Mac files a petition for a discharge in bankruptcy. Macs failure to appear at a meeting
of the creditors listed in Macs schedules may result in Mac being
a. denied a discharge of bankruptcy.
b. fined.
c. held in contempt.
d. imprisoned.
Idaho Farms mistakenly puts its potatoes in Jackson Co-ops storage bin, which already
contains Kelly Spud Farms potatoes. It is impossible to tell which potatoes originally
belonged to which party. This is
a. a bailment.
b. accession.
c. confusion.
d. production.
DeLouse Plastics Corporation pays its executives an excessive amount relative to other
employees and to what executives at competitive companies are paid. This is most
likely to be challenged as
a. illegal and unethical.
b. illegal only.
c. neither illegal nor unethical.
d. unethical only.
Eli obtains a consumer loan from First State Bank at an interest rate that exceeds the
states maximum. First State has
a. calculated the optimum rate that the market will bear.
b engaged in a restraint of trade.
c. underestimated the risk of the loans nonpayment.
d. violated the usury laws.
City Car Company and Daves Autos enter into a contract for a sale of motor vehicles.
City assures Daves that it has valid title to the vehicles. Under the UCC, a warranty of
title arises
a. automatically in most sales contracts.
b. only if the buyer asks for such a warranty.
c. only if the seller expresses such a warranty.
d. only in conjunction with lease contracts, not sales contracts.
Fact Pattern 14-1
Internet Cafes, Inc., contracts to buy all of its requirements for coffee, at a minimum of
1 million pounds per year, from Java Corporation for six years. After three years,
Internet tells Java that it plans to sell its company to Kwik Eateries, Inc. Kwik refuses
to assure Java that it will continue Internets contract.
Refer to Fact Pattern 14-1. Java can
a. assign its rights under the contract but cannot terminate it.
b. do nothing.
c. suspend performance under the contract until Java is fully paid.
d. terminate the contract and seek damages.
Orin is a shareholder of Pinkwater Corporation. In some states, Orin might incur
personal liability for unpaid Pinkwater debts if he
a. accepts a dividend knowing that it was paid from retained earnings.
b. buys stock for less than its fair-market value.
c. fails to fulfill his fiduciary duty to the majority shareholders.
d. sells his shares.
Ric designs a new computer storage drive, which he names “Sci Phi. He also writes the
operating manual to be included with each final product. Ric could obtain patent
protection for
a. the storage drive.
b. the “newness of the storage drive.
c. the name.
d. the operating manual.
Fact Pattern 23-2
Luann and Mace are partners in Networx, a computer peripherals firm.
Refer to Fact Pattern 23-2. Luann signs a contract with Oleo Chips, a retail component
supplier, apparently on Networxs behalf. The contract is binding on
a. Luann, Mace, and Networx.
b. Luann only.
c. Networx only.
d. Oleo only.
Building Restoration, Inc. (BRI), enters into a contract to refurbish an old train depot
for Casual Dining, Inc., to open as Eat Up Restaurant. If BRI completes most of the
work promised in the contract, its performance will be
a. absolute.
b. complete.
c. material.
d. substantial.
Roy leaves his Honda sport utility vehicle at Sams Auto Service for an oil change. This
is a bailment for
a. neither partys benefit.
b. the parties mutual benefit.
c. the sole benefit of the bailee.
d. the sole benefit of the bailor.
Fact Pattern 26-2
Sid, a director of Tech Software Company, learns that a Tech engineer has developed a
new, exciting video game. Sid buys Tech stock and tells his friend Uri, who also buys
Tech stock. When the new game is released three weeks later, Sid and Uri sell their
stock for a big profit.
Refer to Fact Pattern 26-2. Regarding Sids profits on the purchase and sale of Tech
stock, under Section 16(b) of the Securities Exchange Act of 1934 Tech may recapture
a. all of Sids profits.
b. half of Sids profits.
c. 10 percent of Sids profits.
d. none of Sids profits.
In the facts of the previous question, suppose that Thalia had had access to Rhetts
checks through his carelessness. The majority in the Prestridge case would then most
likely hold Silverado liable for
a. all checks.
b. checks that were cashed less than thirty days after the statement.
c. checks that were cashed more than thirty days after the statement.
d. no checks.
Root & Branch Lumber Company obtains a fire insurance policy from Statistical
Insurers, Inc., on a $400,000 warehouse. The policy includes an 80-percent coinsurance
clause. Root & Branch insures the property for $320,000. In a fire, the warehouse
suffers $200,000 in damage. Root & Branch can recover
a. $400,000.
b. $320,000.
c. $200,000.
d. $80,000.
Jim agrees to act on Kits behalf, subject to Kits control, and Kit trusts Jim to so act.
This describes a relationship between
a. a business and its competitors.
b. a government and its governed.
c. a parent and a child.
d. a principal and an agent.
Fact Pattern 12-1
Estelle enters into a contract to buy 132 acres from Desmond to subdivide and sell in
quarter-acre lots for Country Acres, a residential development.
Refer to Fact Pattern 12-1. If Estelle breaches the contract, Desmonds remedy would
most likely be
a. a certain ratio of the amount that Estelle has in liquid funds.
b. a percentage of Estelles unrealized profit.
c. the difference between the lands contract and market prices.
d. specific performance.
In a suit against Owen, Phil obtains specific performance. This is
a. an order to do or to refrain from doing a particular act.
b. an order to perform what was promised.
c. a payment of money or property as compensation.
d. the cancellation of a contract.
Adult Shoppe in Beach City sells a variety of publications, including child
pornography. Beach City enacts an ordinance prohibiting the sale of such materials.
This ordinance is most likely
a. an invalid restriction of individuals privacy.
b. an unconstitutional restriction of speech.
c. a violation of adults rights to enjoy certain privileges.
d. constitutional under the First Amendment.
Moby leases from National Theater Corporation a theater in which to stage a series of
concerts. Ollie buys a ticket to the series. What distinguishes Moby, a tenant, from
Ollie, a licensee, is
a. the exclusivity of possession.
b. the quiet enjoyment of rights.
c. the temporary nature of possession.
d. the title to the property.
Orin claims that a Pennsylvania state statute infringes on his ‘substantive due process
rights. This claim focuses on
a. procedures used to make decisions to take life, liberty, or property.
b. the content of the statute.
c. the similarity of the treatment of similarly situated individuals.
d. the steps to be taken to protect Orins privacy.
Leweys Bicycle Store contracts to buy fifty bicycles from Mountain Bikes, Inc. Unless
the contract states otherwise, this is
a. a bill of lading.
b. a destination contract.
c. a shipment contract.
d. a warehouse receipt.
Peak & Vale Accountants provides other firms with accounting services. Questions of
what is ethical involve the extent to which Peak & Vale has
a. a legal duty beyond those duties mandated by ethics.
b. an ethical duty beyond those duties mandated by law.
c. any duty beyond those mandated by both ethics and the law.
d. any duty when it is uncertain whether a legal duty exists.
Bubbly Cola features Sparkly Colas trademark without its owners permission. Bubblys
use of the mark is actionable provided
a. consumers are confused.
b. Bubblys use is intentional.
c. Bubblys use reduces the value of Sparklys mark.
d. Sparklys mark is registered.
Myron is an employee of Nero. Either party can terminate the employment relationship
at any time for any reason without liability. With respect to the employment-at-will
doctrine, this is
a. an example of the doctrine.
b. an exception based on contract theory.
c. an exception based on public policy.
d. an exception based on tort theory.
Reed borrows $150,000 from Suburban Credit Union to buy a home, which secures the
loan. Three years later, Reed stops making payments on the loan. After Suburban Credit
repossesses and auctions off the property to Tyler, equity remains. This amount most
likely belongs to
a. Reed.
b. Suburban Credit Union.
c. Tyler.
d. the county in which the property is located.
Mineral Resource Company contracts to provide several manufacturers with tin. When
a cartel of tin-producing countries suddenly embargoes future shipments of tin to
Mineral Resource so that it cannot fulfill its contracts, the distributor
a. can substitute some other material for the tin.
b. is excused from the performance of its contracts.
c. is liable for breach of contract.
d. must still supply the tin needs of its customers.
Teona files a voluntary petition in bankruptcy for relief through a liquidation. Debts that
will not be discharged include claims for
a. domestic-support obligations.
b. money to be paid for goods not delivered.
c. contributions to employee benefit plans.
d. long overdue credit-card debt.
Fact Pattern 18-1
Excel Vehicles, Inc., makes and sells automobiles to auto dealers, including Fine Auto
Sales. Fine sells the cars to consumers and businesses.
Refer to Fact Pattern 18-1. Holly, a professional driver, buys an Excel from Fine to
drive in a Grand Prix race. Hollys Excel is
a. a consumer good.
b. an accession.
c. equipment.
d. inventory.
Ray breaches his lease with Sunny Properties and vacates the premises six months
before the end of the term. In some states, Sunny would have to
a. avoid reletting the premises to recover damages from Ray.
b. make reasonable efforts to relet the premises to mitigate damages.
c. relet the premises to recover damages from Ray.
d. sell the premises to recover damages from Ray.
Tania promises to buy Sakis handheld game-player for $75. Saki is
a. an executee.
b. an offeror.
c. a promisee.
d. a promisor.
WiFi Corporation, a U.S. firm, signs a contract with Bueno Computadores, Ltd., an
Argentinean firm, for a shipment and payment for WiFis goods. This is
a. a distribution agreement.
b. a joint venture.
c. direct exporting.
d. licensing.
Grant offers to sell his Honda Civic for $10,000 to Ivy. Referring to the prices for
similar Hondas, Ivy says, “Ill pay no more than $5,000. Grant says, “Forget it. Grants
offer was terminated by
a. Grant.
b. Honda.
c. Ivy.
d. no oneGrants offer is still open.
Detail Designs Company, an architectural firm, wants to hire Eduardo, a noncitizen. A
temporary work visa is most likely to be set aside for a noncitizen who is
a. a “person of ethnic similarity to the employers workforce.
b. a “person of extraordinary ability.
c. a “person of ordinary ability and ambition.
d. a “person with an extraordinary work ethic.
May is a stockbroker. Due to Mays statements, Nora believes that the price of OK
Goods, Inc. (OKGI), a widely traded stock, is going to increase substantially. Nora buys
500 shares of OKGI at $10 per share, but the price soon drops to $2. Nora can
successfully recover
a. nothing.
b. the amount of the purchase price.
c. the amount of the purchase price plus the expected increase.
d. the amount of the purchase price plus the unexpected decrease.
EZ Equipment Corporation leases six forklifts to Fresco Refining Company, but as the
forklifts are delivered, they are lost in an explosion. Under the UCC, the parties rights
and obligations with respect to the loss depend on the concept of
a. physical possession.
b. product liability.
c. risk of loss.
d. title.
A transfer of contract rights to a third party is a delegation.
Generally, stock offerings that involve a small dollar amount are exempt from the
registration requirement.
Presentment warranties protect the person who presents an instrument for payment.
The duty owed under the mitigation of damages doctrine depends on the situation.
Proximate cause exists when the connection between an act and an injury is strong
enough to justify imposing liability.
Delivery of intangible personal property must be done by constructive delivery.
The doctrine of promissory estoppel requires a clear and definite promise.
A written stop payment order is valid for fourteen days.
Estray statutes determine ownership rights in fungible goods that have ‘strayed.
An online offer should include provisions relating to dispute settlement.
A person who in good faith acquires a negotiable instrument from a thief cannot
become an HDC.
A reasonable, lawful, and effective meaning will normally be given to all of a contracts
terms.
An instrument is nonnegotiable unless the word “negotiable is printed on it.
A buyers breach of a contract will not usually give the seller the right to cancel the
contract.
A contract involving property of any kind must be in writing to be enforceable.
All directors must be present before a board can transact business.
A party who substantially performs his or her duties under a contract can enforce the
contract against the other party.
Cumulative voting refers to the accumulation of proposals presented annually for a
shareholders vote.
A covenant not to compete is enforceable only if it is necessary to restrain trade.
Bribery of foreign government officials is both an ethical and a legal issue.