1) A foreign corporation normally does not need a certificate of authority to sell goods
or services via the Internet or by mail.
2) Someone who finds abandoned property acquires title to it and that title is good
against the whole world, including the original owner.
3) Malpractice is professional negligence.
4) The laws governing franchising are primarily designed to protect franchisors from
dishonest franchisees.
5) The implied warranties of merchantability and fitness for a particular purpose extend
to bailments that include rights to use the bailed goods.
6) A company takes a risk by electronically storing their online customers’ credit-card
numbers.
7) An incontestability clause prohibits an insurer from contesting statements made in an
insurance application until a specified time has elapsed.
8) On May 1,Garage Prefabricators, Inc., agrees to sell four portable garages to Hiway
Truck Service Center. Five days later, Hiway refuses delivery and cancels the contract.
Garage Prefabricators is entitled to
a.force Hiway to accept the garage.
b.recover any damages from Hiway but not resell the garage.
c.resell the garage and recover any damages from Hiway.
d.resell the garage but not recover any damages from Hiway.
9) George borrows funds from Hometown Credit Union (HCU) to buy real property.
George signs a written instrument that gives HCU an interest in the property as security
for the debt’s payment. This is
a.a mortgage.
b.an artisan’s lien.
c.a workout agreement.
d.a surety ship arrangement.
10) Savannah and Tim enter into a sales contract for orchids. With respect to the
specific contractual provisions set out in the UCC, Savannah and Tim may
a.agree to different terms only to a reasonable extent.
b.agree to different terms unless they “get caught.
c.agree to whatever terms they wish.
d.not agree to different terms.
11) Norma files a petition in bankruptcy. She turns her assets over to O’Brien, who sells
them and then distributes the proceeds to Norma’s creditors. O’Brien is a
a.preferred creditor.
b.bankruptcy court judge.
c.bankruptcy trustee.
d.debtor.
12) Everett is an accountant whose clients include Finance & Capital, Inc. Under the
Ultramares rule, if Everett is negligent in his work for Finance & Capital, he could be
liable to Finance & Capital and
a.any third party.
b.no third party.
c.third parties who are foreseen users of the work.
d.third parties who are reasonably foreseeable users of the work.
13) Fact Pattern 37-1B
Bryn, Cornell, and Duke are general partners in Equity Lending, a consumer credit,
mortgage, and investment firm. Their agreement states that it is a breach of the
agreement for any partner to assign his or her interest to a creditor without the consent
of the other partners.
Refer to Fact Pattern 37-1B. Cornell’s assignment of his interest in Equity Lendingto
Financial Consultants Corporation results in
a.nothing with respect to Cornellor Equity Lending.
b.the automatic termination of Equity Lending’slegal existence.
c.Cornell’s liability for all of Equity Lending’sdebts.
d.Cornell’s wrongful dissociation and liability for any damages.
14) Ridgeline Bank provides Shirley with a mortgage to buy a home. The rate of
interest is fixed for three years and then adjusts annually. This is
a.a fixed-rate mortgage.
b.an adjustable-rate mortgage.
c.a creditor’s composition agreement.
d.a guaranty agreement.
15) Coffee Klatch Party Group, a political organization, files a claim to challenge a
Delaware statute that limits the liberty of all persons to broadcast “annoying” radio
commercials. This claim is most likely based on the right to
a.equal protection of the law.
b.privacy.
c.procedural due process.
d.substantive due process.
16) A decision by the federal Environmental Protection Agency (EPA) on the amount of
carbon that can be emitted from a car€s exhaust system conflicts with a California state
law. In this situation, under the supremacy clause,
a.both the decision and the law are invalid.
b.both the decision and the law apply concurrently.
c.California€s law takes precedence.
d.the EPA€s decision takes precedence.
17) On April 1, Construction Contractors, Inc., contracts to build a store for Discount
Retail, Inc., at a specific location in Electro City. On April 10, Electro changes its
zoning law to prohibit the construction of a commercial building at that location.
Discount Retail files a suit against Construction Contractors. In this situation
a.Construction Contractors is in breach of contract.
b.Discount Retail is in breach of contract.
c.the contract is discharged.
d.the contract is suspended.
18) FreezE Yogurt Corporation provides its prospective franchisees with projected
earnings figures based on actual data. FreezE Yogurt must also disclose
a.the number and percentage of franchisees that achieved the figures.
b.hypothetical examples of potential earnings.
c.an answer to the entrepreneur’s question, “How much will I make?”
d.none of the choices.
19) Ethel obtains a life insurance policy from Fidelity Insurance Company, naming her
spouse Grover as the beneficiary. Ethel and Grover are divorced. There is no provision
in the policy about divorce. On Ethel’s death, Fidelity must pay
a.no one because Ethel and Grover are divorced.
b.Ethel’s estate and Grover jointly.
c.Grover.
d.Ethel’s estate.
20) Energy Market Corporation wants to build a wind power plant on private land, for
which a federal permit is required. For this action, an environmental impact statement is
a.prohibited.
b.required.
c.unnecessary.
d.voluntary.
21) Toro, S.A., which is based in Mexico, enters into a contract for the purchase of
portable livestock fencing from United Fencing Company, which is based in the United
States. This contract is governed by
a.Mexican law.
b.the provisions in the laws of both countries that are similar.
c.the Uniform Commercial Code.
d.the United Nations Convention on Contracts for the International Sale of Goods.
22) Commercial Wholesale, Inc., conducts its operations unethically, which, when
revealed, will likely affect its
a.good will only.
b.profits only.
c.reputation only.
d.good will, profits, and reputation.
23) Loren signs a note that states, “Payable in thirty days.” The note is dated March
Micah buys the note on April 3. Is Micah an HDC of the note? Explain.
24) Only a defendant can file a motion to dismiss.
25) In sales law, a warranty is an assurance by the seller or lessor about the quality and
features of the goods being sold or leased.
26) Manufacturers must use due care in selecting the materials to be used in a product.
27) Damages that compensate the nonbreaching party for the loss of a bargain are
known as consequential damages.
28) In most states, if neither party requests a jury, the court presumes the parties waive
this right.
29) No offer can be accepted by silence.
30) A holder is any person in possession of a negotiable instrument that is payable
either to the bearer or to an identified person who is the person in possession.
31) A target corporation’s attempted takeover of an acquiring corporation is referred to
as the poison pill defense.