Jean is playing a computer game on a bad disk that melts in her drive, starting a fire that
injures her hands. Jean files a suit against K-Tech, Inc., the games manufacturer.
K-Tech is held liable under the doctrine of strict liability. A significant application of
this doctrine is in the area of
a. cyber crime.
b. negligence.
c. product liability.
d. res ipsa loquitur.
In his will, Vigor makes a gift of $10,000 to Wylie. This is
a. a general bequest.
b. a general devise.
c. a specific bequest.
d. a specific devise.
Trey and Unice orally agree on the sale of Treys Health Club to Unice and note the
terms on a sheet of the clubs stationery, which Trey signs. This agreement is most likely
enforceable against
a. neither Trey nor Unice.
b. Trey and Unice.
c. Trey.
d. Unice.
Jill, in good faith and for value, gets from Kit a check “payable to the order of bearer.
Jill does not know that Kit stole the check. Jill is
a. an HDC.
b. not an HDC, because Kit did not acquire the check for value.
c. not an HDC, because Kit did not acquire the check in good faith.
d. not an HDC, because the check is a bearer instrument.
Grant offers to sell his Honda Civic for $10,000 to Ivy. Referring to the prices for
similar Hondas, Ivy says, “Ill pay no more than $5,000. Grant says, “Forget it. Grants
offer was terminated by
a. Grant.
b. Honda.
c. Ivy.
d. no oneGrants offer is still open.
The Nuclear Regulatory Commission (NRC) files a complaint against General
Construction Corporation (GCC). GCC may want to settle the dispute, before formal
adjudicatory proceedings begin, to avoid
a. appearing uncooperative.
b. eliminating the need for additional proceedings.
c. rectifying the problem to the NRCs satisfaction.
d. saving the expense of formal proceedings and later appeals.
Congress enacts the Supplemental Income Tax Act (SITA) to exempt the citizens of
Louisiana from their federal taxes until New Orleans is rebuilt from the ravages of
Hurricane Katrina. SITA will most likely be
a. rendered invalid under the supremacy clause.
b. rendered valid the equal protection clause.
c. struck down under the taxing and spending clause.
d. upheld under the commerce clause.
Readmore Bookstore Corporation files a registration statement and delivers a
prospectus to the appropriate parties. These items are intended to enable the evaluation
of certain financial risks by
a. market professionals to explain to all investors.
b. government regulators to disclose to the general public.
c. sophisticated investors only.
d. unsophisticated investors.
Super Chef Appliance Company allows Reba to take a set of kitchen appliances that she
bought from Super Chef even though she has not paid the full price. Super Chefs
legally sufficient financing statement in the goods need not include
a. a description of the collateral.
b. a statement of the reason for allowing Reba to take the goods.
c. Super Chefs name.
d. Rebas name.
Koko signs a covenant not to compete as part of a sale of her ongoing medical
equipment business to Laurel Valley Medico, Inc., in exchange for a bonus payment.
The covenant is most likely enforceable by
a. both parties.
b. Koko, but not Laurel Valley.
c. Laurel Valley, but not Koko.
d. no one.
Parkdale Roofing Company receives a check from Quik Mart for fixing its roof, and
indorses the check to Repair Supplies, Inc. (RSI). Stef, RSIs owner, gives the check to
Tiny as a gift. In this situation, the party who is not an HDC of the check but who
acquires HDC rights under the shelter principle is
a. no one.
b. Parkdale Roofing.
c. Stef.
d. Tiny.
Fay is mentally incompetent but has not been so adjudged by a court. Any contract Fay
enters into is
a. voidable if Fay has a lucid interval at the time of contracting.
b. voidable if Fay lacks the capacity to comprehend the consequences.
c. voidable if the other party does not realize that Fay is incompetent.
d. unavoidable.
Lava Excavators, Inc., needs a drill to continue its operations and orders one for $3,000
from Mining Supplies Company. Lava tells Mining that it must receive the drill by
Tuesday or it will lose $10,000. Mining ships the drill late. Lava can recover
a. $13,000.
b. $10,000.
c. $3,000.
d. $0.
Like other corporations, Riveters Construction Company can expand its operations
through
a. a liquidation and distribution of its assets.
b. a purchase of substantially all of the assets of another corporation.
c. articles of dissolution filed voluntarily with the state.
d. the appointment of a receiver to wind up the corporate affairs.
Arcata, California, passes an ordinance to regulate waste disposal. The disposal of
waste may also be regulated by
a. all other levels of government.
b. no other levels of government.
c. the federal government only .
d. the California state government only.
Orange Company makes computers. The companys ad states that “if you arent eatin an
Orange, you arent gettin any C. The Federal Trade Commission would consider this ad
a. false and misleading.
b. impermissibly vague and general.
c. a deceptive half-truth.
d. none of the choices.
Myles obtains a business liability insurance policy from Nova Insurance Company for
Myless Hydraulics & Transmission Repair shop. Nova can cancel the policy
a. if Myles increases the risk assumed by the Nova.
b. if Myles files a claim under the policy.
c. if Myles appears as a witness in a case brought against Nova.
d. under no circumstances.
Odell is a director of Price Rite, Inc. As a director, with respect to the corporation, Odell
is
a. a fiduciary.
b. a forum.
c. a proxy.
d. a quorum.
Regional Investment Corporation (RIC) hires Sam, a real estate agent, to locate
investment properties for RIC. Sam learns of a warehouse available for $100,000, but
neglects to tell RIC. Most likely, Sam
a. breached the agents fiduciary duties to the principal.
b. did nothing wrong.
c. failed to take advantage of a business opportunity.
d. assumed that the information was confidential.
In a dispute over a sale involving a bicycle, Dain argues that as to this deal Emorys
Hobby Shop, where Dain bought the bike, is a merchant. A court may determine
whether Emorys 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.
Cody files a suit against Delta Corporation. Delta responds that it appears from the
pleadings the parties do not dispute the facts and the only question is how the law
applies to those facts. Delta supports this response with witnesses sworn statements.
This is
a. a counterclaim.
b. a motion for judgment on the pleadings.
c. a motion for summary judgment.
d. a motion to dismiss.
Bren leases an apartment from Cris for one year. After two months, she sublets the
premises for the next six months to Dee, without obtaining Criss consent. Dee pays the
rent for only four months. For the last two months of Dees six-month term, Bren is
a. liable for the rent, because Dee defaulted.
b. liable for the rent, because the sublease lacked Criss consent.
c. not liable for the rent, because Bren does not own the apartment.
d. not liable for the rent, because Bren sublet the premises to Dee.
Leo buys an exclusive territory in which he is authorized to set up a plant to make
Midwest Dairy, Inc., products. After receiving the formula, Leo begins making Nice
Ice-brand ice cream and other Midwest products. This is
a. a chain-style franchise.
b. a distributorship franchise.
c. a manufacturing franchise.
d. no franchise.
Fibreboard Construction, Inc., and Gated Community Corporation form a joint venture.
A joint venture is usually formed for
a. an implied duration of not more than six months.
b. a single activity or transaction.
c. a stated duration of not more than one year.
d. a perpetual existence.
Fact Pattern 42-1A
Fresh Fruits & Veggies, Inc., wants to make an initial public offering of securities.
Fresh believes that it qualifies for an exemption under Regulation A from the full
registration requirement of the federal Securities Act of 1933.
Refer to Fact Pattern 42-1A. Fresh decides to sell its new securities via the Internet.
This offering
a. will avoid the payment of commissions to brokers or underwriters.
b. is an investment scam.
c. is a Ponzi scheme.
d. constitutes insider trading.
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.
Fact Pattern 12-A2
Cut-Rate Construction Company (CCC) begins building a restaurant for Diners
Restaurants, Inc., but after two months demands an extra $100,000. Diners agrees to
pay.
If CCC offers, as a reason for the extra $100,000, that extraordinary unforeseen
difficulties will add considerable cost to the project, the agreement is
a. enforceable as an accord and satisfaction.
b. enforceable because of unforeseen difficulties.
c. unenforceable as an illusory promise.
d. unenforceable due to the preexisting duty rule.
Seaside Resort, Inc., adopts an alternative dispute resolution (ADR) program. Tess, a
current employee, signs an agreement under which arbitration is subject to “Seasides
rules, with the employee to bear all costs of the proceeding. When a dispute arises, Tess
refuses to arbitrate. Seaside files a suit to compel arbitration. The court will most likely
a. order arbitration according to Seasides rules.
b. order arbitration but suspend Seasides rules.
c. refuse to order arbitration if a resolution of the dispute is clear.
d. refuse to order arbitration if Tess lacks the ability to pay.
Old Oak Brewery, Inc., makes and sells alcoholic beverages with labels that display a
drawing of a squirrel making the gesture generally known as “giving the finger. Old
Oak applies to the Ohio State Liquor Authority (OSLA) for brand-label approval to sell
the beer in Ohio. Without considering alternatives, OSLA denies approval because “the
label could appear in grocery stores, with obvious exposure on the shelf to children of
tender age. Why would a court hold that the denial of Old Oaks application violates the
First Amendment?
Essen Corporation buys from Fallow Farms, Inc., a rice crop that Fallow plans to plant
and harvest during the next growing season. Essen plans to sell the rice to Gourmet
Grocery Stores. After the rice is planted, but before it is harvested, an insurable interest
in the rice exists in
a. Essen and Fallow, but not Gourmet Grocery.
b. Essen, Fallow, and Gourmet Grocery.
c. Essen only.
d. Fallow only.
Text Publishers, Inc., contracts for a sale of textbooks to University Bookstores, Inc.
Viable Shipping Corporation, the carrier, transports the books to Warehouse Storage
Company. Texts right to stop delivery is lost when Universitys rights to the goods are
acknowledged by
a. the appropriate government agency.
b. the students who opt to buy the books.
c. University Bookstores.
d. Warehouse Storage.
The First Amendment protects obscene speech.
One of the elements of a valid contract is a fair price.
The Bill of Rights protects individuals against various types of interference by the
government.
Private parties can sue violators of Section 10(b) of the Securities Exchange Act of
1934 and SEC Rule 10b-5.
There are no state statutes regulating the use of spam.
A customer can escape liability for failing to notify the bank of forged or altered checks
when the customer can prove that the bank was negligent.
A state law that treats nonresidents different from residents may violate the privileges
and immunities clause.
Bait-and-switch advertising occurs when a salesperson lures a consumer into a store by
advertising a low-priced item in order to switch the consumer to a more expensive item.
A limited liability company, as an entity, pays no taxes.
The lack of an opportunity to read a contract may be unconscionable.
A price list is an offer.
Fungible goods are goods that cannot be delivered by physical transport.
To be negotiable, an instrument must be payable on demand or at a definite time.
Under the Age Discrimination in Employment Act of 1967, a plaintiff must prove that
he or she was replaced by a person “outside the protected class.
A trade name cannot be registered with the federal government unless it is also a
trademark or a service mark.
The UETA applies to all writings and signatures.
Generally, under employment-at-will doctrine, an employer may fire an employee at
any time for any reason.
A vertical restraint is any agreement that in some way restrains competition between
rival firms competing in the same market.
The Sarbanes-Oxley Act of 2002 applies only to domestic public accounting firms that
provide auditing services to “issuers.