Geoff serves in a representative capacity for Huck. To accomplish the objectives of this
relationship, Geoff’s authority can be implied
a. by contradiction.
b. by custom.
c. by lack of reason.
d. under no circumstances.
John writes a check to Kay as payment for a DVD player but soon discovers the player
is broken. He goes to the drawee bank and orally authorizes Larry, a bank officer, to
stop payment on the check. This order is valid for
a. fourteen days.
b. fourteen months.
c. thirty days.
d. six months.
Fact Pattern 20-1
Internet Cafes, Inc., contracts to buy all of its requirements for coffee, at a minimum of
1 million pounds per year, from Java Corporation for six years. After three years,
Internet tells Java that it plans to sell its company to Kwik Eateries, Inc. Kwik refuses
to assure Java that it will continue Internet’s contract.
Sid and Tony enter a contract for a sale of Sid’s collection of electric guitars. Before the
time for performance, Sid tells Tony that he does not want to deliver the guitars.
Anticipatory repudiation is
a. a breach of contract.
b. a compromise between two parties who are unable to perform.
c. a remedy available only to a breaching party.
d. a remedy available only to a nonbreaching party.
Unity Production Company is suspected of employing illegal immigrants. The
government conducts random compliance audits and other enforcement measures
against those who might violate immigration laws through
a. the CIS.
b. the H1-B.
c. the ICE.
d. the NLRB.
Reba is a director of Superb Performance Corporation. Reba’s rights, as a director, do
not include a right of
a. indemnification.
b. inspection of books.
c. participation.
d. preemption.
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.
Reno is the beneficiary of a life insurance policy on Sula’s life obtained from Thayer
Insurance Company. The underwriter of this policy is
a. Reno.
b. Sula.
c. Thayer.
d. the agent or broker through whom the policy was obtained.
Reba and Sly enter into a contract by which Reba promises to deliver newly printed
marketing brochures to Sly. Reba later transfers her duty under the contract to Troy.
Reba is
a. a delegator and an obligor.
b. a delegator only.
c. an obligor only.
d. none of the choices.
According to the court in Case 20.1, Maple Farms, Inc. v. City School District of
Elmira, the defense of commercial impracticability will not excuse the performance of a
contractual obligation when there is an increase in the seller’s costs while the contract is
in force
a. unless the increase in the seller’s costs is substantial.
b. under any circumstances.
c. unless the increase in the seller’s costs makes it impossible for the seller to perform
without losing money.
d. unless the increase in the seller’s costs was not foreseeable at the time the contract
was formed.
Grover Nut Company files a suit against Hud, its former accountant, alleging actual
fraud. Grover must prove
a. intent to deceive.
b. misrepresentation of a non-material fact.
c. the lack of an injury.
d. unjustifiable reliance.
Quincy draws a check payable to “Replay Stadium” to buy two season tickets to the
next year’s State College football games. This instrument is
a. a bearer instrument.
b. an order instrument.
c. valid but nonnegotiable.
d. void.
In Restful Motel’s suit against Sleepy Hotels, Inc., the jury returns a verdict in Restful’s
favor. Sleepy files a motion stating that even if the evidence is viewed in the light most
favorable to Restful, a reasonable jury should not have found in its favor. This is a
motion for
a. a judgment in accordance with the verdict.
b. a judgment on the pleadings.
c. a new trial.
d. judgment n.o.v.
The payment of Jose’s debt to Klint is guaranteed by Jose’s personal property. The
process by which Klint can protect himself against the claims of third parties to this
property is
a. attachment.
b. communication.
c. perfection.
d. search and seizure.
Leyte believes an old comic book he owns has little value, but Milo is convinced it is a
valuable collector’s item. Leyte sells it to Milo for $10 before learning it is worth
$1,000. Leyte can
a. not rescind the contract.
b. rescind the contract on the basis of fraud.
c. rescind the contract on the basis of mistake.
d. rescind the contract on the basis of puffery.
Fact Pattern 24-1
Excel Vehicles, Inc., makes and sells automobiles to auto dealers, including Fine Auto
Sales. Fine sells the cars to consumers and businesses.
Refer to Fact Pattern 24-1. Ira, a police officer, buys an Excel from Fine to drive in his
off-duty hours. Ira’s Excel is
a. a consumer good.
b. an accession.
c. equipment.
d. inventory.
Toby is an accountant whose clients include U-All Company. If Toby is negligent in his
work for U-All, most courts would hold him liable to U-All and
a. any third party.
b. no third party.
c. third parties who are foreseen users of the work.
d. third parties who are reasonably foreseeable users of the work.
Olin convinces Pia, who has no artistic ability, that Pia has considerable talent and
induces Pia to pay Olin $10,000 for art lessons. When Pia realizes the truth, she files a
suit against Olin. Pia is most likely to recover on the basis of
a. fraud.
b. mistake.
c. puffery.
d. undue influence.
Cora, a female, and Dom, a male, are employees of Equipment Leasing Corporation.
Cora regularly e-mails sexually explicit images to Dom via Equipment Leasing’s
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.
On the back of a check payable to Nero, he writes “Pay to Odell, without recourse” and
signs it. This
a. does not effect the check’s negotiability or any party’s liability.
b. relieves Nero of liability on the check.
c. relieves Odell of liability on the check.
d. renders the check nonnegotiable.
Nika operates a sole proprietorship, a corporation, and a partnership. Nika wants to ob-
tain relief for her individual debts and the debts of her corporation and partnership. For
each of these, Nika may file a petition in bankruptcy for relief through
a. a liquidation.
b. a reorganization.
c. a repayment plan.
d. a family-farmer bankruptcy plan.
Pat, an accountant, includes a false statement in a report for Quantity Overstock, Inc.,
that is filed with the Securities and Exchange Commission. Quantity publishes a
misleading ad about its future prospects. Rita sees the ad and calls Stan, who buys stock
in Quantity. Under Section 18 of the Securities Exchange Act of 1934, liability may
attach to
a. Pat’s report.
b. Quantity’s ad.
c. Rita’s call.
d. Stan’s purchase.
The payment of Mo’s debt to Neil is guaranteed by Mo’s personal property. This is
a. governed by Article 2 of the UCC.
b. governed by Article 3 of the UCC.
c. governed by Article 9 of the UCC.
d. not governed by the UCC.
Fact Pattern 20-1
Internet Cafes, Inc., contracts to buy all of its requirements for coffee, at a minimum of
1 million pounds per year, from Java Corporation for six years. After three years,
Internet tells Java that it plans to sell its company to Kwik Eateries, Inc. Kwik refuses
to assure Java that it will continue Internet’s contract.
Refer to Fact Pattern 20-1. Kwik’s refusal constitutes
a. a justified response based on Kwik’s relation to the contract.
b. an assignment of Internet’s rights under the contract.
c. a reasonable suspension of performance under the contract.
d. a repudiation of the contract.
Fabio makes a living by farming near Gastric Combustibles, Inc., which has discharged
pollutants into the area’s air and water. If Fabio brings a suit asking for an injunction
against Gastric on the ground of nuisance, the court is most likely to rule in Gastric’s
favor if
a. Fabio’s operation also pollutes, with pesticides and herbicides.
b. Fabio’s operation suffers harm distinct from the general public.
c. Gastric’s operation is the core of the local economy.
d. Gastric’s operation uses reasonable care to avoid harm to Fabio.
GR8 Stuf Company files a registration statement with the SEC before making an
offering to the general public. The registration contains false, immaterial statements of
which the investors are unaware. GR8 Stuf is charged with violating the Securities Act
of 1933. GR8 Stuf’s best defense is
a. the investors were not aware of the misrepresentations.
b. the issuer reasonably believed the misstatements were true.
c. the offering was made available to the general public.
d. the untrue statements were not material.
Ric designs a new computer hard drive, which he names “Sci Phi.” He also writes the
operating manual to be included with each final product. Ric could obtain patent
protection for
a. the hard drive.
b. the “newness” of the hard drive.
c. the name.
d. the operating manual.
Regal Autos, Inc., sells cars to consumers. To avoid liability for oral express warranties,
each sales agreement should note that a car is sold
a. as is.
b. in perfect condition.
c. subject to warranties included in the written contract only.
d. with no known defects.
Page points a knife at Ray’s daughter, threatening to hold her hostage and “cut” her
unless Ray takes a certain file from Skelter Supplies Corporation, his employer.
Charged with theft, Ray can successfully claim as a defense
a. insanity.
b. duress.
c. entrapment.
d. self-defense.
Jelly Jar Company includes in its online offers a provision that indicates any disputes
arising under the contract must be resolved in Kansas. Lena, a resident of Maine,
accepts Jelly Jar’s offer. If a dispute arises, a court will most likely rule that it must be
resolved in
a. Kansas.
b. Kansas or Maine.
c. Maine.
d. the location selected by the first party to file a suit.
The process behind the production of “Fast Pace,” a racecar video game, is protected by
a. copyright law.
b. patent law.
c. trademark law.
d. trade secrets law.
A Minnesota state statute restricts certain kinds of advertising to protect consumers
from being misled. A court would likely hold this statute 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.
Fact Pattern 15-4
Evelyn, who owns and operates Eve’s Farm & Garden Company, agrees to sell Hill &
Dale Produce, Inc., fifty bushels of apples.
Refer to Fact Pattern 15-4. When bad weather destroys Eve’s Farm & Garden’s apple
crop, the obligation to deliver apples to Hill & Dale is
a. breached.
b. discharged.
c. not affected.
d. suspended.
A covenant not to compete is enforceable only if it is reasonable in duration and
geographic area.
Nero and Olav each buy certain quantities of oil to sell to Petro Refinery, and agree to
share storage costs until Petro can take delivery. The oil is commingled so that Nero’s
oil cannot be distinguished from Olav’s. This is
a. accession.
b. confusion.
c. conversion.
d. irresolution.
Cutter Company makes and sells table saws, which are designed to be safe if used
properly. Erin buys a Cutter saw and lends it to her neighbor Frank. To reach a toolbox
on a high shelf in his garage, Frank props the saw at an angle against a cabinet and
climbs onto the saw. Frank loses his footing, slips off the saw, falls on the blade, and is
injured. He files a product liability suit against Cutter, on the ground of negligence. On
what basis could the maker prevail?
Generally, a tenant must pay agreed-to rent even if the tenant moves out as long as the
move is unjustifiable and the lease is in force.
The United States Supreme Court can review a decision by a state’s highest court only if
a question of federal law is involved.
A failure to follow generally accepted accounting principles and generally accepted
auditing standards is proof of a lack of due diligence.
To commit an intentional tort, one person must intend to harm a certain other person.
The Environmental Protection Agency can regulate a substance that poses an imminent
hazard but cannot prohibit the use of a substance altogether.
There is no distinction between regulating the information dispensed about a product
and regulating the actual content of the product.
A plaintiff is a person against whom a lawsuit is brought.
It is presumed that a co-tenancy is a tenancy in common unless there is a clear intention
to establish a joint tenancy.
A sharing of profits from the sale of the goodwill of a business creates a presumption
that a partnership exists.
Generally, a unilateral mistake affords the mistaken party a right to relief from the
contract.
Anyone who writes a book has automatic copyright protection in every country in the
world.
A contract between parties residing in different countries is subject to Article 2A of the
UCC.
Each bank in a collection chain must pass a check on before midnight of the day of its
receipt.
Federal executive agencies are outside the federal executive departments.
If one corporation owns all of the shares of another corporation, it is referred to as the
target corporation.
If a nonconforming installment substantially impairs the value of a whole contract, the
buyer can treat the entire contract as having been breached.
Local governments, including cities, can exercise police powers.