Rangle contracts with Siena to buy a certain horse for her. Rangle makes a deal with
Timberline Stables, the owner of the horse, and makes a down payment. Siena fails to
pay the rest of the price. Timberline sues Rangle for breach of contract. His right to
hold Siena liable for any damages that he has to pay is the right of
a. avoidance.
b. cooperation.
c. indemnification.
d. reimbursement.
Early one morning, Tab agrees to lend his bike to Sheila, who promises to return it in
the evening. Because there is no consideration, there is no contract. This is
a. a constructive bailment.
b. an involuntary bailment.
c. an express bailment.
d. no bailment.
As the beneficiary of a business trust, Kevin’s liability for trust debts and obligations is
a. limited to his capital investment in the trust.
b. limited to his personal assets.
c. nothing.
d. unlimited.
Ruthie, a minor, charges the cost of an expensive leather jacket at a Girl’s Trend store.
Two nights later, Ruthie loses the jacket at Minors Only Club. She disaffirms the
jacket’s purchase. Ruthie owes Girl’s Trend the reasonable value of the jacket
a. if it is deemed a “necessary.”
b. if it is deemed unnecessary.
c. under any circumstances.
d. under no circumstances.
Lacy is an accountant who prepares her client’ tax returns. Muff is not an accountant,
but he also prepares tax returns for clients. Under the Internal Revenue Code, liability
for preparing a false return may be imposed on
a. Lacy and Muff.
b. Lacy only.
c. Muff only.
d. neither Lacy nor Muff.
Sweet Candy, Inc., and Tasty Treats stores enter into a contract for a sale of confections.
Sweet, a merchant who deals in goods of the kind sold, makes express warranties in
connection with the sale. Under the UCC, at the time a contract is formed, an express
warranty can be disclaimed or modified
a. by clear, conspicuous language called to the buyer’s attention.
b. by implied affirmations of fact relating to the goods.
c. in any way that the seller sees fit for the ordinary purpose.
d. in no way.
Rolf is an emergency medical technician. Medical personnel such as Rolf are prohibited
by state statute from working more than a certain number of consecutive hours. One
month, Rolf works more than the legal limit. Rolf can recover for
a. the hours up to the statutory maximum but not more.
b. the hours up to the statutory maximum and the extra hours.
c. the hours up to the statutory maximum or the extra hours.
d. nothing.
Fashion Retail Center enters into a contract with Great Promotions, Inc., to provide
Fashion with a plan to retool its merchandising strategy. If Great Promotions breaches
the contract, Fashion has a duty to
a. reduce the damages that Fashion might otherwise suffer.
b. reduce the loss that Great Promotions might otherwise suffer.
c. punish Great Promotions and deter others from similar acts.
d. take no action.
Property Financial Corporation makes loans that qualify, under a Federal Reserve
Board amendment to Regulation Z, as Higher-Priced Mortgage Loans (HPMLs). Quinn
applies to Property Financial for an HPML. To make the loan, the lender must
a. convince an appraiser to inflate the value of the property.
b. impose a prepayment penalty for the duration of the loan.
c. structure the loan to specifically evade the HPML protections.
d. verify the borrower’s ability to repay the loan.
Patsy possesses twenty-four acres of remote, rugged land. Patsy has the right to use the
property, including extracting silver from an existing mine, for life. Patsy also has the
right to lease the land for a period not to exceed her life. Patsy’s ownership interest is
a. a fee simple absolute.
b. a leasehold estate.
c. a life estate.
d. the power of eminent domain.
Laredo advertises a reward for the return of his lost dog. Mikayla, who does not know
of the reward, finds and returns the dog. Mikayla cannot recover the reward, because
she
a. did not confer a benefit on Laredo by returning the dog.
b. did not know of the reward when she found and returned the dog.
c. does not need the money.
d. returned the dog.
Duffy and Elbert agree to hijack a truck carrying a load of pecans. If Duffy later refuses
to go through with the crime, Elbert can
a. enforce the agreement.
b. obtain damages from Duffy in the amount of Duffy’s probable share of the illegal
profits.
c. recover in quasi contract for the loss of his share of the illegal profits.
d. do nothing.
Serenity City enacts an ordinance that bans the use of ‘sound amplifying systems” on
public streets. Tyler wants to campaign for a seat on the city council by broadcasting his
message through speakers mounted on a truck. In Tyler’s suit against the city, a court
would likely hold the ordinance 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.
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.
Any decision by the management of Fast-Food Franchise Corporation may significantly
affect its
a. operators only.
b. operators, owners, suppliers, the community, or society as a whole.
c. owners only.
d. suppliers, the community, or society as a whole only.
Bean Vendors, Inc., and Java Bistros Corporation dispute a term in their contract.
Refer to Fact Pattern 3-1. The least expensive method of resolving the dispute between
Bean and Java may be
a. arbitration because the case will be heard by a mini-jury.
b. litigation because each party will pay its own legal fees.
c. mediation because the dispute will be resolved by a non-expert.
d. negotiation because no third parties are needed.
Richard is an avid baseball fan and attends baseball games whenever he can. Richard
considers himself an expert on all things, including risks, related to baseball. One day a
ball flies into the stands, hits Richard in the head and seriously injures him. Richard can
probably successfully win a case against the sports stadium based on
a. negligence.
b. breach of duty of care.
c. defamation.
d. none of the choices.
Colleen is intoxicated, but still mentally capable of understanding the consequences of
her actions when she signs a contract to sell the rights to her latest phone app design to
Addie. The contract is
a. enforceable only if Colleen does not attempt to disaffirm it.
b. enforceable even if Colleen attempts to disaffirm it.
c. unenforceable if Addie attempts to disaffirm it.
d. enforceable only if Addie does not attempt to disaffirm it.
Japan violates an international law. Other countries may take coercive actions, which
include
a. violating the same law in the same way with impunity.
b. confiscating Japanese businesses.
c. boycotting Japanese goods.
d. taxing Japanese citizens.
Dobry Die & Mold, Inc., enters into a contract with Chet’s Refitting Service to fix
Dobry’s precisely engineered molding equipment. If Chet’s delays the repair for five
days, knowing that Dobry will lose a certain percentage of profit for the delay, Dobry
might be awarded consequential damages to
a. establish, as a matter of principle, that Chet’s acted wrongfully.
b. provide Dobry with funds for a foreseeable loss beyond the contract.
c. provide Dobry with funds for its loss of the bargain.
d. punish Chet’s and set an example to deter others from similar acts.
Paula, a disabled person, applies for a job at Quantity Corporation for which she is well
qualified, but for which she is rejected. Quantity continues to seek applicants and
eventually fills the position with a person who is not disabled. Paula is most likely to
succeed in a suit against Quantity for discrimination under the Americans with
Disabilities Act of 1990 if she can show that
a. she was not hired solely because of her disability.
b. she can function well with corrective devices or on medication.
c. her disability causes her undue hardship.
d. she could not perform the job even with reasonable accommodation.
Clyde issues a check payable to Discount Mart. Elle, Discount’s cashier, forges the
store’s indorsement and deposits the check in her bank account. Clyde’s bank, Main
Street Bank, pays the check. Clyde can recover from
a. Elle, but not Main Street Bank.
b. Main Street Bank, which cannot recover from Elle.
c. Main Street Bank, which can recover from Elle.
d. no one.
Buyers Club is an incorporated cooperative. Like other incorporated cooperatives,
Buyers Club distributes profits to its owners on the basis of
a. the amount of capital they contribute.
b. the degree to which they participate in management.
c. their transactions with the cooperative.
d. the requirements of the state in which it was incorporated.
Fact Pattern 25-2
Beth, who has a disability, is an employee of Corporate Office Company (COC). After
the installation of new doors on COC’s building, Beth finds it nearly impossible to get
in and out. For repeatedly failing to be on time, COC replaces Beth with Dian, who
does not have a disability.
Refer to Fact Pattern 25-2. To succeed with a claim against COC under the Americans
with Disabilities Act, Beth will have to show that
a. Beth consistently met the essential requirements of her job.
b. COC refused to make reasonable accommodation for Beth.
c. Dian is unqualified for Beth’s position.
d. the doors were installed as an act of intentional discrimination.
Seth offers to buy a house from Tia for less than Tia paid for it, stating that he would
“hate to see anything bad happen to Tia or her house.” Tia agrees to sell. Regarding this
agreement, a court would likely
a. enforce it.
b. not enforce it.
c. reform it to reflect the true market value of the property.
d. order the parties to renegotiate the price.
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.
Phillip assigns his rights under a contract with Maria to his college roommate, John.
Neither Phillip nor John notifies Maria of the assignment. The assignment
a. will not be effective until notice is given to Maria.
b. will become effective after thirty days even if no notice is given to Maria.
c. is immediately effective.
d. can be circumvented.
Ridgeline Bank provides Stanley with a mortgage to buy a home. The rate of interest is
fixed for three years and then adjusts annually. This is
a. a fixed-rate mortgage.
b. an adjustable-rate mortgage.
c. an interest-only mortgage.
d. a violation of the law.
Listen Up! Corporation books and promotes concerts and other entertainment events,
for which Listen Up! also sells tickets. In weighing a challenge to Listen Up!’s
“monopolistic” ticket prices, a court looks at the relevant geographic market. This
encompasses
a. only areas in which Listen Up! does not have monopoly power.
b. only areas in which Listen Up! has monopoly power.
c. the area in which Listen Up! and its competitors sell, and their customers buy, the
tickets.
d. the entire United States in all cases.
Because stock is intangible personal property, a stockholder’s ownership of the stock
a. exists independently of the stock certificate itself.
b. cannot exist without a tangible stock certificate.
c. cannot exist without the original stock certificate.
d. cannot be transferred to another person.
Jack owns the surface rights for Rocky Ridge Ranch, but does not own the subsurface
rights. Ginny owns the subsurface rights. Rocky Ridge Ranch has a historic barn, which
is damaged when Ginny is excavating minerals from the ranch. Who is most likely
responsible for the damage to the barn?
a. Ginny only
b. Jack only
c. Ginny and Jack
d. no one
Management’s behavior sets the ethical tone of a firm.
A will must normally be attested to by two or three witnesses.
The measurement of compensatory damages for breach of contract is the same for all
types of contracts.
When a minor disaffirms a contract, he or she cannot keep whatever he or she has
received as a result of the contract without paying for it.
Universal defenses are good against all holders except HDCs and holders through
HDCs.
A financing statement is effective for five years from the date of filing.
An act must substantially affect interstate commerce to violate antitrust law.
In a general partnership, the partners are personally liable for the debts of the
partnership.
The Environmental Protection lists all hazardous air pollutants (HAPs) on a prioritized
schedule.
A material change in a loan contract between a creditor and a debtor discharges a surety
only to the extent that the surety suffers a loss.
Title VII of the Civil Rights Act of 1964 prohibits only intentional discrimination.
A corporate director is an “owner” of the corporation.
The “first-in-time” rule means that an unperfected security interest takes priority over a
perfected security interest.
Under the perfect tender rule, if tender is not perfect, the seller is obligated to try again.
Unless otherwise agreed, inspection of goods can take place at any reasonable place and
time and in any reasonable manner.
Steering and targeting occur when a lender manipulates a borrower into accepting a
loan product that benefits the lender but is not the best loan for the borrower.
A corporation’s officers and other executive employees are hired by corporate
shareholders.