farnham. The administrator of the
estate is
a.Farnham.
b.Dalmira.
c.Estee.
d.the court.
8) eCredit Reporting Agency conducts online investigations of consumers’ credit
disputes and litigation and sells the data to merchants, physicians, and landlords. With
respect to the information being reported, a consumer has little recourse unless
a.his or her credit card is rejected.
b.he or she is screened out as an undesirable patient.
c.he or she is screened out as an undesirable tenant.
d.the information is inaccurate.
9) Paulina operates a sole proprietorship, a corporation, and a partnership. Paulina
wants to obtain relief for her individual debts and the debts of her corporation and
partnership. For each of these, Paulina may file a petition in bankruptcy for relief
through
a.a liquidation.
b.a reorganization.
c.a repayment plan.
d.a family-farmer bankruptcy plan.
10) Grain Farms, LLC, and Harvest-to-Market Truck & Transport Company sign a writ-
ten contract that does not involve a sale of goods. To be enforceable, the writing must
include
a.a correct title, such as “Shipment Contract.”
b.all essential and nonessential terms.
c.a statement of the consideration.
d.a description of the parties’ businesses.
11) Felicia goes through an involuntary bankruptcy proceeding. An involuntary
bankruptcy occurs when
a.creditors are forced to accept a discharge of a debtor’s debts.
b.a debtor is unable to pay his or her debts as they come due.
c.a debtor’s creditors force the debtor into bankruptcy proceedings.
d.a debtor’s debts exceed the fair market value of his or her assets.
12) Devon and Edmond enter into a contract for the closing of a sale of Devon’s
recording studio. When Edmond’s schedule conflicts, he asks Ferdie to perform his
duties at the closing. This transfer of duties is
a.a delegation.
b.an assignment.
c.prohibited.
d.a negotiation.
13) An Iowa state statute requires amusement parks to maintain equipment in specific
condition for the protection of patrons. Jack’s Fun Park fails to maintain its equipment.
Keely, a patron, is injured. Jack’s has committed
a.a violation of a dram shop act.
b.negligence per se.
c.res ipsa loquitur.
d.a violation of a Good Samaritan statute.
14) Gwen applies for a homeowners’ insurance policy on her house with Home & Life
Insurance Company through Ivy, an agent who works for Home & Life. In this
transaction, Ivy is
a.an agent for both parties.
b.Gwen’s agent, and not Home & Life’s agent.
c.Home & Life’s agent, and not Gwen’s agent.
d.not an agent for either party.
15) Qiara is a holder of preferred stock in Rio Grande Irrigation & Development, Inc.
Qiara has priority over holders of Rio common stock as to
a.nothing.
b.payments of dividends.
c.the date on which Rio must repurchase the shares.
d.upward changes in the market price of the shares.
16) The shares of Home Mortgage Corporation are publicly traded in securities mar-
kets. Home Mortgage Corporation is
a.aclosecorporation.
b.a privately held corporation.
c.a public corporation.
d.a publicly held corporation.
17) Nelson is Organic Coffee Company’s majority shareholder. Nelson decides to sell
his Organic Coffee stock. The sale will be an effective transfer of the control of the
company. Does Nelson owe a duty to Organic Coffee or its minority shareholders in this
situation?
18) The equal dignity rule requires that if a contract entered into by an agent is in
writing, the principal, must honor it.
19) A negligent misrepresentation is not a basis for rescinding a contract.
20) Warranties of title do not arise in most sales contracts.
21) Risks ordinarily assumed in business constitute consideration for the modification
of a contract.
22) Mucho Tacos, Inc., sells franchises. Mucho Tacosimposes on its franchisees
standards of operation and personnel training methods. What is the potential pitfall to
Mucho Tacosif it exercises too much control over its franchisees?