Like the bylaws of other corporations, the bylaws of Farmland Equipment, 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.
Lew angrily accuses Meg, a broker with New Financial Services, of fraudulently
inducing him to invest in Open Pit Oil Company, whose wells are dry. The reliance that
gives rise to liability for fraud is normally based on a statement of
a. emotion.
b. fact.
c. opinion.
d. puffery.
The payment of Laines debt to Mingo is guaranteed by Laines personal property. The
process by which Mingo can protect himself against the claims of third parties to this
property is
a. attachment.
b. authentication.
c. perfection.
d. bankruptcy.
Musical Tones, Inc., sells fifty MP3 players to Noise Stores, Inc. To avoid liability for
most implied warranties, Musical should state in writing that the players are sold
a. as is.
b. by a merchant.
c. in perfect condition.
d. with no known defects.
Leo buys a Naturo-brand bicycle from his brother, Mike. Mike agrees to keep the bike
at his house until Leo picks it up. During a storm, a tree falls from Ogdens yard onto
Mikes garage and destroys the bike. The loss of the bike is suffered by
a. Leo.
b. Mike.
c. Naturo.
d. Ogden.
A merger between Grain Mills Corporation and Farm2Fork Distribution Inc. can be
expressed as Grain Mills + Farm2Fork =
a. Farm2Fork.
b. Harvest Dining Corporation.
c. Harvest Dining Corporation + EZ Brewing Company.
d. EZ Brewing Company.
Eva owns Fast-Rate Salvage, a demolition company. A demolition by a Fast-Rate crew
injures Glen, a passerby. Under the theory of strict liability, Eva must pay for Glens
injury
a. only if Glens injury was not reasonably foreseeable.
b only if Glens injury was reasonably foreseeable.
c. only if the Fast-Rate crew was at fault.
d. whether or not the Fast-Rate crew was at fault.
Melba and Leon are directors of Fresh Foods, Inc. The right of Melba and Leon to be
notified of special meetings of the board is the right to
a. compensation.
b. indemnification.
c. participation.
d. self-dealing.
To prepare for a trial between Large Lots Development Corporation (LLDC) and
MiniMansion Construction Company (MMCC), MMCCs attorney places LLDCs
president under oath. A court reporter makes a record of the attorneys questions and the
officers answers. This is
a. a cross-examination.
b. a deposition.
c. an imposition.
d. an interrogatory.
Lolly employs a variety of will substitutes to transfer her assets, which consist
principally of cash and investments in mutual funds, outside the probate process. In this
situation, the most important consideration is to
a. avoid the cost of probate.
b. ensure that the arrangements benefit the intended persons.
c. establish grounds for a courts review of the arrangements.
d. follow the same principles as apply to testamentary transfers.
To resolve a dispute, Amy in Boston and Chris in Denver utilize E-Solution, an online
dispute resolution (ODR) service. This limits these parties recourse to the courts
a. not at all.
b. until the ODR service has issued a decision.
c. with respect to any dispute arising between them.
d. with respect to this dispute only.
Rural Power Utility, Inc., enters into a contract with Shovel Excavation Service to dig
up, replace, and rebury Rurals cables in a certain location. Rural advances Shovel 10
percent of its cost. The parties rescind the contract. Shovels refund of the payment is
a. a penalty.
b. liquidated damages.
c. restitution.
d. a breach of contract.
Stu makes an offer to Tina to enter into a contract. Tina accepts the offer. A valid
contract requires
a. an offer only.
b. an acceptance only.
c. an offer and an acceptance.
d. neither an offer nor an acceptance.
Omar hires Petra, a real estate broker, to act as his agent to sell his land for $150,000.
Oil is discovered beneath the land, causing its market value to increase considerably.
The agency agreement is likely
a. still in force if Omar gives Petra additional consideration.
b. still in force if Petra does not tell prospective customers.
c. terminated by mutual consent of the parties.
d. terminated by operation of law.
Five Star Flooring orders carpet from Textile Mills Corporation, but Textile does not
deliver. Five Star will probably be unable to enforce the agreement if the parties omitted
a. the duration of the deal.
b. a payment term.
c. a quantity term.
d. shipping arrangements.
Jay is a surety for Katelyns loan from Lucre Bank. Jays right to be repaid by Katelyn
after having paid her debt is the right of
a. contribution.
b. redemption.
c. reimbursement.
d. subrogation.
Indelible Fabrics, Inc. (IFI), makes “Jeans Denim, a famous brand of clothing. Without
IFIs consent, Kopy Company (KC) begins to use “jeansdenim as part of a domain
name. IFI files a suit against KC and engages in service of process. Service of process
must provide
a. equality and fairness in adjudication.
b. notice and an opportunity to respond.
c. space to fill in important information and time in which to do it.
d. privacy between the litigants and publicity in the judgment.
Fact Pattern 29-1B
Calls Farm & Ranch Supply, Inc., uses its inventory as collateral for a loan from Deland
County Bank. The bank files a financing statement with the secretary of state in the
state in which Calls was chartered. One year later, Calls changes its name to Big Cs,
Inc.
Refer to Fact Pattern 29-1B. To continue the effectiveness of its perfected interest,
Deland County Bank must file
a. a continuation statement after the original filing expires.
b. an amendment to the financing statement before the period expires.
c. a new financing statement immediately.
d. a notice of repossession with all interested creditors.
Vieux Carré S.A., a French firm, imports its goods into the United States and offers
those goods for sale at “less than fair value. “Fair value is the price of Vieux Carrés
goods in
a. the Northern Hemisphere.
b. France.
c. the United States.
d. the world market.
A decision by the Environmental Protection Agency (EPA) on the amount of carbon
that can be emitted from a cars exhaust system conflicts with a California state law. In
this situation
a. both the decision and the law are invalid.
b. both the decision and the law apply concurrently.
c. Californias law takes precedence.
d. the EPAs decision takes precedence.
For Troys will to be valid, he must be mentally competent at the time of
a. death.
b. the acquisition of the property to be distributed under the will.
c. the making of the will.
d. the probate of the will.
Vasili is considering forms of business organization for Vasilis Designs, an architectural
firm. An advantage of a limited liability partnership is that partners may be able to
avoid personal liability for
a. any partnership obligation.
b. only other partners wrongdoing.
c. only partnership obligations that exceed capital contributions.
d. only partnership obligations that fall within capital contributions.
Sherman dies without a will, survived by his granddaughter Roxy and Roxys brother
Pio. Roxy and Pio are Shermans
a. collateral heirs.
b. settlors.
c. trustees.
d. lineal descendants.
Ivan signs Jebs name, without his authorization, to the back of a check. This is
a. no crime.
b. forgery.
c. larceny.
d. robbery.
Fact Pattern 50-1A
Nikita owns land in Ohio. Her ownership rights include the right to sell or give away
the property without restriction, and the right to commit waste, if she chooses.
Refer to Fact Pattern 50-1A. Nikitas ownership interest is
a. a fee simple absolute.
b. a leasehold estate.
c. a life estate.
d. an easement.
Thirty-one days before filing a petition in bankruptcy, Frida transfers property and
makes payments that favor one creditor over another. These are
a. affirmation agreements.
b. preferences.
c. secured interests.
d. unsecured debts.
Franz asks Gateway Mortgage Credit for a loan to pay for the purchase of a home. With
a poor credit score and a high current debt-to-income ratio, Franz does not qualify for a
standard mortgage. Gateway is most likely to provide
a. a deed in lieu of foreclosure.
b. a reverse mortgage.
c. a subprime mortgage.
d. a workout agreement.
Shila promises to pay Blaine $500 because “he does not have as much money as other
people. Shilas promise is
a. enforceable because society wants people to keep their promises.
b. enforceable because the redistribution of wealth is a valid social goal.
c. not enforceable because Shila could have given more.
d. not enforceable because Blaine has not given consideration in return.
Roni, a debtor, wants to confirm the amount of her outstanding secured debt with
Swifty Loan Corporation. Roni can ask Swifty to confirm her view of the debt, without
charge, every
a. month.
b. six months.
c. year.
d. five years.
Sports Line, Inc., and Trudy, a consumer, enter into a contract for a sale of a
snowmobile. If the contract includes a clause that is perceived as grossly unfair to
Trudy, its enforcement may be challenged under the doctrine of
a. good faith.
b. impracticability.
c. square dealing.
d. unconscionability.
Amble Country Stables contracts to buy 1,000 horseshoes from Burleigh Blacksmith,
Inc., for $1 per shoe. When the market price decreases to 50 cents per shoe, Amble
refuses to go through with the deal. Burleigh can recover
a. $1,500.
b. $1,000.
c. $500.
d. $0.
Sid rents an apartment from Town Homes, Inc. The lease, which ends on May 31, does
not include an option for renewal, and Sid and Town do not discuss whether Sid can
stay on at the end of the term. On June 1, Sid has
a. an implied option to renew the term.
b. a right to remain contingent on notice from Town.
c. a right to remain subject to notice to Town.
d. no right to remain.
Olin, a professional artist and art teacher, convinces Plato, who has no artistic ability,
that he has considerable talent and induces him to pay Olin $10,000 for art lessons.
When Plato realizes the truth, he files a suit against Olin. Plato is most likely to recover
on the basis of
a. fraud.
b. mistake.
c. undue influence.
d. none of the choices.
When a lessor refuses to deliver the goods, a lessee can obtain specific performance
only if the goods are not unique.
Downloading software or music into a computers random access memory without
authorization is copyright infringement.
A franchise is a contractual arrangement.
A broker is an agent of the insurance company.
When both parties to a contract are minors, neither of them may disaffirm the contract.
If a creditor obtains a judgment against a debtor and the debtor cannot or will not pay
the judgment, the dispute is at an end.
A seller must warn those who purchase its product of the harm that can result from the
foreseeable misuse of the product.
If a lessors tender of delivery fails to conform to a contract in any way, the lessee can
reject the goods.
The adequate protection doctrine protects secured creditors from losing their security as
a result of the automatic stay.
Standard-form contracts are available on the Internet, and they should be used “as is to
save time and money.
Subrogation refers to the right of a co-surety to recover from the other co-sureties the
amount paid above his or her proportionate share of a debt.
In no states are communications between an accountant and his or her client privileged.
For most purposes, a mortgage assignee of a high-cost or high-fee mortgage product
does not acquire the status of a holder in due course.
An accountant may be liable for a misstatement or omission of material fact in a
registration statement.
Bankruptcy proceedings are held in state courts.
Merchants must ship orders within the time promised in their ads.
A promissory note is a formal contract.