1) A contract that has been fully performed by the parties is called an executory
contract.
2) A security agreement need not be in writing if the collateral is transferred to the
secured party.
3) Vesting gives an employee a legal right to receive pension benefits at some future
date when he or she stops working.
4) Rescission is an equitable remedy used when the parties have imperfectly expressed
their agreement in writing.
5) Generally, government inspectors do not have the right to enter business premises
without a warrant.
6) A franchisee is generally legally independent of the franchisor.
7) Each judge had his or her personal beliefs and philosophy, which shape the legal
reasoning process.
8) A joint effort by businesspersons to obtain legislative action can be exempt from the
antitrust laws.
9) Estelle, who owns and operates a commercial dairy farm, obtains a policy from Farm
& Ranch Insurance Company, which agrees to pay $500,000 to Gabe, Estelle’s son and
beneficiary, on her death. This is
a.disability insurance.
b.health insurance.
c.liability insurance.
d.life insurance.
10) Gift Basket Company′s liabilities exceed its assets. Gift Basket hires Hill & Dale,
an accounting firm, to prepare a balance sheet. Through Hill & Dale′s negligent
omissions, the sheet shows a net worth. Investment Bank relies on the balance sheet to
make a loan to Gift Basket. When Gift Basket defaults, the bank files a suit against Hill
& Dale. Under the Restatement rule, Hill & Dale is most likely
a.liable because Hill & Dale owed a duty of care to Gift Basket.
b.liable because Hill & Dale owed a duty to any foreseeable user.
c.liable if Hill & Dale knew that the bank would rely on the balance sheet.
d.not liable because Hill & Dale and the bank were not in privity.
11) In reviewing the actions of the U.S. Bureau of Land Management and other federal
agencies, the courts
a.are usually reluctant to review questions of fact.
b.rarely defer to the technical expertise of administrative agencies.
c.often rule on the merits of policy determinations.
d.never defer to an agency€s interpretation of law.
12) Camille, a tennis pro, convinces Dante, who has no athletic ability, that he has
considerable skill and induces him to pay Camille $1,000 for tennis lessons. When
Dante realizes the truth, he files a suit against Camille. Dante is most likely to recover
on the basis of
a.opinion.
b.fraud.
c.unconscionability.
d.none of the choices.
13) Darwin serves in a representative capacity for Ewan. To accomplish the objectives
of this relationship, Darwin’s authority can be implied
a.by contradiction.
b.by custom.
c.by whim.
d.under no circumstances.
14) Sustainable Products Corporation regularly expresses opinions on political issues.
Under the First Amendment, corporate political speech is given
a.discouraged.
b.forbidden.
c.protected.
d.required.
15) Gem programs software to prompt a computer to continually crash and reboot. Gem
intends to install this program on various companies’ computer systems without the
companies’ knowledge. The program can reproduce itself, but must be attached to a host
file to travel from one computer network to another. This program is a
a.hacker.
b.botnet.
c.virus.
d.worm.
16) Vidal is an employee of Wild Thing Ranch. Vidal learns that Wild Thing is illegally
importing endangered animals to sell as pets. He reports his employer’s illegal activities
but is laid off shortly thereafter and successfully sues Wild Thing for retaliatory
discharge. With respect to the employment-at-will doctrine, this is
a.an example of the doctrine.
b.an exception based on contract theory.
c.an exception based on public policy.
d.an exception based on tort theory.
17) Kali contracts to sell Leony her car for $3,000. This contract will be fully
discharged when Kali and Leony
a.agree to sign a bill of sale.
b.exchange the car for the $3,000.
c.sign a receipt.
d.shake hands and go their separate ways.
18) Danton, a mentally impaired person, is asked by Elmer to sign a piece of paper that
he says is an autograph book. In fact, the document is a note. If later sued on the note
by an HDC
a.Danton must pay the note.
b.Danton’s best defense would be fraud in the execution.
c.Danton’s best defense would be fraud in the inducement.
d.Danton’s best defense would be mistake.
19) Fried Food, Inc., operates a commercial frying plant, discharging pollutants into the
air. Greg reports the violations to the Environmental Protection Agency. Greg
a.is not entitled to a payment.
b.may be paid up to any amount.
c.may be paid up to $1,000.
d.may be paid up to $10,000.
20) Clean n’ Green, Inc., operates a chain of car washes throughout the United States.
The government entity that is most likely to be involved in regulating the chain€s
environmental impact is
a.Congress.
b.federal and state regulatory agencies.
c.local chambers of commerce.
d.local police departments.
21) While a minor, Uri misrepresents his age as twenty-one to purchase a motorbike
from Van’s Dirt Bikes & Scramblers. Ordinarily, Uri can
a.disaffirm the contract but must return the motorbike.
b.none of the choices.
c.ratify the contract, keep the motorbike, and recover any payments that he made to
Van’s.
d.reject the contract, keep the motorbike, and recover any payments that he made to
Van’s.
22) Colette and Dealership Auto Sales Company enter into an oral contract under which
Dealership Auto agrees to provide Colette with lifetime employment. This contract may
be enforceable by
a.Colette only.
b.Dealership Auto only.
c.any interested third party, such as a Dealership Auto customer.
d.either Colette or Dealership Auto.
23) Fact Pattern 41-2B
Popular Movies Corporation wants to gain control of Quality Films, Inc. The companies
negotiate for several months, without coming to terms. Popular Movies decides to
pursue a takeover attempt. Quality Films decides to resist.
Refer to Fact Pattern 41-2B. Quality Films solicits a merger with Real2Reel
Corporation, a third party, which makes a better offer to Quality Films’s shareholders.
Real2Reel is a
a.crown jewel.
b.Pac-Man.
c.poison pill.
d.white knight.
24) Some of the employees of Righteous Apps, Inc., decide that they want to be
represented by the Science Workers Union in bargaining with Righteous Apps over
overtime pay and the times that the offices open and close. Righteous Apps, and some
employees, including Truman, are against the union. Who can demand that a union
election be held? If the union is elected, does it have to represent Truman? If the union
is elected, does Righteous Apps have to bargain over overtime pay and the times that
the offices open and close?
25) With a mechanic’s lien, real estate becomes security for a debt.
26) When a surety or guarantor pays a debt owed to a creditor, he or she acquires any
right that the creditor had against the debtor.
27) Motors Repair Company contracts to sell a car to Nikki for $3,500. Nikki gives
Motors Repair a worthless check for the price. Nikki assigns her right to the car to
Opie. If Motors Repair refuses to deliver the car to Opie and Opie sues, can Motors
Repair raise Nikki’s fraud as a defense against delivery of the car to Opie? Explain.
28) The content of a family-fisherman bankruptcy plan is very different from that of a
repayment plan.
29) Many courts have broadened the concept of unconscionability to apply it in
situations other than sales of goods.
30) The clerk of a bankruptcy court must provide consumer-debtors with information
on the types of services available from credit counseling agencies.
31) Dividends can be paid from the undistributed net profits earned by the corporation.