In Export Co. v. Imports, Inc., there is no precedent on which the court can base a
decision. The court can consider, among other things,
a. neither public policy nor social values.
b. public policy only.
c. public policy or social values.
d. social values only.
Field Trenchers Inc. initiates a lawsuit against its competitor Master Excavators Inc. out
of malice and without probable cause. Master suffers a loss of profits due to the
litigation, but Field loses the suit. Field is most likely liable for
a. abuse of process.
b. malicious prosecution.
c. no tort.
d. wrongful interference with a business relationship.
Cameron manages an illegal gambling operation in his BBQ Bar & Grill. Cameron
reports the profits of the gambling operation as income from BBQ’s legitimate activities
on its tax returns. This is
a. embezzlement.
b. larceny.
c. money laundering.
d. no crime.
Solid Tool Company’s decision makers view a particular risk in the use of Solid’s
product as open and obvious. Continuing to market the product without telling
consumers of the risk could be justified from a perspective of
a. duty-based ethics.
b. Kantian ethics.
c. rights-based ethics.
d. utilitarian ethics.
Century Properties. Inc., and Broadview Capital Corporation enter into a contract for a
sale of land. To be enforceable, the contract must be in writing if the land is valued at
a. $50.
b. $500.
c. $5,000.
d. any price.
Shelby offers to make digital copies of Relay Company’s business conference
videotapes, CDs, DVDs, and other media for $500. Under the mailbox rule and the
Uniform Electronic Transactions Act (UETA), Relay’s acceptance by e-mail will be
considered effective when
a. received.
b. sent.
c. followed up by a confirmation letter sent by regular mail.
d. composed on a Relay computer.
Len, a citizen of Maryland, obtains a federal license to operate a commercial fishing
boat in Chesapeake Bay. The Maryland state legislature enacts a law that bans all
commercial fishing in the bay. The state law most likely violates
a. no provision in the U.S. Constitution.
b. the commerce clause.
c. the due process clause.
d. the supremacy clause.
Kansas enacts a law requiring all businesses in the state to donate 10 percent of their
profits to Protestant churches that provide certain services to persons whose income is
below the poverty level. Lo-Price Stores files a suit to block the law’s enforcement. The
court would likely hold that this law violates
a. no clause in the U.S. Constitution.
b. the establishment clause.
c. the free exercise clause.
d. the supremacy clause.
Fealty Credit Corporation asks its employees to evaluate their actions and get on the
ethical business decision-making “bandwagon.” Guidelines for judging individual
actions include all of the following except
a. an individual’s conscience.
b. business rules and procedures.
c. loopholes in the law or company policies.
d. promises to others.
Fanny tells Eden that she will sign a lease if it includes a clause permitting Fanny to ex-
tend the lease at the same amount of rent. Fanny’s intent to sign the lease is determined
by reference to Fanny’s
a. assumptions.
b. beliefs.
c. unspoken opinions.
d. words and action.
Neighborly Insurance Company and Ollie put their agency agreement into a written
document that describes the rights and duties of both parties. Ollie, as the agent, has
a. apparent authority.
b. equal authority.
c. express authority.
d. implied authority.
Genna is a director of Fab Stuff Corporation. Without informing Fab, Genna starts up
Evertrendy, Inc., to compete with Fab. Genna is liable for breach of
a. no duty, right, or rule.
b. the business judgment rule.
c. the duty of loyalty.
d. the right of participation.
Excel Goods, Inc., and Finest Products Corporation use the mark “Good Housekeeping
Seal of Approval” to certify the quality of their products. Excel and Finest are not in
business together and do not own this mark. The mark is
a. a certification mark.
b. a collective mark.
c. a service mark.
d. trade dress.
Kay carelessly bumps into Lyle, knocking him to the ground. Kay has committed the
tort of negligence
a. only if Lyle is injured.
b. only if Lyle is not injured.
c. under any circumstances.
d. under no circumstances.
Owen and Pablo enter into a contract for a sale of fifty Western saddles. Pablo pays, but
Owen does not deliver. Pablo can normally recover as damages the difference between
a. any loss avoided and any profit gained.
b. the actual price and the hoped-for price.
c. the contract price and the market price.
d. the current prices in the parties’ locations.
When Jeff’s car breaks down, he asks Kwik Tow, Inc., to tow it from its location to
Loyal Repair Shop. There is no discussion of a price, and Jeff and Kwik do not sign any
documents. After the tow, Kwik sends Jeff a bill. With respect to Jeff’s obligation to pay
the bill, this is
a. an express contract.
b. an implied contract.
c. a quasi contract.
d. no contract.
Musical, Inc., sells fifty MP3 players to Noise Stores, Inc. To avoid liability for most
implied warranties, in some states Musical could simply state in writing that the players
are sold
a. as is.
b. by a merchant.
c. in perfect condition.
d. with no known defects.
Cassandra accepts what she believes was an offer to work for Destination Vacations,
Inc., as a chef. In determining whether a contract has been formed, an element of prime
importance is
a. the condition of the workplace.
b the duration of the work.
c. the intent of the parties.
d. the subject of the contract.
Hi-Tech Company contracts to sell fiber optic cable to Internet Services, Inc. Hi-Tech
may bring an action to recover the purchase price and incidental damages if Internet
a. accepts the cable and pays for it.
b. accepts the cable but does not pay for it.
c. rejects the cable.
d. revokes acceptance of the cable.
In Sales Distribution Corp. v. Consumer Products Co., the court decides that a
precedent is incorrect or inapplicable. The court
a. may rule contrary to the precedent.
b. must apply the precedent.
c. must ask a higher court to rule on the case.
d. must refuse to decide the case.
Cameron enters a coffee shop in which she has an open account, fills a cup of coffee,
holds it so the cashier can see it, acknowledges the cashier’s nod, and walks out with the
coffee, knowing that she will be billed for it at the end of the month. Cameron has
formed
a. an express contract.
b. an implied contract.
c. no contract.
d. a quasi contract.
A Massachusetts state statute imposes a prison term, without a trial, on all street
entertainers who operate in certain areas. A court would likely review this statute under
the principles of
a. equal protection.
b. free exercise.
c. procedural due process.
d. substantive due process.
Clu, Dolf, and Elton do business as Fertile Valley Farm. Clu’s relationship to the firm
ends, but it continues to do business. This is
a. dissociation.
b. dissolution.
c. winding up.
d. wrongful.
Diaz and Cuzco enter an express contract for the construction of a warehouse. Express
contract terms are given, in relation to the parties’ course of performance,
a. less priority.
b. the same priority.
c. no priority.
d. more priority.
Haruko, who owns and operates Garden Orchard, agrees to sell Fresh Produce
Cooperative ten bushels of apples.
When bad weather destroys Garden Orchard’s apple crop, Haruko’s obligation to deliver
apples to Fresh Produce is
a. breached.
b. discharged.
c. not affected.
d. suspended.
Kit loses her suit against Lou in a Minnesota state trial court. Kit appeals to the state
court of appeals and loses again. Kit would appeal next to
a. a U.S. district court.
b. the Minnesota Supreme Court.
c. the United States Supreme Court.
d. the U.S. Court of Appeals for the Eighth Circuit.
Timber Products, Inc., and Walt, a consumer, enter into a contract for a sale of plywood.
If the contract includes a clause that is perceived as grossly unfair to Walt, its
enforcement may be challenged under the doctrine of
a. good faith.
b. square dealing.
c. the mere image rule.
d. unconscionability.
Carl sells Direct Marketing Enterprises, a sole proprietorship, to Eve. This is a transfer
of
a. a license.
b. a trade name.
c. the formula to make a product.
d. the ownership of the business.
An anonymous person posts online a defamatory message about Dewitt. Not knowing
the poster’s identity, Dewitt files a suit against “John Doe.” Using the authority of the
court, Dewitt can obtain from the poster’s Internet service provider
a. an apology.
b. damages.
c. the identity of the poster.
d. nothing.
Musica Production Company and Nora enter into a contract for Nora to write six songs
for which Musica agrees to pay her. Nora transfers her right to payment under the
contract to Omni Entertainment Agency. Nora is
a. a delegator.
b. an assignor.
c. a payor.
d. an assignee.
Ester is a lighting technician who hires out on a per-project basis to film and television
production companies, as well as theatres and other venues that stage dramatic and
musical performances. In this capacity, Ester is
a. an agent.
b. an employee.
c. an independent contractor.
d. a principal.
Megan and Nicole do business as One World Realty. In acting on the firm’s behalf in a
deal with Property Acquisition Company, Megan fails to account for the profit. To her
firm, Megan is
a. liable for breach of the duty of care.
b. liable for breach of the duty of economic sense.
c. liable for breach of the duty of loyalty.
d. not liable.
Boyd is a minor. As a minor, Boyd has the capacity to enter into
a. an invalid contract.
b. an unavoidable contract.
c. a valid contract.
d. no contract.
Clean Machines Company makes washing machines. Over the phone, Clean offers to
sell Dealers Appliance Outlet one hundred model EZ2000 washers at a price of $150
per unit. Clean says that it will keep the offer open for ninety days. Dealers responds
that within two or three weeks it will decide whether to accept. One week later, Clean
faxes, and Dealer receives, notice that the offer is withdrawn. Dealer immediately
phones Clean to accept the $150-per-unit offer. When Clean refuses to deliver at that
price, Dealer files a suit. Clean asserts, first, that there is no contract and, second, that if
there is a contract, it is unenforceable. Discuss Clean’s assertions.
A contract involving a sale is the only contract relating to an interest in land that must
be in writing to be enforceable.
Minimum contacts with a jurisdiction are never enough to support jurisdiction over a
nonresident defendant.
Federal courts are superior to state courts.
Bribery of foreign government officials is both an ethical and a legal issue.
Changing a trademark is forgery.
A covenant not to sue is the substitution of a contractual obligation for a legal action.
No offer may be revoked before it is accepted.
An agreement between shareholders to restrict the transfer of a closely held
corporation’s stock is illegal.
Trade dress has the same legal protection as trademarks.
Apparent authority usually comes into existence through a principal’s pattern of conduct
over time.
There is at least one circumstance in which a person cannot refuse to testify.
Damages is a remedy at law.
If a contract requires performance to the personal satisfaction of a party, the party must
in all cases be personally satisfied.
On rescission of a contract, each party essentially advances to the position he or she
would have been in if the contract had been fully executed.
The most common way to discharge a contract is by breach.
A limited liability company (LLC) formed in one state but doing business in another
state is referred to in the second state as a foreign LLC.