Phil owns a farm in South Dakota. He does not like it when planes from the local
airport fly over his property. Phil is unlikely to win a case claiming that airplanes flying
over his land violate his property rights unless
a. the planes fly over more than twice a day.
b. he can prove there are more efficient routes for the planes to take.
c. the flights are low and frequent and cause direct interference with Phil’s enjoyment of
the land.
d. the planes belong to private individuals.
Frank slips and falls on Guy’s Harbor Tour Boat and is injured. Frank files a suit against
Guy’s for $500,000. If Frank is 20 percent at fault and Guy’s is 80 percent, under the
“50 percent rule” comparative negligence principles, Frank would recover
a. $0.
b. $250,000.
c. $400,000.
d. $500,000.
Hobby Farms, Inc., owns rural property that it leases to various tenants, including Ira.
Ira’s transfer of his entire interest in the leased property to a Jason is
a. an assignment.
b. an eviction.
c. a right of entry.
d. a sublease.
Rafaela Art Gallery and Sequoia Exhibitions form a joint venture. When a dispute
arises, Rafaela files a suit against Sequoia. The court is most likely to apply the same
principles to this joint venture as it applies to
a. business trusts.
b. cooperatives.
c. corporations.
d. partnerships.
T.J. owns a red sports car. T.J. can use the car as he wishes and he can also dispose of it
if he wishes. When T.J. dies, the car will descend to his son. With respect to the car, T.J.
is
a. a joint tenant.
b. a tenant in common.
c. an owner in fee simple.
d. an owner of community property.
Franzea is injured in an accident caused by Gentry. Gentry agrees to pay Franzea
$2,500 if she agrees to release him from further liability. She agrees. If Franzea’s
damages ultimately exceed $2,500, she can collect
a. the balance from Gentry in a breach-of-contract suit.
b. the balance from Gentry in a tort suit.
c. the balance from Gentry on the ground of unforeseen difficulties.
d. nothing more from Gentry.
Dahlia borrows $125,000 from Clearview Credit Union to buy a home. The interest rate
and other terms that are required to be disclosed under federal law must be
a. based on uniform formulas of calculation.
b. expressed in lenders’ language.
c. set out in a formula unique to each loan.
d. stated in “legalese.”
Bella Homes enters into a contract to buy 132 acres from Watershed Holdings to
subdivide and sell in fifth-acre lots for Pristine Meadow, a residential development.
If Watershed breaches the contract, Bella’s remedy would most likely be
a. a certain ratio of the amount that Watershed has in liquidated funds.
b. a percentage of Watershed’s unrealized profit.
c. the difference between the land’s contract and market prices.
d. specific performance.
Megan is charged with jaywalking, which is classified as
a. a misdemeanor.
b. a felony.
c. a petty offense.
d. no crime.
KupaJava hires Lola to manage one of KupaJava’s seven drive-through coffee stands.
KupaJava agrees to pay Lola a salary, plus commission. KupaJava stipulates the
standards that should be observed, the goals that should be attained, and the methods
that should be used. Lola is most likely KupaJava’s
a. employee.
b. independent contractor.
c. principal.
d. power of attorney.
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.”
Grace purchases three tons of fine merino wool on behalf of Woolen Creations. Woolen
Creations wants the wool to remain in the warehouse where it is being stored until it is
needed. Grace makes an offer for the wool on Monday. The offer is accepted on
Tuesday. The warehouser gives Woolen Creations a warehouse receipt on Wednesday.
Woolen Creations picks up the wool from the warehouse three months after the sale.
Title for the wool passed to Woolen creations
a. on Monday.
b. on Tuesday.
c. on Wednesday.
d. three months after the sale.
The assets in Hong’s estate, including the value of his home on Elm Street and its
contents, are insufficient to pay in full all of the gifts provided for in his will. His heirs
will receive
a. full payment in order of seniority until the assets are exhausted.
b. nothingthe assets will descend to the state.
c. reduced benefits.
d. the option of distributing the assets according to their wishes.
Quibble Game Company’s liabilities exceed its assets. Quibble hires Roo & Slay, an
accounting firm, to prepare a balance sheet. Through Roo & Slay’s negligent omissions,
the sheet shows a positive net worth. Town Bank relies on the balance sheet to make a
loan to Quibble. When Quibble defaults, Town files a suit against Roo & Slay. Under
the Restatement rule, Roo & Slay is most likely
a. liable because Roo & Slay owed a duty of care to Quibble.
b. liable because Roo & Slay owed a duty to any foreseeable user.
c. liable if Roo & Slay knew that Town would rely on the balance sheet.
d. not liable because Roo & Slay and Town were not in privity.
Dick works for First City Bank. When his spouse Elin is diagnosed with Lou Gehrig’s
disease, Dick asks to take temporary leave to care for her. First City discharges him. He
files a suit against the bank under the Americans with Disabilities Act of 1990. Most
likely, Dick can
a. recover for association discrimination.
b. recover for reverse discrimination.
c. recover for disparate-impact discrimination.
d. not recover.
Kingston promises to pay Melina $500 to install a sump pump in his warehouse. Melina
completes the installation. The act of installing the pump
a. imposes a moral obligation on Kingston to pay Melina.
b. imposes no obligation on Kingston unless he is satisfied with the job.
c. is not sufficient consideration because it is not goods or money.
d. is the consideration that creates Kingston’s obligation to pay Melina.
Nell’s debt to Olsen is past due. Olsen obtains an order of garnishment to require Nell’s
employer Pro Transmission Service, Inc., to pay part of Nell’s paycheck to Olsen. The
law
a. limits the amount that can be taken from Nell’s take-home pay.
b. permits Olsen to dismiss Nell because her wages are garnished.
c. practically does not allow Olsen to collect the awarded amount.
d. requires Pro to retain Nell as an employee until the debt is paid.
Mariah takes off her ring and places it on her desk while she works. Without her
knowledge or consent, her coworker Nita picks up the ring, puts it on, and walks away.
Nita has likely committed
a. burglary.
b. forgery.
c. larceny.
d. no crime.
Echo takes her car to Fix-It, Inc., which repairs the car and bills Echo for $500. Echo
writes out a check drawn on Capital Bank, but later, believing that Fix-It did not repair
the car properly, issues a stop-payment order.
Capital Bank
a. is liable to Fix-It for the amount of the check.
b. must stop payment if Capital has a reasonable time to act.
c. need not stop payment unless Echo had a valid reason to act.
d. need not follow Echo’s order unless the check was certified.
Dumont threatens physical harm to force Eddie to sell his business, Citywide Vending,
Inc., to Dumont for a below-market price. This is
a. duress.
b. fraud.
c. a unilateral mistake.
d. undue influence.
Fay is admitted to Global Associates, an existing partnership. A partnership debt
incurred before the date of her admission comes due. Fay is
a. not liable for the debt.
b. only liable for the debt up to the amount of his capital contribution.
c. personally liable only to the extent the other partners do not pay.
d. personally liable to the full extent of the debt.
Doctors Medical Associates obtains an insurance policy that protects its members
against negligence claims by their patients. This is
a. casualty insurance.
b. fidelity or guaranty insurance.
c. malpractice insurance.
d. workers’ compensation insurance.
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.
Joan borrows money from Jake under a security agreement. After borrowing the money,
Joan buys a new kayak. The kayak is considered
a. a floating lien.
b. after-acquired property.
c. a future advance.
d. proceeds.
In studying the legal environment of business, Professor Dooley’s students also review
ethics in a business context. Ethics includes the study of what constitutes
a. fair or just behavior.
b. financially rewarding behavior.
c. legal behavior.
d. religious behavior.
Wild Rides Theme Park owes both RollercoasterRepair, Inc. and Hot Dog Harry money.
RollercoasterRepair orally agrees to assume Wild Rides’s debt to Hot Dog Harry to
prevent Hot Dog Harry from filing suit against Wild Rides. This contract is enforceable
by
a. none of these parties.
b. any of these parties.
c. Wild Rides only.
d. RollercoasterRepair only.
Jin, Karlo, and other consumers form Metro Purchasing Cooperative. This form of
business organization makes it possible for these individuals to
a. avoid personal liability for the acts of the cooperative.
b. obtain an exemption from state laws governing corporations.
c. pay no taxes on their business income.
d. pool their resources to gain an advantage in the market.
Even-Flo Hydraulics enters into a contract to repair valves and fittings in Fiesta
Company’s plant. If Even-Flo breaches the contract, Fiesta can
a. do nothing but make a deal with .a different service provider.
b. do nothing but temporarily suspend operations and wait.
c. file a criminal complaint against Even-Flo.
d. sue Even-Flo for damages.
Catalina promises high returns to Darby and other investors, who then agree to trust
their funds to Catalina. She uses these funds to pay previous investors. This is
a. a Ponzi scheme.
b. a stock option.
c. an accredited investor.
d. a tombstone ad.
Bruno is a businessperson with investments in legal and illegal operations. Bruno may
be subject to penalties under RICO
a. for making an unprofitable, but legal, investment.
b. for the commission of any business fraud.
c. only in a case involving a “racket.”
d. only in a case involving organized crime.
George has a badly infected right foot. Herb, George’s physician, prescribes amputation.
George agrees. During the operation, Herb amputates the left foot. In George’s suit
against Herb, George’s best theory for recovery is
a. assumption of risk.
b. negligence per se.
c. res ipsa loquitur.
d. strict liability.
Henry promises not to open his restaurant before 10:00 a.m. if Suzy, who owns a
bakery next door to him, promises to close her bakery by 4:00 p.m. Henry’s
consideration is
a. the destruction of a legal relationship.
b. the creation of a legal relationship.
c. a forbearance.
d. an exchange of money.
Secure Courier, Inc., has a requirements contract with Petro Distribution Corporation
that obligates Petro to supply Secure with all the gasoline it needs for its delivery
vehicles for one year at $2.30 per gallon. A clause inserted in small print in the contract
by Secure, and not noticed by Petro, states, “The buyer reserves the right to reject any
shipment for any reason without liability.” For six months, Secure orders and Petro
delivers under the contract without any controversy. Then, because of a war in the
Middle East, the price of gasoline to Petro increases substantially. Petro tells Secure it
cannot possibly fulfill their contract unless Secure agrees to pay $2.50 per gallon.
Secure, in need of the gasoline, agrees in writing to modify the contract. Later that
month, Secure learns it can buy gasoline at $2.40 per gallon from Refined Oil
Company. Secure refuses delivery of its most recent order from Petro, claiming, first
that the contract allows it to do so without liability, and second, that it is required to pay
only $2.30 per gallon if it accepts the delivery. Discuss Secure’s contentions.
A firm offer by a merchant may be oral.
In an assignment, the assignee obtains only those rights that the assignor had.
Under the perfect tender rule, if tender is not perfect, the seller is obligated to try again.
A business firm may have to comply with the laws of any jurisdiction in which it
actively targets customers.
In raising capital, a sole proprietor is limited to his or her personal fundsa loan is not
possible.
A mechanic’s lien is possessory.
Criminal law spells out the duties that exist between persons or between citizens and
their governments.
Dumping is the sale of imported goods at “less than fair value.”
If the goods are so nonconforming that the buyer has the right to reject them, the risk of
loss does not pass to the buyer.
Absolute mandates such as the commandment “Thou shalt not steal” can be justifiably
broken if there is a benevolent motive.
A franchisee normally does not pay a fee for a franchise license until after the first year
of using it.
An oral stop payment order is valid for fourteen days.
An installment contract is a single contract that requires or authorizes delivery in two or
more separate lots to be paid for in one payment.
The initial interest rate is the part of a purchase price that is paid up front in cash.
Only personal contracts can be discharged by agreement of the parties.
Manufacturers are required to report on any products intended for sale if the products
have proved to be hazardous.
All adsboth online and offlinemust be truthful.