To obtain a business license, Bess writes a check to a certain state agency. Bess is
a. the drawee.
b. the drawer.
c. the indorser.
d. the payee.
The payment of Eden’s debt to Flem is guaranteed by Eden’s personal property. This
property is
a. a secured party.
b. a secured transaction.
c. a security interest.
d. collateral.
Gary has a life insurance policy that requires uniform payments over the term of the
policy. The coverage of the policy decreases over time. This is
a. health insurance.
b. all-risk insurance.
c. decreasing-term life insurance.
d. floater insurance.
Stature Loan Company has notice that a promissory note is overdue if the note is a
demand instrument and Stature takes it
a. an unreasonable time after its due date.
b. before its due date.
c. on its due date.
d. without noticing its due date.
Optima Medico Corporation, a U.S. firm, signs a contract with Pharma Beneficial, Ltd.,
a Canadian firm, to give Pharma the right to sell Optima’s products in Canada. This is
a. a distribution agreement.
b. a joint venture.
c. direct exporting.
d. licensing.
Natural Foods, Inc., orders “Grade A” oil from Olive Grove Farms to process and sell to
Pic “N Pay Grocers. Olive Grove ships “Grade B” oil, which Natural Foods accepts. To
recover damages for the nonconformity, Natural Foods must give notice of the breach
within a reasonable time to
a. Olive Grove only.
b. Olive Grove, Pic “N Pay, and the appropriate government agency.
c. Pic “N Pay only.
d. the appropriate government agency only.
Jaime is fifteen years old, Leo is eighteen years old and Bev is twenty-one years old.
Phil is looking for witnesses for his will. Of the three persons mentioned
a. only Jaime can be a witness.
b. only Jaime and Leo can be witnesses.
c. only Leo and Bev can be witnesses.
d. Jaime, Leo and Bev can all be witnesses.
Jack owns the surface rights for Rocky Ridge Ranch, but does not own the subsurface
rights. Ginny owns the subsurface rights. Rocky Ridge Ranch has a historic barn, which
is damaged when Ginny is excavating minerals from the ranch. Who is most likely
responsible for the damage to the barn?
a. Ginny only
b. Jack only
c. Ginny and Jack
d. no one
Silky Material Corporation in New Jersey sells fifty tons of fabric to Tattered Clothing,
Inc., in Ohio, “F.O.B. New Jersey.” The cost of transporting the fabric to Ohio will be
paid by
a. Silky Material.
b. Tattered Clothing.
c. New Jersey.
d. Ohio.
Ruby Red Corporation is incorporated in South Carolina. In that state, Ruby Red is
a. a domestic corporation.
b. a foreign corporation.
c. an alien corporation.
d. a non-entity.
Before he dies, Wilson makes out a will. After Wilson dies, the validity of his will must
be established. This is accomplished by
a. a probate court.
b. an administrator.
c. a testator.
d. a legatee.
Angie borrows $20,000 from First Line Credit using a field of timber trees as collateral.
To perfect its security interest, First Line Credit must file its financing statement with
a. the county clerk.
b. the mayor.
c. the city counsel.
d. the secretary of state.
Jake and John make an illegal contract that unjustly enriches Jake at the expense of
John. A court will
a. not be concerned with the unjust enrichment of Jake.
b. force Jake to pay damages to John.
c. reform the contract to prevent undue burdens.
d. enforce the contract as it was originally written.
Louise is a director for Icy Ices, Inc. Louise is also a director for Creamy Creams, Inc.
When Icy Ices enters into a contract with Creamy Creams, Louise
a. must resign from one of the boards.
b. must resign from both boards.
c. must make a full disclosure of any conflicts of interest and abstain from voting on the
proposed transaction.
d. need not do anything.
As a judge, Bonnie applies common law rules. These rules develop from
a. administrative regulations.
b. court decisions.
c. federal and state statutes.
d. proposed uniform laws.
During a trial between Laramie and Mikayla over a sale of allegedly diseased livestock,
Mikayla’s attorney asks questions of the plaintiff’s witness Nilson. This is
a. a cross-examination.
b. a deposition.
c. a direct examination.
d. an interrogatory.
Trudy forges Uma’s signature on a check “payable to the order of Trudy” drawn on
Uma’s account in Verity Bank. Most likely, if the bank pays the check
a. the Federal Reserve will reimburse all parties for their costs.
b. the loss will be apportioned among all of Verity’s customers.
c. Uma will be liable for the amount.
d. Verity will have to recredit Uma’s account.
Karson orally agrees to pay Jaime to plant and harvest a quarter of Karson’s farm
acreage for four corn-planting seasons. After Jaime prepares the land and plants the first
crop, Karson says that their deal is off. Jaime can most likely recover
a. in quasi contract.
b. in reformation.
c. in restitution.
d. on the parties’ existing contract.
Regional Wood Products Company and Sylvia enter into a contract for a sale of lumber.
Regional knows the purpose for which Sylvia will use the goods. Under the UCC, an
implied warranty of fitness of a particular purpose arises
a. if the buyer is relying on the seller to select suitable goods.
b. if the buyer asks for it.
c. if the seller is a merchant who deals in goods of the kind sold.
d. in conjunction with lease contracts, not sales contracts.
Phil makes and markets his U.S. patented product in the United States. A Chinese firm
begins making the same product in China and marketing it in China. The Chinese firm
is
a. not guilty of patent infringement.
b. guilty of patent infringement.
c. guilty of trademark infringement.
d. in violation of the America Invents Act.
Machine Corporation requires its employees to have a high school diploma, claiming a
definite connection between a high school education and job performance. In a suit
against Machine Corporation under Title VII, this requirement is shown to have a
discriminatory effect. The employer has
a. no defense.
b. a bona fide occupational qualification defense.
c. a business necessity defense.
d. a seniority systems defense.
The idea for “On Your Mark,” a computer game featuring racing cars, is protected by
a. copyright law.
b. patent law.
c. trademark law.
d. trade secrets law.
Cato and Dolly are involved in a lawsuit. The best definition of a lawsuit is
a. a criminal prosecution, not a civil proceeding.
b. a failure to perform a legal obligation.
c. a judicial proceeding for the resolution of a dispute.
d. an enactment of law by a legislative body.
The board of directors of Integral Components Corporation consists of Frida, Gayla,
and Hart. A quorum is the minimum number of these directors
a. who must be at odds in a dispute to call for its resolution.
b. who must be present to validly transact business.
c. that the shareholders may remove from office at any one time.
d. whose positions must be vacant to warrant an election.
Sara is a partner in the general partnership Big Cookies. Sara does NOT owe Big
Cookies a duty to devote
a. time.
b. compassion.
c. skill.
d. energy.
Gem Jewelers files a voluntary petition for bankruptcy. In listing its assets, Gem
intentionally does not include certain valuable stones. After Gem is granted a discharge,
Hasty Catering, one of Gem’s unsecured creditors whose claims were discharged, learns
of the fraud. Hasty can
a. do nothing.
b. enforce its claim against Gem.
c. file an involuntary petition for bankruptcy against Gem.
d. take possession of the stones with or without a breach of the peace.
Jared is arrested and found guilty of a misdemeanor. His punishment CANNOT include
a. imprisonment for 6 months.
b. a fine of $100.
c. death.
d. imprisonment for 6 months and a fine of $500.
Krissa wants to buy a horse from Gunnar. Gunnar agrees to let Krissa take the horse for
a week to try it out. They sign a contract for a sale on approval. Krissa rides the horse
for a week, but then decides that she does not like it. Krissa
a. must still buy the horse.
b. can return the horse with no penalty.
c. can return the horse, but must buy another one from Gunnar.
d. can return the horse, but must pay a penalty fee.
Fun-E Products, Inc., makes and sells toys. The government agency that has the
authority to remove a potentially hazardous toy from the market is
a. the Consumer Product Safety Commission.
b. the Federal Reserve Board of Governors.
c. the Federal Trade Commission.
d. the Food and Drug Administration.
Hoppy, who works as an employee for Imperial Power Corporation, suffers an injury in
an accident. Hoppy will be compensated under state workers’ compensation laws
a. only if the injury occurred during working hours.
b. only if the injury occurred off the job.
c. only if the injury occurred on the job.
d. whenever and wherever the injury occurred.
A&B Storage, Inc., signs a six-month lease to occupy a warehouse. This is
a. a periodic tenancy.
b. a tenancy at sufferance.
c. a tenancy at will.
d. a fixed-term tenancy.
Will is an agent for MaryElise. MaryElise gives Will clear instructions to only enter into
contracts on Mondays, Wednesdays or Fridays. Will enters into a contract on
MaryElise’s behalf on a Tuesday. Will has breached
a. the duty of performance.
b. the duty of loyalty.
c. no duty.
d. the duty of obedience.
Strong Steel Corporation files a suit against Tuff Tool Company, claiming that the
consideration for their contract is inadequate. The court will most likely not examine
the adequacy of the consideration if
a. it is obvious that the consideration is adequate.
b. Tuff Tool asserts that there is adequate consideration.
c. something of value passed between the parties.
d. the consideration is worth more than $100.
The Clayton Act prohibits certain classes of price discrimination.
Intangible personal property represents a set of rights and interests but has no real
physical existence.
Defense of property is NOT a defense to an allegation of assault or battery.
Under the Constitution, the judicial branch is responsible for foreign affairs.
A third party cannot sue one of the partners of a partnership without suing all members
of the partnership.
Frenchy’s Fast Fries (3F) requires that its employees wear uniforms and protective
clothing while on the job. 3F provides a locker room for the employees to leave their
street clothes and personal items while working. Grant, a 3F employee, changes his
clothes in the locker room before starting work and leaves his wallet and watch in a
pocket of his jacket hanging in his locker. Does Grant’s leaving personal items in the
locker room constitute a bailment? If not, what legal relationship is it? For whose
benefit are the lockers provided and used?
The FTC does not monitor online advertising.
A contract of suretyship does not necessarily have to be in writing to be enforceable.
If a lessor is a merchant, the risk of loss passes to a lessee when the lessee takes
physical possession of the goods.
In certain instances of fraud, a court may “pierce the corporate veil” to hold the
shareholders individually liable.
Cumulative voting refers to the accumulation of proposals presented annually for a
shareholders’ vote.
The age of majority in most states is eighteen years.
The only way that a party can discharge a contract is by performance.
The contract term “delivery ex-ship” means that the risk of loss does not pass to the
buyer until the goods are properly unloaded from the ship or other carrier.
An invitation to negotiate is an agreement.
A de jure corporation is one that is not properly formed.
Secured transactions are governed by the Uniform Commercial Code (UCC).
Tender must occur at a reasonable hour and in a reasonable manner.