Donna goes through an involuntary bankruptcy proceeding. An involuntary bankruptcy
occurs when
a. a debtor files forms designated for the purpose in a bankruptcy court.
b. a debtor is unable to pay his or her debts as they come due.
c. a debtor’s creditors force the debtor into bankruptcy proceedings.
d. a debtor’s debts exceed the fair market value of his or her assets.
Urban Commerce, Inc., issues bonds, which are also known as
a. cumulative investments.
b. fixed-income securities.
c. equity securities.
d. preferred stock.
Big U.S. Oil Company joins with a foreign cartel to control the price of oil. If the cartel
has a substantial effect on U.S. commerce
a. both Big U.S. Oil and the foreign cartel can be sued for violation of U.S. antitrust
laws.
b. neither Big U.S. Oil nor the foreign cartel can be sued for violation of U.S. antitrust
laws.
c. only Big U.S. Oil can be sued for violation of U.S. antitrust laws.
d. only the foreign cartel can be sued for violation of U.S. antitrust laws
Fred and Joanne are married. Joanne purchases a car. Fred and Joanne each technically
own an undivided one-half interest in the car. This is
a. a joint tenancy.
b. fee simple ownership.
c. community property.
d. illegal.
Willy deposits $5,000 with Home State Bank on July 1, 2012. Home State Bank
promises to repay Willy the $5,000 plus 3 percent annual interest on July 1, 2017.
Home State Bank has issued Willy a
a. certificate of deposit.
b. cashier’s check.
c. trade acceptance.
d. draft.
Corporate Bank wants to perfect its security interest in inventory owned by Outdoor
Outfitters, Inc. Most likely, a financing statement should be filed with
a. the bank manager.
b. the county clerk.
c. the U.S. Department of the Interior.
d. the secretary of state.
Brad, Carlos, and Dora are general partners in Eastside Physicians, a medical clinic.
Brad, Carlos, and Dora decide to admit Faisal as a new partner in Eastside Physicians.
Faisal’s liability for partnership debts incurred before his admission is
a. limited to his capital contribution to the firm.
b. limited to his personal assets.
c. nothing.
d. unlimited.
Clear Creek Corporation enters into a contract with Brightside Management Associates
to manage and maintain Clear Creek’s apartment complex. Their contract provides that
neither party can recover damages for a non-fraudulent or unintentional breach. This is
a. a limitation-of-liability clause.
b. an exculpatory clause.
c. a liquidated damages clause.
d. a quasi contract.
Bert’s Bagels & Nosh, Inc., and other bakeries refer to a “baker’s dozen” as consisting
of a collection of thirteen baked goods. This is an example of
a. course of dealing.
b. course of performance.
c. none of the choices.
d. usage of trade.
Ryder and Sergei are partners in Timberline Gear, which sells mountain- and
rock-climbing equipment. Ryder manages the business. Unless the partnership
agreement states otherwise, Ryder is
a. entitled to compensation in proportion to his effect on the business.
b. entitled to compensation in proportion to his effort.
c. entitled to compensation in proportion to his capital contribution.
d. not entitled to compensation.
Carol is married to Andy. Carol buys food for their children’s lunches and charges the
cost to Andy’s account. This is
a. an agency by operation of law.
b. an agency by estoppel.
c. an agency by ratification.
d. not the creation of an agency relationship.
Bay City Mall requires its tenants to sign a lease that includes a clause releasing Metro
from liability in the event of monetary or physical injury no matter who is at fault.
Coco’s Chocolate Creations signs a lease with Bay City that contains the clause.
The clause is most likely
a. enforceable as a matter of public policy.
b. enforceable if either party is considered to be a business for essential services.
c. enforceable if the lease also involves residential property.
d. unenforceable.
Sasha’s debt to Tully is past due. Tully brings a legal action against Sasha to collect the
debt. To ensure that a judgment in Tully’s favor will be collectible, he asks the court to
order the seizure of Sasha’s property. This is a request for
a. a contract of suretyship.
b. an order that would violate most state laws.
c. a writ of attachment.
d. an order of receivership.
Va-Va-Voom Products, Inc., engages in deceptive advertising when it markets its
product Weight-No-More as able to help consumers lose weight in their sleep.
Va-Va-Voom is ordered to include in all future advertising of Weight-No-More the
statement, “This product will not cause anyone to lose weight while sleeping.” This is
a. a counteradvertising order.
b. a multiple product order.
c. a “cooling-off” law.
d. a validation notice.
Guard Personnel Company is charged with using hiring practices that do not meet
requirements set by the Transportation Safety Administration (TSA). The administrative
law judge orders Guard to comply with the TSA’s regulations. Guard may
a. appeal to the commission that governs the TSA.
b. appeal to Congress, which created the TSA.
c. appeal to a different, separate agency.
d. ignore the order.
Hybrid Corporation enters into a contract with Insure Service, Inc. (ISI), to obtain
health insurance for Hybrid employees. If ISI breaches the contract and Hybrid is
awarded compensatory damages, the purpose would be to
a. establish, as a matter of principle, that ISI acted wrongfully.
b. provide Hybrid with funds for a foreseeable loss beyond the contract.
c. provide Hybrid with funds for its loss of the bargain.
d. punish ISI and set an example to deter others from similar acts.
Dondi contracts to buy a custom espresso maker from Caffee Specialties, Inc., for
$4,500, but Caffee fails to deliver. Dondi buys the appliance elsewhere for $5,500.
Dondi’s measure of damages is
a. $1,000.
b. $1,000 plus incidental damages.
c. incidental damages only.
d. $0.
After Edie solicits clients to invest in a nonexistent business, she is charged with “mail
fraud.” This requires, among other things,
a. claiming that an item is “in the mail” when it is not.
b. deceiving postal authorities as to the content of an item of mail.
c. depositing items in the postal system without proper postage.
d. mailing or causing someone else to mail a writing.
Gayla asks Jessie to contract with Jessie’s high school classmates to babysit for Gayla’s
new baby. Jessie orally agrees to do so. This is
a. an agency by agreement.
b. an agency by estoppel.
c. an agency by ratification.
d. not the creation of an agency relationship.
Bright Brew Coffee, Inc., processes and sells a variety of coffee products. Bright Brew’s
product packages must include
a. the identity of the company owner.
b. the net quantity of the contents.
c. the restaurants and stores in which the product is sold.
d. the type of consumer most likely interested in the product.
During the trial phase of Fuel Corporation’s suit against Gas Stations, Inc., their
attorneys engage in voir dire. This is
a. an assessment of the validity of the arguments for both parties.
b. a determination of the issues to be argued before the court.
c. the trial.
d. the selection of jurors.
Jane enters into a contract with Jill to provide 100 roses for a dinner party. Jane fails to
deliver the roses. Jill initiates a suit against Jane, asking the court to order Jane to
deliver the roses. Jill is
a. the plaintiff.
b. the defendant.
c. the binding authority.
d. the persuasive authority.
Wiley incorporates his business as Wiley Wire Corporation in Texas. He and his group
of shareholders intend to make a profit from their sales of fencing wire. Wiley Wire
Corporation is
a. a nonprofit corporation.
b. not a corporation.
c. an alien corporation.
d. a private corporation.
Mark is creating a Web site through which he will enter into contracts over the Internet.
Important terms to include in his offers include
a. provisions specifying the remedies if the contract is breached.
b. a detailed history of his business.
c. glowing reviews from former customers.
d. his educational background.
Lucille, an accountant, is subject to the accounting conventions, rules, and procedures
that constitute generally accepted accounting principles (GAAP). GAAP are determined
by
a. the International Accounting Standards Board.
b. the American Bar Association.
c. the American Institute of Certified Public Accountants.
d. the Financial Accounting Standards Board.
Which of the following does not necessarily make material obscene?
a. The average person finds that it violates contemporary community standards.
b. The work taken as a whole appeals to a prurient interest in sex.
c. The work shows patently offensive sexual conduct.
d. The work shows animals mating.
Bernard is an expert on exotic flowers. Fine Floral Fixtures, Inc. (FFF) hires Bernard to
order exotic flowers from various greenhouses. Bernard does not bother to examine the
quality of the flowers he purchases on behalf of FFF. Bernard has breached
a. the duty of performance.
b. the duty of loyalty.
c. no duty.
d. the duty of notification.
Duffy is a passenger in a car that Caleb is driving when an accident occurs. Both Caleb
and Duffy are emotionally rattled, but neither is physically hurt. Caleb is not liable to
Dufy on a negligence theory because
a. both parties were emotionally rattled.
b. Caleb apparently did not intend to cause an accident.
c. Duffy must have been comparatively negligent.
d. Duffy was not injured.
Philo files a petition in bankruptcy for relief through an individual’s repayment plan. He
is granted a discharge. Debts that will not be discharged include claims for
a. all debts provided for by the plan.
b. money owed for services rendered.
c. claims not provided for by the plan.
d. credit-card debt.
Emily checks her luggage at Flyaway Airlines’s ticket counter before boarding her flight
to Houston, Texas. Subject to a bailment is
a. Emily.
b. Emily’s luggage.
c. Emily’s ticketed seat on the flight.
d. none of the choices.
When an owner is unable to make mortgage payments, a lender may agree to a short
sale.
A small business owner is likely to face legal questions when determining ways to
reduce his small business’s taxes.
A quasi contract is not enforceable by a court.
The public disclosure of private facts about a person is an invasion of privacy.
In most states, revocation becomes effective on receipt.
A lender can make a higher-priced mortgage loan based on the value of the consumer’s
home without verifying the consumer’s ability to repay the loan.
To create an enforceable security interest, the secured party must give value.
In general, if a contract is illegal, a court will not enforce it.
A contract that one party retains the exclusive right to cancel at any time is
unenforceable.
Discharge in bankruptcy is no defense on any instrument regardless of the status of the
holder.
If a voidable contract is avoided, the parties to it are released from it.
A preexisting duty may arise from a previous contract.
Property voluntarily discarded by its owner with no intention of reclaiming it is
abandoned property.
Under the UCC, a firm offer for a sale or lease of goods made by a merchant without
consideration can be revoked at any time before acceptance.
In general, minors are personally liable for their contracts.
SEC Rule 10b-5 prohibits the commission of fraud in connection with the purchase or
sale of any security.
Only a statement made after a contract is entered into can be an express warranty.