State Banks policy requires that indorsements on checks exactly match the names of the
payees. Tovar, an employee of United Company, issues and indorses several payroll
checks in the names of former employees and deposits them into her account at State.
United files a suit against State to recover the funds. Most likely to suffer the loss is
a. State Bank on the basis of bad faith.
b. Tovar on the ground that she was a fictitious payee.
c. United Company for failing to monitor its employee.
d. the employees in whose names the checks were issued and indorsed.
Kady, an agent for Lebron, enters into a contract on Lebrons behalf with Madge that
must be in writing to be enforceable under the Statute of Frauds. Kadys authority to
enter into this contract is not in writing. Under the equal dignity rule, this contract is
a. enforceable.
b. void.
c. voidable at Lebrons option.
d. voidable at Madges option.
City Cab Company and Daves Autos enter into a contract for a sale of motor vehicles.
City assures Daves that it has valid title to the vehicles. Under the UCC, warranties of
title arise
a. automatically in most sales contracts.
b. only if the buyer asks for such a warranty.
c. only if the seller expresses such a warranty.
d. only in conjunction with lease contracts, not sales contracts.
Ray-On Corporation makes inexpensive, highly efficient, solar energy cells. A
anticipates a change in the demand for its products as a consequence of climate change.
According to the Securities and Exchange Commission, Ray-On should
a. disclose this information.
b. keep this information confidential.
c. reveal this information to insiders only if asked.
d. release this information to current shareholders only.
Standard Corporation can not claim a trademark in the phrase “Quality Is Standard if
the phrase
a. has a secondary meaning.
b. is descriptive.
c. is generic.
d. is memorable.
AgriEquip Service & Supply, Inc., sends Merilyn an e-mail in which AgriEquip offers
to employ her for certain hours and a specific amount of money over a limited period of
time. She responds with a counteroffer that reduces the hours and increases the money.
AgriEquip e-mails an acceptance. Merilyn performs, but AgriEquip refuses to pay. She
files a suit against AgriEquip for breach of contract. The court is most likely to rule that
the e-mail
a. showed only an agreement to agree.
b. was an agreement to the essential terms of an employment contract.
c. constituted an unenforceable, non-existent contract.
d. contained a contract but is unenforceable because it is electronic.
Dale files a suit against Eve, alleging her fraud in entering into a contract with him.
Proof of an injury is required
a. to recover damages.
b. to rescind the contract.
c. to undo Eves influence.
d. under no circumstances.
Textiles, Inc., and Fab Fabric Corporation enter into a contract for a sale of muslin. The
terms do not clearly indicate whether it is a destination or shipment contract. A court
would most likely presume that it is
a. a delivery ex-ship.
b. a destination contract.
c. a shipment contract.
d. none of the choices.
Clover finds a laptop and asks Duffy to hold it for her temporarily. Later, Duffy refuses
to return it, claiming that its not hers. Most likely to establish rights to the laptop, under
the doctrine of relativity of title
a. are Clover and Duffy, as concurrent owners.
b. is Clover alone.
c. is Duffy alone.
d. is neither party.
A state legislature enacts a statute that prohibits the advertising of video games
“because the games might be harmful to minors. Despite this new statute, the president
of Games Marketing, Inc. (GMI), orders GMI marketers to place ads in any media.
When a GMI ad appears on HDTV, a local television station, GMI and HDTV are
charged with violating the statute. What is the defendants best defense against a
conviction?
National Grocers, Inc., enters into a contract with Overland Shipping Company for the
delivery of a shipment of fresh produce. If ambiguities appear in the contract, they will
be construed against
a. the party who drafted the contract.
b. the party with the greater bargaining power.
c. the promisor.
d. the promisee.
Rocky and Slim enter into a contract for a sale of five rowboats. Circumstances make it
difficult for Rocky to perform, and the contract is breached. Slim looks for remedies.
Unlike the common law, under the UCC, remedies are
a. cumulative.
b. exclusive.
c. limited.
d. unlimited.
UniOil, a U.S. firm, owns property in Venezuela. When the government of Venezuela
seizes the property, UniOil asks a U.S. court to order the propertys return. The court
rules that Venezuela is exempt from the courts jurisdiction. This is
a. a travesty of justice.
b. the act of state doctrine.
c. the doctrine of sovereign immunity.
d. the principle of comity.
Hadley and Ilene are accountants who work together. Hadley and Ilene can limit their
potential liability for each others misconduct by organizing their business as
a. a limited liability partnership.
b. an unincorporated professional association.
c. an unofficial co-practice.
d. a sole proprietorship.
Erin and Dooley, a married couple, borrow $120,000 from Capital & Credit Bank to
buy a home. When Erin and Dooley divorce, they are unable to make payments on the
mortgage. The market value of the home has declined to less than the balance of the
loan. Capital & Credit agrees to a sale of the property for this amount. This is
a. a deed in lieu of foreclosure.
b. a home equity loan.
c. a reverse mortgage.
d. a short sale.
Trina pays Urban Edge Electronics store $1,500 for a laptop computer. Under the UCC,
this is
a. a gift.
b. a lease.
c. a sale.
d. a crime.
The Tourist Travelers Association wants the federal government to spend money to
build a new highway. Congress can spend revenues
a. only to carry out its enumerated powers.
b. to promote any objective that it deems worthwhile.
c. as long as the funds are spent uniformly among the states.
d. without regard to whether the expense violates the Constitution.
Fact Pattern 30-1A
Stacy sells her all-terrain vehicle (ATV) to her brother Terrill for $1,000. Twelve days
later, Stacy files a petition in bankruptcy for relief through a liquidation.
Refer to Fact Pattern 30-1A. Regarding the sale of the ATV, the trustee may
a. cancel it as a fraudulent transfer.
b. cancel it as a voidable preference.
c. not cancel it because it is a sale, not a gift.
d. not cancel it, but can sue Terrills estate for the return of the $1,000.
GR*Tech Company agrees to sell computer equipment to Home Office Stores, Inc., to
market to its customers. Normally, their contract would not be enforceable unless it
includes
a. the duration of the deal.
b. the price of the goods.
c. the quantity of the goods.
d. the shipping arrangements.
Oak Grove Residences, Inc., owns apartment buildings. Pedro leases one of Oak
Groves apartments. Pedros transfer of his interest in the lease to Quito for a period
shorter than the lease term is
a. an assignment.
b. an eviction.
c. a right of entry.
d. a sublease.
Shady Oaks Development, LLC, and Rural Acres, Inc., sign a written contract for a sale
of land. In some states, to be enforceable, this contract must include
a. a correct title, such as “Land Transfer or “Real Estate Agreement.
b. a declaration of the contracts purpose.
c. a statement of the consideration.
d. a description of the land.
BarBQ Sushi Taco Company considers the impact of its corporate decisions on various
groups and often acts in the interest of a group that has a greater stake in a decision than
BarBQs shareholders. This is most likely to attract potential employees who are
a. investors focused on short-term profits.
b. irresponsible slackers.
c. politically-motivated complainers.
d. recent college graduates.
Travel Tours Company faxes ads to Samantha and other individual consumers without
the recipients permission. This is subject to
a. a cease-and-desist order by the Federal Trade Commission.
b. no sanctions.
c. possible fines by the Federal Communications Commission.
d. rescission on the order of the Federal Reserve Board.
Levon leaves his truck at MakeRight Vehicle Shop for repair. When Levon refuses to
pay for the work, MakeRight refuses to give him possession of the truck. MakeRight
has committed
a. malicious prosecution.
b. no tort.
c. trespass to personal property.
d. wrongful interference with a contractual relationship.
Fact Pattern 28-1B
Chocolate! Chocolate! Corporation is a new company that needs to borrow money to
meet its payroll. Dayna, president and owner of Chocolate! Chocolate!, asks Evermore
Credit Union to loan the funds to Chocolate! Chocolate!
Refer to Fact Pattern 28-1B. If Evermore insists that Dayna sign the loan application,
making her personally liable for payment only if Chocolate! Chocolate! defaults, Dayna
will be
a. a surety.
b. a lienor.
c. a garnishee.
d. a guarantor.
A Jane and Kelly want Lucy to replace Kelly as a party to their contract. They can best
accomplish this by
a. a mutual agreement to rescind.
b. an accord and satisfaction.
c. a novation.
d. an alteration of the contract.
Cora, a female, and Dom, a male, are employees of Equipment Leasing Corporation.
Cora regularly e-mails sexually explicit images to Dom via Equipment Leasings
computer network. Dom finds this offensive. This is
a. hostile-environment harassment.
b. not harassment or any form of discrimination.
c. quid pro quo harassment.
d. reverse discrimination.
Fact Pattern 3-B1
Orin and Pia engage in a business transaction from which a dispute arises. Orin initiates
a lawsuit against Pia by filing a complaint.
Refer to Fact Pattern 3-1. If Pia files a motion to dismiss, and the court grants it
a. Orin will be given more time to file an amended complaint.
b. Orin will have a judgment entered in his favor.
c. Pia will be given more time to file another response.
d. Pia will have a judgment entered in her favor.
Refer to Fact Pattern 9- Minkas software is harmful to the computers on which she
installed it. This program is
a. malware.
b. badware.
c. harmware.
d. infectware.
As the trustee of a business trust, Dwight is required to
a. distribute the trusts profits.
b. assume responsibility for the trusts debts.
c. draft a written trust agreement.
d. none of the choices.
A testator may revoke a will by tearing it.
If a party breaches a contract, the other party can choose one or more of several
remedies.
To be enforceable, any assignment covered by the Statute of Frauds must be in writing.
In the distribution of the debtors estate, unsecured creditors take priority over secured
creditors.
An express contract must be in writing.
Most contracts need to be performed to personally satisfy the party to whom per-
formance is owed.
Ron is an accountant in Standard Business Companys accounting department. Rons
daughters college tuition is due within a week, or she cannot continue taking classes. To
meet the due date, Ron transfers funds from Standard to a fictitious bank account,
planning to repay the firm within one month. The transfer is discovered before the firm
is repaid, and Ron is arrested. What crime, or crimes, if any, has Ron committed?
Intangible property does not come under Article 2.
An implied contract is not an actual contract.
Puffery is fraud.
International copyright protection exists for computer programs as “intellectual
creations.
Stocks represent the borrowing of funds by firms.
Withdrawal from a partnership for a term prematurely does not constitute a breach of
the partnership agreement.
A forum-selection clause indicates the place for the resolution of a dispute arising under
a contract.
The failure of one party to perform a contract entitles the other party to rescind it.
A joint effort by businesspersons to obtain legislative action is not exempt from the
antitrust laws.
Federal law does not prohibit discrimination on the basis of gender in assessing an
employees education, training, or experience.
When more than one security interest has been perfected in the same collateral, their
claims are satisfied proportionately to their value.
Under the UCC, a transfer of rights under a contract is a negotiation.
Express powers of a corporation are found in its articles of incorporation.