Hals Hardware store defaults on a debt to Intrastate Bank, which takes possession of the
collateral securing the debt. Intrastate sells the collat-eral. The proceeds from the sale
are applied first to
a. Hals debt to Intrastate.
b. Hals debts to other creditors.
c. Intrastates fees for the sale.
d. payments Hals made on the debt to Intrastate.
Moby leases from National Theater Corporation a theater in which to stage a series of
concerts. Ollie buys a ticket to the series. What distin-guishes Moby, a tenant, from
Ollie, a licensee, is
a. the exclusivity of possession.
b. the quiet enjoyment of rights
c. the temporary nature of possession.
d. the title to the property.
Under the doctrine of respondeat superior, an agent is liable for the principals
negligence.
a. True
b. False
Big Screen Video Corporation sells high-definition television sets. Under most
cir-cum-stances, Big Screen Video will be presumed to have warranted that its title to
the TVs is
a. the same as each brands name.
b. none of the choicesa warranty of title is not presumed.
c. good and valid.
d. the best that money can buy.
The First Amendment protects corporate political speech.
a. True
b. False
Yellowbox, a DVD rental company, would like to change its corporate status to that of
an S corporation to avoid in-come taxes at the corporate level. To qualify, Yellowbox
must
a. be located in the United States.
b. have more than one hundred shareholders.
c. be a non-profit corporation.
d. have more than one class of stock.
Dyan executes her will to give “to my nephew Esau my stock in Fargo, Inc. Later, Dyan
writes separately, with the same formalities required for a will, to leave the stock to her
niece Ginny and cash to Esau. This writing
a. does not affect the wills gift of the stock to Esau.
b. requires a gift of the stock in equal shares to Esau and Ginny.
c. revokes the whole will, which must be redrafted.
d. revokes the wills gift of the stock to Esau.
Some states provide that in the absence of an agreement to the contrary each member of
a limited liability company has one vote.
a. True
b. False
Farm2Fork, LLC, is a limited liability company. Rather than dis-tribute its profits to its
members, Energy wants to reinvest the profits in its business. For this reason, Energy
may prefer to be taxed as
a. a corporation.
b. a partnership.
c. a sole proprietorship.
d. none of the choices.
Hobby Farms, Inc., owns rural property that it leases to various tenants, including Ira.
Iras 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.
Windstar Heli-Pads, Inc., enters into a contract to employ Valerie as an on-site project
manager for two years. Windstar breaches the contract. Valerie has a duty to
a. do nothing.
b. reduce the damages that Valerie might otherwise suffer.
c. breach the contract with Windstar.
d. sue Windstar to deter others from similar acts.
A principal owes an agent a duty of compensation.
a. True
b. False
Olaf is the creditor in a transaction with Phil. Once certain require-ments are met, Olafs
rights will attach, which means that Olaf will have
a. indivisible ownership right to Phils property.
b. an enforceable security interest in Phils property.
c. a notice affixed to Phils property.
d. the permission of a court to seize Phils property.
A beverage company that competes with Coca-Cola Company cannot call its products
“Koke.
a. True
b. False
Fresh Cream, Inc., wants to make an initial public offering of securi-ties. Fresh believes
that it qualifies for an exemption under Regulation A from the full registration
requirement of the federal Securities Act of 1933.Refer to Fact Pattern 26-1. If Fresh is
exempt from the federal registration requirement, Fresh is
a. automatically exempt from any state registration requirement.
b. not subject to any state securities laws
c. not necessarily exempt under a state registration requirement.
d. automatically subject to all state registration requirements.
When a landlord sells leased premises to a third party, any existing leases terminate
automatically.
a. True
b. False
Under the “danger invites rescue doctrine, a person who tries to rescue another
individual from harm is liable for any injuries to that individual.
a. True
b. False
Will owes Jenny $1,000. Brad owes Will $1,000. Will unconditionally assigns his rights
to Jenny. Wills right to the $1,000 is then
a. unchanged.
b. extinguished.
c. extinguished.
d. assigned to a court.
A nuncupative will is a will that is completely in the handwriting of the testator.
a. True
b. False
Each partner in a partnership has the right to full and complete information concerning
the conduct of all aspects of partnership business.
a. True
b. False
In most states, the seller of a new house warrants that it is fit for habitation.
a. True
b. False
Rollo promises to perform, for a price, shoe repair services in affiliation with Togs n
Things, a clothing store. To support a contract, the consid-eration ex-changed by the
parties must be
a. adequately considerate.
b. equally valuable.
c. legally sufficient.
d. wisely priced.
The first security interest to be perfected is the last in priority over any other perfected
security interests.
a. True
b. False
Elias repays his debt, incurred to buy consumer goods, to Fidelity Bank and
immediately files a written request for a termination state-ment. Fidelity
a. must comply within one month of receipt of the letter.
b. must comply within twenty days of receipt of the letter.
c. must refund $500 to Elias.
d. need not comply.
Carol enters into a contract to hire Joanne to paint a portrait of Carols favorite cat.
Joanne agrees to do the portrait to Carols satisfaction for $100. When Joanne finishes
the portrait, Carol announces that she is not satisfied with the portrait because it does
not look like her cat. Carol
a. must accept the portrait and pay Joanne $100.
b. must accept the portrait and pay Joanne $50.
c. must accept the portrait and pay Joanne $25.
d. does not have to accept the portrait or pay Joanne any money.
Debit & Credit Accounting Services and Brickwork Construction Company negotiate a
con-tract. Terms in the contract that are the subject of separate negotiation will be
con-sidered subordinate to
a. standardized terms.
b. terms that can be understood only by lawyers and judges.
c. terms that are not negotiated separately.
d. none of the choices.
Bean Vendors, Inc., and Java Bistros Corporation dispute a term in their contract.Refer
to Fact Pattern 2-1. The least expensive method of resolving the dis-pute between Bean
and Java may be
a. arbitration because the case will be heard by a mini-jury.
b. litigation because each party will pay its own legal fees.
c. mediation because the dispute will be resolved by a non-expert.
d. negotiation because no third parties are needed.
A certified check is a check that has been signed by a notary public.
a. True
b. False
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. tocreate an ethical code of conduct.
b. todischarge employees who create the appearance of impropriety.
c. to post a marketing campaign online touting the firms ethical tone.
d. for management to direct employees to “do as we say, not as we do.
Mary Kate Corporation allows Ashley Company to use Mary Kates trademark as part of
Ashleys domain name. This is
a. a license.
b. a likelihood of consumer confusion.
c. counterfeiting.
d. trademark dilution.
Jolie signs a contract with Keaton, an unlicensed physician, to perform a medical
procedure. This contract is enforceable by
a. Jolie.
b. Jolies medical insurance company.
c. Keaton.
d. no one.
Judge Julia decides that the precedent for the case she is hearing is no longer correct
due to technological changes. She overturns the precedent when she decides the case. It
is most likely that her case will
a. go unnoticed by the public.
b. be thrown out of court.
c. receive a great deal of publicity.
d. be ignored by the media.
Daphne defaults on a debt to Country Loan Corporation (CLC). As a creditor, CLC can
place liens on all of Daphnes property except
a. motor vehicles used to commute to work.
b. stock in various corporations.
c. items that the debtor selects.
d. vacant commercial property.