1) A bailee must exercise reasonable care in preserving the bailed property.
2) Either the security agreement or the financing statement – but not both – must
describe the collateral in which the secured party has a security interest.
3) A sole proprietor does notown the entire business.
4) Franchising is a form of licensing.
5) Warehouse companies are not liable for loss or damage to property resulting from
negligence.
6) Puffery constitutes deceptive advertising.
7) A security interest can cover property in which the debtor has ownership or
possessory rights in the present or in the future.
8) Industrial Engineering, Inc., promises to give stock options to Jasmine for processes
she has already designed for the firm. This promise is enforceable
a.because it is a new contract.
b.because it is an illusory promise.
c.because it is supported by past consideration.
d.under no circumstances.
9) Fact Pattern 3-B2
Martin files a suit against Nichelle in a state court over payment due on a short-term
employment contract. The case proceeds to trial, after which the court renders a verdict.
The case is appealed to an appellate court.
Refer to Fact Pattern 3-B2. After the state’s highest court’s review of Martin v. Nichelle,
a party can appeal the decision to the United States Supreme Court if
a.a federal question is involved.
b.a question of state law remains unresolved.
c.the party is unsatisfied with the result.
d.the state trial and appellate court rulings are different.
10) California Produce Company hires Drew to work on California Produce’s shipping
dock, checking outgoing loads and dispatching the company’s drivers. With respect to
California Produce, Drew is most likely
a.an agent.
b.an independent contractor.
c.a principal.
d.a work for hire.
11) Logan is Mining Corporation’s agent and is authorized to write checks on Mining’s
account in Northwest Bank. Logan writes a check “pay to the order of Oceanside
Resort.” Logan signs the check “Mining Corporation, by Logan, agent.” Northwest
Bank dishonors the check. Liability extends to
a.Logan.
b.Oceanside.
c.Mining Corporation.
d.no one.
12) Fact Pattern 20-B1
Ripe Produce, Inc., and Southeast Asian Bistro & Market enter into a contract for the
delivery of locally grown fruits and vegetables. The parties use a standard Ripe Produce
form that contains some of the terms the parties agree on but not others. Some of the
produce spoils before it can be cooked, served, and eaten, or sold. Southeast Asian
refuses to pay for the spoiled goods.
Refer to Fact Pattern 20-B1. Ripe Produce responds that it did not waive payment for
spoiled goods in the parties’ previous transaction. Ripe Produce is arguing that the court
should take into account
a.the course of dealing.
b.the course of performance.
c.the usage of trade.
d.a rule of construction.
13) Reno, driving while intoxicated, causes a car accident that results in the death of
Santo. Reno is arrested and charged with a felony. A felony is a crime punishable by
death or imprisonment for
a.any period of time.
b.more than one year.
c.more than six months.
d.more than ten days.
14) Fact Pattern 17-B1
Able Contractors, Inc., enters into a contract with Beau to repair, rebuild, and remodel
Coastal Marina & Boardwalk, using products from Delta Lumber & Marine. Eatwell
Caf© is next to Coastal Marina.
Refer to Fact Pattern 17-B1. The value of Eatwell Caf©’s property will increase after
Coastal Marina store is refurbished. Eatwell Caf© is
a.a delegatee.
b.an assignee.
c.an incidental beneficiary.
d.an intended beneficiary.
15) 5.Gladys enters into a contract with Hydraulic Fracturing, Inc., for a sale of the oil
beneath Gladys€s land for a fraction of the value of the oil and the cost to restore the
land after the oil is extracted. A court is most likely to determine that this deal is unfair
under
a.the concept of unconscionability.
b.the doctrine of promissory estoppel.
c.the principle of freedom of contract.
d.the Statute of Frauds.
16) Michael, a citizen of Ireland, and Nina, a citizen of the United States, enter into a
contract. When Nina breaches the contract, Michael obtains an award of damages in an
Irish court. He asks a U.S. court to enforce the award. The U.S. court defers to and
enforces the Irish court’s decree. This is
a.a travesty of justice.
b.the act of state doctrine.
c.the doctrine of sovereign immunity.
d.the principle of comity.
17) 12.
Fact Pattern 18-B2
Business Computer Solutions Education Service enters into a contract to employ
Chandra as an instructor for two years to begin June 1. One month before the term
begins, Business Computer is underbid by a competitor and loses a major client, Debt
Consolidation Corporation. Business Computer now refuses to hire Chandra.
Refer to Fact Pattern 18-B2. Business Computer’s repudiation of its contract to employ
Chandra is most likely
a.a material breach.
b.a minor breach.
c.a condition subsequent.
d.not a breach.
18) Generally, the strict liability of manufactures and other sellers does not extend to
injured bystanders.
19) In some situations, the unauthorized indorsement of a payee’s name can be as
effective as if the real payee had signed.
20) Devoting time, energy, and skill to partnership business is a partner’s duty and is
nota compensable service.
21) Fruit-of-the-Plant Seed Company is engaged in the agricultural seed industry in the
Midwest. The firm currently has about 40 percent of the market for these products.
GreatGro Seed Corporation competes with Fruit-of-the-Plant in the same states.
Carbonate has about 35 percent of the market. If Fruit-of-the-Plant were to acquire the
stock and assets of GreatGro, would Fruit-of-the-Plant be in violation of any of the
antitrust laws? If so, which one? Discuss fully.
22) Ratification involves a question of intent, and intent can be expressed only by
words.