Lena buys a used MP3 player for $50 and a new laptop for $1,500, and signs a one-year
employment contract for a $4,500 monthly salary to start at the beginning of the next
month. The Statute of Frauds covers
a. the employment contract, and the laptop and MP3 purchases.
b. the employment contract and the laptop purchase only.
c. the employment contract only.
d. the laptop and MP3 purchases only.
Geoff serves in a representative capacity for Huck. To accomplish the objectives of this
relationship, Geoffs authority can be implied
a. by contradiction.
b. by custom.
c. by lack of reason.
d. under no circumstances.
The payment of Edens debt to Flem is guaranteed by Edens personal property. This
property is
a. a secured party.
b. a secured transaction.
c. a security interest.
d. collateral.
Comfort Furniture Store sells household consumer goods. To create a purchase-money
security interest, Comfort Furniture must
a. assign, to a collecting agent, a portion of its accounts payable.
b. assign, to a collecting agent, a portion of its accounts receivable.
c. extend credit for part or all of the purchase price of the goods.
d. refer purchasers to a third-party lender.
Flynn is a drug addict who has completed a supervised drug-rehabilitation program.
Gert used drugs casually in the past. Both work for Home Credit Company. Considered
to have a disability under the Americans with Disabilities Act of 1990
a. are Flynn and Gert.
b. is Flynn only.
c. is Gert only.
d. is neither Flynn nor Gert.
Super Tool Company makes tools for consumers and construction professionals. While
using a Super tool to replace an electrical outlet, Tom neglects to shut off the power and
is electrocuted. Against a suit filed by Toms heirs, Supers best defense is
a. assumption of risk.
b. contributory negligence.
c. negligence per se.
d. superseding cause.
Scott presents an instrument that states “pay to the order of Scott to Town Bank for
payment. This instrument is the most common type of negotiable instrument, which is
a. a certificate of deposit.
b. a check.
c. a note.
d. a trade acceptance.
North Mining Company and South Excavation Company agree to abide by the
decisions of East Coast Financial Corporation as to their respective levels of
production, markets, and prices, effectively reducing competition and increasing profits.
This is most likely
a. a common, legal, time-honored type of business arrangement.
b. an illegal restraint on trade.
c. an innovative, legally efficient approach to doing business.
d. an outdated, but legal business trust.
Town Style Stores orders Hidebound-brand leather jackets from Cowhide & Cotton
Company (CCC). CCC mistakenly ships denim jackets, which Town rejects and returns
via Valu Transport, Inc. During the return, the jackets are lost. The loss is suffered by
a. Town.
b. Hidebound.
c. Valu.
d. CCC.
Loudon Machinery, Inc., wants to fire its employee Newt, who is an at-will employee.
This means that Newt can be fired
a. for any reason or no reason.
b. for cause only.
c. only if Newt agrees to quit.
d. under no circumstances.
Berkies bicycle is damaged in an accident caused by Imogene. Berkie agrees not to sue
Imogene if she will pay for the damage. If she fails to pay, Berkie can bring an action
for breach of contract. This is
a. a covenant not to sue.
b. an accord and satisfaction.
c. an illusory promise.
d. a release.
Ewa is a shareholder of Farm Fresh Foods, Inc., whose management is considering a
tender offer by Growers Market Corporation. Ewa elects appraisal rights. This affects
a. Farm Freshs consideration of the offer.
b. Ewas shareholder status.
c. Growers Markets offer.
d. nothing.
Lark enters into a contract to mine limestone in Milenas quarry, sell it, and share the
profits on its sale with Milena. If the duties under this contract are discharged like those
under most contracts, the duties will be
a. repudiated.
b. breached.
c. performed.
d. rescinded.
Brad stands in front of Rustlers Round-Up Café, shouting “fighting words that are
likely to incite Rustlers patrons to respond violently. The First Amendment protects
such speech
a. all of the time.
b. none of the time.
c. only if it is noncommercial.
d. only if it is symbolic.
Might-E Mart LLC was formed in New Jersey. Might-E Marts members are Oscar, who
is a citizen of New Jersey, and Peri, who is a citizen of New York. For federal diversity
jurisdictional purposes, Might-E is a citizen of
a. all states.
b. New Jersey and New York.
c. New Jersey only.
d. no state.
Omega, Inc., sells business application softwareaccounting and bookkeeping programs,
blank business forms, inventory control functions, and so onin different combinations,
in different packages, at different prices. Each package includes a shrink-wrap
agreement that limits warranties and remedies. Precision Engineering Associates (PEA)
buys an Omega package and uses the product. Later, PEA files a suit against Omega,
claiming that the software is flawed and that the flaws caused PEA to suffer business
losses. PEA asks for relief that exceeds the limits in the shrink-wrap agreement. What
are shrink-wrap agreements? Are these agreements always enforced? Under what
circumstances is a court likely to enforce this agreement?
Main Street Lenders, Inc., attempts to coerce Nolanwho specializes in determining the
value of real and personal propertyinto misstating the value of a property on which a
loan is to be issued. This is
a. a legal and ethicalbut morally arguablefinancial ploy.
b. a legalbut unethicalbusiness practice.
c. a necessary tactic to generate a profitable loan in todays market.
d. a violation of the law.
A Massachusetts state statute imposes a prison term, without a trial, on all street
entertainers who operate in certain areas. A court would likely review this statute under
the principles of
a. equal protection.
b. free exercise.
c. procedural due process.
d. substantive due process.
To obtain office supplies for Doctors Medical Clinic, Elmo executes a draft in favor of
Flynn. A draft is
a. a conditional promise to pay money.
b. an unconditional written order to pay money.
c. a qualified promise to set aside a sum of money.
d. a restricted promise to deliver goods at a future date.
Len, a citizen of Maryland, obtains a federal license to operate a commercial fishing
boat in Chesapeake Bay. The Maryland state legislature enacts a law that bans all
commercial fishing in the bay. The state law most likely violates
a. no provision in the U.S. Constitution.
b. the commerce clause.
c. the due process clause.
d. the supremacy clause.
Pan American Pancake House, Inc., a U.S. firm, and Wallaby Waffles, Ltd., an
Australian firm, enter into a contract that does not have a forum-selection or
choice-of-law clause. Litigation between Pan American and Wallaby over a dispute
involving this contract may occur in
a. Australia only.
b. Australia or the United States, but not both.
c. Australia, the United States, or both.
d. the United States only.
Coverall Paints agrees to sell Grade A-1 latex outdoor paint to Dropcloth Painters to be
delivered May 8. On May 7, Coverall tenders Grade B-2 paint, which Dropcloth.
rejects. Two days later, Coverall tenders Grade C-3 paint with an offer of a price
allowance. Coverall has
a. additional, unlimited time to cure.
b. a reasonable, additional time to cure.
c. one more day to cure.
d. no more time to cure.
Olena signs a promissory note payable to the order of Payday Loan Company. The note
states that it is payable “with interest at the legal rate. This note is
a. negotiable.
b. nonnegotiable, because it does not specify a rate of interest.
c. nonnegotiable, because it is payable with interest.
d. nonnegotiable, because the exact amount payable cannot be determined from the face
of the instrument.
Rafaela Art Gallery and Sequoia Exhibitions form a joint venture. When a dispute
arises, Rafaela files a suit against Sequoia. The court is most likely to apply the same
principles to this joint venture as it applies to
a. business trusts.
b. cooperatives.
c. corporations.
d. partnerships.
Diego performs a contract with Elwood to add a swimming pool to Elwoods property,
but Elwood does not pay. Diego can file a lien on Elwoods property if, from the last
date labor or materials were provided, he acts
a. immediately.
b. within 60 to 120 days.
c. within two years.
d. within a reasonable time.
Chris convinces Dion, who does not understand English, to sign a $1,000 note that Dion
believes is an application for a credit card. Chris negotiates the note to EZ Finance
Company. Dion
a. can avoid payment on the note even if EZ is an HDC.
b. can avoid payment on the note only if EZ is a holder.
c. must pay EZ the amount that it paid for the note.
d. must pay the note in full.
Mountain Valley Winery Corporations attempt to raise $1 million from a few select
investors is
a. a shareholder agreement.
b. key-person insurance.
c. a private offering.
d. a public offering.
Dante enters into a contract with Rosalinda, who does not have contractual capacity.
Dante can enforce the contract if Rosalinda
a. does not choose to avoid the contract.
b. is a minor.
c. can obtain the funds to pay for the benefits of the contract.
d. is intoxicated or mentally incompetent.
Fact Pattern 41-2B
Mega Corporation wants to gain control of MiniCo, Inc. The companies negotiate for
several months, without coming to terms. Mega decides to pursue a takeover attempt.
MiniCo decides to resist.
Refer to Fact Pattern 41-2B. MiniCo is
a. an alien corporation.
b. an acquiring corporation.
c. a receiver.
d. a target corporation.
Haya obtains an insurance policy from Inviolable Insurance Corporation (IIC). IIC may
cancel, or refuse to renew, the policy because of
a. Hayas appearance as a witness against IIC.
b. Hayas gender.
c. Hayas national origin.
d. none of the choices.
Fact Pattern 28-2B
Rico signs a lease on behalf of Start-Up Games, Inc., with Tower Office Suites. As part
of the lease, Rico signs a document titled “GUARANTY, which states that it is “an
absolute guaranty of the leases performance.
Refer to Fact Pattern 28-2B. If Start-Up stops paying the rent, it is most likely that li-
ability or loss for the unpaid amount will rest with
a. no one.
b. Rico and Start-Up.
c. Tower Office Suites.
d. the other tenants on the same property.
Myron is an employee of Nero. Either party can terminate the employment relationship
at any time for any reason without liability. With respect to the employment-at-will
doctrine, this is
a. an example of the doctrine.
b. an exception based on contract theory.
c. an exception based on public policy.
d. an exception based on tort theory.
Dandy Lyin Furniture Store borrows $100,000 at 6 percent interest from Easy Loan
Company and signs a promissory note for that amount. Easy changes the amount of the
note to $120,000 and increases the rate to 8 percent. Easy materially altered the note
when it changed
a. neither the amount nor the interest rate
b. the amount and the interest rate.
c. the amount only.
d. the interest rate only.
A Frisco agrees to lease an apartment from Gina for one day to see Harry, the president
of the United States, deliver a speech in the street below. The speech is canceled ten
days before its scheduled date. The contract
a. is discharged.
b. is not affected.
c. is postponed until another event is scheduled.
d. must be performed immediately.
Blayne writes a check “pay to the order of Cherry drawn on Blaynes account at Dixie
Bank. Cherry presents the check for payment to Dixie Bank, which accepts it. The bank
is
a. not liable for payment.
b. primarily liable for payment.
c. secondarily liable for payment.
d. simultaneously liable, with Blayne, for payment.
A counteroffer does not terminate but continues an offer.
An incontestability clause prohibits an insured from entering a contest during the term
of a policy.
To be enforceable, a memorandum evidencing an oral contract that would otherwise be
unenforceable must include all essential terms.
Most courts apply the same principles to joint ventures as they apply to corporations.
An insurer has a duty to avoid paying a claim even if it means acting in bad faith.
A joint stock company is a hybrid of a partnership and a corporation.
A license is the revocable right of a person to come onto another persons land.
Certain debtors may not qualify to have all debts discharged in bankruptcy.
The government can recover the cost to clean up a hazardous waste disposal site from
the persons who were even remotely responsible.
Under the Statute of Frauds, all contracts must be in writing to be enforceable.
Only the Environmental Protection Agency can sue violators of emission limits under
the Clean Air Act.
Attempted monopolization is not a violation of antitrust law.
Under the Statute of Frauds, any contract that is not in writing is void.
Securities must be registered under the Securities Act of 1933 for the Securities
Exchange Act of 1934 to apply.
In all cases involving allegations of negligence, the plaintiff must prove that the
professionals breach of the duty of care actually caused some injury.
A trustee must call a meeting of the creditors listed in the schedules filed by the debtor.