In a dispute over a sale involving a bicycle, Dain argues that as to this deal Elle’s Hobby
Shop, where Dain bought the bike, is a merchant. A court may determine whether Elle’s
is a merchant by assessing whether
a. it has sold any bikes within the last year.
b. it holds itself out by occupation as having knowledge or skill unique to the bike in
the transaction.
c. its owner enjoys biking.
d. it subscribes to Bike, a biweekly trade magazine.
Bodie’s application to City Bank for a credit card is denied. Bodie can obtain
information on her credit history in a credit agency’s files under
a. no federal law.
b. the Equal Credit Opportunity Act.
c. the Fair Credit Reporting Act.
d. the Fair Debt Collection Practices Act.
Fact Pattern 14-3
Odell and Poppy sign a contract for the sale of Odell’s Pizza Parlor to Poppy. The
parties intend their written contract to be a final statement of most, but not all, of the
terms of their agreementOdell must first buy the building from Quin, after which Odell
and Poppy will negotiate a final price.
Refer to Fact Pattern 14-3. Poppy later disputes some of the provisions of the deal with
Odell. If the dispute results in litigation, a court will most likely admit evidence of
a. ambiguous additional terms.
b. consistent additional terms.
c. contradictory additional terms.
d. fraudulent additional terms.
Ellen publishes a book titled First Place, which includes a chapter from Frank’s
copyrighted book Great Racecar Drivers. Ellen’s use of the chapter is actionable
provided
a. consumers are confused.
b. Ellen’s use is intentional.
c. Ellen’s use reproduces Frank’s chapter exactly.
d. Ellen does not have Frank’s permission.
Fiona invents a new deep-sea fishing net, which she names “Great Catch.” She also
writes the operating manual to be included with each net. Fiona could obtain copyright
protection for
a. the net.
b. the “newness” of the net.
c. the name.
d. the operating manual.
Grady enters into a contract to buy 440 acres from Hollis to expand Grady’s ranch. If
Hollis breaches the contract, Grady’s normal remedy would be
a. damages.
b. quasi contract.
c. reformation.
d. specific performance.
Fact Pattern 13-1
Nano Corporation offers to sell a robotic device to Opal Assembly, Inc., but mistakenly
transposes some of the digits in the price so that $15,400 appears in the offer as
$14,500. Opal accepts the written offer.
Refer to Fact Pattern 13-1. Nano’s best defense against enforcement of the contract is
that Opal knew
a. a bilateral mistake supports the cancellation of a contract.
b. a mistake of value supports the cancellation of a contract.
c. a unilateral mistake supports the cancellation of a contract.
d. the price was below the prices of comparable devices.
Sam, an engineer, supervises the construction of a new bridge. When the bridge col-
lapses due to faulty construction, Sam is sued by those injured in the collapse. As a
professional, Sam is held to the same standard of care as
a. ordinary persons.
b. other engineers.
c. other professionals, including doctors, dentists, and lawyers.
d. those injured in the collapse of the bridge.
Metal Smelting, Inc., operates a planta “major source”that emits hazardous air
pollutants for which the Environmental Protection Agency has set maximum levels of
emission. The plant does not use any equipment to reduce its emissions. Under the
Clean Air Act, this is most likely
a. a violation.
b. not a violation because a “major source” is exempt.
c. not a violation because the plant does not use any equipment.
d. not a violation because the plant is not a mobile source.
InTown Delivery Service promises to deliver a certain couch to Kurt, who promises to
pay for the service. If InTown does not perform, the firm may be required to
a. do nothing.
b. make another promise.
c. pay damages.
b. perform a different service.
Omar sends Nell an e-mail ad touting software that will cloak its user in “the anonymity
of the Internet.” Nell pays Omar for the software, which is never delivered to her. This
is online
a. auction fraud.
b. puffery.
c. retail fraud.
d. frustration but not fraud.
Liu enters Mountain Triathlon, an athletic competition in which Liu has never
competed. Regarding the risk of injury, Liu assumes the risks
a. attributable to the Triathlon in any way.
b. different from the risks normally associated with the Triathlon.
c. greater than the risks normally associated with the Triathlon.
d. normally associated with the Triathlon.
In the ordinary course of business, Xtra Charge Company sells goods to Yvon and other
consumers on credit under installment sales contracts that typically require at least one
year of monthly payments. Xtra does not disclose all of the credit terms to its
customers. This practice is most likely to result in
a. a cease-and-desist order.
b. a fine.
c. no sanctions.
d. rescission of the contracts.
Travis, an accountant, is subject to the accounting conventions, rules, and procedures
that constitute generally accepted accounting principles (GAAP). GAAP are determined
by
a. state courts.
b. the American Bar Association.
c. the American Institute of Certified Public Accountants.
d. the Financial Accounting Standards Board.
Rhea is a director of Spex Corporation, which makes and sells sunglasses and other
eyewear. As a Spex director, Rhea is
a. a trustee because Rhea occupies a position of trust over Spex.
b. a trustee because Rhea holds title to Spex’s property for the use and benefit of others.
c. not a trustee because Rhea does not hold title to Spex’s property for the use and
benefit of others.
d. not a trustee because Rhea is not in a position of trust over Spex.
Vance points a gun at Workman, threatening to shoot him. Workman hits Vance, causing
his death. Charged with homicide, Workman can successfully claim as a defense
a. insanity.
b. duress.
c. entrapment.
d. self-defense.
MaxiMart, Inc., is a discount retailer. MaxiMart’s customer service employees are on
strike. Sixty of the workers block the entrances to one of MaxiMart’s stores. To get
them away from the doors, MaxiMart should seek
a. an injunction.
b. damages.
c. rescission.
d. specific performance.
Bryce’s accountant is Caleb and his attorney is Delilah. All states protect, as privileged
information, Bryce’s communications with
a. Caleb and Delilah.
b. Caleb only.
c. Delilah only.
d. neither Caleb nor Delilah.
Flip’s debt to George is past due. George brings a legal action against Flip to collect the
debt. George asks the court to order Home Bank, in which Flip has an account, to pay a
portion of the funds to George. This is a request for
a. an exemption from most states’ limits on creditors’ actions.
b. an order of garnishment.
c. an order that would violate most state laws.
d. a right of subrogation.
Tyro has the right to drive across Ula’s land, which is next to Tyro’s property, to reach
an access road. Tyro’s right is
a. an easement appurtenant.
b. an easement in gross.
c. a profit appurtenant.
d. a profit in gross.
Elin decides to try to sell her collection of celebrity memorabilia in an auction “with
reserve.” If Elin changes her mind, she can withdraw her collection
a. only before the auctioneer announces that the items are sold.
b. only before the auctioneer delivers the items to the buyers.
c. under no circumstances.
d. within thirty days after the auction.
River Valley Company operates a public water supply system. River Valley must send
to every household that it supplies with water an annual statement describing
a. River Valley’s financial situation and facts that might affect it.
b. other businesses in which River Valley is involved.
c. parties who might be held liable if pollution problems arise.
d. the source of the water, and any contaminants and health concerns.
Fact Pattern 15-3
Bell Medical Education Service enters into a contract to employ Chris as an instructor
for two years to begin May 1. One month before the term begins, Bell is underbid by a
competitor and loses a major client, Delta Hospital Center. Bell now refuses to hire
Chris.
Refer to Fact Pattern 15-3. Under the circumstances, with respect to damages, Chris can
a. bring an action immediately.
b. bring an action only after the contract’s two-year term begins.
c. bring an action only after the contract’s two-year term ends.
d. do nothing.
Ollie transmits unsolicited ads to millions of virtual mailboxes, using misleading and
deceptive information, including false return addresses. Under federal law, this is
a. a crime only if the recipients previously asked to be “opted out.”
b. a crime only if HHH and the recipients are in foreign jurisdictions.
c. not a crime.
d. a crime.
To avoid liability for intentional injuries, Vermont Power Corporation includes in its
contracts an exculpatory clause. This is
a. enforceable if the other parties are protected from liability.
b. enforceable if the other parties consent to it.
c. enforceable if the other parties have equal bargaining power.
d. not enforceable.
Fact Pattern 25-1
Dina asks Edie to co-sign a credit application so that she can borrow money and buy a
truck from Finest Quality Motors.Refer to Fact Pattern 25-1. If, after the loan
agreement is signed, Dina agrees to a higher rate of interest without telling Edie, then
Edie is
a. discharged from the agreement.
b. liable at the higher rate of interest.
c. liable at the lower rate of interest.
d. liable for the principal only.
Fact Pattern 14-1
Macho Marketing, Inc., and Nacho Food Corporation (NFC) discuss the terms of a
contract. Macho faxes NFC a memo on Macho’s letterhead that summarizes the items
on which they agree, including a two-year term. NFC begins to perform, but Macho
refuses to pay. NFC begins to perform, but Macro refuses to pay.
Refer to Fact Pattern 14-1. The transaction between Macho and NFC falls within the
Statute of Frauds’
a. collateral-promise provision.
b. one-year rule.
c. sales-of-goods stipulation.
d. secondary-contracts section.
Pam is an administrative employee of Quality Assurance Company. Social Security
contributions to help pay for Pam’s loss of income on retirement are made by
a. neither Pam nor Quality Assurance.
b. Pam and Quality Assurance.
c. Pam only.
d. Quality Assurance only.
First National Bank signs an agreement not to compete with City Bank that will bar
City Bank from continuing to operate in the state in which both banks do almost all of
their business. The agreement is likely
a. an unreasonable restraint of trade.
b. enforceable.
c. enforceable if it is ancillary to an agreement by the First National Bank to purchase
all of the assets of the City Bank.
d. none of the choices.
Fact Pattern 16-1
Estelle enters into a contract to buy 132 acres from Desmond to subdivide and sell in
quarter-acre lots for Country Acres, a residential development.
Refer to Fact Pattern 16-1. If Desmond breaches the contract, Estelle’s remedy would
most likely be
a. a certain ratio of the amount that Desmond has in liquid funds.
b. a percentage of Desmond’s unrealized profit.
c. the difference between the land’s contract and market prices.
d. specific performance.
Fact Pattern 15-4
Evelyn, who owns and operates Eve’s Farm & Garden Company, agrees to sell Hill &
Dale Produce, Inc., fifty bushels of apples.
Refer to Fact Pattern 15-4. Evelyn dies before the apples are delivered to Hill & Dale.
The contract with Hill & Dale is
a. breached.
b. discharged.
c. not affected.
d. suspended.
Va-Va-Voom Products, Inc., engages in deceptive advertising when it markets its
product Weight-No-More as able to help consumers lose weight in their sleep.
Va-Va-Voom is ordered to include in all future advertising of Weight-No-More the
statement, “This product will not cause anyone to lose weight while sleeping.” This is
a. a counteradvertising order.
b. a multiple product order.
c. a “cooling-off” law.
d. a validation notice.
In Fancy Frills Corporation’s suit against Glamour Stores, Inc., the jury returns a verdict
in Fancy’s favor. Glamour files a motion asking the judge to set aside the verdict and
begin new proceedings. This is a motion for
a. a judgment in accordance with the verdict.
b. a judgment on the pleadings.
c. a new trial.
d. judgment n.o.v.
Helio Company can process hydrogen into an inexpensive fuel for internal combustion
engines. As an innovator in its market, Helio currently has the power to affect the price
of its product. This is
a. market power.
b. predatory pricing.
c. price discrimination.
d. price-fixing.
Fay is admitted to Global Associates, an existing partnership. A partnership debt
incurred before the date of her admission comes due. Fay is
a. not liable for the debt.
b. only liable for the debt up to the amount of his capital contribution.
c. personally liable only to the extent the other partners do not pay.
d. personally liable to the full extent of the debt.
Usually, a private equity firm buys an entire corporation and may later reorganize it as a
publicly held corporation.
Good intention is a complete defense to conversion.
How judges apply the law to specific disputes may depend in part on their personal
philosophical views.
A credit-cardholder is liable for all unauthorized charges made before the creditor is
notified that the card has been lost.
The termination provision of a franchise contract is usually more favorable to the
franchisor.
All employers in the United States are subject to federal employment discrimination
laws.
A partner owes a partnership and its partners a duty of gross negligence and reckless
conduct.
Generally, stock offerings that involve a small dollar amount are not exempt from the
registration requirement.
An environmental impact statement is required for every major federal action that
significantly affects the quality of the environment.
Parties can form a contract without putting the terms in writing.
Under the UCC, a merchant who sells one type of good will be considered a merchant
for any other type of good that he or she may sell.
A patent applicant must demonstrate that the invention, discovery, or design is
commercially practicable to receive a patent.
A counterclaim is raised by a plaintiff against a defendant’s response to a complaint.
A bank that has certified a check is under no obligation to accept it.
Performance that provides a party with most of the benefits of a contract, in spite of a
deviation from the terms, is complete performance.
The Civil Rights Act of 1964 prohibits job discrimination on the basis of experience.
The doctrine of negligence per se applies if an event causing harm does not normally
occur in the absence of negligence.
Any breach allows the nonbreaching party to cancel the contract.
Generally, contract doctrines apply to a landlord-tenant relationship.