As a joke, Jem takes Kyla’s business law textbook and hides it so that Kyla cannot find
it during the week before the exam. Jem may have committed
a. appropriation.
b. conversion.
c. disparagement of property.
d. trespass to personal property.
Sid induces Ty to enter into a contract for the sale of a warehouse. Sid tells Ty that he is
the sole owner, but their signed, written contract lists Sid’s parents as co-owners. The
parol evidence rule governs
a. contracts that are induced by fraud.
b. contracts that must be in writing to be enforceable.
c. the admissibility in court of oral evidence.
d. the merging of oral and written statements into one contract.
In contemplation of death during risky surgery, Donnelly, a guitarist, gives his guitars to
Cathy. The surgery is successful, and Donnelly does not die. The gift of the guitars is
a. not revoked because it was a gift causa mortis.
b. not revoked because it was a gift inter vivos.
c. revoked because it was a gift causa mortis.
d. not revoked because it was a gift largesse.
The articles of incorporation for a corporation do NOT include
a. the corporate name.
b. the nature and purpose of the corporation.
c. the capital structure of the corporation.
d. the minutes of the first organizational meeting.
Norma Jean files for Chapter 7 bankruptcy. She turns her assets over to Addie, who
sells the assets and then distributes the proceeds to Norma Jean’s creditors. Addie is a
a. creditor.
b. federal judge.
c. bankruptcy trustee.
d. debtor.
Jacob offers to sell Bill a valuable collection of baseball cards. In order for the
transaction between Jacob and Bill to be considered a sale under the UCC, Bill
a. must pay for the cards in cash.
b. must pay for the cards with services.
c. may pay for the cards with cash or other goods or services.
d. must pay the fair market value of the cards.
Jaclyn is the beneficiary of Erin’s life insurance policy. Trusted Life Insurance
Company provides Erin’s life insurance policy. The underwriter under this policy is
a. Jaclyn.
b. Trusted Life Insurance Company.
c. Erin.
d. Erin or Jaclyn.
Chatsworth loans his laptop to Zelda. This is
a. a bailment.
b. acquiring ownership by possession.
c. a gift.
d. lost property.
Sweets Store buys chocolate from Tasty Candies, Inc. The parties agree that the
chocolate will be shipped “F.O.B. Sweets” via United Railroad Corporation. The
chocolate is lost in transit. The loss is suffered by
a. Sweets and Tasty, but not United.
b. Sweets only.
c. Sweets, Tasty, and United.
d. Tasty only.
John is an art dealer with special expertise in modern art. Rachel comes to John’s
gallery to purchase a modern art painting as an investment. John shows her several
paintings that he says are high quality and will increase in value in the next ten years.
John’s statement is
a. an express warranty.
b. an implied warranty.
c. an opinion.
d. puffery.
William owns a field where he grows cotton. When William sells the field to Grace, he
includes the cotton that is growing in the field. This sale is governed by
a. the Uniform Commercial Code.
b. common law.
c. real property law.
d. personal property law.
Great Gates, Inc. has a board of ten directors. Great Gates’ bylaws do not state any
quorum requirements. In most states, a quorum for Great Gates will be defined as
a. two directors.
b. six directors.
c. nine directors.
d. ten directors.
Jamie is redoing his kitchen and decides he needs a floor sander to complete the job.
Jamie tells Rachel, his neighbor, that he needs a floor sander. Rachel tells Jamie to call
Home Repair Rentals, Inc. Home Repair Rentals leases Jamie a floor sander. In this
transaction the lessor is
a. Jamie.
b. Rachel.
c. Home Repair Rentals.
d. both Jamie and Rachel.
Ocean Vessels, Inc., and Pacific Harbor Company enter into a contract for a sale of a
boat. Ocean is a merchant who deals in goods of the kind sold. The goods are defective.
Under the UCC, the implied warranty of merchantability is breached
a. only if Ocean did not know about and could not have discovered the defect.
b. only if Ocean did not know about the defect.
c. only if Ocean knew about or could have discovered the defect.
d. regardless of what Ocean knew or could have discovered.
Double D Ranch and Esau enter into a contract on August 1 for the sale of 200 cattle.
Esau cancels the contract ten days later. Double D is unable to sell the cattle to another
buyer. Double D is entitled to
a. force Esau to accept the cattle and recover the contract price.
b. keep the cattle and recover the contract price from Esau.
c. keep the cattle only.
d. recover the contract price from Esau but must destroy the cattle.
Donna goes through an involuntary bankruptcy proceeding. An involuntary bankruptcy
occurs when
a. a debtor files forms designated for the purpose in a bankruptcy court.
b. a debtor is unable to pay his or her debts as they come due.
c. a debtor’s creditors force the debtor into bankruptcy proceedings.
d. a debtor’s debts exceed the fair market value of his or her assets.
Brad defends against a breach-of-contract suit by College Credit Corporation by
claiming that their deala student loan accruing interest at a certain rate and payable
beginning on a certain datewas unfair because the consideration for their contract was
inadequate.
Refer to Fact Pattern 10-2. “Adequacy” of consideration refers to
a. “how much” consideration is given.
b. legally sufficient value in the eyes of the law.
c. the intangible value to a contracting party of a thing exchanged.
d. the substantiality of the consideration exchanged.
Jen is a third party beneficiary under a contract between Kyla and Leo. Kyla and Leo
can modify or rescind their contract without Jen’s consent
a. at any time.
b. at no time.
c. only after Jen’s rights have vested.
d. only before Jen’s rights have vested.
Excellent Exercise Equipment, Inc. (EEE) advertises a treadmill for $199. When Garth
tries to buy one of the treadmills, George, the salesperson, tells him that they are
backordered and will take over a year to arrive. George then shows Garth another
treadmill that is $1,999 and tells him that he can have the more expensive model
delivered the next day. This is
a. a legitimate sales technique.
b. bait-and-switch advertising.
c. counteradvertising.
d. puffery.
Benny rents a house from Geraldine. One day, Benny comes home from work to
discover that Geraldine has changed the locks on the house. Benny has been
a. evicted.
b. terminated.
c. released.
d. rejected.
Don, a U.S. citizen, is the owner of Egrets Unlimited, Inc. Egret’s competitors include
Feathered Friends Company (FFC), which is owned by Greg and Huey. The Bill of
Rights embodies a series of protections for Don against types of interference by
a. FFC and its other competitors only.
b. FFC, Greg, Huey, others, and the government.
c. Greg, Huey, and other private individuals only.
d. the government only.
Neil, a minor, attempts to return to its former owner, a set of skis that he recently
bought, used, and wrecked, in a state in which a duty of restitution is imposed. Neil
a. can return the skis “as is” and avoid further liability.
b. is not required to return the skis due to his or her minority.
c. must return the skis and pay for the damage.
d. cannot return the skis unless they can be fully restored.
U.S. Cars, a U.S. firm, owns property in Argentina. The government of Argentina seizes
the property. U.S. Cars claims that this is confiscation. The government of Argentina
claims that it is expropriation. The burden of proof lies with
a. the U.S. government.
b. the government of Argentina.
c. U.S. Cars.
d. the U.S. Supreme Court.
Fresh Produce, Inc., and Great Grocery Stores dispute the interpretation of an
ambiguous phrase in their contract. In a suit between the parties to construe the
contract, a court may accept evidence of
a. consistent additional terms only.
b. consistent additional terms and contradictory terms only.
c. contradictory terms only.
d. anything extrinsic to the contract.
Pip, a clerk for a Quik Burger, Inc., restaurant goes out on strike with the other
employees. After the strike, Pip must be given his job back if the strike is not deemed
unlawful, there is still work at the restaurant, and the strike was
a. an economic strike only.
b. an economic strike or an unfair labor practice strike.
c. an unfair labor practice strike only.
d. unlawful.
Fix-It-Quik, Inc., offers Denise a job as a plumber. No time for acceptance is specified
in the offer. The offer will terminate
a. after a reasonable period of time.
b. after a work week (five business days).
c. after a month (thirty calendar days).
d. never.
Most creditors will require borrowers to purchase mortgage insurance if the borrower’s
down payment, in relation to the purchase price, is less than
a. 50 percent.
b. 60 percent.
c. 30 percent.
d. 20 percent.
Emily checks her luggage at Flyaway Airlines’s ticket counter before boarding her flight
to Houston. Subject to a bailment is
a. Emily.
b. Emily’s luggage.
c. Emily’s ticketed seat on the flight.
d. none of the choices.
Rig Heli-Pads, Inc., enters into a contract to employ Scott as an on-site project manager
for two years. If Rig breaches the contract, Scott has a duty to
a. do nothing.
b. reduce the damages that Scott might otherwise suffer.
c. rescind the contract with Rig.
d. punish Rig and set an example to deter others from similar acts.
Treadwell Tire Manufacturing Company employs Uri as an agent. To terminate Uri’s
authority, Treadwell must notify
a. only third parties who are aware of the agency relationship.
b. the public generally.
c. Uri and any third parties who are aware of the agency relationship.
d. Uri only.
Jenilee promises to pay Kyle $500 because “he does not have as much money as other
people.” Jenilee’s promise is
a. enforceable because society wants people to keep their promises.
b. enforceable because the redistribution of wealth is a valid social goal.
c. not enforceable because Jenilee could have paid Kyle more.
d. not enforceable because Kyle has not given consideration in return.
Roger’s creditors try to force him into involuntary bankruptcy. The creditors will be
unsuccessful if
a. Roger’s business employs fewer than ten people.
b. Roger is a farmer.
c. Roger has a medical condition.
d. Roger has to pay child support.
Lisa brings a lawsuit against her employer for unlawful discrimination. Lisa is
successful in proving that she was unlawfully discriminated against by her employer.
Lisa may be awarded
a. back pay, but not retroactive promotions.
b. retroactive promotions, but not back pay.
c. damages, but not back pay.
d. back pay, retroactive promotions and damages.
Elmo pays First National Bank $1,000 plus a service fee to draw a check on itself made
payable to Go Delivery Service. This is
a. a cashier’s check.
b. an overdraft.
c. a stale check.
d. a stop-payment order.
Beachside City enacts an ordinance that bans the distribution of all printed materials on
city streets. Carl opposes the city’s latest “revenue-enhancing” measure and wants to
protest by distributing handbills. In his suit against the city, a court would likely hold
the printed-materials ban to be
a. an unconstitutional restriction of speech.
b. constitutional under the First Amendment.
c. justified by the need to protect individual rights.
d. necessary to protect national interests.
The president can appoint and remove officers from executive agencies.
If equity remains after a foreclosed property is sold, the borrower often gets to keep the
difference between the sale price and the mortgage amount.
Concealing assets from a bankruptcy court is a crime.
A bank’s responsibility to honor its customers’ checks is NOT absolute.
A demand instrument is payable immediately after it is issued.
Punitive damages are meant to reward the defendant.
The act of state doctrine is not important for firms doing business in other countries.
Oral evidence of the meaning of a contract with incomplete terms can be introduced at a
trial.
Under the Americans with Disabilities Act of 1990, an employer must hire unqualified
applicants who have disabilities.
A primary obligation is created when a party agrees to pay for something on the
condition that a certain other party does not make the payment.
Any relevant material, except information stored electronically, can be the object of a
discovery request.
A covenant not to compete is enforceable only if it is necessary to restrain trade.
A special indorsement names the indorsee.
Some states impose a duty on a minor who disaffirms a contract to restore the adult
party to the position he or she held before the contract was made.
Under federal law, both employers and employees contribute to help pay for the
employees’ loss of income on retirement.
The use of a person’s likeness for commercial purposes without permission is
appropriation.
Savory Cooking Sauces, Inc., a U.S. business firm, makes and sells distinctively
flavored cooking sauces. Although the recipes are secret, the ingredients could be
revealed and the sauces could be reconstructed with diligent efforts. What can Savory
do to prevent its products from being “decoded” and pirated abroad?
Corporate directors and officers are insurers of business success.
One of the disadvantages of a sole proprietorship is that the owner is liable for all the
actions of the business.
Parents who sign a contract made by their minor child with an adult have the same
option to disaffirm as the child.