Flo tells Gregor that she will buy his textbook from last semester for $65. Gregor
agrees. Flo and Gregor have
a. an executed contract.
b. an express contract.
c. an implied contract.
d. a quasi contract.
Mitchell buys 100 bales of hay from New Grain Fields. The parties agree that the hay
will be transported “F.O.B. New Grain Fields via Farm County Trucking Company.
Farm Countys truck and the hay are lost in a fire following an accident. The loss is
suffered by
a. Mitchell.
b. New Grain Fields.
c. Farm County Trucking.
d. all of the parties as tenants in common in equal measure.
The credit department of Mega-Mart calls Nora at work about an overdue bill. Noras
employer objects. Mega-Mart continues to call Nora at work. This is a violation of
a. no federal law.
b. the Fair and Accurate Credit Transactions Act.
c. the Fair Debt Collection Practices Act.
d. the Truth-in-Lending Act.
Shakira issues a check drawn on Thrifty Bank to United Office Supply to pay for six
computer desks. Later, Shakira discovers defects in the goods and orders Thrifty to stop
payment on the check. Shakira does not renew the order, and the bank clears the check
eight months later. The bank
a. must recredit Shakiras account.
b. must obtain funds from United to cover the amount of the check.
c. must substitute acceptable goods.
d. need not recredit Shakiras account.
Quincy signs a check payable to Richland Investors, Inc., and gives it to Richland,
leaving the amount blank but authorizing Richland to fill in the check for $1,000.
Richland fills in $1,459 and negotiates the check to Silverado Bank, to whom Richland
owes $1,459. Silverado Bank, an HDC, can enforce the check for
a. $0.
b. $459.
c. $1,000.
d. $1,459.
Fact Pattern 41-1B
Shrimp Boat Company decides to consolidate its operations with Trawlers, Inc., to form
Coastal Fishers Corporation (CFC).
Refer to Fact Pattern 41-1B. The articles of consolidation differ from Shrimp Boats
articles of incorporation. The articles
a. are replaced by Trawlers articles of incorporation.
b. are replaced by the articles of consolidation.
c. effectively prevent the consolidation.
d. prevail.
Lyle, vice-president of sales for Mi-T Electric, Inc., adheres to Judeo-Christian religious
ethical standards. With respect to their application, these standards are
a. absolute.
b. analytical.
c. discretionary.
d. utilitarian.
Fact Pattern 1-A1
The Texas Supreme Court decides the case of Livewire Entertainment Co. v. Power
Play Corp. Of nine justices, six believe the judgment should be in Livewires favor.
Justice Bellamy, one of the six, writes a separate opinion. The four justices who believe
the judgment should be in Powers favor join in a third separate opinion.
Refer to Fact Pattern 1-1. Bellamys opinion is known as
a. a concurring opinion.
b. a dissenting opinion.
c. a majority opinion.
d. a per curiam opinion.
Sophie and Tiny incorporate their beverage-container business as U-Twist Products,
Inc. The first board of directors may be appointed by the firms
a. board of directors.
b. incorporators.
c. officers.
d. shareholders.
Orin creates a living trust to pass his assets, including stock in Petro Oil Company and
other business investments, to his heirs. One advantage of this arrangement is that
a. income taxes do not have to be paid on trust earnings.
b. the assets are sheltered from the payment of estate taxes.
c. the assets can be transferred without going through probate.
d. the trust does not come into existence until the grantors death .
Hauser takes temporary family leave from his job at Gelato Confectionary Corporation
to care for a new baby. On Hausers return from the leave, Gelato must
a. restore Hauser to his original position.
b. reimburse Hauser for his expenses while on leave.
c. promote Hauser to the status of a key employee.
d. do nothing.
Frank slips and falls on Gails Harbor Tour Boat and is injured. Frank files a suit against
Gails for $500,000. If Frank is 20 percent at fault and Gails is 80 percent, under the “50
percent rule comparative negligence principles, Frank would recover
a. $0.
b. $250,000.
c. $400,000.
d. $500,000.
Pam is an administrative employee of Quality Assurance Company. Contributions to
help pay for Social Security benefits that will partially make up for Pams loss of income
on retirement are required to be made by
a. not Pam nor Quality Assurance.
b. Pam and Quality Assurance.
c. Pam only.
d. Quality Assurance only.
In Troll Line Fishing Companys suit against UniHarvest, Inc., the jury returns a verdict
in Troll Lines favor. UniHarvest files a motion stating that even if the evidence is
viewed in the light most favorable to Troll Line, a reasonable jury should not have
found in its favor. This is a motion for
a. a judgment in accordance with the verdict.
b. a judgment on the pleadings.
c. a new trial.
d. judgment n.o.v.
Auto Body Repair Shop (ABRS) promises to pay Ben $1,000 a week to work for
ABRS. Ben accepts and quits his job with Car Care Service. ABRS fails to provide a
job for Ben. Ben has a cause of action based on
a. an illusory promise.
b. a release.
c. past consideration.
d. promissory estoppel.
Juice Café buys 25 bags of Florida navel oranges from Sweet Citrus Company. The
parties agree to ship the oranges “F.O.B. Juice Café via Fresh Harvest Truckline. The
oranges rot in transit. The loss is suffered by
a. Juice.
b. Fresh Harvest.
c. Florida.
d. Sweet Citrus.
Dwayne, an electrician, files a suit against Electro Mechanix, Inc., alleging that its
circuit breakers are unreasonably dangerous due to the possibility of electrical shock.
Dwaynes suit is most likely to
a. fail, because Dwayne assumes the risk if he uses an Electro product.
b. fail, because Dwayne is a knowledgeable user.
c. succeed, because the danger is open and obvious.
d. succeed, because Electros products are not safe for all uses.
Parsley, a world-famous chef, signs a contract to give lessons in French cooking to
Curry. Parsley wants to transfer his duties under the contract to Relish, the operator of a
hot dog concession. The transfer is
a. valid because the performance required is of a nonpersonal nature.
b. valid if Relish is a highly regarded vendor.
c. not valid because performance depends on Parsleys personal skills.
d. not valid if Curry does not hold Relish in high regard.
Baboo rents a golf cart at Country Club Golf Course. Durwood, the attendant, gives
Baboo key number “12 and points to the cart lot behind the clubhouse. This is
a. constructive delivery.
b. physical delivery.
c. not a delivery until Baboo turns the key and starts the cart.
d. no delivery.
Charcoal Briquettes, Inc., is the offeror and Dantes Firewood Company is the offeree
under a unilateral sales contract in which Embers Kindling & Tinder Company is also
interested. Charcoal is not notified of Dantes performance within a reasonable time.
Charcoal
a. may treat the offer as having lapsed.
b. must assume that Dante has started to perform.
c. must contact Dante.
d. must make an offer to Ember.
Accumulated Capital Corporation and Business Funds, Inc., form a joint stock
company. The ownership of a joint stock company is represented by
a. partnership certificates.
b. shares of stock.
c. title documents.
d. trust certificates.
Fact Pattern 15-A2 )
Radford and Serenity sign a written contract for the sale of Rads Coffee & Bagels
business to Serenity. The parties intend their written contract to be a final statement of
the terms of their agreement.
Serenity later disputes some of the provisions in the deal with Radford. If the dispute
results in litigation, a court will most likely exclude evidence that
a. buttresses the written terms.
b. contradicts the written terms.
c. duplicates the written terms.
d. reinforces the written terms.
Fact Pattern 27-1B
Echo takes her car to Fix-It, Inc., which repairs the car and bills Echo for $500. Echo
writes out a check drawn on Capital Bank, but later, believing that Fix-It did not repair
the car properly, issues a stop-payment order.
Refer to Fact Pattern 27-1B. If Capital Bank pays the check, Capital
a. can sue Echo for a wrongful stop-payment order.
b. can sue Fix-It for breach of contract.
c. can sue no one because it paid a check that was not properly payable.
d. is liable for Echos loss due to the wrongful payment.
Corbin, a partner in Doctors Medical Clinic, applies for a loan with Evermore Bank
allegedly on Doctors behalf but without the authorization of the other partners.
Evermore knows that Corbin is not authorized to take out the loan. Corbin defaults on
the loan. Liability for its unpaid amount is imposed on
a. Corbin and Doctors, jointly.
b. Corbin only.
c. Doctors only.
d. Evermore only.
Flips debt to George is past due. George brings a legal action against Flip to collect the
debt. George asks the court to order Home Bank, in which Flip has an account, to pay a
portion of the funds to George. This is a request for
a. a writ of execution.
b. an order of garnishment.
c. an order that would violate most state laws.
d. an artisans lien.
Ruth owns a home on which she has two mortgages provided by Security Bank. Town
Refinance Inc. tells Ruth that it can refinance the loans to reduce her payments. Town
Refinance provides all of the required documents, which accurately state the payments
under the new loan as higher. Ruth does not read the documents. Town Refinance is
most likely liable for
a. fraud.
b. misrepresentation.
c. negative amortization.
d. nothing.
Bob writes a check on his account at County Bank to Darby, a famous singer. The
person claiming to be Darby is an imposter, however, named Etta. Etta indorses the
check to Felipe, for whom County Bank cashes it. Ultimately, the loss will most likely
fall on
a. Bob.
b. County Bank.
c. Darby.
d. Felipe.
Jess and Kaley own and operate Little Tykes, a small-business enterprise. Little Tykes
pays taxes on its profits, and Jess and Kaley pay taxes on the profits that are afterwards
distributed to them. Little Tykes is
a. a corporation.
b. a limited liability company.
c. a partnership.
d. a sole proprietorship.
Filbert wants to put some money in trust for his son Gregor, but he does not want to
lose full control over the funds in case he may need them in the future. One trust suited
to Filberts needs is
a. a charitable trust.
b. a constructive trust.
c. a spendthrift trust.
d. a Totten trust.
Neil goes to Oil Shop to change the oil in his car. Pat, the service technician, learns that
Neil plans to take a trip and advises the use of a certain type of oil. The oil breaks down
during the trip, damaging the car. Neil may recover from Oil Shop for breach of
a. an express warranty.
b. an implied warranty of fitness for a particular purpose.
c. an implied warranty of merchantability.
d. a warranty of title.
Fact Pattern 17-B1
Kip sells an apartment building to Lacy with a promise to repair the roof, which
violates the local housing code, within six months. One year later, Kip sends Milo, a
carpenter, to fix the roof. Lacy orders Milo to leave and refuses to make further
payments to Kip, who files a suit against Lacy.
Refer to Fact Pattern 17-1. Lacys refusal to make further payments is most likely
a. a material breach.
b. complete performance.
c. excused by Kips failure to fix the roof.
d. substantial, but not complete, performance.
Macro Corporation and National Purchasing Company may create an agency agreement
a. by conduct, in writing, or orally.
b. by conduct or orally only.
c. in writing only.
d. under no circumstances.
Danton, a popular performer, dies. His spouse Caitlin sells their house to Buck. Un-
known to Caitlin or Buck, in one of the closets is the master recording of an unreleased
album. With respect to this recording, Buck can
a. keep it because Caitlin should have known about it.
b. keep it because the sale of a house includes everything in it.
c. not keep it because there was no voluntary consent to its sale.
d. not keep it because the sale of a house includes nothing in it.
Bret contracts to work for City Construction Corporation (CCC) during July for $4,500.
On June 30, CCC cancels the contract. Bret declines a similar job with Downtown
Builders, Inc., which would have paid $4,000. Bret files a suit against CCC. As
compensatory damages, Bret can recover
a. $4,500.
b. $4,000.
c. $500.
d. $0.
Big Valu Grocery Stores is an unincorporated cooperative. Big Valu and other
unincorporated cooperatives are often treated like
a. business trusts.
b. corporations.
c. joint stock companies.
d. partnerships.
A forged signature on a check has no legal effect as the signature of a drawer.
Under the act of state doctrine, a firm whose assets a foreign government has expro-
priated may not recover compensatory damages in a U.S. court.
An action in strict product liability requires that the product not be in a defective
condition when the defendant sells it.
For an ordinary holder to become an HDC, the holder must have acted honestly in the
process of acquiring the instrument.
A quitclaim deed conveys to the grantee whatever interest the grantor had.
Both intended and incidental beneficiaries acquire legal rights in a contract.
A corporation that is selling all of its assets must obtain approval only from its
shareholders.
The Securities and Exchange Commission creates regulations governing the purchase
and sale of securities.
Children under fourteen years of age are not allowed to work.
Once the registration statement has been filed, there is no waiting periodthe issuer can
offer and sell the securities without restrictions.
Parol evidence includes testimony of communications between the parties that is not
contained in the contract itself.
A person assumes all risks associated with any activity in which he or she participates.
Most parties settle their lawsuits for damages or other remedies prior to trial.
Undue influence may be inferred when a named beneficiary is in a position to influence
the making of a will.
Most cyber crimes are “new crimes.
An invitation to negotiate”can you afford this?is an offer.
Employers who do not accommodate the needs of persons with disabilities must
demonstrate that the accommodations would cause undue hardship.