Mello Coffee Shops, Inc., sells a franchise to Noah’s Arch, a café. Mello is
a. a franchisee.
b. a franchisor.
c. an agent.
d. a principal.
Vieux Carré S.A., a French firm, imports its goods into the United States and offers
those goods for sale at “less than fair value.” “Fair value” is the price of
a. comparable goods in a select “basket” of other countries.
b. Vieux Carré’s goods in France.
c. Vieux Carré’s goods in the United States.
d. Vieux Carré’s goods on the world market.
To finance the purchase of a house from Tuna, Uri signs an instrument promising to pay
to “Verity Mortgage Service” $160,000 with interest in installments with the final
payment due July 10, To be negotiable, this instrument must include the signature of
a. a non-party witness.
b. Tuna or Tuna’s realtor.
c. Uri.
d. Verity’s chief financial officer.
Jim organized, and owns and operates, Jim’s Landscaping Service in the simplest form
of business organization. This is
a. a corporation.
b. a limited liability company.
c. a partnership.
d. a sole proprietorship.
Furniture Depot sells Gail a bedroom suite on credit. Gail fails to make the scheduled
payments for six months. Furniture Depot sends her a letter, asking for immediate
payment. 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.
Dolf borrows money from Elin. Dolf defaults. To use attachment as a remedy, Elin must
first
a. file a suit against Dolf.
b. lose a suit against Dolf.
c. succeed in a suit against Dolf.
d. take possession of Dolf’s property.
Cal sells “DownSize,” a weight-reduction program, from a Web site, in competition
with Eat-Less Inc.’s product “Fit n Trim.” Eat-Less files a suit against Cal, alleging in
part that he is a sole proprietor, but his enterprise should be deemed a different form of
business. Cal’s enterprise should most likely be considered
a. a corporation because DownSize is sold online.
b. a franchisee because DownSize is sold in competition to Fit n Trim.
c. a sole proprietorship because Cal is a sole proprietor.
d. no form of business entity because Cal has no formal organization.
Louis, a certified public accountant and an investor, and Maria, an insurance
salesperson and a realtor, may create an agency relationship for
a. a business purpose only.
b. a legal purpose only.
c. any purpose.
d. no purpose.
Boutique Corporation would like to change its corporate status to avoid income taxes at
the corporate level. To qualify, the shareholders must not be
a. corporations.
b. estates.
c. individuals.
d. partnerships.
The payment of John’s debt to Kirsten is guaranteed by John’s personal property.
Kirsten is most likely to perfect her interest by
a. attaching a bright label to John’s property.
b. calculating the precise amount of John’s debt.
c. correcting grammatical errors in the parties’ written agreement.
d. filing a financing statement with the appropriate authority.
Hydraulic Equipment Company makes its products without required pollution control
technology, causing a discharge of oily waste into the nearby Idle Lake. This activity
can result in
a. a criminal fine or imprisonment only.
b. a criminal fine, imprisonment, or an injunction only.
c. a criminal fine, imprisonment, an injunction, or damages.
d. an injunction only.
Cole drives into Dino’s Service Station and asks Erin, the attendant, to fill the tank in
Cole’s hybrid vehicle. After Erin fills the tank, but before Cole pays for the gas, any
contract between Cole and Dino’s is
a. executed.
b. executory.
c. quasi.
d. unenforceable.
In the following situations, two parties claim the same goods. Who is most likely to
prevail in each circumstance? Explain.
(a) Olan steals Phil’s television set and sells it to Quincy, an innocent purchaser, for
value. Phil learns Quincy has the set and demands its return.
(b) Riley takes his television set for repair to Silky, a merchant who sells new and used
television sets. By accident, one of Silky’s employees sells the set to Tuna, an innocent
purchaser-customer, who takes possession. Riley wants his set back from Tuna.
Through a series of e-mail messages, Hudson convinces Gwen to transfer funds to
Hudson to invest in Fried Critter Company stock on Gwen’s behalf. Fired Critter stock
does not exist. This is computer crime in which the computer is
a. the object of the crime.
b. the subject of the crime.
c. the instrument of the crime.
d. irrelevant to the crime.
Clu, Dolf, and Elton do business as Fertile Valley Farm. Clu’s relationship to the firm
ends, but it continues to do business. This is
a. dissociation.
b. dissolution.
c. winding up.
d. wrongful.
Leigh wants to go into the business of construction contracting. Among the reasons that
would probably convince Leigh to set up his business as a sole proprietorship would be
a. its greater organizational flexibility.
b. its limited liability.
c. its perpetual existence.
d. the ease of transferring the business to other family members.
The Federal Trade Commission (FTC) is a government agency that issues rules, orders,
and decisions. The Georgia state legislature enacts statutes. The Jackson County Board
and the Peach City Council enacts ordinances. Administrative law includes
a. all law that affects a business’s operation.
b. the rules, orders, and decisions of the Federal Trade Commission.
c. statutes enacted by the Georgia state legislature.
d. ordinances created by the Jackson County Board and the city council of Peach City,
Georgia.
Fact Pattern 13-3
Moore Properties, Inc., offers in writing to sell to Lawn Acres Development
Corporation a certain half-acre of land for “$112,000.” After Lawn Acres signs the offer
in acceptance and returns it, Moore discovers that the price should have been stated as
“$121,000.”
Refer to Fact Pattern 13-3. Moore’s misstatement of the price is
a. a bilateral mistake.
b. a fraudulent misrepresentation.
c. a unilateral mistake.
d. unconscionable.
Ethan is seventeen years old. Under the Fair Labor Standards Act, Ethan cannot work
a. during school hours.
b. in a hazardous occupation.
c. more than eighteen hours per week.
d. without a special permit.
Fact Pattern 11-2
Brad defends against a breach-of-contract suit by College Credit Corporation by
claiming that their deala student loan accruing interest at a certain rate and payable
beginning on a certain datewas unfair because the consideration for their contract was
inadequate.
Refer to Fact Pattern 11-2. A court is most likely to evaluate the adequacy of considera-
tion if
a. a thing exchanged has no intangible value to one of the parties.
b. something exchanged is not of direct economic or financial value.
c. the items exchanged were of unequal value.
d. there is a gross disparity in the value of the consideration exchanged.
Dru signs a check “pay to the order of Eppie” drawn on Dru’s account in First Federal
Bank. Greta forges Eppie’s indorsement. First Federal pays the check. Most likely
a. Dru will be liable for the amount.
b. Eppie will have to pay Dru for the amount.
c. First Federal will have to recredit Dru’s account.
d. the Federal Reserve will reimburse all parties for their costs.
Alaskan salmon that fill the hold of Bill and Carla’s fishing boat are fungible if the
salmon are
a. alike naturally or by agreement or trade usage.
b. fundamentally different.
c. fun, good, and edible.
d. liable to deteriorate over time.
On May 1, City Auto & Truck Sales agrees to sell a car to Dino. Five days later, Dino
refuses delivery and cancels the contract. City is entitled to
a. force Dino to accept the car.
b. recover any damages from Dino but not resell the car.
c. resell the car and recover any damages from Dino.
d. resell the car but not recover any damages from Dino.
Doctors Hospital Corporation employs seven thousand workers in seven locations.
These employees have the right to
a. demand that Doctors Hospital Corporation be a closed shop.
b. make “hot-cargo” agreements.
c. organize.
d. refuse to bargain with Doctors Hospital Corporation.
Gretel, an obese individual, files a suit against Hot n” Tasty, Inc., alleging that its food
is unhealthy because, as is well known, it contains high levels of salt and sugar. Gretel’s
suit is most likely to
a. fail, because salt and sugar are not unhealthy ingredients in food.
b. fail, because the danger is well known to a reasonable consumer.
c. succeed, because consumers are not aware of the danger.
d. succeed, because the food is most likely a cause of Gretel’s obesity.
Nashville Harmonies Inc. and Taylor enter into a contract for Taylor to write six songs
for which Nashville agrees to pay her. Taylor transfers her right to payment under the
contract to Omni Entertainment Agency. In the transfer of rights, Taylor is
a. a delegator.
b. an assignor.
c. an obligor.
d. an alien.
Fact Pattern 27-1
First State Bank issues a letter of credit in favor of Oboe Company, an American firm,
to facilitate an international sales contract to buy resources from Lapland Mining, Ltd.,
a Finnish company.
Refer to Fact Pattern 27-1. To obtain payment, Lapland must comply with all of the
requirements of the letter of credit
a. strictly.
b. substantially.
c. reasonably.
d. materially.
Ludwig receives from Milo a marimba stolen from Nadine. To be criminally liable,
Ludwig must know
a. Milo.
b. Nadine.
c. that the marimba is stolen.
d. what a marimba is.
High Pointe LLC’s members include Irvin. For purposes of holding title to property,
High Pointe is
a. an aggregate of Irvin and the other members.
b. a natural person in the members’ “family.”
c. a legal entity apart from the owners.
d. a non-participating third party.
Fact Pattern 25-4
Dillon and Evan are brothers. They agree to act as guarantors on a loan made by their
sister, Fiona. Fiona defaults on the payments and Dillon refuses to pay. Evan pays the
debt.
Refer to Fact Pattern 25-4. Evan can recover from Fiona under
a. the right of proportionate liability.
b. the right of reimbursement.
c. the right of subrogation.
d. no one, because the parties are brother and sister.
When Overseas Exports, Inc., based in New York, does business internationally, the
firm may be subject to international law. The sources of this law include
a. the laws of individual nations only.
b. treaties and international organizations only.
c. the laws of individual nations, and treaties and international organizations.
d. none of the choices.
Eduardo is an employee of Free-Flo Plumbing Corporation. With respect to the
workplace, under federal health and safety statutes, Free-Flo has
a. a general duty to keep it safe and to meet specific standards.
b. no general duty to keep it safe but must meet specific standards.
c. no general duty to keep it safe or to meet specific standards.
d. only a general duty to keep it safe.
Sol is chairman of the board of Tasty Foods Corporation. Uma, a consumer, falls sick
after eating a Tasty product. Uma sues Tasty, and Sol individually. Tasty may pay Sal’s
legal fees
a. only if Sol wins the suit.
b. only if Tasty wins the suit.
c. only if Uma wins the suit.
d. regardless of the outcome.
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.
Cato promises Isabella $40,000 if she graduates from State College. Isabella enrolls in
State, attends full-time for four years, and graduates. When she asks Cato for $40,000,
he says, “I don”t remember promising you $40,000. But if there was a promise, it’s not
enforceable, because we didn’t bargain for it. And even if there was a promise that
would otherwise be enforceable, I revoke it now.” Can Isabella enforce Cato’s “prom-
ise”? Why or why not?
Ads cannot be unfair.
Service of process is the process of obtaining information from an opposing party
before trial.
With a couple of new ideas regarding software design, Carol and Ray start a partnership
that, with business success, becomes Pacific Applications Company. The company
grows to include a staff of twenty-one employees. Over time, Pacific develops a new
computer operating system. The firm signs licensing contracts with several computer
manufacturers, but needs to double the number of its employees to fulfill those con-
tracts. Is Pacific subject to federal antidiscrimination laws? If so, what should it
consider in hiring new employees?
A state court can exercise jurisdiction over any property within the boundaries of the
state regardless of the property owner’s location.
In some states, business trusts pay corporate taxes.
A trade name cannot be registered with the federal government if it is also a trademark.
Brie is a student at Collegiate University. In need of funds to pay for tuition and books,
Brie asks Dependable Bank for a short-term loan. The bank agrees to make a loan if
Brie will have someone who is financially responsible guarantee the loan payments.
Esperanza, a well-known businessperson and a friend of Brie’s family, calls the bank
and agrees to pay the loan if Brie cannot. Because of Esperanza’s reputation, the loan is
made. Brie is making the payments, but because of illness she is unable to work for one
month. She asks Dependable extend the loan for three months. The bank agrees, raising
the interest rate for the extended period. Esperanza is not notified of the extension (and
thus does not consent to it). One month later, Brie drops out of school. All attempts to
collect the remainder of the loan from Brie fail. Can Dependable assert a claim against
Esperanza on the debt?
Real Estate Investments, Inc., owns and manages an office building. Secure Insurance
Company agrees to lease the building for five years. Under the lease, Secure is
obligated to pay all of the utility costs. Two years into the term, Secure asks Real Estate
to modify the lease to provide that the utility costs be split equally between them. Real
Estate agrees, but later decides it does not want to share the costs and refuses to pay. Is
the landlord bound to its agreement to share the utility costs? Why or why not?
Only blue-collar crimes are prosecuted under RICO.
A lessor is a party who acquires a right to the possession and use of goods under a lease.
If a debtor will not pay a judgment, a creditor can only resort to ‘self-help” to collect.
In contract law, “consideration” refers to the courtesy that one party shows another in
negotiating a deal.
An unlimited number of persons can hold property as joint tenants.
The only purpose of a licensing statute is to protect the public from unlicensed
practitioners.
Corporate shareholders are the ultimate authority in every corporation.
A mortgagee can obtain a judgment against a mortgagor to cover the difference between
the amount of a mortgage debt and the proceeds of a foreclosure sale.
A court cannot exercise jurisdiction over an out-of-state defendant who has only done
business in the state over the Internet.
Any limit on a partner’s capacity to act on the partnership’s behalf does not affect a third
party who does not know about it.