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Luella just purchased 5 shares of common stock in TriColor, Inc. for $250. Luella has
the right to:
a. manage the day-to-day business of the corporation.
b. set executive compensation.
c. require that a proposal be placed in the companys proxy statement to be voted on at
the shareholder meeting.
d. vote to elect directors.
Country Bank, located in Indiana, loaned Chmelik $5,000 and obtained a security
interest in a copyright Chmelik owns. Chmelik lives in Illinois, but works in Indiana. In
order to perfect its interest, Country Bank files a financing statement in Indiana. The
financing statement provides Chmeliks correct name, his business address, and a
reasonable description of the copyright used as collateral. Is the financing statement
sufficient?
a. Yes, it meets the UCC requirements for contents and filing.
b. No, if the debtor is an individual, the secured party must file in the state of the
debtors principal residence, which in this case would be Illinois.
c. No, the contents of the financing statement are incomplete.
d. Both b and c are correct.
In determining whether parties intended to reduce their agreement to writing, which of
the following factors would normally NOT be considered:
a. whether the type of agreement is one that is normally put into writing.
b. the complexity of the agreement.
c. whether or not the terms are complete.
d. the amount of money involved in the agreement.
The initial term for which a financing statement will be effective is:
a. one year.
b. five years.
c. ten years.
d. two years.
A corporation must obtain shareholder approval before the company:
a. sells off a major portion of its business to another company.
b. amends its bylaws.
c. amends its charter.
d. All the above are correct.
Jeff picks up a piece of metal pipe and swings it around, hitting Gary across the back of
the head. What factor would be required for Jeffs employer to be liable to Gary?
a. Jeff was at the factory when it happened.
b. Jeff voluntarily hit Gary.
c. Jeff was moving the pipe as part of his work responsibilities when he hit Gary.
d. Gary cannot be an employee of the same company as Jeff.
Pablo, a resident of New Mexico, while driving through Arizona was struck by a SUV
driven by Dick, a resident of California. Dick was speeding when the accident
happened and Pablo suffered severe injuries that ruined a potential acting career. Pablo's
damages are estimated at $200,000. Discuss the court system(s) in which Pablo may
bring a lawsuit.
As English judges were developing the common law of contracts in the twelfth and
thirteenth centuries:
a. most promises were found to be enforceable.
b. promises were found not binding unless written and sealed.
c. the term "contract became common.
d. changes in the law occurred rapidly.
Which of the following types of contracts cannot be either contradicted or
supplemented by evidence of prior agreements or expressions?
a. Totally integrated contracts.
b. Incomplete contracts.
c. Ambiguous contracts.
d. Oral contracts.
Daddy buys an electric car for his 10-year-old son. Daddy follows the directions for
assembly carefully, but the son gets an injuring shock when he sits in the car. If Daddy
and son sue the manufacturer for negligence, they will:
a. be successful only if they can prove that the car manufacturer knew of the defect and
failed to correct it.
b. be successful only if they can prove that the car manufacturer failed to use reasonable
care in designing, manufacturing, or warning the purchasers about intended uses and
foreseeable misuses.
c. lose, because the son has no privity of contract and therefore no standing to sue.
d. not be successful if the car was sold "AS IS."
Mayco has received goods from Wallace pursuant to a sale or return agreement. If
Mayco subsequently declares bankruptcy, the goods will be:
a. returned to Wallace because title did not pass to Mayco under this type of sale.
b. belong to Mayco and will not be a part of the bankruptcy.
c. subject to the claims of Mayco's creditors under Section 2-326 of the Uniform
Commercial Code.
d. will be kept by the bankruptcy judge and clerk.
Orson was fired from his job behind the ticket counter at the airport. He was loudly told
to put his personal belongings into a plastic bag and was led out by security guards in
front of his co-workers and customers. His supervisor told him not to return. Orsons
employer faces potential liability for:
a. intentional infliction of emotional distress.
b. whistleblowing.
c. defamation.
d. violation of the FLSA.
"I'll sell you my car if I decide to sell it" is an example of:
a. a conditional offer.
b. an unliquidated offer.
c. a unilateral contract.
d. an illusory promise.
In good faith, Clinton gave Jane $500 for a negotiable promissory note made out to
Jane for $550. She needed some money before the due date on the note, and Clinton
had no notice of outstanding claims or other defects of the note. Clinton:
a. has more rights than Jane.
b. has the same rights as Jane.
c. has only conditional rights because they depend on Janes rights.
d. cannot transfer the note to anyone else.
The equal dignities rule relative to agency law applies to an agent:
a. hired to contract for a booth at a trade show scheduled to occur in two years.
b. selling real estate for the principal.
c. authorized to enter into a two-year lease for her principal.
d. All the above.
Statements of facts about the past and present are called:
a. provisions and terms.
b. promises and covenants.
c. representations and warranties.
d. damages and remedies.
Bernie owes an undisputed amount to Wildes Heating & Air Conditioning. Which of the
following is true?
a. If Wildes agrees to accept less than the full amount as full payment, the agreement is
not binding.
b. The undisputed amount is also known as an unliquidated amount.
c. If the parties agree to settle for less than the full amount, their agreement is governed
by the ruling in Henches v. Taylor.
d. If Wildes agrees to accept less than the full amount, the agreement is only binding if
it is in writing and signed by Bernie.
Which of the following is generally NOT in the introductory paragraph of a contract?
a. The date of contracting.
b. The location of contracting.
c. The parties to the contract.
d. The nature of the contract.
E-mation entered into a contract with a consumer, Ezra, a recent immigrant to the
United States, who spoke very little English, and had no formal education. The contract
provided for Ezra to pay $2500 for a computer system. The system was worth $400. If
E-mation sued Ezra for enforcement the contract, what is the most likely result?
a. The contract is enforceable because of the Statute of Frauds.
b. The contract is enforceable because of the parol evidence rule.
c. The contract is enforceable because of the underlying reference rule.
d. The contract is unenforceable because it is unconscionable.
If Oregon passed a statute that prohibited liquor stores from engaging in any kind of
advertising, that statute would be:
a. valid as an exercise of police power.
b. valid, as alcohol is illegal for minors.
c. invalid as a violation of the Commerce Clause.
d. invalid as an unreasonable restriction of free speech.
Who owns and controls an accountant's working papers?
a. The client, in theory.
b. The IRS.
c. The accountant, in theory and practice.
d. The AICPA.
UCC Section 2-204 provides three important rules that enable parties to make a contract
quickly and informally. These include all but which of the following?
a. The parties may make a contract in any manner sufficient to show that they reached
an agreement.
b. A writing sufficient under the statute of frauds may be a simple memo, a letter, or
informal note, but need not itself be a contract.
c. The UCC will enforce a deal even though it is difficult to say exactly when it was
formed.
d. A court may enforce a bargain even though one or more terms were left open.
You make an online purchase of a hooded sweatshirt with the logo of the Dallas
Cowboys. The next time you log on, your screen has a banner ad for Dallas Cowboy
hats and shirts. This banner ad is most likely the result of:
a. tracking software
b. a coincidence.
c. the Internet crime of theft of private information.
d. encryption software.
A promise by Derkin Restaurants to buy all of the produce it needs this next year at an
established price from Elfredo's Produce would be an:
a. enforceable requirements contract.
b. enforceable output contract.
c. unenforceable, illusory contract.
d. unenforceable promise based on past consideration.
TECO Coal Corporation is interested in the inspections that the U.S. Bureau of Mines
has conducted over the past year. To secure this information, TECO should:
a. issue a subpoena duces tecum.
b. make a Freedom of Information Act request.
c. make a de novo request.
d. assert the substantial evidence rule.
Bertha, from Chicago, traveled to San Francisco to attend a conference. Her sister,
Martha, lives in San Francisco and consequently, Bertha made arrangements to spend a
couple of days with her sister. The next morning sitting at the breakfast table, Bertha
realizes that she packed a mismatched pair of shoes (one is black and the other is blue).
Luckily, Martha wears the same size of shoes and lends Bertha a pair of black leather
pumps. During the day, the shoes are damaged while Bertha is wearing the shoes.
Bertha's duty of care would be a duty of:
a. extraordinary care, because this is a bailment for the sole benefit of the bailee.
b. ordinary care, because this is a bailment with both parties receiving mutual benefits.
c. only slight care, because this is a bailment for the sole benefit of the bailor.
d. none, as the sisters would share without condition.
Which of the following is least likely to be regarded as a necessary?
a. Rent.
b. Food.
c. Medical expenses.
d. Educational expenses.
The concept that an injured party may recover consequential damages only if the
breaching party should have foreseen them was established in:
a. Bi-Economy Market, Inc. v. Harleysville Ins. Co. of New York.
b. Putnam Construction & Realty Co. v. Byrd.
c. Hadley v. Baxendale.
d. Toscano v. Greene Music.
When a stock underwriter acts as the company's agent in selling stock, it is called a:
a. company underwriting.
b. express underwriting.
c. firm commitment underwriting.
d. best efforts underwriting.
Cecilia made a check out to Gideon for $15. Gideon fraudulently changed the check to
read $150, and cashed it at Corner Bank. Is Cecilia discharged from liability on the
check?
a. Yes, Cecilia owes nothing on the check because alteration of a check is a real defense
and real defenses are good even against holders in due course.
b. No, Cecilia pays $150 because of the impostor rule.
c. No, Cecilia pays $150 because she in not an indorser or accommodation party.
d. Yes, Cecilia owes nothing unless Corner Bank is a holder in due course in which case
she owes the original $15.
What phrase explains how a requirements contract can be valid?
a. "will buy 100 percent of output
b. "willing to accept the entire quantity
c. "no consideration needed
d. "in good faith
Parents may not disinherit their minor children without good reason.
Bidding on one's own goods at an online auction may subject the bidder to liability
under anti-fraud statutes as well as liability under state statutes explicitly prohibiting
shilling.
Union members earn, on average, $200 more per week than non-union members.
List the types of agreements that are within the statute of frauds and explain the
consequences if the parties do not comply with the requirements of the statute of frauds.
Discuss how a corporation is terminated.
J.T. Tidwell entered into an oral contract with Robert Anthony for the purchase of 100
head of cattle at a price of $500 each. When the oral contract was made, Tidwell gave
Anthony a check for $1000 as "earnest money or good faith money towards the
purchase of the cattle." Anthony sold the cattle to someone else. Tidwell sued, asking
the court to either compel Anthony to perform the contract or to pay damages that
Tidwell suffered from the alleged breach of contract. What issues do you see and how
would you resolve those issues?
If one party makes accessions without agreement and the improvements can be "undone
without damaging the property, the improver must undo them.
Under the UCC, the party who has title to the goods always has the risk of loss.
Miranda v. Arizona considered the intent requirement in an armed robbery case.
Briefly describe the process of jury selection.
Misleading commercial speech may be outlawed altogether without violating the
Constitution.
Shoe Sunshine, Inc. filed for bankruptcy protection under Chapter 11 and submitted a
plan of reorganization within 120 days after filing for relief. Two of the classes of
creditors voted against the plan. However, the bankruptcy judge considered the plan to
be reasonable, achievable, and fair, and approved it in spite of these creditors'
objections. This action by the judge is called a "cramdown."
Preferred Contractors was a general contractor and owner of a condominium complex
which was under construction. Barrett, a subcontractor, had been hired by Henderson
Plumbing, another subcontractor, to help it complete the plumbing work on the project.
When Henderson began using shoddy installation procedures and subsequently fell
behind the scheduled completion time for the project, Preferred Contractors urged
Barrett to correct Henderson's mistakes and to finish the job. Barrett refused to continue
until he knew who would pay him, since he feared Henderson's financial position was
shaky. Nonetheless, Preferred Contractors job superintendent told Barrett to go ahead
even if Barrett and Preferred Contractors had no contract because "he would use his
influence to try to help Barrett get his money." Barrett finished the work and sent a
$7,500 bill to Henderson, which was never paid. When Barrett later sent the bill to
Preferred Contractors, these facts emerged: Preferred Contractors told him that due to
Barrett's failure to notify Preferred Contractors promptly of Henderson's non-payment,
Preferred Contractors had already paid Henderson in full and therefore would not pay
twice for the work. Discuss the best possible theory of recovery Barrett may argue.
After completing an audit, the most unfavorable opinion an auditor can issue is a
disclaimer of opinion.
The Internet was started in the 1960s as a project to link military contractors and
universities. The World Wide Web was created in 1991 as a subnetwork of the Internet.
Hannah orally agrees to sell her house to Brett for $175,000. If she delivers the deed to
Brett with the expectation of payment in two weeks and he fails to pay, most courts will
not enforce the contract since it was not in writing.
