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Fact Pattern 14-A3
Flip, an accountant, certifies an audit for Erstwhile Corporation, Flips client, knowing
that Erstwhile will use the audit to obtain a loan from Deepwater Bank. Flip believes
that the audit is true and does not intend to deceive the bank, but does not check the
audit before certifying it.
On learning the truth, Deepwaters chief loan officer confronts Flip, who says, "I didnt
know. This is
a. a mistake of value.
b. innocent misrepresentation.
c. negligent misrepresentation.
d. unconscionable.
B2B, LLC, is a limited liability company. Among its members, a dispute arises that the
operating agreement does not cover. The dispute is governed by
a. the applicable state LLC statute.
b. the federal Uniform LLC Law.
c. the principles of partnership law.
d. the state corporation statute.
Fact Pattern 7-A1
Roy owns an apartment building that contains units of different sizes. The sidewalks
around the building are in poor repair. Many sections have buckled from the growth of
tree roots over the years.
As the owner of the building, Roy has a duty to
a. arrange to escort anyone who walks onto the property.
b. do nothing.
c. repair the sidewalks.
d. repair the sidewalks only if he is notified that it is a problem.
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.
Drummond wants to make a federal case out of his dispute with Elena. Federal cases
originate in
a. federal courts of appeals.
b. federal district courts.
c. state trial courts.
d. the United States Supreme Court.
Fact Pattern 28-3B
Dillon and Evan are brothers. They agree to act as guarantors on a loan made by their
sister, Fiona. Fiona defaults on the payments and Dillon refuses to pay. Evan pays the
debt.
Refer to Fact Pattern 28-3B. Evan can recover from Dillon under
a. the right of proportionate liability.
b. the right of reimbursement.
c. the right of contribution.
d. no right, because the parties are brothers.
Ginamarie files a suit against Gaming Innovators Unlimited, Inc., to enforce a written
contract between the parties. If the court finds that the parties intended the contract to
be the final statement of their agreement, parol evidence can be admitted to prove
a. an orally agreed-on condition precedent.
b. terms discussed orally before the contract but not contained in it.
c. terms discussed orally at the time of the contract that contradict the written terms.
d. nothing.
Sonia manages a Tasty Pastry store for United Food Company. To manage the business,
Sonias authority can be implied by
a. an inference from the position Sonia occupies.
b. any inference a reasonable customer or supplier would make.
c. any inference Sonia chooses to make.
d. no inference.
Reliable Banks financing statement in collateral owned by Sunsource Energy
Corporation will expire in less than a year. With the filing of subsequent continuation
statements, the effectiveness of the banks statement can be continued
a. indefinitely.
b. for no longer than five years.
c. for no more than six months.
d. up to five years and six months.
Free Range Western Ranch is a family limited liability partnership. All of the partners
must be
a. natural persons only.
b. natural persons or persons acting as fiduciaries for natural persons.
c. persons acting as fiduciaries for natural persons only.
d. related.
Cold Stuf, Inc., makes snowboards, which it sells to Deep Freeze Sports Store (DFS).
DFS sells Cold Stuf boards to consumers, including Ed. Ed is injured while using the
board. In a product liability suit based on strict liability, Ed may recover from
a. Cold Stuf only.
b. Cold Stuf or DFS.
c. DFS only.
d. no one.
Hydraulic Leasing Corporation (HLC) and Dockside Offloading Company enter into a
contract for a lease of ten hydraulic lifts. Under the perfect tender rule, HLC must ship
or tender goods to the lessee that
a. approximately conform to the contract description.
b. entirely conform to the contract description in most ways.
c. conform to the contract description in every way.
d. substantially conform to the contract description.
Exotic Stuff Company and First Pier, Inc., form a business organization to engage in
importing and exporting. Its property is held in the names of the members and its
shareholders have personal liability. This business organization is
a. a business trust.
b. a joint stock company.
c. a joint venture.
d. a syndicate.
Klondike and Leola own 10,000 shares of stock in My-T Gro Corporation. On the death
of ether owner, that owners interest in the stock passes to the surviving owner. This is
a. a joint tenancy.
b. a life estate.
c. a tenancy in common.
d. ownership in fee simple absolute.
Eliza is a state court judge. Flora appears in a case in Elizas court, claiming that Glover
breached a contract. As in most state courts, Eliza may
a. award damages or cancel the contract.
b. award damages only.
c. cancel the contract only.
d. neither award damages nor cancel the contract.
Fact Pattern 33-1A
Ulani indicates that she is acting as an agent on behalf of an unidentified
clientThoroughbred Stallions, LLCwhen she enters into a contract with Shana.
Refer to Fact Pattern 33-1A. Liability to Shana for nonperformance of the contract may
be imposed on
a. neither Ulani nor Thoroughbred Stallions.
b. Ulani and Thoroughbred Stallions.
c. Ulani only.
d. Thoroughbred Stallions only.
Rachel operates a scrap metal business and contracts to provide ten tons of scrap steel at
$50 per ton to be delivered to Pure Metals, Inc., in six months. An unforeseen shortage
of scrap steel suddenly develops, making it impossible for Rachel to fulfill the contract
for less than $500 per ton. Rachels best defense against performing the contract would
be that
a. performance of the contract is commercially impracticable.
b. procuring the steel would force the seller into bankruptcy.
c. the law has rendered performance of the contract illegal.
d. the specific subject matter of the contract has been destroyed.
Ron does not make a payment on his car loan for several months. The dealer, Star Auto,
repossesses the car by towing it from a public parking lot. Ron sues Star for breach of
the peace. Ron will probably
a. prevail, because Ron has not formally defaulted on the car loan.
b. prevail, because the car was in a public lot when it was towed.
c. not prevail, because the repossession was not a breach of the peace.
d. not prevail, because a creditor can repossess property in which it holds an interest if
no threats or force are used against a debtor.
Jill is an appellate court judge. In this capacity, Jill establishes a rule of law. Under the
doctrine of stare decisis, the principle must be adhered to by
a. all courts.
b. courts of lower rank only.
c. that court and courts of lower rank.
d. that court only.
Kenyon files a petition for bankruptcy. Kenyon must include with the petition
a. a plan to turn over his future income to the trustee.
b. a certificate proving attendance at a credit-counseling briefing.
c. a provision of adequate means for the petitions execution.
d a statement of preference for one creditor over another.
Alan offers to transfer Beths DVDs to digital flash drives for $150 plus the cost of the
drives. The mailbox rule will not apply if Beth accepts the offer by
a. e-mail.
b. messenger.
c. regular mail.
d. telegram.
Sincere Forms, Inc., uses, in its ads, a trademark that is similar, but not identical, to the
famous, registered mark of Desired Objects, Inc. Sinceres unauthorized use of the mark
constitutes trademark dilution provided
a. consumers are confused.
b. Sincere and Desired are competitors.
c. Sinceres use is intentional.
d. Sinceres use lessens the value of Desireds mark.
Fact Pattern 24-1A
Flik draws a check payable to "DeliMart to buy groceries.
Refer to Fact Pattern 24-1A. Fliks check is most likely
a. a certificate of deposit.
b. an order to pay.
c. a promise to pay.
d. a promissory note.
Wyoming enacts a statute that limits the liberty of all persons, including corporations, to
broadcast "annoying radio commercials. This may violate
a. equal protection.
b. procedural due process.
c. substantive due process.
d. the right to privacy.
Principal Resources Corporation contracts with Quality Construction to build an
addition to Principals corporate office building. Quality contracts with Rite Supply
Company for materials for the addition but refuses to pick up the materials. Meanwhile,
Principal hires Skye, a certified public accountant, to work in its cost-accounting
division as an employee, with no authority to hire or supervise others. Skye asks Theo,
an outside experienced accountant, to advise her on certain accounting procedures but
fails to pay Theo for the service. Principal also contracts with Uma, a salesperson, to
solicit orders for its products in a designated territory. Uma obtains an order from Verity
Industries, Inc., which is assured the order will be filled soon. But Uma does not follow
through with the paperwork and fails to submit the order to Principal. Verity suffers a
loss. Rite Supply, Theo, and Verity Industries claim Principal is liable under agency law.
Discuss fully whether an agency relationship was created by Principal with Quality
Construction, Skye, or Uma.
Parties cannot opt out of the UETA.
Fact Pattern 28-3B
Dillon and Evan are brothers. They agree to act as guarantors on a loan made by their
sister, Fiona. Fiona defaults on the payments and Dillon refuses to pay. Evan pays the
debt.
Refer to Fact Pattern 28-3B. Evan can recover from Fiona under
a. the right of proportionate liability.
b. the right of reimbursement.
c. the right of subrogation.
d. no one, because the parties are brother and sister.
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.
Marky holds a power of attorney for Nuncio. Marky is
a. an attorney-in-fact.
b. an attorney-in-law.
c. a durable attorney.
d. a notary public.
An agreement between Pinnacle Oil Company and Omega Refinery, Inc., requires
Omegas bank to pay Pinnacle on receipt of invoices and bills of lading. This letter of
credit is
a. a formal contract.
b. no contract.
c. an implied contract.
d. a quasi contract.
Opal conveys three acres of wetlands to Pristine Places, Inc., with a deed that warrants
only that Opal held good title during her ownership of the property. This deed is
a. a grant deed.
b. a quitclaim deed.
c. a special warranty deed.
d. a warranty deed.
Fact Pattern 27-2B
Thom draws a check, on his account in State Bank in New York, payable to Digital
Computers, Inc., in San Francisco. Digital deposits the check in its account at First
National Bank. First National deposits the check in the Federal Reserve Bank of San
Francisco, which transfers it to the Federal Reserve Bank of New York. That Federal
Reserve Bank sends the check to State Bank.
Refer to Fact Pattern 27-2B. Digitals bank is
a. the cashing bank.
b. the depositary bank.
c. the intermediary bank.
d. the payor bank.
Creative Solutions Corporation (CSC) agrees to sell software to Drew from CSCs Web
site. To complete the deal, Drew clicks on a button that, with reference to certain terms,
states, "I agree. What is this sort of agreement called? Do the parties have a binding,
enforceable contract that includes the terms? Explain.
Debt collectors who use a prohibited debt-collection tactic are exempt from liability if
they can show that the debtor used misrepresentation in assuming the debt.
There are additional disclosure requirements for a higher-priced mortgage loan.
A corporation formed in another country but doing business in the United States is
referred to in the United States as an alien corporation.
Food labels are not required to provide standard nutrition facts.
The initial interest rate is the part of a purchase price that is paid up front in cash.
In determining whether a copyrighted work is infringed under the "fair use doctrine,
one factor is the effect of the use on the market for the work.
Employers are not required to modify their job-application and selection process so that
those with disabilities can compete for jobs with those who do not have disabilities.
Brock is a shareholder of Competent Homebuilders Corporation (CHC). For the last
few years, business has not been profitable for CHC. The firm has lost money on its
operations. There has been some profit through sales of company assets, but the board
of directors has refused to declare a dividend. This last year, the firms accountants
failed to file federal income tax returns and the board refused to pay the tax. Brock
takes a close look at the firm and protests to the board, in particular over the failure to
declare a dividend, but the board ignores the complaint. Which of these events, if any,
would form a ground for a court to order the dissolution of CHC, on Brocks petition? If
the court denies the petition, could Brock and the other shareholders dissolve CHC?
The day-to-day operation of franchise business normally is left up to the franchisee.
A partnership ends if one partner dissociates from the firm.
A finder of lost property who knows the true owner and fails to return the property is
guilty of the tort of conversion.
Liquidated damages provisions are usually not enforceable.
Elle is walking to work along a sidewalk next to a road. A truck owned by Fast
Distribution Company (FDC) strikes and injures Elle, causing her injuries that result in
more than $250,000 in medical expenses. Elle is a resident of Georgia, where the
accident occurred. FDC has its principal place of business, and is incorporated, in
Delaware. In what court may Elle sue FDC?
Warranty liability is subject to the conditions of proper presentment, dishonor, and
notice of dishonor.
Kino sees a DVD player on the porch of Lulus house, takes the player to his home, and
tells everyone he owns it. Maya, holding a knife, forces Nick to give her his boom box,
and runs away with it. Ollie breaks into Pams apartment, takes a computer, and leaves.
Quico sells Randi an expensive wristwatch for a fraction of its value, admitting that the
watch is stolen property but claiming that he is not the thief. Which of these acts are
crimes, and what are the differences among them?
To recover workers compensation, an employee must prove that an injury did not occur
on the job or in the course of employment.
In State X, persons must be at least eighteen years old before they can purchase
alcoholic beverages. The state also has passed a law requiring that persons who prepare
and serve liquor in the form of drinks in commercial establishments be licensed. The
only requirement for obtaining a yearly license is that the person be at least eighteen
years old. Moffitt, aged thirty-five, is hired as a bartender for the Lone Star Restaurant.
Bekins, a staunch alumnus of a nearby university, brings twenty of his friends to the
restaurant to celebrate a football victory. Bekins has ordered four rounds of drinks, and
the bar bill exceeds $200. Bekins learns that Moffitt has failed to renew his bartenders
license, and Bekins refuses to pay, claiming the contract is unenforceable. Is Bekins
correct?
Only a mistake in value will make a contract voidable.
