Fact Pattern 12-B1
Sal contracts with Tasty Pizza Company to deliver its products. Both parties change
their minds, however, and inform each other that they would like to cancel the
contract. Sal and Tasty
a. may rescind their entire contract.
b. may rescind their contract to the extent that it is executory.
c. must perform their entire contract.
d. must perform the part of their contract that is executory.
Ric designs a new computer hard drive, which he names “Sci Phi. He also writes the
operating manual to be included with each final product. Ric could obtain patent
protection for
a. the hard drive only.
b. the name only.
c. the operating manual only.
d. the hard drive, the name, and the operating manual.
Brick executes a will, telling the witnesses that the document they are about to sign is
his “last will and testament. After Bricks death, the will is admitted for probate. Cecily,
his lawyer, reads the will to his heirs. The publication of the will is
a. Bricks declaration to the witnesses.
b. Bricks execution of the will.
c. Cecilys reading of the will to Bricks heirs.
d. the admission of the will for probate.
Everyday Loans, Inc., issues a line of credit in Glade Electronics Corporation under a
security agreement. Later, Glade buys new HD TVs to add to its inventory. Everyday
has a security interest in the new inventory
a. if the security agreement included an after-acquired property clause.
b. if Everyday has not yet filed a financing statement.
c. if Glade bought the inventory with Everyday funds.
d. under no circumstances.
Cathy obtains from Depend Insurance Company a policy that provides if a dispute
arises between the parties concerning the settlement of a claim, the dispute must be
submitted to an impartial third party, not a court, for resolution. This is
a. an antilapse clause.
b. an arbitration clause.
c. an appraisal clause.
d. an incontestability clause.
Huck decides to open River Raft Adventures as a tourist service and operate the
business as a corporation. At the directors initial meeting, the directors are most likely
to
a. draft articles of incorporation.
b. adopt bylaws.
c. choose a corporate name.
d. print and distribute stock certificates.
Dewey is Ezras agent and is not authorized to sign checks or notes on Ezras behalf.
Despite the lack of authority, Dewey issues a note “payable to the order of Fab Finance
Company [signed] Ezra, by Dewey. Liability on this note extends to
a. Dewey and Ezra.
b. Dewey only.
c. Ezra only.
d. no one.
State Bank offers to lend money to Rodeo Promotions, Inc., at 15 percent interest.
Before Rodeo accepts, a statute is enacted prohibiting loans at interest rates greater than
12 percent. Rodeo and the bank have
a. have a contract for a loan at 15 percent interest.
b. have a contract for a loan at 12 percent interest.
c. have a contract for a loan at 0 percent interest.
d. no contract for a loan.
At Parkside Bistro, Ogden believes that he was overcharged and shoves Nellie, the
waiter. Nellie sues Ogden, alleging that the shove was a battery. Ogden is liable
a. if Parkside did not overcharge Ogden.
b. if the shove was offensive.
c. if Ogden acted out of malice.
d. under no circumstancesthe shove was not a battery.
The shares of Capital Corporation are publicly traded in securities markets. Capital
Corporation is
a. a private corporation.
b. a privately held corporation.
c. a public corporation.
d. a publicly held corporation.
Grover Nut Company files a suit against Hud, its former accountant, alleging actual
fraud. Grover must prove
a. intent to deceive.
b. misrepresentation of a non-material fact.
c. the lack of an injury.
d. unjustifiable reliance.
Fact Pattern 30-1B
In January, Jazz Dance Studio owes Kay, its musical director, $1,800 for current wages,
receives $700 as a down payment for dance lessons from Lora, and pays a Music, Inc.,
a sheet music supplier, $1,500 of $3,000 owed. In February, the studio files a petition in
bankruptcy for relief through a liquidation.
Refer to Fact Pattern 30-1B. Based on the size of the studios estate in bankruptcy, each
of Jazzs creditors will get only 10 percent of their claims. Regarding the payment to
Music, Inc., the trustee may
a. not recover it because Musics claim has priority.
b. not recover it unless Music is an insider.
c. recover it as a fraudulent transfer.
d. recover it as a voidable preference.
Parker and Oscar sign a partnership agreement to do business as “Parkers Plumbing
without specifying a duration. This partnership is terminable
a. at any time by either partner.
b. only after a reasonable term.
c. only if Parker dissociates from the firm.
d. only if Oscar dissociates from the firm.
Fact Pattern 14-B4
Pete, the owner of Quality Orchards, contracts to sell fruit to Ripe Produce, Inc. When
Pete refuses to perform, Ripe Produce files a suit to enforce the contract.
To defend successfully on the ground of unconscionability, Pete must show that
enforcement of the contract would be
a. economically meaningless.
b. legally worthless.
c. manifestly unfair or oppressive.
d. undeniably valuable.
Crafted Countertops, Inc., and Kitchen Design Corporation enter into a contract that
does not specify the payment terms. Payment may be made in
a. any commercially normal or acceptable means except credit card.
b. cash only.
c. any commercially normal or acceptable means.
d. cash or check only.
Jack promises to buy Kellys computer for $400. Jack is
a. an executor.
b. an offeree.
c. a promisee.
d. a promisor.
Petra. Queenie, and Randall want to form Sales-to-Infinity, LLC (limited liability
company). What should they provide in their operating agreement? If they fail to
include some important operating details, what determines these details?
Cherry is injured in an accident caused by Bronco. Bronco agrees to pay Cherry $2,500
if she agrees to release him from further liability. Cherry agrees. If Cherrys damages
ultimately exceed $2,500, she can
a. collect the balance from Bronco in a breach-of-contract suit.
b. collect the balance from Bronco in a tort suit.
c. collect the balance from Bronco on the ground of unforeseen events.
d. not collect the balance from Bronco.
Financial Innovations, Inc., issues bonds, which are also known as
a. cumulative investments.
b. debt securities.
c. equity securities.
d. preferred stock.
One night, Kyle discovers Lee, an intruder, in Kyles home. Kyle shoots and kills Lee.
With respect to criminal prosecution for this use of deadly force, under a duty-to-retreat
law Kyle
a. is presumed innocent or may be exempt from prosecution.
b. must prove that he first told Lee to “Get out! or to “Retreat!
c. must prove that he first tried to retreat or that his life was in danger.
d. must prove that Lee did not try to retreat or acted without regard for his own life.
Miracle Motors employs Norris as a sales agent for a trial period. At the end of the
period, Miracle Motors and Norris disagree on the amount of the commissions Norris is
due for sales that he made. Norris may demand
a. a constructive trust.
b. an accounting.
c. nothing.
d. specific performance.
Scot enters into a contract with Tiffany that later proves voidable at Tiffanys option. If
she elects to avoid any duty to perform under the contract
a. both parties are released from it.
b. neither party is released from it.
c. only Scot is released from it.
d. only Tiffany is released from it.
Stacy, a minor, charges the cost of an expensive leather jacket at a Girls Trend store.
Two nights later, Stacy loses the jacket at Minors Only Club. She disaffirms the jackets
purchase. Stacy owes Girls Trend the reasonable value of the jacket
a. if it is deemed a “necessary.
b. if it is deemed unnecessary.
c. under any circumstances.
d. under no circumstances.
Movies, Inc. (MI), releases on DVD Nothing to Hide, a film focusing on the lack of
privacy in cyberspace. Owen posts online computer code that cracks the DVDs
encryption, allowing users to make unauthorized copies. MI files a suit against Owen.
The court is most likely to rule that
a. computer code is a form of “pure speech.
b. the First Amendment completely protects computer code.
c. the First Amendment does not apply to computer code.
d. the First Amendment protects computer code to a lesser extent.
Industrial Solvents, Inc., averages $15,000 profit per day before deciding to ignore air
pollution standards, after which the average is $30,000. Industrial Solvents is subject to
a fine of
a. $0.
b. $15,000 per day.
c. $30,000 per day.
d. $30,000 total.
In Ben v. City Car Dealership, a state supreme court held that a minor could cancel a
contract for the sale of a car. Now a trial court in the same state is deciding Daphne v.
Even Steven Auto Deals, Inc.,, a case with similar facts. Under the doctrine of stare de-
cisis, the trial court is likely to
a. allow the minor to cancel the contract.
b. disregard the previous case.
c. order the minor to cancel the contract.
d. require the minor to fulfill the contract.
Fact Pattern 3-B2
Kelly files a suit against Lewis in a state court. The case proceeds to trial, after which
the court renders a verdict. The case is appealed to an appellate court.
After a final determination in the case of Kelly v. Lewis, any judgment will be satisfied
a. if the losing party pays the judgment, or his or her property is sold and the proceeds
paid to the winner.
b. only if the court orders the sheriff to pay the winner.
c. only if the losing party pays the judgment in cash.
d. only if the losing partys property is sold and the proceeds paid to the winner.
Fay is a member of Garden Groves LLC. Like other members of limited liability
companies, Fays liability for Garden Grovess obligations resembles the liability of
a. a participant in a joint venture.
b. an owner of a sole proprietorship.
c. a partner of a partnership.
d. a shareholder of a corporation.
Harbor Town enacts an ordinance to allow only a few street vendors to operate in
certain areas, for the purpose of reducing traffic. A court would likely review this
ordinance under the principles of
a. the commerce clause.
b. the equal protection clause.
c. the due process clause.
d. the First Amendment.
Grey has two children, Ham (the eldest) and Ivy, both of whom predecease Grey. Ham
is survived by a daughter, Jess, and Ivy by two sons, Kato and Lars. On Greys death, if
the estate is distributed per stirpes
a. each grandchild receives one-third of the estate.
b. Jess receives one-half of the estate, and Kato and Lars each receive one-fourth.
c. Jess receives the entire estate.
d. the grandchildren receive nothing.
Labor Recruiters, Inc., has been ordered to appear at a hearing before an administrative
law judge of the National Labor Relations Board. A significant difference between a
trial and an administrative hearing is that
a. attorneys are not allowed to attend administrative hearings.
b. clients are not allowed to communicate with their attorneys during administrative
hearings.
c. hearsay can be introduced as evidence in an administrative hearing.
d. the burden of proof is on the charged party to prove innocence.
Raw Resources, Inc., sells unprocessed minerals to commercial processors in Texas.
With regard to the UCCs good faith requirement, Raw can
a. avoid it only by a conspicuous written disclaimer.
b. avoid it only by oral disclaimer.
c. avoid it with or without a disclaimer.
d. not disclaim it.
Fact Pattern 19-B1
Fruits & Vegetables, Inc., and Grovers Market enter into a contract for the delivery of
locally grown produce. The parties use a standard Fruits & Vegetables form that
contains some of the terms the parties agree on but not others. Some of the produce
spoils before it can be sold. Grovers refuses to pay for the spoiled goods.
Refer to Fact Pattern 19-1. Grovers contends that the practice in the grocery trade with
respect to payment for spoiled produce justifies its refusal to pay. Grovers is arguing
that the court should take into account
a. the course of dealing.
b. the course of performance.
c. the usage of trade.
d. a rule of construction.
Crest Jewelers buys diamonds from Paramount Gems to resell with the right to return
the unsold stones in lieu of payment. This is
a. a bailment.
b. a consignment.
c. a sale on approval.
d. a sale or return.
Final administrative rules do not have binding legal effect unless the courts later declare
them to be binding.
A surety is not entitled to receive from the debtor outlays made on behalf of the
suretyship arrangement.
When the corporate privilege is abused for personal benefit, the courts will require the
owners to assume personal liability.
Restraints that have a significant impact on interstate commerce do not violate antitrust
law.
In May, National Biotech Corporation generally advertises that it will make a $4
million offering of stock in June. National makes the offering as advertised and, ten
days after the first sale, notifies the Securities and Exchange Commission (SEC). All
buyers of the stock are given material information about the company, its business, and
the stock. Before the end of the year, the offering is completely sold out. The buyers
include forty unaccredited investors and fifty accredited investors. National does not
register the offering. The SEC files a suit against National, seeking civil sanctions on
the ground that this offering was not exempt from registration. National argues that the
applicable exemption is Rule 505 of Regulation D of the Securities Act of 1933 and that
because of this exemption, any resale of the stock is also exempt. Who is correct?
Any irregularity on the face of an instrument that calls into question its validity will bar
HDC status.
Creditors may contract with a debtor for discharge of the debtors liquidated debts.
A minors right to disaffirm a contract terminates sixty days after the contracts date.
Reliance on a misrepresentation is justified if the misrepresentation is an obviously
extravagant statement.
The U.S. Constitution is the supreme law of the United States.
Ordinarily, a minor who affirmatively misrepresents his or her age cannot disaffirm a
contract.
In most states, debtors may use only federal exemptions to exempt certain property
from the bankruptcy.
To be negotiable, an instrument must be payable in money.
Ordinarily, “ignorance of the law is an excuse, or a valid defense to criminal liability.
In a judicial foreclosure, the lender is allowed to foreclose on and sell the property
without judicial supervision.
When a person contracts for improvements on real property but does not immediately
pay for the improvements, the creditor can place a mechanics lien on the property.