Book Title
Business Law with UCC Applications 14th Edition

LGST 64812

March 1, 2019
Fish not yet caught by a commercial fisher are called future goods.
Lending one's car to a friend would be an example of a mutual benefit bailment.
An automobile title certificate under the UCC has the legal status of a document of title.
If the taker is negligent in not discovering that something was wrong with the
instrument, it establishes lack of good faith.
Congress, not the NLRB, has the authority to conduct investigations into unfair labor
practice charges.
Agent-employees have the authority to, and usually do, deal with third parties on behalf
of the principal.
Some websites use "clickbot" software, which are capable of mechanically clicking on
certain advertisements at programmed intervals. All of the major search engines have
found themselves in litigation because of this new cyber-confidence game.
Escheat is a type of fraud.
If a bank refuses to certify a check, the bank has dishonored it.
A bankrupt individual is required by law to eventually repay all of his or her debts to
If ABC Co. and XYZ Co. agree to charge consumers a fixed, but fair, price for their
products, the courts will judge the legality of the practice by the rule-of-reason
The provisions of Article 2 of the Uniform Commercial Code apply when a
cyber-agreement deals with the sale of goods.
Most of the time, vicarious liability is applied to negligence cases, because workers are
not usually hired to commit intentional torts.
Teri sends an offer to Morris to sell her car for its Blue Book value. Morris is the
Matthew agrees with a friend to divide the proceeds from a bank robbery that the two
will commit. This agreement is void.
According to the priority list of property distribution in the Bankruptcy Code,
administrative expenses incurred during the administration of bankruptcy are paid
before secured debts.
Not all contracts are agreements.
The courts have never been inclined to enforce social agreements.
When personal property is owned solely by one person, it is said to be owned in
Under the FMLA, in order to qualify for leave time, a worker should have been
employed by a firm for at least one year and worked for 1,250 hours over a 12-month
period before leave is requested.
Gabriel points a gun at a store clerk to frighten the clerk. This is an example of assault.
Uncle Joe promises Mary a new car on her birthday. This is a contract.
The common law is the body of previously recorded legal decisions made by courts in
specific cases.
An arbitrator's decision is always binding and cannot be appealed in court.
An option contract holds an offer open for an agreed period of time.
A unilateral mistake offers each party the right to rescind the contract.
An electric company would be an example of a quasi-public corporation.
In a sole proprietorship, the owner may keep all the profits.
Notice of dishonor of a check may only be given through a Federal Reserve Bank.
Labor unions are not protected by the First Amendment because they are not political
The dissolution of an LLC need not be followed up by a winding up of the LLC.
In the Sousa v. American Medical Response of Connecticut (AMR) case, the NRLB
protected the free speech rights of the employee.
Quantum meruit damages are token damages awarded to parties who have experienced
an injury to their legal rights, but no actual loss.
Ivan receives his June 2015 Friendly Bank statement and promptly calls the bank to
report a series of forged checks shown on the statement dating back to March 2015.
Friendly Bank must credit Ivan's account for the forged checks.
Parents are legally obligated to leave their property to their children.
Under bodily injury liability automobile insurance, the insurer is liable for damages up
to the limit of the insurance purchased.
The Geneva Conventions deal with:
A. prisoners of war only.
B. occupation forces only.
C. both occupation forces and prisoners of war.
D. neither prisoners of war nor occupation forces.
A copyright protects the idea itself rather than the expression of an idea.
Which of the following is true of ethical and legal harmony?
A. In a utopian society, ethics and law would always differ.
B. Ethical considerations cannot form the foundation of a legal system.
C. A legal system founded on ethics will rarely succeed in reaching its objectives.
D. Ethics can lead the way in difficult situations where the law has yet to venture.
The right to cast another shareholder's vote is called:
A. cumulative voting.
B. proxy voting.
C. a pooling agreement.
D. a shareholder proposal.
The first rule of contract interpretation, under the ____________, tells judges that their
primary objective in the interpretation of a written contract is to uncover the goals that
the parties had when they entered into the contract in the first place.
A. standard construction rule
B. state of frauds
C. subjective construction rule
D. mutual assent rule
Small State has a limited customer base north and south of the interstate highway.
Company A and Company Z agree that A will sell north of the interstate highway and Z
will sell south of the interstate. This is a ___________ violation of the Sherman
Antitrust Act.
A. per se
B. rule-of-reason
C. joint federal and state
D. minor
An acceleration of the debt:
A. increases the interest rate.
B. makes the entire amount of the debt due for immediate payment.
C. increases the monthly payment amount.
D. makes the repayment period of the entire debt one year.
Courts with the power to hear any type of case are courts with ____________
A. personal
B. special
C. general
D. subject matter
Which of the following provides a system in which debtors are forced to sell most of
their property and use the cash to pay their creditors a portion of the amount owed each
A. Family Farmer or Fishing Business Debt Adjustment
B. Reorganization
C. Liquidation
D. Individual Debt Adjustment
Eloise made a contract in January that gave her until the end of the year to complete her
work on a new computer system for Dexter. In mid-July, Eloise is working on the
computer system. The contract in July is considered:
A. executory.
B. unenforceable.
C. being expressed.
D. executed.
Dan is an accountant with Miller & Co. The financial condition of Miller & Co. is not
so good, but Dan shows it to be very healthy while preparing its financial statement,
knowing that Miller & Co. will show the statement to Chase in seeking financing for its
new project. Dan will ____________ personally liable to Chase if the new project goes
bankrupt, and Chase will be able to recover against Miller based on the liability theory
of ____________.
A. not be; general consent
B. be; attorney-client privilege
C. not be; breach of contract
D. be; actually named third parties
Aspen assigns his right to receive payment from Donna to Henry. Later, Aspen assigns
this same right to Doris. Doris gives notice to Donna on May 1, and Henry gives notice
to Donna on May 2. Which of the following is most likely to be the court's ruling?
A. Since Henry was the first assignee, he will be given the superior right to claim
Aspen's benefits.
B. Since Doris was the first to notify Donna, she will be given the right to claim the
assigned benefits.
C. Henry and Doris are joint assignees and will be given equal rights to claim the
assigned benefits from Donna.
D. Donna will be required to pay to Aspen, who in turn will be asked to make
respective payments to Doris and Henry.
Under the doctrine of ____________, the principal consideration is the safety of a
product, not the conduct of the manufacturer or supplier of the goods.
A. public policy
B. negligence
C. public interest
D. strict liability
In a tender of payment, the:
A. buyer offers to turn the money over to the seller.
B. buyer shows a seller his or her legal tender.
C. seller puts conforming goods at the buyer's disposition.
D. seller provides storage facilities for goods to the buyer.
Jamie authorizes Amy to sell his house, but does not clarify about the compensation
payable to Amy. What amount should be paid to Amy when she sells Jamie's house?
A. Nothing, since agency relationships are assumed to be gratuitous unless an
agreement specifies compensation.
B. An amount to be determined by arbitration.
C. A fair value for the services performed.
D. Ten percent of the sales price.
Monty quit his $150,000 annual salary job with Computer Associates in Monterey,
California, and moved with his family to Fairfield, Connecticut based upon an oral
promise by Software Power to provide reimbursement of all moving expenses and at
least three years employment at an annual salary of $250,000 per year. One month after
moving, and before being reimbursed for moving, Monty's employment with Software
Power is terminated due to a reduction in force caused by lower-than-expected product
sales. Can Monty successfully sue Software Power?
A. No, since the promise was oral.
B. Yes, under promissory estoppel.
C. No, since a promise of employment is always subject to market conditions.
D. Yes, but only for the moving expenses that Monty can prove he incurred.
____________ occurs when a targeted corporation makes a deal with the suitor to
protect management of the target.
A. Greenmail
B. A lockup agreement
C. A public relations campaign
D. A targeted shareholder agreement
If a defendant can prove ____________, the plaintiff is completely barred from
recovering any damages.
A. comparative negligence
B. partial comparative negligence
C. partial contributory negligence
D. contributory negligence
The status of a de facto corporation can be directly challenged by:
A. private citizens.
B. the state government.
C. both private citizens and the state government.
D. neither private citizens nor the state government.
A ____________ is an intangible property right granted to authors of musical
compositions, while a ____________ gives a person the exclusive right to sell an
A. copyright; trade secret
B. copyright; patent
C. patent; trade secret
D. trademark; patent
Political scientist and philosopher, Michael Sandel, warns that our tendency to evaluate
everything based on money creates two insidious results—injustice and corruption.
Here, Sandel is most likely critiquing which ethical theory?
A. Market value ethics
B. Positive law
C. Utilitarianism
D. Social contract theory
A mistake by only one of the parties is called a ____________ and ____________ offer
sufficient grounds for rescission or renegotiation.
A. unilateral mistake; does not
B. mutual mistake; does
C. binding mistake; does not
D. bilateral mistake; does
When a party (the movant) files a motion for ____________, the movant is telling the
court that no ____________ exists, and that the movant is entitled by law to
A. discovery; further discovery; a verdict in his favor
B. a counter claim; genuine issue of material fact; a favorable judgment
C. summary judgment; genuine issue of material fact; a favorable judgment
D. an affirmative defense; further testimony; dismiss the other party's case
____________ is the making of a false statement under oath.
A. Perjury
B. Dereliction of duty
C. Intimidation
D. Tampering with evidence
A ____________ check is a check drawn by one bank on another bank in which it has
funds on deposit in favor of a third person, the payee.
A. traveler's
B. teller's
C. cashier's
D. certified
Tom dies, and in his will, he names Pinson as the personal representative of his estate.
Pinson decides to sell Tom's house to Sally. Pinson could transfer title to Sally by means
A. the probate court records.
B. the decree of the probate court judge.
C. the sworn statement of Pinson.
D. a license issued by the court.
Thomas is named "office manager" by Bigger Co., but his precise duties are not
described. What type of authority would authorize Thomas to purchase office supplies?
A. Express authority
B. Implied authority
C. Apparent authority
D. Operation of law authority
Arian is a sole proprietor and owes a number of business creditors. The business
creditors may sue to:
A. only take Arian's business assets.
B. only take Arian's personal assets.
C. take both Arian's business and personal assets.
D. not take any assets, but only the profits of the business.
The Uniform Computer Information Transactions Act (UCITA) covers diverse areas,
such as database contracts and software licensing agreements.
In a locality that restricts business on Sunday, which of the following is usually true
regarding these restrictive laws?
A. They invalidate all agreements made on Sunday.
B. They validate agreements made on Sunday for delivery of goods on a business day.
C. They validate agreements made on Sunday if the business in question has closed on
D. They validate agreements made on Sunday requiring performance on a Sunday.
Under RUPA, a ____________ takes place whenever a partner is no longer associated
with the running of the firm.
A. dissolution
B. dissociation
C. rescission
D. devolution
In terms of social responsibility, which of the following arguments is true?
A. Under provisions of most incorporation statutes, a corporation is considered nothing
more than a company.
B. The decisions of corporate managers must always be narrowly focused on the profits
of the shareholders.
C. Corporate social responsibility is based on the premise that it is unethical for
corporations to earn profits for themselves.
D. Corporate decisions have an impact on more people than just the shareholders and
____________ subdivided into groupings of statutes that deal with a particular area of
the law are called ____________.
A. Codes; titles
B. Codes; articles
C. Titles; chapters
D. Codes; divisions
Allison is an attorney representing Big Co. in trademark litigation. Allison fails to
conduct market research in advance of the trial to determine the extent to which
consumers identify with the trademark associated with Big Co. Big Co. loses the
litigation under a finding that the trademark is generic and not uniquely associated with
it. Has Allison violated any duty she owed Big Co.? Discuss.
Suds, Inc., a local self-service laundry, has a large sign on the inside wall reading:
Georgia puts her damp clothes in a drier and within three minutes, the clothes are
burning due to an excessively hot drier. Suds had failed to perform maintenance on the
drier according to the manufacturer's instructions. Discuss in detail Georgia's ability to
recover from Suds for her burnt clothing.
Jan, a nonmerchant buyer, receives nonconforming goods from Zoe, a merchant seller.
Jan is so upset that she places the goods outside next to the trash collection bin and tells
Zoe to come get her "trash." Rain damages some of the goods before Zoe picks them up
the next day. Discuss Jan's duties and Zoe's rights.
Morgan, Slater, and Jergenston were partners in a legal consulting partnership.
Jergenston pocketed $500,000 he had solicited in bank loans for expanding the
partnership. When Morgan and Slater discovered Jergenston's impropriety, Jergenston
told them, "Tough luck, but as partners, we are jointly liable on this debt and must pay
off the $500,000 plus interest together." Was Jergenston correct? Explain.
Lane mails a $600 check for his $50,000 home policy with Surround Insurance Co. two
months late. Surround cashes the check. Two weeks later, the house is destroyed by fire.
When Lane attempts to collect the $50,000 in policy proceeds, Surround asserts that the
policy had lapsed and offers to refund the $600 payment. Discuss the legal rights and
obligations of Lane and Surround Insurance Co.
Jo testifies before the NRLB about the unfair labor practices of Large Co. Large Co.
transfers Jo from its plant in Cleveland, Ohio to its plant in Fairbanks, Alaska against
her wishes. Discuss the legal aspects of this situation.
Pierce was arrested under a city ordinance that made distributing handbills on the city
streets a crime. Pierce argued that the U.S. Constitution guaranteed his right to free
speech under the First Amendment. The local prosecutor argued that the First
Amendment to the U.S. Constitution did not apply to state laws. Was the prosecutor
correct? Explain.
Lisa realizes that her colleagues and her boss judge her based on the way she speaks.
Lisa is French and does not speak fluent English. Discuss the situation.
Melinda is considering opening a fast-food business across the street near a university
campus. Melinda needs to secure $100,000 in loans to open her business. The owner of
the land promises her that she has two months to accept his offer of $50,000 for the
land. Discuss how Melinda can ensure that the owner does not sell the land to another
Jill, a resident of Iowa, suffers $20,000 in damages when a BIG Corp. truck hits her
parked car in Illinois, where Jill is visiting her aunt. BIG Corp. is incorporated in
Delaware. In what court may her suit be filed?
Big Co. hires its auditor, Geraldo, as Vice President for Finance. Geraldo is a partner in
Seasoned Accounting, a firm that will continue to audit Big. Discuss the major legal
issues this situation raises.
The architectural firm of Maxwell-Wyatt, Inc. designed a house for Sandoval. Due to an
error in the architect's plans, the drain in the basement did not work properly. Can
Sandoval rightfully expect the firm to pay him the $1,500 it would cost to correct the
error? Explain.
Melinda hits a hole in the road while driving down the highway. Her car's axle breaks,
resulting in $2,500 of damages. Discuss if Melinda has coverage under any form of
auto insurance.
Kurt Johannessen, a well-known professional athlete, and Tina, his actress wife, have
filed for divorce and are involved in a dispute for the custody of their son. Because of
their celebrity status, neither wants the media coverage and public detailing of their
private lives that come with official court trials. However, mediation and arbitration
efforts have failed as neither party is willing to compromise. Discuss how they can
resolve their custody dispute and avoid the publicity issues.
Sarah gives a negotiable note for $5,000 to Roofing Contractors. Roofing cleverly alters
the note to $7,000 and negotiates the note to Bigger Bank for consideration. When this
alteration is discovered, discuss what recourse Bigger Bank will have against Sarah and
Tobyland is a developing nation and needs five million dollars to build dams and
flyovers. Which international organization will give Tobyland a loan of five million
Xavier hired Sam to sell Xavier's private Lear jet. Before any sale could be made, the
jet was destroyed in a crash. The destruction of the jet terminated the agency by
operation of law. Whom must Xavier inform of the termination?
An international contract between two merchants is the subject of a dispute between the
two companies, Universal Exports and Global Industries. The Universal offer specifies
delivery by January 15, while the Global acceptance specifies delivery by July 15.
Discuss how the CISG will resolve this dispute.
Tammy purchases a promissory note that has numbers scratched out and rewritten.
What legal problem will Tammy encounter in claiming to be a holder in due course of
the note?
Overwhelmed by his debt, Jaime decided that he would file for Chapter 7 bankruptcy
the following month. Fifteen days before he filed, Jaime took out a $3,000 cash advance
on one of his credit cards, and used the money to purchase and install a hot tub in his
bathroom. Jaime believed that he would be able to discharge the debt for the hot tub
when he went through the bankruptcy proceeding. Was he correct in his belief? Why or
why not?