Khali’s debt to Lew is past due. Lew obtains a judgment against Khali to collect the
debt, but Khali refuses to pay. Lew asks the court to order Khali’s employer to pay a
portion of Khali’s paycheck to Lew. This is a request for
a. an exemption from most federal limits on creditors’ actions.
b. an order of garnishment.
c. an order that would violate most state laws.
d. a right of contribution.
Doug is an accountant whose clients include Everyday Products, Inc. (EPI). Under the
Ultramares rule, if Doug is negligent in his work for EPI, he could be liable to
a. EPI and any third party.
b. EPI and third parties who are foreseen users of his work for EPI.
c. EPI and third parties who are reasonably foreseeable users of his work for EPI.
d. EPI only.
Elle is an agent for Fine Cosmetics, Inc. Elle owes Fine Cosmetics the duty of
a. avoidance.
b. compensation.
c. indemnification.
d. performance.
Red’s Plumbing Service substantially performs its contract with Shady Grove
Condominiums, Inc. Shady Grove is entitled to
a. damages.
b. nothing more.
c. repudiation.
d. alteration.
USA Farms offers to sell Valu Bakeries, Inc., fifty bushels of wheat. Valu’s
representative Wendy responds, “We agree to buy fifty bushels only if the wheat is
Grade A quality.” Wendy’s statement is
a. a breach of the parties’ contract.
b. a counteroffer.
c. a fulfillment of the parties’ contract.
d. an acceptance.
As a joke, Jem takes Kyla’s business law textbook and hides it so that Kyla cannot find
it during the week before the exam. Jem may have committed
a. appropriation.
b. conversion.
c. intentional infliction of emotional distress.
d. trespass to personal property.
Crater Tools Company may be subject to regulations issued by the Occupational Safety
and Health Administration (OSHA). Like other administrative agencies, the OSHA
affects
a. almost every aspect of a business’s operations.
b. almost no aspect of a business’s operations.
c. a firm’s capital structure and financing, but nothing else.
d. a firm’s hiring and firing procedures, but nothing else.
Lake Port Services enters into a contract to load Max’s Great Lakes barges with the
cargo that Max designates. Lake Port’s offer to perform, when Lake Port is ready,
willing, able to do so, is
a. tandem.
b. tonnage.
c. tender.
d. tinder.
Beachside City enacts an ordinance that bans the distribution of all printed materials on
city streets. Carl opposes the city’s latest “revenue-enhancing” measure and wants to
protest by distributing handbills. In his suit against the city, a court would likely hold
the printed-materials ban to be
a. an unconstitutional restriction of speech.
b. constitutional under the First Amendment.
c. justified by the need to protect individual rights.
d. necessary to protect national interests.
Brad is an employee of Custodial Service, Inc. In deciding whether Brad acts within the
scope of his employment when he commits a tort against Didi, a court will not consider
whether
a. Brad indicated that he was acting on behalf of Custodial.
b. Custodial authorized the act.
c. Custodial furnished the means by which the injury was inflicted.
d. the act is one commonly performed by employees for their employers.
Holiday Sales Company and Global Distributors, Inc., enter into an express contract for
the delivery of imported specialty goods. Express contract terms are given
a. less priority than the parties’ prior dealing.
b. less priority than the trade usage in the parties’ industry.
c. less priority than the parties’ course of performance.
d. more priority than the prior dealing, course of performance, and trade usage.
Digital Architecture, Inc., enters into a contract to design robotic software for Chassis
Assembly Corporation. The freedom to enter into contracts is
a. a fundamental public policy of the United States.
b. an ambiguous business goal that is irrelevant in terms of the law
c. a philosophical concept that underlies international law.
d. a principle that describes contracting parties’ intent.
John is sales manager for Kleen N Brite Products, Inc. Compared to John’s personal
activities, his business activities most likely involve
a. more complex ethical issues.
b. no ethical issues.
c. simpler ethical issues.
d. the same ethical issues.
Patty’s parents give her a car as a graduation present. While Patty spends the summer in
Europe, her friend Rita agrees to keep the car in her garage. On Patty’s part, this is
acquisition of property by
a. bailment.
b. capture.
c. find.
d. gift.
Fresh Vegetables, Inc., a wholesaler, refuses to sell its produce to Good Mart Stores,
Inc., a retailer. Under the Sherman Act, this is
a. “an unfair or deceptive act or practice.”
b. a per se violation.
c. not a violation.
d. subject to analysis under the rule of reason.
Dora writes a check for $100 drawn on Eastern Bank and presents it to Fast Cash, Inc.,
for payment. If the check is not backed by sufficient funds, Dora may be prosecuted for
a. forgery.
b. fraud.
c. negligence.
d. robbery.
Transnational Corporation and United Shipping, Inc., agree to a contract that includes
an arbitration clause. If a dispute arises, a court having jurisdiction may
a. monitor any arbitration until it concludes.
b. order an arbitrator to rule in a particular way.
c. order a party to bring the dispute to court.
d. order a party to submit to arbitration.
CheezBurger Heaven, Inc., conducts a chain-style franchise. This involves the transfer
to Clive, one of its franchisees, of
a. a license.
b. a trade name.
c. the formula to make a product.
d. the ownership of the business.
Solid Tool Company’s decision makers view a particular risk in the use of Solid’s
product as open and obvious. Continuing to market the product without telling
consumers of the risk could be justified from a perspective of
a. duty-based ethics.
b. Kantian ethics.
c. rights-based ethics.
d. utilitarian ethics.
Fact Pattern 17-1
Bayside Construction Company enters into a contract with Clio to remodel Dewey’s
Home Store, using products from Eagle Building Supplies. Fresh Food Café is next to
Dewey’s Home Store. The remodeling is a gift from Clio to Dewey, Clio’s nephew and
the owner of Dewey’s Home Store.
Refer to Fact Pattern 17-1. Halfway through the project, Bayside refuses to finish the
job. The contract can be enforced against Bayside by
a. Clio only.
b. Clio or Dewey only.
c. Clio, Dewey, or Eagle only.
d. Clio, Dewey, Eagle, or Fresh Food.
Canada and the United States are signatories of the Berne Convention. Doug, a citizen
of Canada, publishes a book first in Canada and then in the United States. Doug’s
copyright must be recognized by
a. all of the signatories of the Berne Convention.
b. Canada and the United States only.
c. Canada only.
d. none of the signatories of the Berne Convention.
Kirk Custodial Service and Green Energy Company enter into an oral contract under
which Kirk agrees to provide custodial service for Green’s facilities for two years. This
contract is enforceable by
a. Kirk.
b. Green.
c. any interested third party, such as a janitorial supplies provider.
d. none of the choices.
Trudy forges Uma’s signature on a check “payable to the order of Trudy” drawn on
Uma’s account in Verity Bank. Most likely, if the bank pays the check
a. the Federal Reserve will reimburse all parties for their costs.
b. the loss will be apportioned among all of Verity’s customers.
c. Uma will be liable for the amount.
d. Verity will have to recredit Uma’s account.
Belle enters into a contract to subdivide and sell housing lots in Cole’s hillside field if
Dell City annexes the property within the next year. Belle’s duty to perform is
a. absolute.
b. conditional.
c. illusional.
d. irresolute.
Ideal Gadgets, Inc., and Jolly Outlets Corporation enter into a contract for a sale of
kitchenware. The contract requires Ideal to deliver the goods to Ladle Carrier Company
for transport to Jolly’s warehouse in Metro City. Risk of loss passes to Jolly when
a. Ideal delivers the goods to Ladle.
b. Ideal identifies the goods to the contract.
c. Ladle transports the goods to Jolly’s warehouse.
d. the goods arrive in Metro City.
Fact Pattern 13-1
Nano Corporation offers to sell a robotic device to Opal Assembly, Inc., but mistakenly
transposes some of the digits in the price so that $15,400 appears in the offer as
$14,500. Opal accepts the written offer.
Refer to Fact Pattern 13-1. Opal’s best argument in favor of enforcement of the contract
is that
a. a bilateral mistake does not afford relief from a contract.
b. a mistake of value does not afford relief from a contract.
c. a unilateral mistake does not afford relief from a contract.
d. the price was below the prices of comparable devices.
Posing as Platinum Bank, Oswald e-mails Nadia, asking her to update her personal
banking information through a link in the e-mail. She clicks on the link and types in the
data, which Oswald promptly sells to Moe. This is
a. cyber stalking.
b. employment fraud.
c. phishing.
d. vishing.
Ralph offers to sell Sophie, who is seventeen years of age, a car about which Ralph
intentionally misrepresents several material facts. In reliance on the misrepresentations,
Sophie buys the car. To prove fraud in this transaction, Sophie would have to show that
a. Ralph intentionally deceived Sophie.
b. Ralph made statements that were obviously exaggerated.
c. Sophie does not know anything about cars.
d. Sophie is under eighteen years of age.
Kelly is injured when she slips and falls on Layla’s sidewalk. To determine whether
Layla owed a duty of care to Kelly, Layla is subject to the standard of
a. a realistic person.
b. a reasonable person.
c. a recognizable person.
d. a reliable person.
Natalie agrees to assume Orina’s debt to Consumer Credit Corporation. Natalie does not
get any personal benefit for the agreement. To be enforceable, the promise must be in
writing if the debt is for
a. more than $500.
b. more than $5,000.
c. more than $50,000.
d. any amount.
A specific grade of corn that fills BioFuel Cooperative’s silo is fungible. This means
that the corn is
a. alike naturally or by agreement or trade usage.
b. fundamentally different.
c. fundamentally edible.
d. perishable.
Fitch and Gert enter into a contract for the distribution of Fitch”‘s produce to local
restaurants and wineries for which Fitch agrees to pay Gert. Gert transfers his right to
payment under the contract to Honor Bank. This transfer is
a. a delegation.
b. an assignment.
c. an obligato.
d. prohibited.
Dan writes a check to Emma on his account at First State Bank. The bank dishonors the
check even though Dan has sufficient funds in his account. The bank is
a. liable to Dan only.
b. liable to Dan and Emma.
c. liable to Emma only.
d. not liable to Dan or Emma.
The payment of Brian’s debt to Chuck is guaranteed by Brian’s personal property. This
is
a. a reorganization.
b. a secured transaction.
c. a suretyship agreement.
d. a violation of most state laws.
All student loans are dischargeable in bankruptcy.
The rights under a contract for personal service normally can be assigned.
On May 1, Brand Name Industries, Inc. (BNI), sent Carol a letter, via overnight
delivery, offering to employ her to audit BNI’s financial statements for the current year
for $10,000. In the letter, BNI stated that Carol had ten days to accept. On May 5, Carol
sent BNI a fax that stated, “The price for the audit seems too low. Would you consider
paying $12,000?” BNI received the fax. The next day, Dan offered to conduct the audit
for $8,000. On learning of Dan’s offer, Carol immediately e-mailed BNI, agreeing to do
the work for $10,000. BNI received this e-mail on May 7. Explain why BNI and Carol
do, or do not, have a contract.
Under the principle of comity, a foreign business that deals with a U.S. business may be
subject to U.S. law.
Patent infringement occurs only if an invention is copied in its entirety.
A buyer has no right to accept goods that fail in any respect to conform to the terms of a
contract in every detail.
All rights can be assigned.
Baby Products, Inc., hires Chewy to develop and implement an e-commerce strategy for
marketing Baby’s products. Chewy signs a contract that includes a clause prohibiting
him from competing with Baby during and after the employment. Before the strategy is
implemented, Chewy resigns from Baby’s employ and opens a business to compete with
Baby. In Baby’s suit against Chewy, to determine whether he may compete with Baby,
what is the most important factor the court should consider? Is the clause likely to be
enforced? Explain.
Dieter’s will provides for a distribution of his assets on his death. Who will “distribute”
Dieter’s property, and what are the steps involved?
An innocent party can cancel a fraudulent contract.
The preexisting duty rule permits a party who is bound by contract to perform a certain
duty to use that duty as consideration for a second contract.
A foreign corporation is a corporation formed in another country.
Business ethics applies only to the owners, operators, and employees of corporations.
To be enforceable, any assignment must be in writing.
An obligation is enforceable only if it is supported by past consideration.
Judges use precedent when deciding a case in a common law legal system.
Private parties cannot sue violators of the Securities Act of 1933.
Hacking is not widespread.
Cody signs and returns a letter from Dora, referring to Dora’s Double-D Ranch and its
price. When Cody attempts to complete the deal, Dora refuses, claiming that they have
no contract. Cody claims they do. What standard determines whether these parties have
a contract?