Lita is a holder of preferred stock in Mighty Clean Detergents, Inc. Lita has priority
over holders of Mighty common stock as to
a. nothing.
b. payments of dividends.
c. the date on which Mighty must repurchase the shares.
d. upward changes in the market price of the shares.
Bryces accountant is Caleb and his attorney is Delilah. All states protect, as privileged
information, Bryces communications with
a. Caleb and Delilah.
b. Caleb only.
c. Delilah only.
d. neither Caleb nor Delilah.
Petro Industries, Inc., operates an oil refinery near Quigley River, which flows into
Royal Lake. Discharging oil from the refinery into the river can result in
a. penalties and damages.
b. penalties only.
c. damages only.
d. no penalties or damages.
Jody is an agent for Kwik Credit Company (KCC). In the course of Jodys performance
for KCC, Jody pays Leo for certain auto maintenance and repair services. Jodys right to
obtain the amount of those payments from KCC arises under the principals duty of
a. avoidance.
b. cooperation.
c. indemnification.
d. reimbursement.
Quincy draws a check payable to “Replay Stadium to buy two season tickets to the next
years State College football games. This instrument is
a. a bearer instrument.
b. an order instrument.
c. valid but nonnegotiable.
d. void.
Commercial Shipping, Inc., and Dock Services Corporation enter into a contract for
Dock to load Commercials barges for which Commercial agrees to pay Dock. Dock
transfers its duty to load the barges to Riverside Freight Company. Dock is
a. a delegator.
b. an assignor.
c. an alien.
d. an obligee.
Guaranty Financial Corporation merges with Fraternal Bank Corporation, with
Guaranty absorbing Fraternal. After the merger
a. a different, new entity is the surviving corporation.
b. Guaranty and Fraternal are both surviving corporations.
c. Guaranty is the surviving corporation.
d. Fraternal is the surviving corporation.
Demi operates Eyes Wide Open, a small-business optician enterprise. To raise capital,
Demi contacts Foster, a venture capitalist. Besides capital, Foster will most likely
a. assist in the drafting of a business plan.
b. decline a proportion of future profits.
c. offer assistance with respect to marketing.
d. refrain from demanding operational control.
Press Now Corporation, a disk manufacturer, sells its product in certain quantities to
Quik 2U, a retailer, for $275 but charges Rite Here, a competitive retailer, $350. This
price discrimination is legal
a. under any circumstances.
b. unless its effect is to cause a competitor a loss of any business.
c. unless its effect is to substantially lessen competition.
d. unless there is no effect on a competitor.
Jane enters onto Sams property to help someone in danger. If Sam charges Jane with
trespass to land, Jane has
a. no defense.
b. a possible defense.
c. a partial defense.
d. a complete defense.
Clay buys an MP3 player for $200 and a pair of stereo speakers for $600 from a
Discount City store, and downloads $300 worth of digital music from E-Music.com. To
be enforceable, the contract that must be in writing is the purchase of
a. the digital music, the MP3 player, and the speakers.
b. the MP3 player and the speakers only.
c. the MP3 player only.
d. the speakers only.
Auto & Truck Loan Corporation uses ‘self-help repossession when its debtors default on
their loans. This simplifies the process of repossession because
a. it can be done without judicial process.
b. it is less stressful for debtors.
c. it provides an incentive for confrontations with debtors.
d. the UCC clearly defines what constitutes “breach of the peace.
Juana contracts to sell Ignacio her MP3 player for $30. This contract will be fully
discharged when Juana and Ignacio
a. agree to sign a bill of sale.
b. exchange the player for the $30.
c. sign a receipt.
d. shake hands and go their separate ways.
Nina is a dissenting shareholder of Mediterranean Olive Oil Company whose
management is considering a tender offer by Healthwise Foods, Inc. Nina and
Mediterranean cannot agree on the fair value of the stock. The value will be determined
by
a. a court.
b. Nina.
c. Mediterranean.
d. Healthwise.
Enterprising Markets Coalition (EMC), a political lobbying group, wants a certain
policy enacted into law. If EMCs policy conflicts with the U.S. Constitution, a law
embodying it can be imposed by
a. Congress.
b. a federal court.
c. a state legislature.
d. none of the choices.
Estes, an accountant, contracts to perform services for Frasier. In performing those
services, Estes uncovers a suspicious financial transaction. Estes is most likely not
liable if he
a. acted negligently in failing to discover the transaction sooner.
b. conceals the discovery and otherwise finishes the work.
c. investigates and reports the discovery to Frasier.
d. obtains restitution from the perpetrator without Frasiers knowledge.
Marvel 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 Marvel under the Civil Rights Act of 1964, this requirement is shown to
have a discriminatory effect. Marvel has
a. an affirmative action defense.
b. a bona fide occupational qualification defense.
c. a business necessity defense.
d. no defense.
Machine Operations, Inc. (MO), employs four hundred workers at three locations in
three states. Workers who lose their jobs with MO have a right to continued health-care
coverage under MOs group plan unless they
a. are fired for gross misconduct.
b. are laid off for budgetary reasons.
c. have their hours decreased from full-time to part-time.
d. quit their jobs voluntarily.
Greta is the only female employee in the maintenance department of Hydro Hydraulics
Inc. Gretas supervisor and co-workers tease and play tricks on her so relentlessly that
she feels compelled to quit. This is
a. a constructive discharge on the basis of gender discrimination.
b. a harassing discharge on the basis of treatment discrimination.
c. a voluntary discharge on the basis of impact discrimination.
d. not a discharge or discrimination.
Following negotiations with Merchants Storage Company, Lonny enters into an
informal contract to clean the loading dock. This means that the parties contract
a. requires no special form.
b. must be drafted “in form to be valid.
c. is indefinite and imprecise.
d. does not exist.
Commercial Storage (CS), a bailee, holds goods for Delta Distributors, Inc., which has
contracted to sell them to Eagle Company. The goods are to be delivered without being
moved. The risk of loss will pass to Eagle when Eagle receives
a. a copy of Deltas contract with CS.
b. a copy of Deltas contract with Eagle.
c. a negotiable document of title.
d. a notice that Eagles payment for the goods has cleared.
A contract between Drill-Bit Sharpeners, Inc., and East Oil Mining Corporation
contains a clause stating that any assignment is “void. This ordinarily prohibits
a. any assignment.
b. no assignment.
c. only an assignment of contract rights to personal services.
d. only an assignment that would change the obligors risk.
Chips Chips Company agrees to supply Delicioso Café with all the corn chips that it re-
quires for a year. A sudden demand for ethanol results in a shortage of corn, and the
price rises sharply. Chips asks Delicioso to pay a higher price for the chips. This request
is
a. invalid as an attempt at extortion or the so-called holdup game.
b. invalid under the preexisting duty rule.
c. valid as a risk ordinarily assumed in business.
d. valid due to the unforeseen difficulty of the sudden price increase.
Ilya is an officer with Jetspeed, Inc. Ilya is in a position to acquire assets that would
benefit Jetspeed if acquired in its name. Ilyas usurping this opportunity may violate the
duty of
a. acting in ones own interest.
b. agency.
c. care.
d. loyalty.
Binary Corporation and Coda, Inc., two software firms, wish to combine their research
and development capabilities to make a special, limited edition computer game. The
appropriate legal entity for this project is most likely
a. a business trust.
b. a joint stock company.
c. a joint venture.
d. a syndicate.
Kato and Leilani dispute the quality of a collection of sports memorabilia sold over the
Internet. They agree to resolve this dispute in 2BRNot2B.com, an online forum. Like
most online forums, 2BRNot2B.com applies
a. general, universal legal principles.
b. the provisions of the Federal Arbitration Act.
c. jurisprudence developed by the United Nations.
d. the law of California (or another specific U.S. jurisdiction) .
Velma transfers a note by signing it and delivering it to Woz. Woz is
a. a delivery person.
b. an indorsee.
c. a note passer.
d. a promisee.
Pippi, the manager of Quik Mart, deposits the stores receipts in its account at Regional
Bank. As to the receipts, the relationship between Quik Mart and the bank is
a. attorney and client.
b. creditor and debtor.
c. guardian and ward.
d. trustee and beneficiary.
Rikki and Sid enter into a sales contract for tennis equipment. With respect to the
specific contractual provisions set out in the UCC, Rikki and Sid may
a. agree to different terms only to a reasonable extent.
b. agree to different terms unless they “get caught.
c. agree to whatever terms they wish.
d. not agree to different terms.
Fact Pattern 50-1A
Nikita owns land in Ohio. Her ownership rights include the right to sell or give away
the property without restriction, and the right to commit waste, if she chooses.
Refer to Fact Pattern 50-1A. Nikita conveys some of her land to Reggie with the right
to possess and use the property for a certain period of time. Nikita has given Reggie
a. a fee simple absolute.
b. a leasehold estate.
c. a life estate.
d. an easement.
Iowa enacts a statute that requires a label on a video game to warn parents when “the
range of options available to a player include killing and maiming the image of a human
being. Gamemakers file a suit against the state to block the statutes enforcement. Based
on the decision of a California court in a case involving a similar statute, the court in
this case is most likely to rule that the statute
a. extends restrictions on sex-based content to violence in video games.
b. violates the First Amendments guarantee of freedom of speech.
c. imposes market-share liability on makers of violent video games.
d. replaces the voluntary rating system currently in use.
Dahlia borrows $125,000 from Clearview Credit Union to buy a home. The interest rate
and other terms that are required to be disclosed under federal law must be
a. based on uniform formulas of calculation.
b. expressed in lenders language.
c. set out in a formula unique to each loan.
d. stated in “legalese.
Resale price maintenance agreements are currently considered per se violations of
antitrust law.
An “assignment of all rights creates an assignment of rights but not a delegation of
duties.
Dividends can be paid in cash.
The trustee is the person for whose benefit a trust is held.
If a lessee wrongfully refuses to accept goods that conform to a contract, the lessor
must tender substitute goods.
A collection agency must include a validation notice whenever it initially contacts a
debtor for payment of a debt.
An employees resignation must be the foreseeable result of an employers
discriminatory action to support a showing of constructive discharge.
Under the UCC, a firm offer for a sale or lease of goods made by a merchant can be
revoked at any time before acceptance.
Precise Engineering Corporation has a contract with Quik Mart Stores to provide
customized software for Quiks inventory control system. Retail Outlets, Inc, Quiks
competitor, induces Sam, a Precise subcontractor who is writing code for the Quik
software, to delay delivery of the code for one week. As a result, Precises delivery of
the software is delayed, and Quik sustains $500,000 in lost profits. On what ground
could Quik recover damages from Retail Outlets?
Any beneficiary who is not deemed an intended beneficiary is considered incidental.
Power Up Corporation makes batteries for motor vehicles. The Federal Trade
Commission (FTC) learns that Quantum Automotive Stores, a retail company that sells
Power Ups batteries, engages in deceptive advertising practices. What actions can the
FTC take against Quantum?
A franchisor is the purchaser of a franchise.
For a defendant to be convicted in a criminal prosecution under the securities laws,
there can be no reasonable doubt that the defendant knew he or she was acting
wrongfully.
A business firm may have an insurable interest in the life of any of its employees,
except a key employee.
Pretexting is the process of obtaining information by false means.
Credit insurance pays to a debtor the balance of a debt on his or her disability, death,
insolvency, or bankruptcy.
UCC Article 2 applies to sales transactions between all buyers and sellers.
A warranty of title cannot be disclaimed.