Book Title
Business Law with UCC Applications 14th Edition

LGST 63991

March 1, 2019
The manager of a manager-run LLC is protected by the business judgment rule, but not
the fairness rule.
When two or more persons own real property as tenants in common, each person owns
an undivided share of the whole property.
Directors are not entitled to be notified about regular board meetings unless notice is
required by the corporation's bylaws.
In most states, a child who can prove that she was mistakenly (rather than intentionally)
left out of her parent's will receive the same share that she would have received had her
parents died without a will.
A will must be typewritten and must be under seal.
Jackie's mortgage payment to Commerce Bank was due on June 1. On May 31, Jackie
received a notice that her mortgage had been assigned to Brown Investments. Jackie is
allowed a reasonable time to verify that an assignment has been truly made.
When vacating, the tenant must turn over to the landlord all trade fixtures.
People who are able to make a down payment and have a steady income may become
eligible for a mortgage loan as soon as two years following a discharge in bankruptcy.
Under the just war theory, a just cause for war includes the defense of a nation that has
been aggressively attacked and is unable to defend itself.
Capital contributions are sums that are contributed by the partners as temporary
investments which the partners are entitled to have returned, at their discretion.
A person who makes an offer is called an offeree.
Pumping gas into a car at a self-service gas station would be an example of an
implied-in-law contract.
The Copenhagen Accord actually operates outside the jurisdiction of the United
Braxton has an oral contract to deliver 500 cases of green beans to Mary for $10,000.
During a court hearing concerning the validity of the contract, Braxton admits that he
sold Mary 100 cases of green beans. The contract is enforceable to only 100 cases of
green beans.
A certificate of deposit is a written promise by the maker to pay money to the order of
another party, the payee.
Law is a means of civil management.
Outstanding shares of stock of the Bittman Corporation were held by seven
shareholders, all from the same Bittman family. The Bittman Corporation may be
designated as a close corporation.
Janet is the promoter of a corporation called Time Inc., which is in the process of being
formed. Janet rents office space in Time's name. Time is bound by Janet's contract.
The U.S. Constitution grants the federal government express authority to enact criminal
law statutes.
American businesses do not have a legal obligation to give U.S. citizens working
abroad the same protection against discrimination that they give to workers in the
United States.
A deed of trust is requires court action to sell property upon default of the debtor.
The first set of numbers on a printed check is the bank's Federal Reserve number.
While examining allegations of "undue influence," the court treats kindliness and undue
influence as one and the same.
The most common type of draft in use today is the check.
"Survival statutes" allow the family members of an individual, who is killed as the
result of a tort, to sue the wrongdoer for the loss of support from the deceased.
In an auction with reserve, the auctioneer must accept the highest bid.
Proxy contests involving large, publicly held corporations are regulated by the
Department of Commerce.
In his book, Law and History, Professor Anthony Chase writes that the balance between
the spirit and the letter of the law is one of the most obvious dualities in the law.
In the Wickard v. Filburn case (1945), the Supreme Court declared that the private use
of wheat on a single family farm could be curtailed by the federal government.
Predictive political history is a technique for determining what the "new world order"
will look like.
The Clayton Act of 1914 prohibited federal courts from issuing injunctions against
labor strikes.
When both parties to an illegal agreement are equally wrong in the knowledge of the
operation and effect of their contract, they are said to be in pari delicto.
Courts typically award punitive damages in breach of contract cases.
Colleagues Sarah and Julia are involved in a dispute and get another colleague,
William, to make suggestions about resolving their dispute. This is an attempt at
A holder in due course of a negotiable instrument can never have more rights than
previous holders of the instrument.
Assumption of risk can be used as defense to negligence if the victim is forced to enter
the risky situation because no other choice is available.
Lillian Fey purchases a night table from Aretha Boyner. Aretha wants Lillian to pay her
by check before delivering the night table to Lillian's house. Lillian decides to attach an
indorsement that reads, "Pay to Aretha Boyner if she delivers her night table to me,
Lillian Fey, at 16 Holmes RD." This is an example of a(n)
A. indorsement for deposit.
B. conditional indorsement.
C. qualified indorsement.
D. significant indorsement.
Which of the following statements holds true for a patent?
A. A patent application cannot be accessed by the general public.
B. A patent expires at the end of a 20-year period.
C. A patent is subject to "first-to-invent" patent process, rather than the "first-to-file"
D. A patent is a process used in a business and disclosed only to those employees who
need to know it to do their jobs.
Universal life insurance allows the policy owner to modify the:
A. face value of the policy and the premiums.
B. face value of the policy, but not the premiums.
C. premiums, but not the face value of the policy.
D. face value of the policy and obtain refunds of premiums already paid.
Jack has an auto accident while on business for Small Enterprises, an RLLP consisting
of Jack and Alex. Who is liable for damages resulting from the auto accident?
A. Small Enterprises only
B. Jack only
C. Jack and Alex only
D. Small, Jack, and Alex
It is important to identify a ____________ contract because it includes both goods and
services. If the sale of goods dominates the contract, then it will be governed by
____________; however, if services dominates the contract, then it will be governed by
A. blended; CISG; common law
B. blended; common law; UCC Article 2
C. hybrid; UCC Article 2; common law
D. hybrid; common law; Restatement of Contracts
____________ is a legal doctrine that restricts a party from denying that a promise was
made under certain conditions, even though consideration has not been exchanged to
bind an agreement.
A. Statutes of limitations
B. Promissory estoppel
C. Locus sigilli
D. Accord and satisfaction
Edwin, Marketing VP of Amalgamated Sales, Inc., writes a letter dated August 1 to
Bargain Stores, Inc. offering to sell candy to Bargain Stores at $50 per case for the next
thirty days. Bargain Stores then contracts with local retailers based on the offer from
Amalgamated. Ten days later, Amalgamated receives an offer from Dandy Stores, Inc.
to purchase this same candy at a price of $75 per case. Can Amalgamated withdraw its
offer to Bargain Stores?
A. Yes, the offer may be withdrawn since it lacks consideration.
B. No, as this is a firm offer.
C. Yes, the offer was simply an invitation to negotiate.
D. No, as this is only an option.
According to the E-SIGN Act:
A. diverse areas such as database contracts, software licensing agreements, customized
software formulation, and the rights to multimedia commodities are covered.
B. the participants must concur on the use of an electronic medium to create their
contractual relationship.
C. e-contracts that are entered into over the Internet will be valid, provided that the
parties to the e-contract have agreed that electronic signatures will be used.
D. an e-contract, even if it cannot be duplicated and stored, will have the same validity
as a paper contract.
____________ is the communication of false and destructive information about an
individual through the use of electronic devices.
A. Cyber disparagement
B. Cyberinvasion
C. Cyberdefamation
D. Cybermining
Bridget contracts with Hunter to purchase $30,000 worth of goods for her store. Hunter
wants a clause in the contract stating that neither party will sue the other after one year
from the date of breach of contract. Which of the following is true of this situation?
A. Parties are not allowed to provide time limits in their sales agreements, since the
UCC sets this time.
B. Competent and informed parties can agree to set any time limit to sue for breach of
C. The courts must review the time limits the parties have determined in the sales
agreement as reasonable.
D. The UCC allows parties to shorten the time limit to bring a suit to a minimum of one
Webtel Services, Inc. and Acme Co. sign a document which states that Webtel Services
will create a web page for Acme and that Acme will pay for this work. This is an
example of a:
A. bilateral, voidable contract.
B. quasi, unilateral contract.
C. bilateral, express contract.
D. unilateral, implied-in-law contract.
An uninsured motorist drove through a red light and hit the passenger side of David's
car. David, the driver, suffered a concussion, and the passenger, Jayne, broke her right
arm and leg. David's car sustained extensive damages that would cost $2,000 to repair.
If David has uninsured-motorist insurance, the coverage will:
A. protect David, but not Jayne.
B. protect David and Jayne and reimburse David for the $2,000 in damages to his car.
C. protect David and Jayne, but not cover any of the damages to David's car.
D. cover any injuries sustained by the uninsured motorist, to prevent the motorist from
suing David.
The law exercises the power of ____________ to confiscate privately owned land for
community purposes.
A. eminent domain
B. the ultimate ruler
C. social justice
D. property statutes
An instrument containing an acknowledgment that a bank has received a sum of money
and a promise by the bank to repay the sum of money is called a(n):
A. installment note.
B. certificate of deposit.
C. promissory note.
D. certificate of demand.
The clause that gives the most power to Congress in Article I of the U.S. Constitution is
the ____________ clause, which has been used over the last two centuries to empower
Congress to regulate science and technology.
A. commerce
B. equal protection
C. due process
D. necessary and proper
A consumer has the right to claim an expedited credit if the customer asserts in good
faith that the:
A. bank charged the consumer's account for a substitute check that was not given to the
B. check was not properly charged to the consumer's account.
C. consumer did not suffer a resulting loss.
D. production of another substitute check is necessary to determine the validity of any
ADR is most likely to be useful in cases involving:
A. constitutional law.
B. civil rights.
C. contracts.
D. criminal law.
A ____________ means the exclusive control of a market by a business enterprise.
A. monopoly
B. common enterprise
C. trust
D. confederation
In the past, infant and childhood deaths and short life spans used to limit population
growth. In today's world, thanks to improved nutrition, sanitation, and medical care,
more babies survive their first few years of life. The combination of a continuing high
birth rate and a low death rate is creating a rapid population increase in many countries
in Asia, Latin America and Africa. Which organization was formed under the United
Nations auspices to deal with the problem of population increase? What are the main
functions of this organization?
Electronic ____________ is a system in which funds are electronically transferred from
a customer's checking account, eliminating the need to process a paper check.
A. fund transfer
B. check transfer
C. check conversion
D. teller system
The Emmett School (ESD) district contracts with the GoldenFarms Dairy for "all of the
milk" GoldenFarms can produce during ESD's current school year. The contract
specifies a price, but no exact quantity of milk to be purchased is set in the contract.
This contract is a(n):
A. invalid contract because no quantity is set.
B. valid requirements contract.
C. valid output contract.
D. invalid contract because consideration is missing.
The theory of ____________ means ____________.
A. respondeat superior; torts committed by an employee during his employment will
result in both the employee and the employer being held liable under tort law
B. respondeat superior; an employee may be held liable under tort law for the torts
committed by her employer, while the employee was working at the organization
C. respondeat superior; an employee working with an organization and having
committed a tort can be held liable for even though he or she did not intend the harm
D. proximate cause; an organization is not held liable under tort law for the torts
committed by its employees during their work tenure at the organization
Which of the following is true of litigation and ADR?
A. Litigation is less adversarial than ADR procedures.
B. Litigation is generally more expensive than ADR procedures.
C. ADR procedures are generally more time-consuming than litigation.
D. The use of ADR procedures makes litigation unnecessary.
Under Chapter 13 of the Bankruptcy Code, what happens if the debtor submits the
repayment plan to the court, but the court has yet to hold its hearing?
A. The debtor is not required to start payments within the stipulated period of thirty
B. The debtor makes the payments to the trustee.
C. The debtor makes payments individually to the creditors.
D. The debts of the debtor are discharged.
The Identity Theft Penalty Enhancement Act added a new crime called ____________
to the original statute.
A. aggravated identity theft
B. fraudulent misrepresentation
C. uttering
D. identity violation
In 1990, in the case known as ____________, the United States Supreme Court ruled
that the right to die was guaranteed by the due process clause of the United States
A. Cruzon v. Director, Missouri Department of Health
B. Roe v. Wade
C. Gonzalez, Attorney General v. Oregon
D. Windsor v. United States
Lori went into an electronics store that had a sign posted on the wall declaring "All
sales final!" She told the salesperson that she was looking for an iPod with Pandora, so
that she could listen to streaming music while working out in her wifi-enabled health
club. The salesperson selected a wifi-capable iPod and told Lori that she could receive
Pandora as long as the fitness center had wifi. The next day, when Lori tried to use the
iPod at the fitness center with wifi, she found that she could only hear static. Which of
the following is true of this situation?
A. Lori will be unable to return the iPod because the store's policy said "All sales final!"
at the time of the purchase.
B. Lori may not be able to claim a refund, since the iPod will be declared as
C. Lori can claim a refund of the iPod on the basis of an implied warranty of fitness for
a particular purpose created by the salesperson.
D. Lori can claim a refund from the store based on a limited warranty that is practiced
in the electronics industry.
After receiving her credit card bill, Claire feels that the credit card company has made a
mistake. Several transactions are not hers. The law that has established procedures for
the prompt handling of such billing disputes is known as the:
A. Fair Credit Reporting Act.
B. Fair Credit Billing Act.
C. Fair Debt Collection Practices Act.
D. Truth in Billing Act.
Mark enjoys hacking into the computer databases of companies, but never takes or
damages any data. Mark has violated which of the following statutes?
A. Access Device Fraud Act
B. Computer Fraud and Abuse Act
C. Wiretap Act
D. Mark has not violated any statute, since there is no damage.
Which of the following is true of "click" fraud?
A. The click-on process functions only in online contracts and not for online
B. Clicks are proven ways to gauge interest in the advertiser's service or product.
C. A problem that arises in this area is verifying the identity of the "clicker."
D. The click-on process functions only for online advertisements and not for online
LeVoe wrote a check for $1,200 to the order of Henry Smith and delivered it to Smith in
payment for a used car that Smith said had a rebuilt engine. Smith indorsed the check
and delivered it to Kraus. LeVoe stopped payment on the check when she discovered
that the engine had not been rebuilt. Analyze the case.
Shannon offered a $50 reward for the return of a lost kitten. When Mark found the
kitten and returned it to Shannon, she refused to give him the reward because he had not
promised to find the kitten before he went looking for it. Analyze the case.
Emerson, a wealthy man, has a special seal made that contains his family crest and
motto. Emerson places the seal impression next to his name on every contract that he
signs in order to prove that other contracts containing a signature without the
impression are forgeries. Discuss the type of contract Emerson makes.
Ashe indorses an order instrument in the following manner: "Pay to Big Bank, for
deposit only, Ashe." Discuss the types of indorsements and the legal implications the
instrument represents.
Tom has filed for a Chapter 13 bankruptcy and one of his creditors is attempting to
organize the other creditors into a group to petition the bankruptcy judge to allow them
to prepare a debt readjustment plan for Tom. Will the bankruptcy judge allow this
action by creditors?
To support his efforts in the writing of a new novel, Madden sold various patrons an
interest in the forthcoming novel. The patrons agreed to supply him with money in
exchange for a return on their investments out of any profits Madden made in the sale
of the novel. Could this scheme be considered a sale of securities? Why or why not?
Hansen had a contract with a Swedish corporation for the delivery of several
automobiles. When the corporation failed to deliver the vehicles as agreed, Hansen
indicated that he would bring his case to the International Court of Justice for a proper
hearing. Can Hansen make good on his promise to file a complaint with the
International Court of Justice? Explain.
Charles writes a check payable to Jane on his account at Friendly Bank. Friendly
accepts the check, but subsequently determines that there are insufficient funds in
Charles' account to pay the check. Explain what liability Charles has.
Dale posts an ad in the local newspaper—"$100 reward for the return of my dog,
Buster"—with a picture. Henry, after seeing the newspaper advertisement, finds that a
dog has strayed into his garden. Henry checks the dog's collar that has a tag with Dale's
address and returns the dog. Is Henry legally entitled to the $100 reward? Explain.
Teller agreed to buy a stolen piano from Luthor, but failed to live up to his part of the
deal. Does Luthor have a legitimate cause of action against Teller? Explain.
Colleen disinherited her husband Glen and left her entire estate to her church. Glen
desires to challenge this distribution. Discuss Glen's likely success.
Hayley loans David $20,000 by taking a mortgage on David's land on February 1st, but
does not record a mortgage. On April 1, Gavin loans David $15,000 taking a mortgage
on the same land and records the mortgage on April 4th. Hayley then records her
mortgage on April 8. Discuss the proceedings in case David is unable to pay either of
the lenders.
Juanita's grandfather loans valuable artwork to the Art Museum on the condition that
the same will go to Juanita if the museum closes. She wants to purchase property
insurance on the art work because she feels that it would be a great loss if any mishap
occurs. Discuss the legal implications of this situation.
Workers at Titan Industries are concerned that employment-at-will allow Titan to act
arbitrarily and without any procedure or progressive discipline when firing workers.
Discuss what legal remedies, if any, are available to the workers.
Lisa did not deliver goods in 1992 as her contract with Jozell required, but Jozell took
no legal action for fifteen years and then sued Lisa for breach of contract. Discuss the
A court decides that a state agency, rather than a federal one, can control what
government employees, in the course of performing their duties, are permitted to talk or
write about in relation to official policies, procedures, and programs. Such a prohibition
might appear to violate the employee's Constitutional right of free speech as a U.S.
citizen. Analyze.
Fritz is having his will prepared and also wants to prepare other advance directives.
Discuss the typical advance directives and why they are prepared.
Gail buys a car at the age of 17 and makes regular monthly payments until six months
after her 18th birthday, when the car is totaled in a wreck. Gail wants to disaffirm the
car purchase. The age of adulthood in Gail's state is 18. Discuss.
Late one evening Charles and Henry are discussing the purchase and sale of $2,500 of
coffee shop equipment after an entrepreneurship class. They are in the classroom when
Henry writes their agreement on the classroom whiteboard and both Henry and Charles
sign it on the whiteboard. Discuss if this whiteboard document is sufficient to provide a
binding written agreement.
Santos created an irrevocable living trust for her stepdaughter. In her later years, she
became angry with her stepdaughter and sought to rescind the trust. Will she be able to
do so? Explain.