Peter and Ray are riding their horses together. Peter jokingly tells Ray that Ray’s horse
is too slow. Ray laughs and jokingly responds “Yes, he is too slow! I would sell him for
$5!” Peter hands Ray $5. This is
a. a valid acceptance because Peter gave Ray the money in a reasonable time.
b. a valid acceptance because there is consideration on both sides.
c. not a valid acceptance because Ray’s offer was made in jest.
d. not a valid acceptance because Ray’s horse is worth more than $5.
Vance points a gun at Workman and threatens to shoot him. Workman hits Vance,
causing his death. Charged with homicide, Workman can successfully claim as a
defense
a. nothing.
b. duress.
c. entrapment.
d. self-defense.
Two Japanese firms’Mikato, Ltd., and Shuzushi, Ltd.enter into a joint venture in an
attempt to increase their market share of the U.S. auto market. If the joint venture is not
a per se violation of U.S. antitrust laws, a U.S. court could exercise jurisdiction over the
firms
a. if the joint venture has a substantial effect on U.S. commerce.
b. if the joint venture has any effect on U.S. commerce.
c. if the joint venture was entered into in the United States.
d. under no circumstances.
Sarah believes that she was rejected for a position at Trekking Travel Agency due to her
race. Sarah files a suit against Trekking Travel Agency under Title VII on the basis of
disparate-treatment discrimination. Sarah must show all of the following except that
a. she is a member of a protected class.
b. she applied and was qualified for the job in question.
c. she was rejected by Trekking Travel Agency.
d. other people of her race hold similar positions with other employers.
Suisse Internationale, a Swiss maker of athletic equipment, enters into a price fixing
agreement with Total World Sports, a U.S. wholesaler of Suisse’s products. U.S. courts
will apply U.S. antitrust laws if
a. the agreement was made in Switzerland.
b. the agreement was made in the United States.
c. the price fixing has a substantial effect on U.S. commerce.
d. the Swiss government agrees to be sued in the United States.
The best definition of a precedent is
a. a law developed from custom.
b. a judicial proceeding for the determination of a dispute between parties in which
rights are enforced or protected.
c. a proceeding by one person against another in court.
d. a court decision that furnishes an example or authority for deciding subsequent cases
involving identical or similar facts.
Dhani signs a check “pay to the order of Etan” drawn on Dhani’s account in First State
Bank and dates the check “May 1.” Etan presents the check to the bank for payment on
December 15. This is
a. a cashier’s check.
b. an overdraft.
c. a certified check.
d. a stale check.
In Kettle Cafe’s suit against Food Services, Inc., the court issues a judgment in Kettle’s
favor. The judgment can be appealed to an appropriate court of appeals by
a. either party.
b. Kettle only.
c. Food Service only.
d. neither party.
Jacqi tells Kenneth, who does not know how to perform comedy, that she will tutor him
in the subject for $500. As an offer, this is
a. effective.
b. not effective, because comedy is not a serious subject.
c. not effective, because Jacqi’s tutoring will be subjective.
d. not effective, because Kenneth has no knowledge of the subject.
Leona enters into a contract with Munchie Bakery to cater a sales conference. When the
conference is postponed indefinitely, Leona asks a court to cancel the contract and
return the parties to the positions that they held before its formation. This request
involves
a. specific performance.
b. an injunction.
c. rescission.
d. an action that the court cannot order.
Bay City Construction, Inc., a contractor, asks Cool Electric, a subcontractor, to provide
certain services. Nothing is said about payment. Cool provides the services, but Bay
City refuses to pay. In Cool’s suit to recover, the chief issue is most likely to be whether
these parties had
a. a formal contract.
b. an express contract.
c. an implied contract.
d. a voidable contract.
Jackie distributes a handbill throughout her neighborhood accusing her neighbor Ked of
being a convicted sex offender. The statement is defamatory if
a. a neighbor repeats it.
b. Ked suffers emotional distress.
c. the statement is true.
d. the statement is false.
Thelma is an employee at Foreign Food Mart. Thelma is called for jury duty and as a
result cannot work her scheduled shift at Foreign Food Mart. Foreign Food Mart fires
Thelma. This is a violation of
a. an example of the doctrine.
b. an exception based on contract theory.
c. an exception based on public policy.
d. an exception based on tort theory.
Mix-It Concrete Company has the right to enter Nim’s land and remove the rock from
Nim’s quarry. This is
a. a fee simple absolute.
b. a license.
c. an easement.
d. a profit.
It is possible to copyright an idea.
Rocco gives Sequoia a smartphone as a gift. Sequoia develops a new game app for the
phone. She obtains intellectual property protection, and forms Titan Games, LLC, to
make and market the game. Sequoia’s acquisition of the game is by
a. gift.
b. accession.
c. confusion.
d. production.
Maggie and Nate enter into a contract for the sale of a car, but Nate later refuses to
deliver the car. Maggie asks a court to order Nate to perform as promised. Ordering a
party to perform what was promised is
a. specific performance.
b. damages.
c. rescission.
d. beyond the court’s authority.
Dorothy files a petition for bankruptcy under Chapter 13. If she is granted a discharge,
debts that will most likely be discharged include
a. claims not provided for by the plan.
b. payments on retirement accounts.
c. claims for domestic support obligations.
d. credit-card debt incurred more than one year before filing.
After an accident with a driver for Onyx Security Company, Paul signs a covenant not
to sue Onyx for damages in a tort action if it pays for the damage to his car. This
covenant
a. bars recovery only if Onyx pays.
b. is an illusory contract.
c. is barred by the preexisting duty rule.
d. is unconscionable.
Jim agrees to act on Kit’s behalf, subject to Kit’s control, and Kit trusts Jim to so act.
This describes a relationship between
a. a business and its competitors.
b. a government and its governed.
c. a parent and a child.
d. a principal and an agent.
Joy and Karl contract for the sale of Joy’s prize-winning show dog for $1,000.
Unknown to either party, the dog has died. Karl is
a. entitled to another dog of equivalent value.
b. not required to pay due to the bilateral mistake.
c. not required to pay due to the unilateral mistake.
d. required to pay because he assumed the risk the dog might die.
Precise GPS Company’s ad states that its product is “the finest that money can buy.”
Because of this ad, the Federal Trade Commission is most likely to issue
a. a cease-and-desist order.
b. a counteradvertising order.
c. a multiple product order.
d. none of the choices.
Andy knows nothing about horses. Peter, an expert horse trainer, knows that a certain
horse has no talent and is not likely to win any competitions. Peter convinces Andy to
buy the horse for $500,000 by assuring him that it has great talent. The horse turns out
to have no talent and never wins any competitions. Andy can most likely recover
damages based on
a. fraud.
b. mistake.
c. undue influence.
d. duress.
Fact Pattern 19-2
Tom draws a check, on his account in State Bank in New York, payable to Digital
Media, Inc., in San Francisco. Digital deposits the check in its account at First National
Bank.
Refer to Fact Pattern 19-2. Digital’s bank is
a. the cashing bank.
b. the depositary bank.
c. the intermediary bank.
d. the payor bank.
If a bank is both the drawer and the drawee with regard to a draft, then the draft is a
a. certificate of deposit.
b. cashier’s check.
c. nonnegotiable instrument.
d. promissory note.
Ergonomic Corporation convenes its employees for its managers to announce (1) a new
company-wide ethical code of conduct, (2) an ad campaign to publicize the new code,
and (3) the discharge of employees who do not adhere to the code. One of the most
effective ways to set a tone of ethical behavior within a business organization is
a. to create an ethical code of conduct.
b. to discharge employees who create the appearance of impropriety.
c. to post a marketing campaign online touting the firm’s ethical tone.
d. for management to direct employees to “do as we say, not as we do.”
Café Cuisine Dining, Inc., employs one hundred workers at three locations in two
states. Under federal law, Café Cuisine 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.
Eli owes Martin $10,000. Martin assigns the claim to Jack. Jack does not notify Eli of
the assignment. A week later, Martin assigns the same claim to Allen. Allen
immediately notifies Eli of the assignment. Jack
a. has priority to payment in all states.
b. has priority to payment in states that follow the English rule.
c. does not have priority to payment in any state.
d. has priorty to payment in most states.
Rally Speedboat Corporation refuses to sell its products to Super Weekends, Inc., a
recreational water products dealership. This is
a. an exclusive-dealing contract.
b. a horizontal market division.
c. attempted monopolization.
d. a unilateral refusal to deal.
Trend-Rite Clothiers, Inc., sells t-shirts to Brand Name Stores, Inc., under an existing
contract. When textile costs increase, Brand agrees to a price increase, but later wants to
cancel the contract. Brand may
a. cancel the contract immediately.
b. cancel the contract only after accepting a final shipment.
c. cancel the contract only on reasonable notice.
d. not cancel the contract.
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.
Richard suspects his supervisor of unethical accounting practices. However, he does not
want to lose his job if he reports the supervisor and the supervisor finds out who
reported him. An important feature of online reporting systems like EthicsPoint is
a. the employee reporting the unethical behavior can do so anonymously.
b. the employee reporting the unethical behavior is financially compensated if he loses
his job as a result of the report.
c. the employee reporting the unethical behavior must give his full name when making
the report.
d. the employee reporting the unethical behavior must have another employee
supporting him.
There is no cap on damages for discrimination in violation of the Civil Rights Act of
1964.
The only requirement for a valid contract is that the parties voluntarily entered into it.
A tariff is always a flat rate per unit.
Words or terms in contracts that are subject to more than one reasonable interpretation
can lead to bilateral mistakes.
The only way that a party can discharge a contract is by performance.
Divestiture of a business interest is a possible penalty under RICO.
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.
A law that limits only some person’ exercise of a fundamental right is valid under any
circumstances.
In most courts, auditors cannot be held liable to third parties for negligence in the
performance of their duties.
Business ethics focuses on ethical behavior in the business world.
Adding value to a piece of personal property by labor or materials is accession.
Misrepresentation can occur through conduct.
A gift is effective whether or not it is accepted.
Few securities can be resold without registration.
For an agent’s implied authority to be effective, a principal must ratify it.
Insurance is classified according to the amount of the payment on a claim.