Nick represents himself as a contractor in Ohio, but he is not licensed in that state. A
contract between Pat and Nick by which Nick agrees to build a warehouse for Pat in
Ohio is
a. enforceable only if Pat does not object after learning of Nick’s status.
b. enforceable only if Pat knows that Nick is unlicensed.
c. enforceable only if the outcome is successful.
d. not enforceable.
Rhett works at Scarlett’s Sandwich Café. After work, in the parking lot, Rhett finds a
diamond ring lost by Thalia. Title to the ring is possessed by
a. Rhett.
b. Scarlett’s.
c. Thalia.
d. the state.
Mica, a minor, signs a contract to pay National Fitness Club a monthly fee for
twenty-four months to use its facilities. Six months later, after reaching the age of
majority, Mica continues to use the club. This act is
a. disaffirmance.
b. emancipation.
c. ratification.
d. unconscionable.
The police obtain a search warrant and search Dave’s apartment. After yelling
obscenities at the officers, Dave confesses to a crime and implicates his friends. The
Constitution protects against
a. obscene speech only.
b. others’ implication only.
c. unreasonable searches only.
d. obscene speech, others’ implication, and unreasonable searches.
Otis is interested in buying a franchise from Plentiful Inc. This transaction, like other
franchise deals, is regulated to protect
a. certain types of anticompetitive agreements.
b. franchisors from dishonest prospective franchisees.
c. prospective franchisees from dishonest franchisors.
d. the government’s power to restrict freedom of contract.
Mason creates a trust to prevent his son, Newt, the beneficiary, from assigning his rights
to future payments of income from the trust. This is
a. a charitable trust.
b. a constructive trust.
c. a spendthrift trust.
d. an illegal trust.
The U.S. Citizenship and Immigration Service issues a rule. Like the rules of other
federal administrative agencies, this rule is compiled in
a. the Administrative Register of the Federal Government.
b. the Code of Federal Regulations.
c. the Federal Rules of Civil Procedure.
d. the United States Code.
Jen questions whether there is consideration for her contract with Isaac to exchange her
catering services for his payment of a certain amount. To constitute consideration, the
value of whatever is exchanged must be
a. objectively worthy.
b. grossly inadequate.
c. legally sufficient.
d. practically sound.
Thermal Appliances Corporation, a U.S. firm, orally agrees to sell six freezers to Pisa
Pizza, Ltd., in Italy. Thermal fails to deliver. Under the United Nations Convention on
Contracts for the International Sale of Goods (CISG), Pisa Pizza can
a. enforce the agreement.
b. not enforce the agreement because it is not in writing.
c. not enforce the agreement because the CISG does not apply.
d. not enforce the agreement because Thermal is a U.S. firm.
GR8 Fashion, Inc., complains to the Federal Trade Commission (FTC) about an ad
broadcast by Hott Clothes Company, GR8’s competitor. The FTC investigates and
concludes that the ad is deceptive. The FTC’s next step is to
a. conduct negotiations between the competitors.
b. draft a formal complaint.
c. issue a cease-and-desist order.
d. permit GR8 to broadcast similarly deceptive counteradvertising.
To prepare for a trial between Large Lots Development Corporation (LLDC) and
MiniMansion Construction Company (MMCC), MMCC’s attorney places LLDC’s
president under oath. A court reporter makes a record of the attorney’s questions and the
officer’s answers. This is
a. a cross-examination.
b. a deposition.
c. an imposition.
d. an interrogatory.
In a suit against Owen, Phil obtains specific performance. This is
a. an order to do or to refrain from doing a particular act.
b. an order to perform what was promised.
c. a payment of money or property as compensation.
d. the cancellation of a contract.
Niche Stores, Inc., must hold a shareholders’ meeting
a. once a month.
b. once a year.
c. once every two years.
d. only when it is called by the board of directors.
New Discoveries Corporation, and its officers, directors, and shareholders, buy and sell
securities. Section 10(b) of the Securities Exchange Act of 1934 applies to
a. only the purchase or sale of a security involving misappropriation.
b. only the purchase or sale of a security involving short-swing profits.
c. only the purchase or sale of a security involving a tipper and tippee.
d. the purchase or sale of any security.
Rita buys a Super Grill franchise. Super Grill requires that its franchisees buy its
products for every phase of their operations. Because Rita wishes to buy less expensive
products, she challenges the requirement. Her best argument is probably that the re-
quirement violates
a. the commerce clause.
b. the Equal Protection Clause.
c. the federal antitrust laws.
d. the First Amendment.
Standard Business Company appeals a decision against it, in favor of Top Flight
Corporation, from a lower court to a higher court. Standard is
a. the appellant.
b. the appellee.
c. the defendant.
d. the plaintiff.
Fact Pattern 25-1
Dina asks Edie to co-sign a credit application so that she can borrow money and buy a
truck from Finest Quality Motors.Refer to Fact Pattern 25-1. If Edie is a guarantor, then
the guaranty is required to be in writing because of
a. the debtor’s right of redemption.
b. the co-signer’s right of contribution.
c. the creditor’s transfer of possession.
d. the Statute of Frauds.
Longway Trucking, Inc., files a suit against Midge, an accountant, under the antifraud
provisions of the Securities Exchange Act of 1934 and Rule 10b-5 of the Securities and
Exchange Commission. To succeed in recovering damages, Longway must show that
Midge
a. acted with scienter.
b. bought or sold a security.
c. is incompetent.
d. knows nothing about securities.
To generate sales, Yakkity-Yak, Inc., uses phone solicitation. Under federal law and
Federal Trade Commission regulations, in soliciting business, Yakkity-Yak’s
telemarketers must
a. disclose all material facts related to a sale.
b. identify the seller’s name (only if asked).
c. refrain from calling consumers who have not requested a call.
d. speak clearly and conspicuously.
Dru tells his Excel Company coworkers that Fiona, Excel’s office manager, is stealing
from their employer. The statement is defamatory only if
a. a coworker believes it.
b. Fiona feels as if she were falsely imprisoned.
c. the statement is true.
d. the statement is false.
Machismo Motor Sales Corporation regularly advertises its off-the-road and all-terrain
vehicles and other products. Under the First Amendment, these ads and other
commercial speech are given
a. less protection than noncommercial speech.
b. more protection than symbolic speech.
c. no protection.
d. the same protection as defamatory speech.
Lynn files a suit against Karl. Karl denies Lynn’s charges and sets forth his own claim
that Lynn breached their contract and owes Karl money for the breach. This is
a. a counterclaim.
b. a crosclaim.
c. an affirmative defense.
d. an irrelevant response.
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.
Quentin, an accountant, prepares for Ruff n” Reddy Concrete Corporation a financial
statement that omits a material fact. The statement is included in Ruff n” Reddy’s
registration statement filed with the Securities and Exchange Commission. Timor, who
reads the statement, and Ubi, who does not, each buy Ruff n” Reddy stock. Under
Section 11 of the Securities Act of 1933, Quentin may be liable to
a. neither Timor nor Ubi.
b. Timor and Ubi.
c. Timor only.
d. Ubi only.
Fact Pattern 21-1
Bret, a representative of Concrete Products, Inc. assures Dependable Construction
Company (DCC) that Concrete’s cement will not crack within a certain range of
temperatures. DCC uses the product. When cracks develop within the stated
temperature range, DCC files a suit against Concrete.
Refer to Fact Pattern 21-1. Suppose that the court rules against Concrete. The
manufacturer might have avoided that result by
a. making its cement fit for its particular purpose.
b. making its cement merchantable for its intended use.
c. not allowing Bret to express an opinion.
d. not permitting Bret to make an express warranty.
Fresh Seasonal Fruit Company has assets of less than $10 million and fewer than fifty
shareholders. Gourmand Pastries, Inc., has assets of more than $50 million and more
than five hundred shareholders. The Securities Exchange Act of 1934 applies to
a. Fresh Seasonal Fruit and Gourmand Pastries.
b. Fresh Seasonal Fruit only.
c. Gourmand Pastries only.
d. neither Fresh Seasonal Fruit nor Gourmand Pastries.
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.
Elisa steals Filbert’s personal information from Filbert’s computer. This is computer
crime in which the computer is
a. the object of the crime.
b. the subject of the crime.
c. the instrument of the crime.
d. irrelevant to the crime.
Hubert mistakenly pays property taxes that should have been assessed against Jesse.
Hubert can recover the amount from Jesse in quasi contract
a. even if Jesse was not aware of the error.
b. only if Jesse tried to conceal the error.
c. only if Jesse was aware of the error.
d. under no circumstances.
Inferior Company sells products that are poorly made. Jack, who has never bought an
Inferior product, files a suit against the company, alleging that its products are
defective. The firm’s best ground for dismissal of the suit is that Jack does not have
a. certiorari.
b. jurisdiction.
c. standing.
d. sufficient minimum contacts.
Lem buys a used MP3 player for $50 and a new laptop for $1,500, and signs a one-year
employment contract for a $4,000 monthly salary to start at the beginning of the next
month. The Statute of Frauds covers
a. the employment contract, and the laptop and MP3 purchases.
b. the employment contract and the laptop purchase only.
c. the employment contract only.
d. the laptop and MP3 purchases only.
The U.S. Fish and Wildlife Service utilizes notice-and-comment rulemaking. This
involves a period during which
a. judges, legislators, and the president are asked about a proposed rule.
b. potential violators of a proposed rule are notified and publicized.
c. the administrators “notice” a problem and “comment” on it.
d. the public is asked to comment on a proposed rule.
Flo-Thru Corporation is poised to issue securities that, under the Securities Act of 1933,
are “exempt.” This means that the securities can be sold
a. on the basis of a material omission or misrepresentation.
b. on the basis of nonpublic information.
c. within any six-month period by certain insiders.
d. without being registered.
Nationwide Business Company and One-State Sales, Inc., agree to simultaneously
rescind their contract and enter into a new agreement under which their duties are the
same. Nationwide later sues One-State to enforce the new agreement. The court
a. may apply the preexisting rule or allow the rescission.
b. must allow the rescission.
c. must apply the preexisting duty rule.
d. must not apply the preexisting rule or allow the rescission.
Section 10(b) of the Securities Exchange Act of 1934 covers only corporate officers and
directors.
Performance standards for major sources of air pollution require the use of the any
available technology, or AAT.
An agency relationship cannot exist in the absence of a formal agreement.
Property voluntarily placed by its owner and inadvertently forgotten is mislaid property.
A check, like other negotiable instruments, is a formal contract.
Under the UCC, a sale occurs when title passes from a seller to a buyer for a price.
A principal is not liable for an agent’s fraud unless the agent has the apparent authority
to commit torts.
On the entry of an order for relief in a reorganization case, the creditors generally take
over the operation of the debtor’s business.
An accountant’s liability under the Section 10(b) and Rule 10b-5 of the Securities
Exchange Act of 1934 requires privity of contract.
If an agency decides that an environmental impact statement is unnecessary, it need not
issue a statement supporting this conclusion.
In a limited liability company, members do not have to participate in its management.
Parol evidence includes oral evidence that is outside a written contract and not incorpo-
rated into the contract expressly or by reference.
Congress cannot impose any restrictions on exports except taxes.
Don is an elderly man who lives with his nephew Evan. Don is dependent on Evan for
care. Evan advises Don to “invest” in Evan’s “professional gambling” venture. Evan
tells Don that he will no longer provide care unless Don makes this investment. Don
liquidates his other investments, signs a contract with Evan, and gives him the funds.
Can Don set aside this contract?
The First Amendment requires a complete separation of church and state.
The death of a limited partner dissolves a limited partnership.