Cotton Products Corporation is a public company whose shares are traded in the public
securities markets. The Securities Act of 1933 requires Cotton to disclose financial and
other significant information concerning its securities in order to
a. increase corporate accountability by imposing responsibility on chief corporate
executives.
b. prevent insiders from trading among themselves.
c. protect investors.
d. provide a ‘safe harbor” for companies that make forward-looking statements.
Cafe Dining, Inc., employs one hundred workers at three locations in two states. Under
federal law, Café must provide its employees, during any twelve-month period, family
or medical leave of up to
a. twelve days.
b. twelve weeks.
c. twelve months.
d. twelve years.
Personnel Staffing Corporation meets all of the requirements to be subject to the federal
employment discrimination laws. Among these, the most important statute prohibiting
discrimination against members of protected classes is
a. the Age Discrimination in Employment Act of 1967.
b. the Americans with Disabilities Act of 1990.
c. the Pregnancy Discrimination Act of 1978.
d. Title VII of the Civil Rights Act of 1964.
The Constitution sets out the authority and the limits of the branches of the government.
The term checks and balances means that
a. Congress writes checks and the president balances the budget.
b. each branch of government has some power to limit the actions of the other branches.
c. each branch of government may exercise the authority of the other branches.
d. the president “checks” the courts, which “balance” the laws.
Rally Corporation enters into a contract to sell ski gear to SnoSportz Company, which
sells a pair of the skis to Tyra, a consumer, who later sells them to Uli, another
consumer. Article 2 of the UCC applies to the sales transactions between
a. all of the buyers and sellers.
b. Rally and SnoSportz only.
c. SnoSportz and Tyra only.
d. Tyra and Uli only.
Mona asks Ned if she can store her furniture in his garage while she serves a tour of
duty with the U.S. Marines Corps. Ned agrees. This is a bailment for
a. neither party’s benefit.
b. the parties’ mutual benefit.
c. the sole benefit of the bailee.
d. the sole benefit of the bailor.
Ratzo is asked to be a witness to Sade’s will. Before attesting to the will,
a. Ratzo does not have to read the will or be informed of its contents.
b. Ratzo must read the will and recite its contents.
c. Sade must orally tell Ratzo of the will’s contents.
d. Sade’s attorney must read the will aloud to Ratzo.
Clancy sells shares in Darling Pool & Spa Company to Eton. Clancy does not deliver
the actual possession of the shares to Eton, but gives him the key to a safety-deposit box
in First State Bank in which the stock certificates are locked. Presenting the key is
a. constrictive delivery.
b. constructive delivery.
c. destractive delivery.
d. destructive delivery.
Clay offers to pay Dot $50 for a golf lesson for Eula. They agree to meet the day after
tomorrow to exchange the cash for the lesson. These parties have
a. a bilateral contract.
b. a trilateral contract.
c. a unilateral contract.
d. no contract.
Thirty-one days before filing a petition in bankruptcy, Frida transfers property and
makes payments that favor one creditor over another. These are
a. affirmation agreements.
b. preferences.
c. secured interests.
d. unsecured debts.
Barb pays $1,000 for a new computer to Computer Products Corporation, which pays
Discount Warehouse, Inc., $50 to store the computer until Barb retrieves it. Discount
Warehouse is
a. a bailee.
b. a consignee.
c. a lessee.
d. a seller.
Fact Pattern 43-1
Town Transport Company (TTC) agrees to pick up two containers for Unlimited Sales,
Inc., and store their contents, to be delivered later. While TTC unloads one container,
the other disappears from TTC’s loading dock.
Refer to Fact Pattern 43-1. TTC can avoid liability
a. by proof that TTC did not convert the goods and was not negligent.
b. by proof that TTC’s warehouse is located in a high-crime area.
c. by proof that Unlimited Sales was negligent in hiring TTC.
d. under any circumstances.
Jaime, an accountant, contracts to perform services for Kase. Jaime acts in good faith
and conforms to generally accepted accounting principles, but makes a mistake in
judgment. Jaime is most likely
a. liable if Jaime failed to discover a defalcation.
b. liable if Jaime failed to discover a fraud.
c. liable if Jaime failed to discover an impropriety.
d. not liable.
Jill is an appellate court judge. In this capacity, Jill establishes a rule of law. Under the
doctrine of stare decisis, the principle must be adhered to by
a. all courts.
b. courts of lower rank only.
c. that court and courts of lower rank.
d. that court only.
Fact Pattern 11-5
Dag and Enita are in an auto accident. Dag offers Enita $2,000 if she promises not to
pursue her potential legal claim against him. Enita agrees. Later, Enita discovers that it
will cost $1,500 to repair her car and $4,000 to cover her medical expenses for a latent
injury.
Refer to Fact Pattern 11-5. In Enita’s suit against Dag to recover her repair and medical
expenses, Enita will most likely recover
a. half the amount to pay those costs over what Dag already paid her.
b. nothing.
c. the estimated amount to pay those costs and any other liability.
d. the exact amount to pay those costs and no more.
Fact Pattern 11-1
Dave’s Hobby Town and Eva’s Yarn Shoppe are adjacent stores with adjoining parking
lots. Dave offers Eva a discount on purchases from Dave’s store if Eva will not tow the
cars of Dave’s customers who park in Eva’s lot.
Refer to Fact Pattern 11-1. Eva’s forbearance from towing is legally sufficient consid-
eration
a. because it is a promise of something of value.
b. only if Dave’s customers park in Eva’s lot.
c. only if Eva’s customers cannot park in her lot because it is full.
d. under no circumstances.
Neverend Music Company and Monotonous Metronome Corporation form a joint stock
company. A joint stock company can be formed for, at the most,
a. an implied duration of not more than six months.
b. a perpetual existence.
c. a single activity or transaction.
d. a stated duration of not more than one year.
Orin claims that a Pennsylvania state statute infringes on his ‘substantive due process”
rights. This claim focuses on
a. procedures used to make decisions to take life, liberty, or property.
b. the content of the statute.
c. the similarity of the treatment of similarly situated individuals.
d. the steps to be taken to protect Orin’s privacy.
Simon signs a check “pay to the order of Tilly” drawn on Simon’s account in United
Bank. Vela forges Tilly’s indorsement, First Federal Bank cashes the check, and Vela
disappears. United pays First Federal and debits Simon’s account. Most likely, the
ultimate loss will fall on
a. Simon.
b. Trudy.
c. United Bank.
d. First Federal Bank.
Fitch agrees to assume Gandy’s debt to Hybrid Seed Corporation. Fitch does not get any
personal benefit for the agreement. To be enforceable, the promise
a. must be in writing.
b. must be in writing only if the debt is valued at $500 or more.
c. must be in writing only if the debt will not be repaid within one year.
d. need not be in writing.
Double D Ranch and Esau enter into a contract on August 1 for the sale of 200 cattle.
Esau cancels the contract ten days later. Double D is unable to sell the cattle to another
buyer. Double D is entitled to
a. force Esau to accept the cattle and recover the contract price.
b. keep the cattle and recover the contract price from Esau.
c. keep the cattle only.
d. recover the contract price from Esau but must destroy the cattle.
Lebron, an attorney, allows a statute of limitations to lapse on a claim by Midwest
Metal Fabrication Company, a client. Lebron
a. can be held liable for malpractice.
b. has violated an ethical standard but cannot be held liable.
c. is subject to criminal penalties under the statute of limitations.
d. will be automatically disbarred.
Sam, a citizen of New Mexico, wants to file a suit against Tanya, a citizen of Texas.
Their diversity of citizenship may be a basis for
a. any court to exercise in rem jurisdiction.
b. a federal district court to exercise original jurisdiction.
c. a U.S. court of appeals to exercise appellate jurisdiction.
d. the United States Supreme Court to issue a writ of certiorari.
Omega Corporation makes and markets digital timers, clocks, and related products.
Like other business corporations, Omega issues securities to
a. increase its market share.
b. obtain financing.
c. reduce its production costs.
d. safeguard its facilities.
Fact Pattern 24-2
General Leasing Company (GLC) buys equipment for use as inventory, borrowing $1
million from Helpful Finance Corporation for a security interest in the equipment. The
next day, GLC borrows $513,000 from Interstate Bank, also for a security interest in the
equipment. GLC defaults on the loans. Refer to Fact Pattern 24-2. Suppose that Helpful
perfects its security interest when GLC takes possession of the equipment. In that cir-
cumstance, the party with priority to the collateral on GLC’s default would be
a. GLC.
b. Helpful and Interstate proportionately.
c. Helpful only.
d. Interstate only.
Jamal signs a lease with Kelvin to occupy a house on Leech Lake in Minnesota for the
summer. Jamal’s tenancy is
a. a fixed-term tenancy.
b. a periodic tenancy.
c. a restrictive covenant.
d. a tenancy at will.
Timberline Plywood Company discharges its untreated wastewater into Urban City’s
storm drainage pipes, which empty into Valley Creek. Under the Clean Water Act, this
discharge is most likely
a. a violation.
b. not a violation because the company does not own the pipes.
c. not a violation because water is not a stationary source.
d. not a violation because a storm drainage pipe is not a point source.
Gourmet Foods, Inc., requires all distributors of its products to sell them at a specified
minimum price. Under the Sherman Act, this is a violation
a. if the anticompetitive effects outweigh the competitive benefits.
b. if the competitive benefits outweigh the anticompetitive effects.
c. under any circumstances.
d. under no circumstances.
The U.S. Patent and Trademark Office (USPTO) wants to review certain records of
Verity Corporation. The USPTO can legitimately gain access to the records through
a. agency coercion.
b. infiltrating Verity’s computers without the firm’s knowledge.
c. public comment.
d. Verity’s consent.
Reel Graphics, Inc., agrees to assume a debt of Suave Marketing Company to Town
Credit Union. This promise is for Reel’s benefit. To be enforceable, the promise
a. must be in writing.
b. must be in writing only if the debt is valued at $500 or more.
c. must be in writing only if the debt will not be repaid within one year.
d. need not be in writing.
Fact Pattern 37-1
Fresh Goods, Inc., wants to make an initial public offering of securities. Fresh believes
that it qualifies for an exemption under Regulation A from the full registration
requirement of the federal Securities Act of 1933.
Refer to Fact Pattern 37-1. Fresh decides to sell its new securities via the Internet. This
offering
a. will avoid the payment of commissions to brokers or underwriters.
b. is an investment scam.
c. is a Ponzi scheme.
d. constitutes insider trading.
Tiny is an accountant. Tiny’s violation of generally accepted accounting principles and
generally accepted auditing standards
a. does not indicate that Tiny was negligent.
b. is prima facie evidence that Tiny was negligent.
c. precludes Tiny from raising any defense against a negligence claim.
d. will never subject Tiny to liability.
Owen is a holder of a promissory note obtained from Purchase Money, Inc. Regarding
the defenses against payment of the note to which Purchase Money is subject, Owen, as
an ordinary holder, is subject to
a. more defenses.
b. no defenses.
c. some defenses, but not as many.
d. the same defenses.
Jen makes a gift of a check to Kilroy who takes it in good faith and without notice of
any claim, defense, or defect. With respect to this check, Kilroy is
a. an extraordinary holder in due course.
b. an ordinary check passer.
c. an ordinary holder.
d. an ordinary holder in due course.
To recover for fraud, a plaintiff must be over twenty-one years of age.
Minimum resale price maintenance agreements are subject to analysis under the rule of
reason.
An accord and satisfaction is used to discharge an unliquidated debt.
A payee whose name is misspelled on an instrument cannot indorse the instrument.
Current City (CC) is a retail seller of television sets. CC sells Dhani a $3,000
large-screen, high-definition, LED set on a retail installment security agreement in
which he pays $100 down and agrees to pay the balance in equal installments. CC
retains a security interest in the set, and perfects that interest by filing a financing
statement centrally. Two months later, Dhani is in default on the payments to CC and is
involuntarily petitioned into bankruptcy by other creditors. Discuss CC’s right to
repossess the TV set and whether CC has priority over the trustee in bankruptcy.
The basis for the U.S. legal system is the natural law school.
A U.S. citizen can bring a civil suit in a U.S. court against a U.S. entity for a tort
allegedly committed overseas.
To rescind a contract, each party essentially advances to the position he or she would
have been in if the contract had been fully executed.
Under the Sarbanes-Oxley Act of 2002, an accountant must destroy working papers on
the conclusion of the audit to which the papers relate.
The purpose of tort law is to provide remedies when various protected interests have
been invaded.
Antidumping duties are the responsibilities of international environmental polluters.
International law attempts to reconcile the authority of each nation over its own affairs
with its desire to benefit from trade and harmonious relations.
An oral stop payment order is valid for thirty days.
A foreign state is immune from the jurisdiction of U.S. courts as long as the state is
involved in commercial activity in the United States.
Federal law dictates the requirements for the formation of a limited liability company.
A business trust is created by a written trust agreement.
Cyber criminals who steal persons’ identities normally do not use them.
All statutes that serve to protect the interests of consumers are classified as consumer
law.
An invitation to negotiate”can you afford this?”is an offer.