Deleon trespasses on Capital Corporations property. Through the use of reasonable
force, Capitals security guard Brenda detains Deleon until the police arrive. Capital is
most likely liable for
a. abuse of process.
b. false imprisonment.
c. trespass to personal dignity.
d. none of the choices.
Property Financial Corporation makes loans that qualify, under a Federal Reserve
Board amendment to Regulation Z, as Higher-Priced Mortgage Loans (HPMLs). Quinn
applies to Property Financial for an HPML. To make the loan, the lender must
a. convince an appraiser to inflate the value of the property.
b. impose a prepayment penalty for the duration of the loan.
c. structure the loan to specifically evade the HPML protections.
d. verify the borrowers ability to repay the loan.
Quinn is a state court judge. In the case of Royal Banners, Inc. v. Superior Flags Co.,
Quinn establishes a logical relationship by comparing the facts in the case to the facts in
other cases and, to the extent the facts are similar, applies the same rule. This is
a. deductive reasoning.
b. faulty reasoning.
c. linear reasoning.
d. reasoning by analogy.
Ruff Games, Inc., wishes to acquire a controlling interest in Sport Toy Company by
buying its stock. A public offer by Ruff Games to Sport Toy shareholders is
a. a buyout notice.
b. a golden parachute.
c. an acquisition call.
d. a tender offer.
Fact Pattern 21-B1
First State Bank issues a letter of credit in favor of Oboe Company, an American firm,
to facilitate an international sales contract to buy resources from Lapland Mining, Ltd.,
a Finnish company.
Refer to Fact Pattern 21-1. First State Bank is bound to
a. make sure that the parties perform the contract.
b. verify with Oboe that the transaction has been completed.
c. make payment when Lapland presents the proper documents.
d. pay Lapland whenever it asks to be paid.
Caleb is driving a car in which Dona is a passenger when an accident occurs. Caleb and
Dona are emotionally rattled, but neither is physically hurt. Caleb is not liable to Dona
on a negligence theory because
a. both parties were emotionally rattled.
b. Caleb did not apparently intend to cause an accident.
c. Dona must have been comparatively negligent.
d. Dona was not injured.
Chelsea, an agent for Bountiful Seafood, Inc., has often done business with Alvins
Dockside Diner on Bountifuls behalf. When Chelsea and Bountiful terminate their
agency, to avoid liability for later deals, Alvins must be notified by
a. Chelsea and Bountiful.
b. Chelsea only.
c. Bountiful only.
d. no one.
Location! Realty LLC is a limited liability company (LLC). Like other LLCs, for
federal jurisdictional purposes, Location! Realty is most likely a citizen of
a. all states.
b. every state in which its members are citizens.
c. no state.
d. only the state in which it was formed.
Delilah files a petition in bankruptcy. The proceeding is governed by the Bankruptcy
Code, which is part of
a. state law.
b. federal law.
c. the U.S. Constitution.
d. international law.
The Internal Revenue Service (IRS) wants to seize certain documents of Mortgage
Bank, Inc. Deciding whether it is permissible for the IRS to request or seize the
documents depends on whether the documents are
a. incriminating.
b. relevant.
c. technical.
d. valuable.
Helen owns heavy construction equipment and the tools to service it, as well as office
furniture, including computers. Ilya owns a number of patents, trademarks that identify
the products made under those patents, and stock in the company that sells those
products. Personal property includes the items owned by
a. Helen and Ilya.
b. Helen only.
c. Ilya only.
d. neither Helen nor Ilya.
Rita borrows $30,000 from South State Credit Union. South State accepts Ritas equity
in her home as collateral, which can be seized if the loan is not repaid on time. This is
a. a home equity loan.
b. a hybrid mortgage.
c. a reverse mortgage.
d. a violation of the law.
Lulu joins with other creditors to force McCoy, a debtor, into bankruptcy. One of the
goals of bankruptcy law with respect to creditors is to
a. ensure that creditors will continue to lend to insolvent debtors.
b. protect creditor assets from diminution in value.
c. provide a fair means of distributing a debtors assets.
d. make all debtor property available for creditors.
Flo-Thru Plumbing 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.
Jen makes a gift of a check to Kilroy who takes it in good faith and without notice of
any claim, defense, or defect. With respect to this check, Kilroy is
a. an extraordinary holder in due course.
b. an ordinary check passer.
c. an ordinary holder.
d. an ordinary holder in due course.
Luna leases a commercial building to operate Moms Diner. During the term of the
lease, Luna installs a new roof and a walk-in cooler, and repaves the parking lot. Most
likely to meet the definition of a trade fixture is
a. the cooler.
b. the parking lot.
c. the roof.
d. none of these choices.
Hi-Tech Company contracts to sell fiber optic cable to Internet Services, Inc. Hi-Tech
may bring an action to recover the purchase price and incidental damages if Internet
a. accepts the cable and pays for it.
b. accepts the cable but does not pay for it.
c. rejects the cable.
d. revokes acceptance of the cable.
Faith and Gordon are accountants who work together. Faith and Gordon can limit their
potential liability for each others misconduct by organizing their business as
a. a foreign corporation.
b. a non-professional corporation.
c. an unincorporated corporation.
d. a professional corporation.
Ernie contracts to buy securities from Freda. Later, believing that Freda committed
fraud in the deal, Ernie files a suit against her. If Freda is found liable, Ernie may obtain
a. an apology only.
b. damages to the extent of Fredas illegal profits only.
c. damages to the extent of Fredas illegal profits or rescission of Ernies contract to buy
securities from Freda.
d. rescission of Ernies contract to buy securities from Freda only.
Dita takes out a student loan from Everloan Bank. When she fails to make the
scheduled payments for six months, Everloan advises her of further action that it will
take. This violates
a. no federal law.
b. the Fair and Accurate Credit Transactions Act.
c. the Fair Debt Collection Practices Act.
d. the Truth-in-Lending Act.
Chocolate Gourmet Company obtains an insurance policy to protect against losses
incurred by the firm as a result of being held liable for personal injuries or property
damage sustained by others. This is
a. casualty insurance.
b. fire insurance.
c. life insurance.
d. title insurance.
Consumers Credit Company is a creditor beneficiary in a deal that involves Devon and
Elena. Consumers Credit, like most creditor beneficiaries, is
a. a donee beneficiary.
b. an incidental beneficiary.
c. an intended beneficiary.
d. one of the original contracting parties.
Fact Pattern 3-B1
Orin and Pia engage in a business transaction from which a dispute arises. Orin initiates
a lawsuit against Pia by filing a complaint.
Refer to Fact Pattern 3-1. If Pia files a motion to dismiss, she is asserting that
a. Orin did not state a claim for which relief can be granted.
b. Orins statement of the facts is not true.
c. Orins statement of the law is not true.
d. Pia suffered greater harm than Orin.
Brad borrows $20,000 from City Bank to repair his home and to buy a car. Brad buys a
stereo from Discount Store in a transaction financed by the seller. If these parties are
subject to the Truth-in-Lending Act, Regulation Z applies to
a. the car loan only.
b. the home repair loan only.
c. the retail installment sale only.
d. the car loan, the home repair loan, and the retail installment sale.
Truckers Storage Depot, a private company, wants to build a warehouse on private land.
For this action, an environmental impact statement is
a. prohibited.
b. required.
c. unnecessary.
d. voluntary.
Ogilvie, a director of Pitstop Service Station Corporation, does not attend a board meet-
ing for three years. During that time, Noreen, Pitstops president, makes improper loans
that cost the company $100,000. Ogilvie is most likely
a. liable for negligence or mismanagement.
b. liable for violation of the business judgment rule.
c. not liable because missing meetings is an honest mistake.
d. not liable because missing meetings is only poor judgment.
Mena applies for a homeowners insurance policy on her house with Neighbors
Insurance Company through Obie, an agent who works for Neighbors. In this
transaction, Obie is
a. an agent for both parties.
b. Menas agent, and not Neighborss agent.
c. Neighborss agent, and not Menas agent.
d. not an agent.
Sustainable Café LLC is a limited liability company. Like any other LLC, unless
Sustainable Café chooses otherwise, the firm will be taxed as
a. a corporation.
b. a joint venture.
c. a partnership.
d. a cooperative.
Cliff dies without a will. His survivors include his spouse Dana and his two children,
Efrem and Fay. Under applicable laws, of Cliffs estate, Dana will probably receive
a. everything.
b. nothing.
c. one-half.
d. one-third.
Gigi, a twenty-year-old, wants to execute a will before she undertakes a moun-
tain-climbing trip on a peak in the Himalaya Mountains. In most states, the legal age for
executing a will is
a. sixteen years of age.
b. eighteen years of age.
c. twenty-one years of age.
d. twenty-five years of age.
Rashad accesses Quant Companys computer system without authority to obtain
protected financial data. Under federal law, this is
a. a felony if it is committed for a commercial purpose.
b. a felony if Quant brings a civil suit against Rashad.
c. not a crime.
d. a crime, but not a felony.
Metro City operates its own municipal public drinking water system for which the
Environmental Protection Agency has set maximum levels of pollutants. Metro does not
use any equipment to meet these standards. With regard to any contamination of the
water, under the Safe Drinking Water Act, this is most likely
a. a violation.
b. not a violation because Metro does not set the standards.
c. not a violation because water is not a stationary source.
d. not a violation because Metro does not use any equipment.
Skyler dies after having made a valid will. Skyler has died
a. in escheat.
b. in probate.
c. intestate.
d. testate.
Treadwell Tire Manufacturing Company employs Suri as an agent. To terminate Suris
authority, Treadwell must notify
a. only third parties who are aware of the agency relationship.
b. the public generally.
c. Suri and any third parties who are aware of the agency relationship.
d. Suri only.
Some risks are obvious but, with respect to the duty of care required to establish
negligence, a warning is always necessary.
A consignment is treated as a sale or return and governed by Article 2.
The First Amendment does not protect corporate political speech.
The distinctions between a surety and a guarantor are recognized in all states.
The first bank to receive a check for payment is the intermediary bank.
A corporation whose shares are not publicly traded is a partnership.
How judges apply the law to specific disputes may depend in part on their personal
philosophical views.
A loss that results from a well-crafted forgery usually falls on the party whose signature
was forged.
There is at least one circumstance in which a person cannot refuse to testify.
Under the theory of negligence, the duty of care requires an intentional act.
Under the UCC, an offeree can accept an offer to buy goods by a prompt promise to
ship the goods.
A partner always has the power and the right to dissociate from the partnership.
A corporate takeover is the process of acquiring control over a corporation by the
purchase of a substantial number of the voting shares of its stock.
Shareholders must approve fundamental changes affecting the corporation before the
changes can be implemented.
A consignment is similar to a sale or return but normally results in a bailment rather
than a sale.
In a limited partnership, a general partner has full responsibility for the partnership and
for all its debts.
Quicksilver Delivery Service contracts to deliver Petes Pizza Parlors products to its
customers for $5,000, payable in advance. Petes pays the money, but Quicksilver fails
to perform. Can Petes rescind the contract? Can Petes also obtain restitution? What does
it mean to “rescind a contract? How is a contract rescinded? What is restitution? How is
restitution accomplished? Explain.
When rights under a contract are assigned unconditionally, the rights of the assignor are
extinguished.
To be enforceable as a contract, a writing must have been signed by the party who seeks
to enforce it.