Elmo is the owner and manager of a business trust. Under the terms of a business trust,
Elmo is required to
a. distribute the profits and manage the property.
b. distribute the profits only.
c. manage the property only.
d. neither distribute the profits nor manage the property.
Fact Pattern 3-1
Java Cafes, Inc., and Kaffe Import Corporation dispute a term in their contract.
Refer to Fact Pattern 3-1. Resolving the dispute between Java and Kaffe by having a
neutral third party render a binding decision is one of the advantages of
a. arbitration.
b. conciliation.
c. intervention.
d. mediation.
Brick’s debt to Conry is past due. Conry brings a legal action against Brick to collect the
debt. To ensure that a judgment in Conry’s favor will be collectible, Conry asks the
court to order the seizure of Brick’s property. Exempt from such an order in most states
is
a. all of Brick’s personal property.
b. as much of Brick’s personal property as Brick opts to exempt.
c. equipment that Brick uses in a business up to a specified amount.
d. none of Brick’s personal property.
Mei orally promises Nester that she will buy his fishing trawler for $10,000. Before
either party acts in reliance on this promise, under the doctrine of promissory estoppel,
the transaction is enforceable by
a. the seller or the buyer.
b. the marina where the trawler is docked.
c. the state in which the trawler is located.
d. none of the choices.
Kitsch Niche Corporation is a noninvestment company that wants to issue $3 million of
stock in a twelve-month period. Kitsch Niche, with less than $20 million in annual
sales, qualifies as a small business issuer. Before Kitsch Niche sells the stock, it must
provide investors with
a. an offering circular.
b. a notice of the issue.
c. a red herring prospectus.
d. a tombstone ad.
As part of a sale of a business, Lee signs a covenant not to compete that is unreasonable
in its essential terms. To prevent undue hardship, a court will most likely
a. enforce the covenant as written.
b. enforce the covenant but evaluate its effects over time.
c. reform the covenant’s terms.
d. refuse to enforce the covenant without additional consideration.
Mineral Mining Corporation is a U.S. employer. Mineral, and other U.S. employers,
must perform I-9 verifications for new hires who work under the employer’s direct
supervision
a. excluding contractors and day workers.
b. excluding contractors but including day workers.
c. excluding day workers but including contractors.
d. including contractors and day workers.
Fact Pattern 44-1
Nika owns land in Ohio. Her ownership rights include the right to sell or give away the
property without restriction, and the right to commit waste, if she chooses.
Refer to Fact Pattern 44-1. Nika’s ownership interest is
a. a fee simple absolute.
b. a leasehold estate.
c. a life estate.
d. an easement.
Centrex Computer Company offers to sell Deluxe Vehicle Sales Corporation 1,000
computers for a $500,000, states that the offer will be open for six days, and asks for a
response by fax. On the fourth day, Deluxe sends an acceptance to Centrex via the mail,
which is received on the sixth day. In this deal
a. a contract is formed.
b. no contract is formed, because Centrex asked for a response by fax.
c. no contract is formed, because Centrex received the acceptance late.
d. no contract is formed, because Deluxe sent the acceptance late.
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. “Adequacy” of consideration refers to
a. “how much” consideration is given.
b. legally sufficient value in the eyes of the law.
c. the intangible value to a contracting party of a thing exchanged.
d. the substantiality of the consideration exchanged.
Green Grocers, Inc., enters into a contract with Hiway Transport Company for the
delivery of a shipment of fresh produce. If the language in the contract has more than
one meaning, it will be construed against
a. the party who drafted the contract.
b. the party with the greater bargaining power.
c. the promisor.
d. the promisee.
Betty files a suit against Carl. Before going to trial, the parties meet, with their
attorneys to represent them, to try to resolve their dispute without involving a third
party. This is
a. arbitration.
b. litigation.
c. mediation.
d. negotiation.
China Bank is a foreign entitya firm owned and operated by investors in a foreign
country. With respect to an LLC in the United States, China Bank can
a. act as a creditor, but cannot otherwise invest or participate.
b. become a member.
c. not become a member, but can participate in its operations.
d. not become a member or otherwise participate in its operations.
The abbreviation “P.A.” in the name “Painless Dental, P.A.” means that this
organization is
a. a private association.
b. a professional association.
c. a public association.
d. a publicly administered corporation.
Dom, a salesperson for Excel Autos, promises Fern that a certain car will give her a
‘smooth ride.” Dom offers a test drive, which Fern declines. She buys the car but soon
realizes that its suspension is in poor condition. Fern
a. can rescind the contract on the ground of fraud.
b. can rescind the contract on the ground of misrepresentation.
c. can rescind the contract on the ground of mistake.
d. was not defrauded.
Fact Pattern 13-4
Flo enters into a contract under Gail’s threats. Later, Flo refuses to perform, claiming
that she acted under duress.
Refer to Fact Pattern 13-4. Flo sues to rescind the contract. Gail claims that duress is a
defense to enforcement of a contract, not a ground for rescission. The court will
probably rule in favor of
a. Flo only.
b. Flo and Gail.
c. Flo or Gail, but not both.
d. Gail only.
Guaranty Bank receives a check drawn on the account of Get-Rich Industries, Inc., one
of the bank’s customers, at 3 p.m. Friday. Garry, the presenter of the check, is not one of
the bank’s customers. The bank uses deferred posting with a 2 p.m. cutoff hour. If it
decides to dishonor the check, it must do so by midnight
a. Saturday.
b. Sunday.
c. Monday.
d. Tuesday.
Grade-A Construction Corporation offers to buy from Harden Cement Company a
certain quantity of cement for a certain price. Harden can accept the offer by
a. doing nothing.
b. promising to ship or promptly shipping the cement.
c. promising to ship the cement only.
d. promptly shipping the cement only.
To drive its competitors out of a certain geographic segment of its market, Fryin”
Potatoes, Inc., sets the prices of its products below cost for the buyers in that area. This
is
a. a refusal to deal.
b. business acumen.
c. predatory bidding.
d. price discrimination.
Mit-E Mart LLC was formed in New Jersey. Mit-E Mart’s members are Odel, who is a
citizen of New Jersey, and Pola, who is a citizen of New York. For federal diversity
jurisdictional purposes, Mit-E is a citizen of
a. all states.
b. New Jersey and New York.
c. New Jersey only.
d. no state.
Rusty and Sylvia are shareholders of Triad Hotel Corporation. Triad’s directors fail to
declare a dividend. Rusty and Sylvia could succeed in asking a court to order the
directors to meet and declare a dividend
a. if Triad has sufficient earnings available to pay a dividend.
b. if Triad has cash reserves, even if earmarked for a different purpose.
c. if withholding a dividend is an abuse of the directors’ discretion.
d. under no circumstances.
Olly applies for a job with Petro Company. Petro does not hire Olly because of his
ethnicity, or national origin. This is
a. desperate-measure discrimination.
b. disparate-impact discrimination.
c. disparate-treatment discrimination.
d. not discrimination.
Bubbly Cola features Sparkly Cola’s trademark without its owner’s permission.
Bubbly’s use of the mark is actionable provided
a. consumers are confused.
b. Bubbly’s use is intentional.
c. Bubbly’s use reduces the value of Sparkly’s mark.
d. Sparkly’s mark is registered.
Ray breaches his lease with Sunny Properties and vacates the premises six months
before the end of the term. In some states, Sunny would have to
a. avoid reletting the premises to recover damages from Ray.
b. make reasonable efforts to relet the premises to mitigate damages.
c. relet the premises to recover damages from Ray.
d. sell the premises to recover damages from Ray.
Rural Utility, Inc., enters into a contract with Shovel Excavation Service to dig up,
replace, and rebury Rural’s cables in a certain location. Rural advances Shovel 10
percent of its cost. If the parties rescind the contract, Shovel’s refund of the payment
would be
a. a penalty.
b. liquidated damages.
c. restitution.
d. specific performance.
Quotient Financial Corporation is a secured party with a security interest in property
owned by Retail Sales Company. Perfection of this security interest may not protect
Quotient Financial against the claim of
a. a bank.
b. a buyer in the ordinary course of business.
c. a subsequent lien creditor.
d. a trustee in bankruptcy.
Ira orally agrees to buy a unique collection of sports memorabilia for $1,000 from Jane
and sends her $250 as a down payment. When Ira sends her the rest of the price, Jane
refuses to ship Ira the collection. Ira should seek
a. damages.
b. reformation.
c. rescission.
d. specific performance.
Dina’s debit card, issued by Eminent Bank, is stolen and used without Dina’s
permission. Dina tells Eminent Bank within thirty days. Dina may be required to pay no
more than
a. $5.
b. $50.
c. $500.
d. $5,000.
Heavy Hauling, Inc., is a public company whose shares are traded in the public
securities markets. Under the Sarbanes-Oxley Act of 2002, to ensure that Heavy
Hauling’s financial results are accurate and timely, the firm’s senior officers must set up
and maintain
a. internal “disclosure controls and procedures.”
b. external “release and reveal timetables.”
c. personal “peruse and review liability policies.”
d. public “information and discussion forums.”
Without authorization, Rolf contracts on behalf of Sari to have Tige paint the interior
and exterior of Sari’s house. Sari ratifies the contract. Later, Sari tries to rescind the part
of the contract relating to the exterior. This attempt will be
a. partly successful.
b. partly unsuccessful.
c. totally successful.
d. totally unsuccessful.
Order Processing Corporation and Pinpoint Data, Inc., enter into a contract online in a
state that has enacted an unmodified version of the UETA. With regard to the E-SIGN
Act
a. the E-SIGN Act does not preempt this version of the UETA.
b. the E-SIGN Act preempts this version of the UETA.
c. the “fit” between the acts is an issue for a court to determine.
d. the two acts “cancel” each other’s application.
Eagle Financial Corporation merges with First Bank Corporation, with Eagle Financial
absorbing First Bank. After the merger
a. a different, new corporation is the surviving corporation.
b. Eagle Financial and First Bank are both surviving corporations.
c. Eagle Financial is the surviving corporation.
d. First Bank is the surviving corporation.
A financial institution must encode a returned check with certain information.
The four broad types of damages in contract law are conciliatory, consecutive, punctual,
and nominative.
“Consideration” refers to the genuine assent of all of the parties to a contract.
If a life insurance applicant pays a premium but dies before the physical exam, there is
obviously no coverage.
Ed, a businessperson, is a friend of Fran, the owner of a candy store. Every day, Ed
spends five minutes in Fran’s candy store, looking at the candy and usually buying one
or two candy bars. One afternoon, Ed goes into the store, looks at the candy, and picks
up a $1 candy bar. Ed waves the candy at Fran without saying a word and walks out. Is
there a contract? If so, how would it be classified in terms of formation, performance,
and enforceability?
Gaining unauthorized access to an electronic fund transfer system is a felony.
Shareholders own a corporation.
Contract law shows what excuses our society accepts for breaking certain types of
promises.
Law includes enforceable rules governing relationships between individuals and their
society.
Constructive delivery occurs when property is physically transferred.
An association cannot be a partnership without an express agreement.
A joint tenant’s sale of his or her interest terminates the joint tenancy.
Terminating an employee who uses drugs violates the Americans with Disabilities Act
of 1990.
If the proceeds of a foreclosure sale cover the costs of the sale and the mortgage debt,
any surplus is a windfall to the creditor.
A seller must warn those who buy a product of harm that could result from the
foreseeable misuse of the product.
An employer must hire a disabled applicant even if he or she lacks necessary job
qualifications.
The appropriate location for a trial can be a key issue in a case involving a cyber crime.
A seller’s duty to deliver always becomes absolute once a contract is formed.
If goods identified to a contract are destroyed through no fault of either party, both
parties are excused from performance.