Denise, Ervin, and Flem occupy the positions of directors on the board of Gallery
Corporation. As directors, they may not
a. authorize major corporate policy decisions.
b. decide to issue stock and bonds, and declare dividends.
c. select and remove corporate officers.
d. support businesses that directly compete with Gallery.
Lively Toys Store and Movin” Products Company (MPC) enter into an e-contract under
which MPC agrees to ship a case of electronic, remote-controlled bugs to Lively Toys,
which agrees to pay on delivery. The Uniform Electronics Transactions Act (UETA)
a. denies the enforcement of such contracts.
b. does not apply to such contracts.
c. preempts all other laws with respect to such contracts.
d. supports the enforcement of such contracts.
Java Corporation wants to purchase all of the assets of Kaffeen Corporation. Loni is a
Kaffeen shareholder. The approval of Loni and other Kaffeen shareholders is necessary
a. in all circumstances.
b. in no circumstances.
c. only if Kaffeen will be paid with unauthorized, unissued stock.
d. only if Java assumes Kaffeen’s liabilities as part of the deal.
Perfect Fit Furnishings, Inc., agrees to lease a desk to Research Resources, Inc. (RRI),
which requests that the desk be left outside Streetside Warehouse for RRI to pick up.
Before RRI retrieves the desk, it is stolen. The loss is suffered by
a. Perfect Fit and RRI, but not Streetside Warehouse.
b. Perfect Fit only.
c. Perfect Fit, RRI, and Streetside Warehouse.
d. RRI only.
The United States taxes each barrel of imported oil at a flat rate. This is
a. an antidumping duty.
b. a dumping duty.
c. a quota.
d. a tariff.
Grace applies for a homeowners’ insurance policy on her house with Heroic Insurance
Company through Ian, a broker. In this transaction, Ian is
a. an agent for both parties.
b. Grace’s agent, and not Heroic’s agent.
c. Heroic’s agent, and not Grace’s agent.
d. not an agent.
Gina induces Hugh to enter into a contract for the purchase of a condominium about
which Gina knowingly misrepresents a number of material features. When Hugh
discovers the truth, he can
a. not rescind the contract.
b. rescind the contract on the basis of fraud.
c. rescind the contract on the basis of mistake.
d. rescind the contract on the basis of undue influence.
Pat, the manager of Quik Mart, deposits the store’s receipts in its account at Regional
Bank. As to the receipts, the relationship between Quik Mart and the bank is
a. attorney and client.
b. creditor and debtor.
c. guardian and ward.
d. trustee and beneficiary.
Shelby offers to make digital copies of Relay Company’s business conference
videotapes, CDs, DVDs, and other media for $500. Under the mailbox rule and the
Uniform Electronic Transactions Act (UETA), Relay’s acceptance by e-mail will be
considered effective when
a. received.
b. sent.
c. followed up by a confirmation letter sent by regular mail.
d. composed on a Relay computer.
On Monday, Eve deposits in her account at Fiscal Bank a local check for $500. After
5:00 p.m. on Friday, from these funds, Eve can withdraw no more than
a. $100.
b. $400.
c. $500.
d. $600.
Based on Bluto’s conduct, Cass reasonably believes that Dee has the authority to act on
Bluto’s behalf even though Dee does not have the actual authority to do so. Cass makes
a payment to Dee for Bluto. Dee keeps the money and disappears. Bluto
a. can demand that Cass make a repayment directly to Bluto.
b. can obtain damages from Cass for Dee’s misconduct.
c. may be estopped from denying that Dee had authority.
d. must repudiate Dee’s misconduct to avoid liability.
Clarice pays Damien $10,000 to design an ad campaign for her Sweetwater Coffee
Stand chain. The next day, Damien tells Clarice that he has accepted a job in New York
and cannot design her campaign. She files a suit against Damien. As compensatory
damages, she can recover
a. $100,000.
b. $10,000.
c. $1,000.
d. $0.
Rick manages an illegal gambling operation in his Sushi Bar & Grill. Rick reports the
profits of the gambling operation as income from Sushi’s legitimate activities on its tax
returns. This is
a. embezzlement.
b. larceny.
c. money laundering.
d. no crime.
Equipt Rental Corporation and Family Custodial Service, Inc., are parties to an oral
agreement for a lease of goods with payments in excess of $10,000. They may satisfy
the Statute of Frauds by
a. mutually agreeing not to commit fraud.
b. restating the terms in a phone call.
c. setting out the terms in an e-mail.
d. shaking hands on the deal.
Patsy possesses twenty-four acres of remote, rugged land. Patsy has the right to use the
property, including extracting silver from an existing mine, for life. Patsy also has the
right to lease the land for a period not to exceed her life. Patsy’s ownership interest is
a. a fee simple absolute.
b. a leasehold estate.
c. a life estate.
d. the power of eminent domain.
Like the bylaws of other corporations, the bylaws of Retail Sales, Inc.,
a. establish the operating name of the corporation.
b. establish the value and classes of corporate stock.
c. were adopted at its first organizational meeting.
d. were submitted for approval to the public official in charge.
Olivia contracts for the sale of this year’s strawberry crop to Phoenix, with payment to
go to Rural Cooperative Association. The contract reserves to Olivia and Phoenix the
right to modify its terms. Rural Cooperative’s right to payment is
a. not affected by the reservation.
b. subject to any change that Olivia and Phoenix make.
c. limited only if Rural Cooperative agrees to any changes.
d. terminated by the reservation.
Midwest Agri-Products Corporation offers to sell its sugar substitute to Nice Candies,
Inc., only if Nice Candies agrees to buy all the corn it needs from Midwest
Agri-Products, even though there are other corn sellers from whom Nice Candies could
buy. This is
a. an exclusive-dealing contract.
b. a tying arrangement.
c. price discrimination.
d. a group boycott.
Bret enters into a contract with Collegiate University over the Internet to take an online
course titled “Internet Law.” This is an e-contract because
a. the contract was entered into over the Internet.
b. the contract was formed between a student and a university.
c. the contract will be performed online.
d. the subject matter of the contract is “Internet Law.”
Fact Pattern 17-1
Bayside Construction Company enters into a contract with Clio to remodel Dewey’s
Home Store, using products from Eagle Building Supplies. Fresh Food Café is next to
Dewey’s Home Store. The remodeling is a gift from Clio to Dewey, Clio’s nephew and
the owner of Dewey’s Home Store.
Refer to Fact Pattern 17-1. Dewey is
a. a delegatee.
b. an assignee.
c. an incidental beneficiary.
d. an intended beneficiary.
Fern contracts to buy a franchise from Green Grocery Company. The contract is silent
on the issue of territorial rights. Green allows a competing franchise to be established
near Fern’s store, which suffers a significant loss in profits. This is most likely a
violation of
a. no law.
b. the ban on certain types of anticompetitive agreements.
c. the Federal Trade Commission’s Franchise Rule.
d. the implied covenant of good faith and fair dealing.
Nano Games Corporation’s creditors agree to a workout with the firm. This is
a. an agreement to pay a debt dischargeable in bankruptcy.
b. an accountant’s summary of a debtor’s financial situation.
c. a privately negotiated adjustment of creditor-debtor relations.
d. a reorganization of corporate debts and debtors.
Teona files a voluntary petition in bankruptcy for relief through a liquidation. Debts that
will not be discharged include claims for
a. domestic-support obligations.
b. money to be paid for goods not delivered.
c. contributions to employee benefit plans.
d. long overdue credit-card debt.
Phaedra and Raul contract with Sheldon to transfer the ownership of their lake cottage
to him. This is
a. a delegation.
b. an assignment.
c. a third party beneficiary contract.
d. an alienation.
Halley, a lawyer on the staff of International Group, applies the utilitarian theory of
ethics in business contexts. Utilitarianism focuses on
a. moral values.
b. religious beliefs.
c. the consequences of an action.
d. the nature of an action.
The Social Security Administration hires Thorough Paving, Inc., to repave a parking lot.
For this action, an environmental impact statement is most likely
a. prohibited because the action does not affect the environment.
b. required because the action is “federal.”
c. unnecessary because the action is not “major.”
d. voluntary because the action does not affect the environment.
Fact Pattern 15-4
Evelyn, who owns and operates Eve’s Farm & Garden Company, agrees to sell Hill &
Dale Produce, Inc., fifty bushels of apples.
Refer to Fact Pattern 15-4. Through no fault of Eve’s Farm & Garden, a fire destroys
the apples before they are delivered. The contract with Hill & Dale is
a. breached.
b. discharged.
c. not affected.
d. suspended.
Greta is the only female employee in the maintenance department of Hydraulics Inc.
Greta’s supervisor and co-workers tease and play tricks on her so relentlessly that she
feels compelled to quit. This is
a. a constructive discharge on the basis of gender discrimination.
b. a harassing discharge on the basis of treatment discrimination.
c. a voluntary discharge on the basis of impact discrimination.
d. not a discharge or discrimination.
Braxton questions whether there is consideration for his contract with Tawny to
exchange his accounting services for her payment of a certain amount. To constitute
consideration, there must be
a. a payment of money.
b. a performance of services.
c. a bargained-for exchange.
d. detrimental reliance.
BBQ, Inc., makes and sells grills to Grill Mart, a retailer, which sells one of the grills to
Hope, a consumer. BBQ and Grill Mart include in their contracts a limitation on
consequential damages for personal injuries arising from a breach of warranty. This is
prima facie unconscionable with respect to
a. all of these parties.
b. BBQ and Grill Mart, but not Hope.
c. Hope only.
d. none of these parties.
Denise and Elke do business as Final Curtain Decorators. In most states, for purposes of
holding title to property, this partnership would be treated as
a. an aggregate of the individual partners.
b. a natural person.
c. an entity.
d. a non-existent party.
Angie buys a lamp from Brite Lites Store, which agrees to keep it for Angie until she
picks it up. Before Angie gets the lamp, a fire destroys the store and the lamp. The loss
is suffered by
a. Angie and Brite Lites.
b. Angie only.
c. Brite Lites only.
d. neither Angie nor Brite Lites
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.
Service Employees International Union would like Tasty Cafés, Inc., to require union
membership of its job applicants as a condition to obtaining employment. This is
a. illegal in all states.
b. illegal only in states that have right-to-work laws.
c. legal in all states.
d. legal only in states that have right-to-work laws.
Eppie gives a check to Fund Investments to buy 100 shares of stock in GR8 Tech
Corporation for Eppie. The price of the shares is constantly fluctuating. Fund
Investments asks Eppie to leave the amount of the check blank and allow it to fill in the
price when making the purchase. Eppie agrees. Fund Investments buys the stock when
the price is $4,000, but fills in the check for $5,000. The check is negotiated as payment
for a $5,000 debt to Hasty Accounting Services, which takes the check in good faith and
without notice of Fund Investments’s act. Hasty later learns that Fund Investments was
not authorized to fill in the check for $1,000 over the price. Is Hasty an HDC? If so, for
how much?
Employer who willfully violates safety regulations can be prosecuted under state
criminal laws.
A party seeking to recover in quasi contract must show that he or she acted without
reasonably expecting to be paid.
“Piercing the corporate veil” means revealing to shareholders the internal rules of
corporate management.
In sales law, a warranty is an assurance by one party of the existence of a fact on which
the other party can rely.
A license permits the use of intellectual property for certain limited purposes.
One requirement for a product liability suit based on strict liability is a failure to
exercise reasonable care.
The management of Sport Shoes Corporation, a U.S. firm, wants to expand into foreign
investment and employment markets. They are considering either opening their own
production facility in a foreign country or entering into a licensing agreement with a
foreign firm. What are the advantages and disadvantages of each of these courses of
action?
The owners of an incorporated cooperative are personally liable for its obligations.
Merchants must issue a refund within a specified period of time when a consumer
cancels an order.
Norwest Trucking Corporation files a suit in a state court against Bob’s Service
Company (BSC), and wins. BSC appeals the court’s decision, asserting that the
evidence presented at trial to support Norwest’s claim was so scanty that no reasonable
jury could have found for the plaintiff. Therefore, argues BSC, the appellate court
should reverse the trial court’s decision. Is the appellate court likely to reverse the trial
court’s findings with respect to the facts? If not, why not? What are an appellate court’s
options after reviewing a case?
If a contract for a sale of goods does not include a quantity term, it is a requirements
contract.
Under the doctrine of strict liability, liability is imposed strictly according to fault.
Dumping is the exporting of environmentally polluting goods to a foreign market.
To be enforceable, a writing evidencing an oral contract that would otherwise be
unenforceable must be signed by the party who seeks to enforce it.
A state constitution may resolve a conflict among documents involving a corporation.
If a debtor’s income is below the median income, there is a presumption of bankruptcy
abuse.
An accountant’s working papers are the documents that are used and developed during
an audit.