Roslyn is an inventor. She has many tools, including a hammer, a handsaw and a drill.
Roslyn has a patent on her most recent invention and she owns stock in Handy
Appliances, Inc., which is a company that often uses her inventions. Roslyn’s tangible
personal property includes the
a. hammer, handsaw and drill.
b. Handy Appliances stock only.
c. patent on her invention only.
d. Handy Appliances stock and the patent on her invention.
Phil agrees to work for Vacation Resorts, Inc., as a chef. In determining whether a
contract has been formed, an element of prime importance is
a. the parties’ intent.
b. Phil’s rate of pay.
c. Phil’s education.
d. the terms of Phil’s employment.
Martha has a checking account with Homeplace Bank. Martha signs a check “payable
to Phillipa” drawn on Martha’s account. Homeplace Bank is
a. the payer.
b. the drawee.
c. the drawer.
d. the payee.
Tracy borrows $30,000 from Secure State Bank. The lender accepts Tracy’s equity in
her home as collateral, which can be seized if the loan is not repaid on time. With
respect to any proceeding that occurs if Tracy fails to make the payments, this loan is
subordinated. This means that it
a. takes a higher priority.
b. takes a lower priority.
c. has the same priority as the primary mortgage.
d. fluctuates with the market value of the property.
A court adjudicates Jimi mentally incompetent and appoints Krispin to be his guardian.
Later, without Krispin’s knowledge, Jimi signs a contract to sell his lake cabin to Lazar
for its real market value. The contract is
a. enforceable if Jimi comprehended the consequences.
b. enforceable if Jimi knew the market value of the farm.
c. enforceable if Lazar has been recorded to be the owner of the cabin.
d. void.
Mary Kate Corporation allows Ashley Company to use Mary Kate’s trademark as part
of Ashley’s domain name. This is
a. a license.
b. a likelihood of consumer confusion.
c. cybersquatting.
d. trademark dilution.
Over the course of a year, Discount Market Company sells goods from its inventory and
also sells one of its warehouses. In exchange, Discount receives checks, which Discount
uses to repay a loan from Evermore Credit Inc. Article 2 of the UCC governs
a. the checks.
b. the payment of the loan.
c. the sale of the buildings.
d. the sale of the goods.
Good Food Corporation buys from Home Farms, Inc., a rice crop that Home Farms
plans to plant and harvest during the next growing season. Good Food plans to sell the
rice to Interstate Grocery Stores. After the rice is planted, but before it is harvested, an
insurable interest in the rice exists in
a. Good Food and Home Farms, but not Interstate Grocery.
b. Good Food, Home Farms, and Interstate Grocery.
c. Good Food only.
d. Home Farms only.
Milo borrows $125,000 from North State Bank to buy a home. Because a mortgage
involves a transfer of real property, the mortgage must be
a. a highly formal document.
b. a particular form.
c. in the same format as the lender’s other loans.
d. in writing.
Orin creates a living trust to pass his assets, including stock in Petro Oil Company and
other business investments, to his heirs. One advantage of this arrangement is that
a. income taxes do not have to be paid on trust earnings.
b. the assets are sheltered from the payment of estate taxes.
c. the assets can be transferred without going through probate.
d. the trust does not come into existence until the grantor’s death .
Alain and Brie sign a contract for the sale of Alain’s Coffee Caf to Brie. The parties
intend their written contract to be a final statement of most, but not all, of the terms of
their agreementAlain must first buy the building from Developed Commercial
Properties, Inc., after which Alain and Brie will negotiate a price.
The writing that Alain and Brie signed is
a. a completely integrated contract.
b. a conditionally integrated contract.
c. a partially integrated contract.
d. a supplemental integrated contract.
Four-Square Construction Company enters into a contract with Ben to remodel Carol’s
Home Store, using products from Delta Building Supplies. Eatery Caf is next to Carol’s
Home Store. The remodeling is a gift from Ben to Carol.
Carol is
a. a delegatee.
b. an assignee.
c. an incidental beneficiary.
d. an intended beneficiary.
Tania promises to buy Saki’s handheld video game-player for $40. Saki is
a. an executee.
b. an offeror.
c. a promisee.
d. a promisor.
Denise borrows $90,000 from Clear Lake Credit Union to buy a home. Denise loses her
job and fails to make payments on the mortgage, but assures Clear Lake Credit that she
will soon secure a new job. The lender agrees to postpone the payments. This is
a. foreclosure.
b. forbearance.
c. a reamortization.
d. a restructure.
Sonny agrees to buy a unique collection of Olympics memorabilia for $7,000 from Jana
and sends $1,500 as a down payment. When Sonny sends Jana the rest of the price, she
refuses to ship the collection. Sonny should seek
a. a penalty.
b. liquidated damages.
c. restitution.
d. specific performance.
Michel, the owner of Nature’s Refuge Caf, and Olin enter into a contract under which
Olin agrees to design an outdoor addition to the caf for which Michel agrees to pay
$3,000. This contract may not be assigned if
a. the assignment will significantly change the risk of nonperformance.
b. the assignment is expressly prohibited by the terms of the contract.
c. the contract is uniquely personal in nature.
d. any of the choices.
Food Packaging, Inc., agrees to sell 50,000 6-ounce yogurt containers to Golden Dairy
Company. Food can obtain only 20,000 of the 6-ounce containers, but also ships 30,000
more expensive 8-ounce containers for the same price. Under these circumstances,
Golden
a. cannot reject delivery, and Food cannot later replace the containers.
b. cannot reject delivery, but Food can later replace the containers.
c. may reject delivery, and notice to Golden of Food’s intent to cure will give Food a
reasonable time to replace the containers.
d. may reject delivery, but Food cannot later replace the containers.
Flora, who owns and operates Garden Fresh Organic Farms, agrees to sell Harvesters
Grocery a minimum quantity of fresh fruits and vegetables every week for three
months.
If a strike delays delivery of the produce beyond the time for performance, Flora’s
contract with Harvesters is most likely
a. breached.
b. discharged.
c. not affected.
d. suspended.
Edgar, Jon and Phoebe do business as Reliable Movers. Phoebe develops a debilitating
illness and can no longer work. Phoebe
a. may dissociate from the partnership.
b. may not dissociate from the partnership without Edgar and Jon’s consent.
c. must pay damages to Edgar and Jon for the loss of her work.
d. may terminate the partnership.
Luc writes a check for $1,000 drawn on Ridgetop Bank and presents it to Bianca.
Bianca presents the check for payment to Ridgetop Bank, which dishonors it for
insufficient funds. The party most likely liable to Bianca is
a. Luc in a civil suit.
b. Luc in a criminal prosecution.
c. Ridgetop Bank in an administrative proceeding.
d. neither Luc nor Ridgetop Bank.
Jody owns KuppaJava 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 capital expenditures.
c. limited to the extent of his or her original investment.
d. unlimited.
The Internal Revenue Service (IRS) wants to seize certain documents of Monetary
Propriety, Inc. Whether it is permissible for the IRS to request or seize the documents
depends on whether the documents are
a. incriminating.
b. relevant.
c. technical.
d. valuable.
Lost in a canyon near Gila, Arizona, Hester writes her will in crayon, on a paper bag,
while Ivan states orally how he wants his estate distributed. Most states do not permit
a. an olographic will.
b. a nuncupative will.
c. a will written on a paper bag.
d. a will written in crayon.
Tom draws a check, on his account in State Bank in New York, payable to Digital
Media, Inc., in San Francisco. Digital deposits the check in its account at First National
Bank.
Digital’s bank is
a. the cashing bank.
b. the depositary bank.
c. the intermediary bank.
d. the payor bank.
Thirty-one days before filing a petition in bankruptcy, Gavin transfers property and
makes payments that favor one creditor over another. These are
a. affirmation agreements.
b. preferences.
c. secured interests.
d. unsecured debts.
Dave is an officer for Sweet Somethings Candies, Inc. In 2012, chocolate hearts were
very popular. Acting within his managerial authority and the powers of the corporation,
Dave signs a contract for an increase in chocolate heart production for 2013. In 2013
chocolate hearts do not sell well and Sweet Somethings Candies loses money. Dave is
most likely
a. liable for breach of duty of care.
b. liable for breach of duty of loyalty.
c. none of the choices.
d. liable for violation of the business judgment rule.
Miranda is a U.S. citizen working in Europe for Tourist Vacations, Inc., a U.S. travel
agency. Tourist fires Miranda for reasons that she believes violate U.S.
antidiscrimination laws. Those laws apply
a. extraterritorially.
b. only to signatories of the North American Free Trade Agreement.
c. only to members of the World Trade Organization.
d. only within U.S. borders.
Mix-It Concrete Company has the right to enter Nim’s land and remove the rock from
Nim’s quarry. This is
a. a fee simple absolute.
b. a license.
c. an easement.
d. a profit.
The Securities and Exchange Commission decides to create a new rule relating to the
dissemination of material nonpublic information through corporate Web sites. The first
step is
a. compile the rule with others in the Code of Federal Regulations.
b. conduct an on-site inspection.
c. publish a notice of the proposed rulemaking.
d. solicit public comment.
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.
Everyday Loans, Inc., issues a line of credit in Glade Electronics Corporation under a
security agreement. Later, Glade buys new HD-TVs to add to its inventory. Everyday
has a security interest in the new inventory
a. if the security agreement included an after-acquired property clause.
b. if Everyday has not yet filed a financing statement.
c. if Glade bought the inventory with Everyday funds.
d. under no circumstances.
Savers Mart, Inc., distributes its merchandise to retail outlets on an interstate basis.
Under the commerce clause, Congress has the power to regulate
a. any commercial activity in the United States.
b. only activities that are in intrastate commerce.
c. only activities that are in local commerce.
d. only activities that are not in commerce.
Kali contracts to sell Leony her car for $3,000. This contract will be fully discharged
when Kali and Leony
a. agree to sign a bill of sale.
b. exchange the car for the $3,000.
c. sign a receipt.
d. shake hands and go their separate ways.
Simon signs a check “pay to the order of Tilly” drawn on Simon’s account in United
Bank. Vela forges Tilly’s indorsement, First Federal Bank cashes the check, and Vela
disappears. United pays First Federal and debits Simon’s account. Most likely, the
ultimate loss will fall on
a. Simon.
b. Trudy.
c. United Bank.
d. First Federal Bank.
Commercial Decor, Inc., files a suit against Discount Mart Corporation, asking the
court to enforce an oral contract between the parties under the doctrine of promissory
estoppel. This doctrine applies in
a. all states.
b. no states.
c. one state.
d. some states.
A liquidated damages provision specifies that a certain amount to be paid in the event of
a future default or breach of contract.
Brock is a shareholder of Competent Homebuilders Corporation (CHC). For the last
few years, business has not been profitable for CHC. The firm has lost money on its
operations. There has been some profit through sales of company assets, but the board
of directors has refused to declare a dividend. This last year, the firm’s accountants
failed to file federal income tax returns and the board refused to pay the tax. Brock
takes a close look at the firm and protests to the board, in particular over the failure to
declare a dividend, but the board ignores the complaint. Which of these events, if any,
would form a ground for a court to order the dissolution of CHC, on Brock’s petition? If
the court denies the petition, could Brock and the other shareholders dissolve CHC?
If the meaning of a statute’s language is unclear and an agency interprets it, a court must
follow the interpretation as long as it is reasonable.
Very few states have limited the amount of damages that can be awarded in tort cases.
The drawee who signs a draft or check is not primarily liable to any subsequent holders.
Self-defense is a defense to negligence.
If a contract is fully performed by all parties to it, then it is presumed to have been
ratified.
A quasi contract arises from a mutual agreement between two parties.
A contract for lifetime employment cannot not be performed within one year and so it
must be in writing to be enforceable.
In the absence of express constitutional, statutory, or other provisions, the corporation
has no implied powers.
A principal is not liable on any contract made by the agent acting outside the scope of
his or her authority.
If a loan is not paid within a reasonable time after a notice of default, the borrower will
receive a notice of sale.
State law establishes the specific procedures for mergers.
A void contract is enforceable if it is in writing.
If a corporation fails, the shareholders are all individually liable.
Defense of others is a defense to an allegation of battery, but not assault.
A lottery is an example of an offer for an unilateral contract.