Book Title
Business Law with UCC Applications 14th Edition

LGST 66130

March 1, 2019
The Equal Credit Opportunity Act makes it illegal for businesses to discriminate against
credit applicants receiving public assistance income.
The Daubert v. Merrell Dow Pharmaceuticals case involved a question of expert
testimony and the causation of the plaintiff's injuries.
Generally, the words "as is" on an item for sale exclude implied warranties.
Joseph and Susan are business partners. If Susan dies, her death will impact their
The equal dignities rule provides that when a party appoints an agent to negotiate an
agreement that must be in writing, the appointment of the agent must also be in writing.
In a summary jury trial, there is no time limit placed on the parties as this allows them
to practice their arguments.
Daisy attempts to put up Harry's property for a loan without Harry's knowledge or
consent. Daisy has attached, but not perfected, Harry's property.
The Federal Mediation and Conciliation Service cannot act by itself, but only upon the
request of either side to a labor dispute.
The standard construction rule is the most fundamental guideline involved in the
interpretation of written contracts.
A holder in due course must show that he took the instrument (1) for fair value, (2) in
good faith. and (3) without any alteration.
Negative rights theory holds that rights are a human invention designed to help people
escape moral law.
If Amanda owns 10% of the stock of Modern Co., she has the common law right to
purchase a proportionate share of every new offering of stock by the corporation, unless
this right is limited by the corporate charter or by state law.
The Convention on Contracts for the International Sale of Goods (CISG) requires a
written contract for the sale of goods when the price exceeds $5,000.
Minors who become emancipated are responsible for their own contracts.
Those in possession of stolen property can convey good title to others by giving them
that property as a gift.
Until recently, a business system was also considered unpatentable because it was not a
"process, machine, manufacturer, or composition of matter."
Foster Aircraft Co. has agreed with the U.S. government to rapidly produce a new
fighter aircraft in exchange for specified production expenses and a 10% profit. This is
a current market price contract.
Under the law, capacity is considered a rebuttable presumption.
If William sues Sam for fraud with the intention of pressuring Sam to sell his business
to William, William has committed an abuse of process.
When an instrument is indorsed in blank, it becomes payable to the bearer and may be
transferred by delivery alone.
Massive Equipment Company sends machinery on approval to Mountain Moving
Company. While in possession of the machinery, but prior to acceptance, Mountain
becomes insolvent. The machinery is subject to the claims of Mountain's creditors.
The seller of an automobile must provide a written statement disclosing the odometer
reading at the time of the transfer of title of a motor vehicle.
Stan threatens to use his computer skills to shut down the computers of the U.S. air
traffic control system unless he is paid money. Stan is likely committing
A business concern incorporated in Canada and doing business in Ohio would be called
an alien corporation.
According to the Consumer Product Safety Act, interstate commerce consists of local
business activity carried on within state boundaries.
In the event of a wrongful eviction, the tenant is not justified in abandoning the
premises without paying rent.
An intermediary bank is the first bank to which an item is transferred in the course of
Stella contracts to purchase Wilma's horse, Running Cloud, for $10,000. The horse dies
soon after the contract is signed, but prior to Stella taking possession of the horse. Stella
is still obligated to pay for the horse.
Joseph is instructed by Helen, his employer, to go to the local donut shop during his
lunch break and purchase six-dozen donuts for the department's tea party. If Joseph has
a traffic accident on the way to the donut shop, he is not entitled to workers'
Some jurisdictions require litigants to submit to case management hearings and
settlement hearings before they can secure a trial date.
Kits wants to become a CPA and this must be approved by a vote of the SEC.
Juanita received a negotiable instrument as a Christmas present and is, therefore, a
holder in due course.
Brigg Co. asked its employees to refrain from joining the Moderate Union. It promised
an out-of-turn promotion for all employees who would refrain from joining the union.
Big Co. has committed no legal offense by this act.
The assignee should always give notice of assignment to the obligor, to protect against
subsequent assignments.
Wolfgang was transported while unconscious from the scene of a motorcycle accident
to a local hospital, where he was admitted for emergency treatment. Does the hospital
need to be concerned about obtaining written consent to treatment from someone before
starting treatment on Wolfgang?
A. Yes, informed consent requires a signed document.
B. No, it can get consent after the treatment.
C. Yes, without consent from the next of kin, there is liability.
D. No, general consent is implied, and this is an emergency.
A(n) ____________ is a check that is presented for payment more than six months after
its date.
A. overdraft
B. postdated check
C. antedated check
D. stale check
In Classic Case #2, the Venter Institute filed patent #US 2007 0264688 with the U.S.
Patent Office in an attempt to patent synthetic life because Venter had produced a
self-replicating ____________ completely under the control of a synthetic genome.
A. patent
B. copyright
C. amoeba cell
D. bacterial cell
Morey and Sheryl enter into a contract in which Morey agrees to pay Sheryl $40 to
collect his mail while he is on a month-long vacation. Sheryl then delegates the duty to
her son, Greg. In this delegation, Sheryl is the:
A. assignor.
B. obligor.
C. assignee.
D. obligee.
The first major expansion of the Commerce Clause of the U.S. Constitution was done
through which of these?
A. The Dodd Frank Act
B. Wickard v. Filburn
C. Gibbons v. Ogden
D. The Securities Exchange Act
Alan, a corporate manager at DollarShopper Corp., decides he would like to pursue a
business opportunity he knows DollarShopper would also be interested in. Under the
corporate opportunity rule, Alan may:
A. pursue the business opportunity only if he offers it to other corporate managers and
also allows them to pursue it.
B. never pursue the business opportunity as long as he is employed by DollarShopper.
C. pursue the business opportunity only if he first offers it to DollarShopper, and the
corporation rejects it.
D. pursue the business opportunity without informing DollarShopper of it.
Post-appellate procedures:
A. involve taking a case that has been rejected or dismissed by a domestic court to an
international organization.
B. refer to a pledge to use arbitration, should the parties find themselves in
disagreement as to the enforcement rights under the original contract.
C. are processes by which agencies invite the organizations who will be affected by a
new rule to provide input about the writing of that rule.
D. specify that the parties to the agreement have promised to use an alternative dispute
resolution technique when a disagreement arises rather than litigating the issue.
Treasure Valley Pentecostal Church has an opening for a new head pastor. Rajid, who is
a Hindu, applies for the job. The church declines to hire him and continues to look for
other applicants. Rajid files a claim of illegal discrimination against the church based
on his religion. What result?
A. Treasure Valley will prevail based on a BFOQ defense.
B. Treasure Valley can claim that Mohamed did not make out a prima facie case of
illegal discrimination under Title VII.
C. Treasure Valley can assert that its hiring practices do not create a hostile
D. Rajid can claim that not being hired was reverse discrimination.
In the WTO, the most-favored nation principle allows:
A. economically developing nations to receive special treatment.
B. the developed nations to obtain economic advantages.
C. all member nations to have similar treatment regarding similar imports.
D. poor nations to receive financial payments from wealthy nations.
Thomas Terrific, aged 59 years, and other employees were terminated by Northwest
Power, Inc. due to corporate "down-sizing". All of the employees who were laid off as a
result of the closing were promised preferential treatment for other jobs at Time, Inc.
Terrific applied for more than 30 of these positions, but he was never rehired. Other
employees who were much younger than Terrific were hired. Most of the time, the
reason given for his rejection was that he was overqualified. Terrific decides to sue. If
you were advising Terrific, which course of action would you suggest?
A. Register a claim with the EEOC based on an ADEA claim.
B. Sue Northwest under an ADEA claim.
C. Sue Northwest under an ADA claim.
D. Sue Northwest under a Title VII claim.
A blank indorsement should be used:
A. only for the purpose of deposit or collection.
B. to impose warranty liability on the maker.
C. to reserve more space for other indorsements.
D. only in limited situations.
Under the Foreign Trade Antitrust Improvements Act (FTAIA), even if an American
company is operating totally in a foreign market, that company is subject to American
antitrust law.
Patricia holds 150 shares of common stock in a large corporation. Patricia:
A. is guaranteed the rights to some of the profits of the corporation.
B. is most likely entitled to two votes for each share of stock she holds.
C. will not be included in the distribution of capital upon dissolution of the corporation.
D. risks whatever money she invested in the 150 shares of common stock.
Mary contracts to lease an automobile from Zippo Sales with payments of $300 per
month for a year and a final balloon payment of $1,200. This final payment is:
A. lawful, since it satisfies the requirements of the Consumer Leasing Act.
B. unlawful, since it exceeds $1,000.
C. unlawful, as it exceeds three times the average monthly payment.
D. lawful, since both parties have contracted on mutual agreement.
Which of the following is true of arbitration?
A. The procedures involved in arbitration are more rigid than those followed in
B. An arbitrator's decision is binding and cannot be appealed in court.
C. An arbitration hearing can be planned and executed by the parties themselves.
D. An arbitrator's decision cannot come under the review of the courts.
Which of the following is true of a foreign draft?
A. It is drawn in one state and payable in another state.
B. It is drawn in one nation and payable in another nation.
C. It is drawn on one bank and payable to a governmental body.
D. It is drawn in one city and payable in another city in the United States.
A(n) ____________ provision in the security agreement allows the security interest of
the creditor to also apply to goods the debtor acquires at a later time.
A. forbearance
B. attachment
C. floating lien
D. acceleration
Even though Spice gives her four-year-old car to Homeless Helpers Charity, she:
A. need not provide an odometer statement.
B. must provide an odometer statement.
C. need not provide an odometer statement, since the car is not over 15 years old.
D. must set the odometer to zero before resale.
In the "Classic Case" of Griggs v. Duke Power (1971), Duke refused to transfer any
employees at its plant to better jobs unless they had a high school diploma or could pass
an intelligence test. The company was willing to pay two-thirds of the tuition for an
employee's high school training. Neither a high school education nor the intelligence
test was significantly related to successful job performance. Both requirements
disqualified African Americans at a substantially higher rate than white applicants. Is
the company in violation of Title VII?
A. No, Duke is not liable under Title VII because the employment conditions are
B. Yes, Duke may be liable under Title VII because the employment conditions are not
C. Yes, Duke is liable under Title VII for reverse discrimination.
D. No, Duke is not liable under Title VII because the conditions are essential to the
company's success.
Congress passed the ____________ which requires lenders to disclose the finance
charge and the annual percentage rate.
A. Fair Credit Reporting Act
B. Equal Credit Opportunity Act
C. Truth-in-Lending Act
D. Fair Debt Collection Practices Act
____________ consist of rules of conduct established by the government of a society to
maintain harmony, stability, and justice.
A. Morals
B. Ethics
C. Laws
D. Values
Iris is looking for a short-term mortgage that will allow her to pay fixed payments at a
relatively low fixed interest rate during the life of the mortgage and one large payment
at the end of the term. What kind of mortgage should Iris take?
A. A balloon-payment mortgage
B. A VA mortgage
C. A conventional mortgage
D. A graduated-payment mortgage
Jean and Bert enter into a written agreement to establish their partnership. Their
partnership agreement must be modeled after the terms of the RUPA.
In a(n) ____________ contract, one party consents to sell to a second party all of the
goods that party makes in a given period of time.
A. requirements
B. current market price
C. cost-plus
D. output
The law is a delicate balancing act. This is evident because:
A. political parties are always competing for power.
B. individuals require restraint to prevent chaos.
C. one corporation's contractual rights may be upheld, while another's are struck down.
D. one company may overcharge consumers.
Which of the following is true of a firm offer?
A. It occurs when parties intend to be bound by a contract, but fail to mention the price.
B. It occurs when a seller agrees to sell all it can produce to a particular buyer.
C. It occurs when a merchant promises to hold an offer open without any consideration.
D. It occurs when a buyer agrees to buy all its requirements from a particular seller.
Which of the following is true of real defenses?
A. Real defenses can be used against holders, but not holders in due course.
B. Anyone who has a real defense is required to pay an instrument.
C. Real defenses can be used against everyone, including holders in due course.
D. Real defenses include breach of contract, failure or lack of consideration, fraud in
the inducement, and payment.
____________ is an element of negligence that occurs if the alleged tortfeasor has not
met the appropriate standard of care.
A. Legal duty
B. Actual harm
C. Proximate cause
D. Breach of duty
If a person obtains property as a result of another's fraud, misrepresentation, mutual
mistake, undue influence, or duress, the person is said to hold only:
A. voidable rights.
B. contract rights.
C. insured rights.
D. valid rights.
MeatPackers, Inc. bought a new kind of refrigeration system from Coolit, Corp. for
storage of its meats. As part of the contract, Coolit delivered the refrigeration system to
the MeatPackers plant, installed it, set its temperature, and then monitored it for several
hours to make sure it worked. Before they left, Coolit's technicians handed MeatPackers
a bill of sale. Absent any other terms or conditions, MeatPackers, Inc. received title to
Coolit's refrigeration system when:
A. Coolit delivered the system to the Meatpacker plant.
B. MeatPacker paid for the Coolit system prior to delivery.
C. Coolit delivered, installed, and tested the system.
D. Coolit handed MeatPacker the bill of sale.
In a national emergency strike, the Attorney General can address a petition to the:
A. U.S. Supreme Court.
B. federal court of appeals.
C. federal district court.
D. state supreme court.
Tasha phones Robert and asks if she can borrow his vacuum cleaner to clean her
apartment before her parents visit. Robert agrees to this. But when Tasha goes to pick
up the vacuum, Robert refuses to give it to her. Which of the following statements is
A. A bargained-for exchange has occurred, so Robert must loan Tasha the vacuum
B. A bargained-for exchange has not occurred, so Robert does not have to loan Tasha
the vacuum cleaner.
C. Robert has promised Tasha something of value, so he must loan her the vacuum
D. Robert has committed a breach of contract.
In a limited partnership, general partners:
A. take an active part in management, but have unlimited liability for the firm's debts.
B. take an active part in management, but have no liability for the firm's debts.
C. take an active part in management, but are nonparticipating investors.
D. take no part in management, but contribute cash or property.
Repair Garage Company rents tools and stalls to independent auto mechanics to repair
cars. Repair Garage allows Joe to print business cards reading "Repair Garage
Company—Joe, Certified Mechanic." A customer is unhappy with the repairs Joe made
to her car and sues Repair Garage. What legal theory, if any, would allow Repair to be
sued by the customer?
A. Express authority
B. Implied authority
C. Apparent authority
D. Incidental authority
A(n) ____________ contract does not exist, but is imposed by the court as an equitable
remedy in the interests of fairness and justice.
A. quasi-
B. implied-in-fact
C. informal
D. executory
Jackson is a car purchasing agent for Highway Motors, a used car dealer. Jackson
attends wholesale auto auctions and notices that some autos have consistently greater
demand and higher prices. Jackson forms a car purchasing partnership with Viva Inc. to
buy these cars from "for sale by owner" advertisements and then sell them in Viva's
name at the auto auctions where Jackson purchases them for Highway. Discuss if
Jackson has violated any duty he owes Highway Motors.
Uta, Piper, and Hoku own 1,000 acres of land as tenants in common. Part of the land
borders an interstate highway, another part borders a farm-to-market road, and part is
scarred with deep erosion and gullies. The three want to divide the land into separate
parcels for each of them, but cannot agree. Discuss how a court will resolve the
Westdress, Inc. entered into a contract with Salvo, Inc. to supply them with specified
goods by June 15th. Salvo, Inc. shipped the goods, which were delivered to Westdress,
Inc. on May 30th. Westdress inspected the goods, found 50% of the goods to be
nonconforming to their order, but kept them without notifying the seller of the
discrepancy. In the meantime, Salvo, Inc. realized its error and contacted Westdress to
replace the goods, but Westdress refused the offer. Discuss the case.
Global Corp. is incorporated in Mexico and wants to do business in Ohio. Discuss the
legal status of Global in relationship to Ohio and what Global must do to qualify to do
business in Ohio.
Trudy has a steady income, but is behind on her payment of debts. Trudy wants to pay
her debts, but needs some relief from her creditors. Discuss what type of Bankruptcy
Procedure would best fit her case.
Callaghan bought a bedroom set from a furniture store and signed a consumer credit
contract agreeing to pay $150 in 12 monthly installments. The furniture store
immediately negotiated the credit contract to a finance company, with which it had an
arrangement, and received payment. The furniture turned out to be defective. Discuss if
Callaghan can use the defense of defective furniture against the furniture store and the
finance company for the money owed.
Nancy Nelson, who worked for the Farmington Institute of Technology, took a leave of
absence for health purposes. Her supervisor, Mark Bohm, told Nelson, "When you
recover from your health problems, you can have your job back with full seniority."
Nelson believed Bohm and did not look for work elsewhere. When she returned to
work, Nelson found that FIT would not honor Bohm's promise to her. It took Nelson
eight months to find another job. Does Nelson have any legal recourse? Explain.
Clothe You Inc. was incorporated as a nonprofit organization that gave away
secondhand clothes to homeless persons. In order to pay overhead and administration
costs, Clothe You Inc. also sold the secondhand clothes to any interested individuals
who did not qualify as homeless. One year after its formation, Clothe Me Inc. was
incorporated in the same state. Clothe Me Inc. was a consignment shop that sold its
secondhand clothes cheaply. Clothe Me Inc. ran an aggressive print advertising
campaign, marketing its clothes "to everyone, for every reason, for practically no cost."
After this campaign, Clothe You Inc. discovered that people, especially homeless
individuals, were confusing the two organizations. What legal action, if any, can be
taken by Clothe You Inc.?
Friendly Furniture Co. wants to repossess a sofa in Ed's living room, but Ed refuses to
allow the repossession crew into his house. Discuss what options Friendly has.
Pantia agreed to write software codes for "a reasonable price" for a video game being
produced by Mindbinder, Inc. When Pantia submitted a bill for $5,000, Mindbinder
believed that a reasonable amount for the work was $3,000 and sent Pantia a check for
that amount with a notation on the check, "Payment in full." Discuss the case.
In creating ABZ Inc., Newman and Zimmer followed all the steps in the incorporation
process as authorized in their state's incorporation statute except for the appointment of
a statutory agent. They were never informed of the oversight and proceeded under the
assumption that they were properly incorporated. Several years later, a customer was
injured by one of their products. The customer's lawyer told Newman and Zimmer that
they were individually liable because ABZ Inc. was not properly incorporated. Was the
lawyer correct? Explain.
Corzina, a small nation-state, has been attacked by its neighbor, Troy. Another
nation-state, Rutland is a friend of Corzina's, but has problems with Troy. Finding this
to be the best opportunity, Rutland attacks Troy, defeats Troy, and takes control over its
government and the civilian population. Is the cause and intention of Rutland just?
Jackson Enterprises wants to provide two hours of work after school for children, up to
eight years old, and from economically disadvantaged families who cannot afford
after-school day care. The work will be coordinated with school assignments and will
appeal to each child's unique interests. Discuss any legal issues associated with this
Bishop and Thomas had been partners and had a business disagreement that was
resolved by private arbitration. Bishop now knows that Thomas is seeking a loan. Based
on his personal experience with Thomas, Bishop tells a banker friend that Thomas is
difficult to do business with and that anyone doing business with Thomas could be
cheated. As a result of Bishop's statements, Thomas is denied a bank loan. Discuss what
Thomas can do in this situation.
Xavier owned and operated the Xavier Paper Products Corporation. Xavier discovered
that one of his employees planned to hold a meeting in order to discuss the possibility
of forming a union. Xavier placed a notice on the bulletin board in each store warning
employees that any employee who joined a union would be subject to immediate
dismissal. Did such a notice violate federal law? Explain.
ABC Co. owns land that is in the path of a new proposed interstate highway. ABC does
not want to surrender this land. Discuss what rights ABC or the shareholders of ABC
have to challenge this proposed taking?
A corporation has constitutional rights under the 14th Amendment not to be deprived of
property without due process of law.
Maximberg is a country in Europe and is a member of the European Union. For the
convenience of tourists and other commercial purposes, it wants to adopt the Euro as its
currency. Can it adopt the Euro?
Alphonse owes huge debts to many creditors. A month before filing for bankruptcy, he
distributes all of his assets to his church. Discuss the case.
Ron, a fast-talking, used car salesperson, convinced Maureen, an elderly semi-invalid,
to purchase an automobile worth $500 for $12,000. When Maureen later refused to pick
up the car or pay the bill, the used car dealer sued her. Discuss the case.
While sleepwalking during his stay in a hotel, Boterus ran into Selan, another guest at
the hotel, knocking Selan down the stairs. Selan called the police and demanded that
Boterus be arrested. Will Boterus likely be convicted of a crime? Explain.