An offeror is a person who makes an offer.
If a buyer wrongfully refuses to accept goods that conform to a contract, the seller can
maintain an action to recover the damages sustained.
A criminal case must be proved beyond a reasonable doubt.
If a debtor’s income is below the median income, there is a presumption of bankruptcy
abuse.
An opinion that disclaims any liability for false or misleading financial statements is too
general.
A unilateral contract is formed when the one receiving the offer completes the requested
act or performance.
A board of directors cannot conduct business outside a formal meeting.
A professional’s gross negligence in performing a duty constitutes actual fraud.
A lessee’s breach of a contract will usually give the lessor the right to cancel the
contract.
Olsen Grocery Company files a suit against Pickle Products, Inc. Pickle responds that
even if Olsen’s statement of the facts is TRUE, according to the law Pickle is not liable.
This is
A.a counterclaim.
B.a motion for judgment on the pleadings.
C.a motion for summary judgment.
D.a motion to dismiss.
An action may be legal and ethical.
The state office in which a financing statement should be filed depends on the creditor’s
location.
An association cannot be a partnership without an express agreement.
A holder takes an instrument for value by performing the promise for which the
instrument was issued.
Oral evidence of otherwise clear terms in a contract can be introduced at a trial to
contradict those terms.
Generally, the funds represented by a deposited local check must be available for
withdrawal the same business day.
Any corporation with more than $10 million in assets and five hundred or more
shareholders must register their securities with the Securities and Exchange
Commission.
Certain reorganization cases may be converted to repayment plan cases with the consent
of the debtor.
In most courts, auditors cannot be held liable to third parties for negligence in the
performance of their duties.
An adjustable-rate mortgage is a standard mortgage with an unchanging rate of
interest.
Most online dispute resolution services apply general, universal legal principles to
resolve disputes.
Dissolution can be brought about voluntarily by the directors and shareholders of a
corporation.
A director usually serves on a corporation’s board for a life term.
A summary judgment is granted only if there is no genuine question of law.
In most states, if neither party requests a jury, there will be no jury trial.
The person to whom rights in a contract are assigned is the assignor.
A treaty is a contract or other agreement between two or more nations that must be
ratified by the United Nations to take effect.
The article of corporation cannot exclude shareholders’ voting rights.
A will must normally be attested to by two or three witnesses.
Making any material modification in the terms of a debtor’s contract, without the
consent of the surety, will not discharge the surety’s obligation.
A security interest that provides for a security interest in proceeds is a floating lien.
“Forward-looking” financial forecasts are prohibited under SEC Rule 10b-5.
There are no exceptions to the rule that contracts voluntarily entered into will be
enforced.
To be valid, a security agreement must contain a description of the collateral.
There are additional disclosure requirements for a high-cost mortgage loan.
A bank has no right to charge a customer’s account for the amount of a stale check.
A fixed-term tenancy is created when a lease does not specify its duration.
The law establishes rights, duties, and privileges that are consistent with the values of
society.
A corporation is liable for the torts committed by its officers within the course and
scope of their employment.
A stock warrant is a distribution of corporate profits or income.
Fact Pattern 9-3
Dex and Carmen are in an auto accident. Dex offers Carmen $2,000 if she promises not
to pursue her potential legal claim against Dex. Carmen agrees. Later, Carmen
discovers that it will cost $1,500 to repair her car and $4,000 to cover the medical
expenses for a latent injury.
Refer to Fact Pattern 9-3. In Carmen’s suit against Dex to recover her repair and
medical expenses, Carmen will most likely recover
A.half the amount to pay the costs over what Dex already paid Carmen.
B.nothing.
C.the estimated amount to pay those costs and any other liability.
D.the exact amount to pay those costs and no more.
Riley, an engineer for Shur-2-Gro Seed Corporation, learns that Shur-2-Gro has
developed a corn hybrid to triple the output of any farm. Riley buys 20,000 shares of
Shur-2-Gro stock. He tells Tess, who buys 15,000 shares. After the new hybrid is
announced publicly, the price of Shur-2-Gro stock increases. Riley and Tess sell their
shares for a profit. Under the Securities Exchange Act of 1934, liability may be
imposed on
A.none of these parties.
B.Riley and Tess only.
C.Riley only.
D.Riley, Shur-2-Gro, and Tess.
Naomi and Ogden are shareholders of MediCare Residences, Inc. As shareholders, they
must approve
A.conducting a merger.
B.deciding to pursue new business opportunities.
C.terminating a managerial employee.
D.negotiating a contract between management and labor.
Cory employs Daily Delivery Agency as an agent under a written agreement that
describes the rights and duties of both parties. This is
A.apparent authority.
B.equal authority.
C.express authority.
D.implied authority.
Ideal Gadgets, Inc., and Jolly Outlets Corporation enter into a contract for a sale of
kitchenware. The contract requires Ideal to deliver the goods to Ladle Carrier Company
for transport to Jolly’s warehouse in Metro City. Risk of loss passes to Jolly when
A.Ideal delivers the goods to Ladle.
B.Ideal identifies the goods to the contract.
C.Ladle transports the goods to Jolly’s warehouse.
D.the goods arrive in Metro City.
Shade Tree Lending Corporation advertises loans as fixed-rate loans but, in fact, their
rates or payment amounts will change. This is
A.a legal and ethical-but morally arguable-financial ruse.
B.a legal-but unethical-business practice.
C.a necessary tactic to generate a profitable loan in today’s market.
D.a violation of the law.
InTown Delivery Service promises to deliver a certain couch to Kurt, who promises to
pay for the service. If InTown does not perform, the firm may be required to
A.do nothing.
B.make another promise.
C.pay damages.
D.perform a different service.
Jock hires Kym to act as his agent to purchase Lifetime Gym & Fitness, Inc. Jock tells
Kym to reveal that she is buying the firm on behalf of a third party and to tell Lifetime’s
seller who that third party is. Jock is
A.a disclosed principal.
B.an apparent principal.
C.an undisclosed principal.
D.a partially disclosed principal.
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.
To resolve a dispute, Amy in Boston and Chris in Denver utilize E-Solution, an online
dispute resolution (ODR) service. This limits these parties’ recourse to the courts
A.not at all.
B.until the ODR service has issued a decision.
C.with respect to any dispute arising between them.
D.with respect to this dispute only.
Business Properties, Inc. (BPI), offers to sell a warehouse to Corporate Investments.
Corporate says that it will pay BPI $100 to hold the offer open for three business days.
This
A.creates an illegal contract by adding a clause to BPI’s offer.
B.makes the offer irrevocable for three days if BPI accepts.
C.negates BPI’s offer by changing the price term.
D.voids BPI’s offer by extending the time term.
Mason creates a trust to prevent his son, Newt, the beneficiary, from assigning his rights
to future payments of income from the trust. This is
A.a charitable trust.
B.a constructive trust.
C.a spendthrift trust.
D.an illegal trust.
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.
Bob, a salesperson at a Carpets Galore store, tells Dita, a customer, “Buy your carpet
here, and I’ll install it for half of what the store would charge.” Dita buys the carpet,
which Bob installs for half the store’s price. Bob keeps the money. Bob has breached
A.no duty.
B.the duty of loyalty.
C.the duty of notification.
D.the duty of obedience.
Research Statistics Corporation uses a merit system to pay its employees according to
their job performance. Suki, a female, and Troy, a male, are Research employees with
comparable jobs. Due to superior performance, Suki is paid more than Troy. This is
A.disparate-impact discrimination.
B.gender discrimination.
C.not discrimination.
D.reverse discrimination.
Crater Tools Company may be subject to regulations issued by the Occupational Safety
and Health Administration (OSHA). Like other administrative agencies, the OSHA
affects
A.almost every aspect of a business’s operations.
B.almost no aspect of a business’s operations.
C.a firm’s capital structure and financing, but nothing else.
D.a firm’s hiring and firing procedures, but nothing else.
Filtration Products, Inc., files a suit against Emmett, its former accountant, alleging
constructive fraud. Emmett may be held liable
A.if Filtration cannot prove actual fraud.
B.if Emmett was grossly negligent in the performance of his duties.
C.only if Emmett acted with fraudulent intent.
D.only if Emmett impersonated someone else who could be liable for fraud.
Spencer Hydraulics Corporation’s ethics committee is asked a business ethics
question-should the firm bid low to obtain a contract that it knows it can fulfill only at a
higher price? A practical method to investigate and solve this question involves all of
the following steps except
A.absolution.
B.decision.
C.inquiry.
D.justification.
Kasper, the owner of Lakeview Farm, and Milt, the tenant of the farmhouse on the
property, may create a tenancy for years by
A.deed.
B.express contract.
C.implication.
D.sufferance.
City Bank’s financing statement in collateral owned by Delta Waters Corporation will
expire in less than a year. Filed timely, a continuation statement could extend the
effectiveness of the financing statement for
A.one year.
B.two years.
C.five years.
D.ten years.
Reaching for a bottle of soda from a display in a Bargain Mart store, Cody slips in a
puddle of spilled soda and falls, suffering an injury. Bargain Mart’s employees are not
aware of the spilled soda until Cody falls. In a suit against Bargain Mart, Cody will
most likely
A.lose, because Bargain Mart’s employees were not aware of the spill.
B.lose, because Cody should have exercised more care.
C.win, because Bargain Mart can recover from the soda bottler.
D.win, because the spilled soda was foreseeable.
Jay is a member of Kitchen Cookouts, LLC, a limited liability company. Jay is liable
for Kappa’s debts
A.in proportion to the total number of members.
B.to the extent of his investment in the firm.
C.to the extent that the other members do not pay the debts.
D.to the full extent.
Diners Caf orders five gallons of transfat-free cooking oil from Restaurant Supply, Inc.
The seller mistakenly ships the wrong oil, which the buyer keeps, despite the
nonconformity. The oil is destroyed in a kitchen fire. The loss is suffered by
A.Diners and Restaurant Supply, but not Diners’s customers.
B.Diners, Restaurant Supply, and Diners’s customers.
C.Diners only.
D.Restaurant Supply only.
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.
Demi promises to buy a house from Caleb, who promises to vacate the property on June
1. If these promises are in writing, they are most likely
A.enforceable.
B.unenforceable.
C.void.
D.voidable.
Jen signs a check “pay to the order of Kev” drawn on Jen’s account in Little Bank to
buy Kev’s car. Jen asks Little Bank to indicate on the face of the check that it will
accept it when Kev presents it for payment. If the bank agrees, this will be
A.a cashier’s check.
B.a certified check.
C.a trade acceptance.
D.a traveler’s check.
Bella owns a farm in Colorado. Doyle drives his sport utility vehicle off a highway and
onto Bella’s land. Doyle commits trespass if he
A.does not have Bella’s permission to drive on the property.
B.drives onto the property for recreational purposes.
C.harms the property in a material way.
D.harms the property in any way.
Bild-Rite, Inc., is a Colorado-based firm that does business with clients throughout
North America. Bild-Rite oversees construction projects, and buys and sells commercial
buildings, undeveloped land, and construction supplies and other goods. Bild-Rite has
had to deal with work-site theft and vandalism. With respect to these circumstances, the
Uniform Commercial Code (UCC) provides a framework for
A.commercial transactions for the sale of and payment for goods.
B.international construction contracts.
C.domestic and foreign transactions in real estate.
D.prosecuting crimes against business interests.
Lars accuses Moe, an attorney, of committing malpractice. Malpractice is
A.a breach of ethics.
B.a defalcation.
C.a mistake in judgment.
D.professional negligence.
Lou claims that he and Myra entered into an implied-in-fact contract. To establish this
contract, it is not necessary to show that
A.a court imposed a promise in the interest of fairness.
B.Lou expected to be paid for providing services or property.
C.Lou provided Myra with services or property.
D.Myra failed to reject services or property provided by Lou.
Fiona invents a new deep-sea fishing net, which she names “Great Catch.” She also
writes the operating manual to be included with each net. Fiona could obtain copyright
protection for
A.the net.
B.the “newness” of the net.
C.the name.
D.the operating manual.
Jody owns KuppaJoe Kiosks, a sole proprietorship. Jody’s liability is
A.limited by state statute and varies from state to state.
B.limited to the extent of her capital expenditures.
C.limited to the extent of her original investment.
D.unlimited.
Mikayla enters into a contract with Logan to provide surface material for Mikayla’s
tennis courts by April 1 for a tournament to begin May 1. The contract specifies an
amount to be paid if the contract is breached. This is a liquidated damages clause if the
amount is
A.an excessive estimate of the loss on a breach.
B.a reasonable estimate of the loss on a breach.
C.designed to penalize the breaching party.
D.intended to quickly provide cash to the nonbreaching party.
ValuRich Tools, Inc., sells tools, tool parts, and related supplies under “full” warranties.
Under the Magnuson-Moss Warranty Act, this means that ValuRich must provide
A.a choice between a refund or replacement if a product cannot be fixed and repair or
replacement of defective parts.
B.neither a choice of a refund or replacement, or repair of defective parts.
C.only a choice of a refund or replacement if a product cannot be fixed.
D.only repair or replacement of defective parts.