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A court adjudicates Huck mentally incompetent and appoints Inez to be his guardian.
Later, without Inez's knowledge, Huck signs a contract to sell his farm to Kyle for its
real market value. The contract is
a. enforceable if Huck comprehended the consequences.
b. enforceable if Huck knew the market value of the farm.
c. enforceable if Huck was the record owner of the farm.
d. void.
Ozzy is an officer of Prudent Financial Corporation. Ozzy serves in a representative
capacity for Prudent Financial's owners. With respect to binding Prudent Financial to
contracts, Ozzy is
a. an agent and has the authority.
b. an agent but does not have the authority.
c. not an agent and does not have the authority.
d. not an agent but does have the authority.
Clerical Workers Union represents the employees of Miracle Medical Research
Company. The management of the firm refuses to bargain with the union over the hiring
of unnecessary workers. This violates
a. federal labor law.
b. state right-to-work laws.
c. federal employment discrimination law.
d. no federal or state law.
William is a surety for Jeannie's loan from Richard. Richard knows of William's
existence. When the loan comes due, Jeannie tries to pay Richard, but Richard rejects
the payment. William is
a. released from any obligation on the debt.
b. required to pay the amount of the debt to Richard.
c. required to pay up to half of the amount of the debt to Richard.
d. required to pay the amount of the debt to Jeannie.
Rick and Sandy are limited partners in Total Profit Enterprises, a limited partnership. To
avoid personal liability for partnership obligations, they must not
a. acquire an interest in the firm.
b. contribute property to the firm.
c. engage in activities independent of the firm's business.
d. participate in the firm's management.
Blythe's application to Community Bank for a credit card is denied. Blythe can obtain
information on her credit history in a credit agency's files under
a. no federal law.
b. the Equal Credit Opportunity Act.
c. the Fair Credit Reporting Act.
d. the Fair Debt Collection Practices Act.
Solar Power, Inc., files a suit against Thunder Bay Utility Company and seeks to
examine certain documents in Thunder's possession. A legitimate reason for this
examination is that the documents contain
a. evidence about the case.
b. private information about Thunder's operations.
c. public information about energy generation.
d. irrelevant data that can be eliminated from consideration.
Sandy, a businessperson, is convicted of RICO offenses. Sandy's penalties may include
a. closing a business, but not selling it.
b. not closing a business or selling it.
c. selling a business, but not closing it.
d. closing a business or selling it.
Fact Pattern 24-1: Jake is the maker of a $2,000 promissory note payable to Kim. Kim
indorses the note to Lou who, in turn, indorses it to Mona, who then indorses it to Nat,
the present holder.
Refer to Fact Pattern 24-1. Suppose that Mona pays Nat on the note. With timely notice
to the proper parties, Mona may collect payment on the note from
a. Jake, Kim, or Lou.
b. Jake or Kim only.
c. Lou only.
d. no one.
Building Restoration, Inc. (BRI), enters into a contract to refurbish an old train depot
for Casual Dining, Inc., to open as Eat Up Restaurant. If BRI completes most of the
work promised in the contract, its performance will be
a. absolute.
b. complete.
c. material.
d. substantial.
According to the terms of Carmen's will, specific gifts are made, and taxes and other
estate expenses and debts are paid. The assets of Carmen's estate that remain are most
likely to be distributed
a. by codicil.
b. holographically.
c. per capita.
d. through a residuary clause.
Fact Pattern 33-3
Mary's home is in a state that has a $30,000 homestead exemption. Mary defaults on a
$60,000 debt that she owes to Nina. Mary's home is sold at auction for $80,000.
Refer to Fact Pattern 33-3. Other property Mary may own that may be exempt from
satisfaction of judgment debts includes
a. any property that Mary wishes to exempt.
b. investments that Mary has made in her family's businesses.
c. recreational vehicles that Mary uses on weekends.
d. tools that Mary uses in her trade.
Richard's will leaves $5,000 to his two children, Sam and Sara. When Richard dies, he
only has $8,000 to honor his bequests. Sam and Sara each receive $4,000. This is
a. an execution.
b. an abatement.
c. a division.
d. a devise.
Jody owns KuppaJava Kiosks, a sole proprietorship. Jody's liability is
a. limited by state statute and varies from state to state.
b. limited to the extent of capital expenditures.
c. limited to the extent of his or her original investment.
d. unlimited.
Garden Tool Company makes hedge trimmers. Troy is injured while using a Garden
Tool trimmer and sues the company for product liability based on negligence. To win,
Troy must show that
a. Garden Tool did not use due care with respect to the trimmer.
b. Garden Tool misrepresented a material fact regarding the trimmer.
c. Troy was experienced in the use of trimmers.
d. Troy was in privity of contract with Garden Tool.
Through fraudulent means, Finlay induces Ethel to sign a contract to invest with him
the profits from her business. When Ethel learns the truth, she may
a. only enforce the contract.
b. only recover what she invested with Finlay.
c. enforce the contract or recover what she invested with Finlay.
d. do nothing.
Corporate Bank wants to perfect its security interest in inventory owned by Direct Sales
Company. Most likely, a financing statement should be filed with
a. the bank manager.
b. the county clerk.
c. the federal loan officer.
d. the secretary of state.
USA Gasoline Corporation signs an instrument that states it is being executed "in
accord with a contract for the sale of 4,000 barrels of oil dated May 1." This instrument
is
a. negotiable.
b. nonnegotiable, because information about the sale must be obtained from another
source.
c. nonnegotiable, because it states an express condition to payment.
d. nonnegotiable, because the terms of the sale are not clear.
Home Products Store buys furniture from Relax-o Furniture, Inc. The parties agree that
the furniture will be shipped "F.O.B. Relax-o's warehouse" to Home Products via Swift
Shipping Corporation. The furniture is lost in transit. The loss is suffered by
a. Home Products and Relax-o Furniture, but not Swift Shipping.
b. Home Products, Relax-o Furniture, and Swift Shipping.
c. Home Products only.
d. Relax-o Furniture only.
Adult Shoppe in Bay City sells a variety of publications, including child pornography.
Bay City enacts an ordinance prohibiting the sale of such materials. This ordinance is
most likely
a. an invalid restriction of individuals' privacy.
b. an unconstitutional restriction of speech.
c. a violation of adults' rights to enjoy certain privileges.
d. constitutional under the First Amendment.
Mallory's sister gives Mallory a leather working kit for Christmas. Mallory uses the kit
to make a saddle. Mallory's acquisition of the saddle is by
a. a bailment.
b. accession.
c. confusion.
d. production.
Edgy Engine Components, Inc., a maker of vehicle parts, refuses to sell to Fidgety
Fix-It, Inc., a national vehicle service firm. Edgy Engine convinces Greasy Motor Parts
Company, a competitor, to do the same. This is
a. a group boycott.
b. a market division.
c. a joint venture.
d. an exclusive-dealing contract.
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.
A Rhode Island state statute requires machinery in industrial plants to include automatic
shut-off switches accessible to each employee working on the machine. Steel
Company's equipment does not have the switches. Trudy, a Steel employee, suffers an
injury that an accessible shut-off switch would have prevented. Trudy's best theory for
recovery is
a. assault.
b. assumption of risk.
c. invasion of privacy.
d. negligence.
GR8 Products, Inc., warrants its goods to be free of defects. If Heck issues an
instrument to obtain goods from GR8 that prove defective, Heck can avoid paying on
the instrument
a. only if it is a check.
b. only if it is a note.
c. whether it is a check or a note.
d. under no circumstances.
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.
Expert Pavers, Inc., contracts with Fabricated Building Corporation to repave
Fabricated's parking lot for which Fabricated agrees to pay. The requirements of this,
and any other, contract do not include
a. consideration.
b. capacity.
c. legality.
d. practicality.
Mona borrows $1,000 from National Bank, using her motorcycle as collateral. To
perfect its security interest, the bank must file its financing statement with
a. the secretary of state.
b. the county clerk.
c. the city treasurer.
d. the ward alderman.
Marta is a partner in Kasper's Kleaning. When Marta dies her heirs are
a. not entitled to any interest in Kasper's Kleaning.
b. entitled to half of Marta's interest in Kasper's Kleaning.
c. entitled to the value of Marta's interest in Kasper's Kleaning.
d. entitled to one third of Marta's interest in Kasper's Kleaning.
Fact Pattern 33-3
Mary's home is in a state that has a $30,000 homestead exemption. Mary defaults on a
$60,000 debt that she owes to Nina. Mary's home is sold at auction for $80,000.
Refer to Fact Pattern 33-3. If Nina recovers less than she is owed, she can realize the
difference from
a. any property that Mary owns.
b. only exempt property that Mary owns.
c. only nonexempt property that Mary owns.
d. property that any other member of Mary's family owns.
Telfonix Corporation, a U.S. firm, and Adex, Inc., a British firm, are parties to a
contract with a choice-of-forum clause. The forum specified in the clause
a. must be within the geographic boundaries of the United States.
b. must be within the geographic boundaries of Britain.
c. need not be within the geographic boundaries of either party.
d. must be within the geographic boundaries of either the United States or Britain.
Fred has six nieces, ages five to sixteen. He writes an order instrument for $50 that
states "Pay to the order of my niece." The order instrument is
a. negotiable.
b. nonnegotiable, because the amount of money is less than $500.
c. nonnegotiable, because it is illegal to write an order instrument
payable to a relative.
d. nonnegotiable, because there is no specific person identified.
Lon enters into a contract to mine limestone in Mica's quarry, sell it, and share the
profits on its sale with Mica. If the duties under this contract are discharged like those
under most contracts, the duties will be
a. conditioned.
b. breached.
c. performed.
d. rescinded.
Perfection refers to the quality of the collateral that secures a creditor's interest in a
debtor's debt.
Browse-wrap terms are arguably not enforceable.
An employer has no control over an employee's work.
Trade names have the same legal protection as trademarks.
Smartt Software Company borrows $10,000 from Term "N All Loans, Inc., but cannot
repay the loan when it comes due. Term "N All refuses to extend the time for repayment
unless Smartt can provide an acceptable surety. Uno Venture Corporation agrees to act
as a surety for the loan after Smartt offers the firm a discount on software and shows
Uno financial statements, compiled with Term "N All's assistance, that misrepresent
Smartt's financial situation. Later, after Uno uses the discount to buy software, Smartt
again defaults on repayment of the loan, and Term "N All files a suit against Uno to
collect the amount of the debt. Is Uno liable? Why or why not?
A covenant not to sue is against public policy.
The mailbox rule applies to communication by phone and fax as well as the mail.
A floating lien cannot apply to the proceeds of the sale of after-acquired property.
Public officials prosecute criminal defendants.
A corporation's officers and other executive employees are hired by corporate
shareholders.
A promise is a declaration that something will or will not happen in the future.
Proceeds consist of whatever is received when collateral is sold.
Class-action lawsuits are suits in which a number of persons join together to bring an
action.
A buyer and a seller cannot normally have an insurable interest in identical goods at the
same time.
Government authorities cannot enforce national law.
If no harm results from an allegedly negligent act, there is no liability.
