Rita believes that Shady Grove Apartments, Inc., her landlord, has violated the law in a
way that entitles her to withhold the rent. This remedy is generally associated with
a. breach of the covenant of quiet enjoyment.
b. breach of the implied warranty of habitability.
c. discrimination.
d. failure to provide security against crimes in common areas.
To Cody, the written law of a particular society at a particular time is most significant.
Cody is
a. a legal positivist.
b. a legal rationalist.
c. a legal realist.
d. a person who adheres to the natural law school.
Numeric Methods Corporation promises to give stock options to Orin, a project
schedule manager, for projects that have already been completed ahead of schedule.
This promise is
a. enforceable because it is a new contract.
b. enforceable because it is an illusory promise.
c. enforceable because it is supported by past consideration.
d. unenforceable.
Delilah files a petition in bankruptcy. The proceeding is governed by the Bankruptcy
Code, which is part of
a. state law.
b. federal law.
c. the U.S. Constitution.
d. international law.
Eager Beaver Corporation fails to adopt bylaws. Under this circumstance, Eager Beaver
is most likely
a. a corporation by estoppel.
b. a de facto corporation.
c. a de jure corporation.
d. ultra vires.
Fact Pattern 25-1
Dina asks Edie to co-sign a credit application so that she can borrow money and buy a
truck from Finest Quality Motors.Refer to Fact Pattern 25-1. If Edie signs the
application only after language is included that requires Finest to exhaust its legal
remedies against Dina before looking to her, then Edie is
a. a guarantor and a surety.
b. a guarantor only.
c. a surety only.
d. neither a guarantor nor a surety.
Bree leaves a pair of new shoes at Cobbler’s Shoe Store to be dyed. Cobbler’s sells the
shoes to Dian, who does not know that the shoes belong to Bree. Bree can recover from
a. Cobbler’s Shoe Store only.
b. Cobbler’s Shoe Store or Dian.
c. Dian only.
d. neither Dian nor Cobbler’s Shoe Store.
Fact Pattern 25-5
Mary’s home is in a state that has a $30,000 homestead exemption. Mary defaults on a
$60,000 debt that she owes to Nina. Mary’s home is sold at auction for $80,000.
Refer to Fact Pattern 25-5. If Nina recovers less than she is owed, she can realize the
difference from
a. any property that Mary owns.
b. only exempt property that Mary owns.
c. only nonexempt property that Mary owns.
d. property that any other member of Mary’s family owns.
Prime Property Investments, Inc., files a financing statement to provide notice of its
security interest in the property of Qwik Breakfast Restaurant. The initial effective term
of a financing statement is a period of
a. five days.
b. five months.
c. five weeks.
d. five years.
Drew contracts to sell a residential duplex to Evan. The contract provides that if Drew
does not close the deal by September 15, he must pay Evan one-half of the contract
price. This provision is not enforceable because it is
a. a liquidated damages clause.
b. a mitigation clause.
c. a nominal damages clause.
d. a penalty clause.
Horizon Corporation makes cell phones. Inez files a product liability suit against
Horizon, alleging a design defect. Under the Restatement (Third) of Torts: Products
Liability, in deciding whether to hold Horizon liable, the court may consider
a. neither the effect of an alternative design on the products’ costs and life nor the range
of consumer choice among products.
b. only the effect of an alternative design.
c. only the range of products.
d. the effect of an alternative design and the range of products.
Gigi, a twenty-year-old, wants to execute a will before she undertakes a moun-
tain-climbing trip on a peak in the Himalaya Mountains. In most states, the legal age for
executing a will is
a. sixteen years of age.
b. eighteen years of age.
c. twenty-one years of age.
d. twenty-five years of age.
Middling Credit Corporation asks Little Supply Company to agree to a security
agreement that provides for coverage of the proceeds from the sale of after-acquired
property. This is
a. a first-in, first-out rule.
b. a floating lien.
c. a funds guaranty.
d. in violation of secured transactions law.
Home Products Company and House & Yard, Inc., use the mark “Good Housekeeping
Seal of Approval” to certify the quality of their products. Home Products and House &
Yard are not in business together and do not own this mark. This mark is
a. a certification mark.
b. a collective mark.
c. a service mark.
d. trade dress.
Bette backs out of City Parking Garage, colliding with Dill’s car. Dill may recover
$7,500 to cover the cost of the repairs if Bette failed to act as
a. a blameless person.
b a faultless person.
c. a reliable person.
d. a reasonable person.
Natalie is a shareholder of Off-Road Vehicle Company. As a shareholder, Natalie does
not have
a. a right to compensation.
b. dividend rights.
c. inspection rights.
d. preemptive rights.
Helen owns heavy construction equipment and the tools to service it, as well as office
furniture, including computers. Ilya owns a number of patents, trademarks that identify
the products made under those patents, and stock in the company that sells those
products. Personal property includes the items owned by
a. Helen and Ilya.
b. Helen only.
c. Ilya only.
d. neither Helen nor Ilya.
Don executes a will leaving half of his farm to his spouse Elsie and the rest to his sons,
Frank and Greg, in equal shares. The will disinherits a third son, Hal. Don and Elsie
divorce, but Don dies before changing his will. Under the Uniform Probate Code
a. Elsie receives half of the farm, and Frank and Greg share the rest.
b. Elsie receives half of the farm, and Frank, Greg, and Hal share the rest.
c. Frank and Greg receive the entire estate in equal shares.
d. the state inherits the entire estate.
Della, an officer for Energy Petrol Corporation (EPC), buys 100 shares of EPC stock.
One week later, EPC announces that it will merge with a competitor, Fuel Oil Company,
and the price of EPC stock increases. One month later, Della sells her shares for a
profit. Under Section 16(b) of the Securities Exchange Act of 1934, Della would not be
liable if, after buying the stock, she had waited
a. less than fourteen days to sell it.
b. more than six months to sell it.
c. ninety days to sell it.
d. two months to sell it.
In Ben v. City Car Dealership, a state supreme court held that a minor could cancel a
contract for the sale of a car. Now a trial court in the same state is deciding Daphne v.
Even Steven Auto Deals, Inc.,, a case with similar facts. Under the doctrine of stare de-
cisis, the trial court is likely to
a. allow the minor the Daphne case to cancel the contract.
b. disregard the Ben case.
c. order the minor in the Daphne case to cancel the contract.
d. require the minor in the Daphne case to fulfill the contract.
Fruits & Vegetables, Inc., employs hundreds of seasonal and permanent workers, both
skilled and unskilled, in seven states. Under the Immigration Act of 1990, Fruits &
Vegetables can hire illegal immigrants
a. if either the employer or the immigrants file special forms.
b. only if the employer files a special form.
c. only if the immigrants file special forms.
d. under no circumstances.
Location! Realty LLC is a limited liability company. Like other LLCs, for federal
jurisdictional purposes, Location! Realty is most likely a citizen of
a. all states.
b. every state in which its members are citizens.
c. no state.
d. only the state in which it was formed.
Fact Pattern 23-2
Tom draws a check, on his account in State Bank in New York, payable to Digital
Media, Inc., in San Francisco. Digital deposits the check in its account at First National
Bank. First National deposits the check in the Federal Reserve Bank of San Francisco,
which transfers it to the Federal Reserve Bank of New York. That Federal Reserve Bank
sends the check to State Bank.
Refer to Fact Pattern 23-2. Digital’s bank is
a. the cashing bank.
b. the depositary bank.
c. the intermediary bank.
d. the payor bank.
Fact Pattern 15-4
Evelyn, who owns and operates Eve’s Farm & Garden Company, agrees to sell Hill &
Dale Produce, Inc., fifty bushels of apples.
Refer to Fact Pattern 15-4. When the market price for apples exceeds the price in the
contract with Hill & Dale, Evelyn decides not to deliver the apples. The contract with
Hill & Dale is
a. breached.
b. discharged.
c. not affected.
d. suspended.
Craig is an accountant whose clients include Digby Excavation Corporation. Elbert is
Craig’s attorney. Under the common law and by statute in many states, working papers
that Craig develops when preparing financial reports for Digby are owned by
a. Craig.
b. Digby.
c. Elbert.
d. no onethe papers must be destroyed immediately after use.
Home Development Company employs llya to buy property for a future residential
development. Ilya secretly buys some of the property and sells it to Home Development
at a profit. Ilya has breached
a. no duty.
b. the duty of accounting.
c. the duty of loyalty.
d. the duty of notification.
Region Bank wants to perfect its security interest in timber owned by Superior Lumber,
Inc. Most likely, a financing statement should be filed with
a. the local chamber of commerce.
b. the county clerk.
c. the federal loan officer.
d. the secretary of state’s office.
Dizzy is not Edwina’s agent but enters into a contract with Frida on Edwina’s behalf.
Edwina later contacts Frida to approve the contract. 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.
Peter offers to pay Quik Delivery (QD) $50 if it picks up and delivers to him a package
from Rico within 30 minutes. QD can accept the offer only by meeting the deadline. If
QD performs as directed, these parties will have
a. a bilateral contract.
b. a trilateral contract.
c. a unilateral contract.
d. no contract.
Picabo drives a truck as an employee for Quik Delivery, Inc. Picabo would most likely
be considered acting outside the scope of her employment if she
a. crashed into a car at the airport while off duty.
b. hit a pedestrian in a parking lot during a “working” lunch.
c. ran over an attendant at a gas station while refueling the truck.
d. smashed into a store-front while intoxicated on-duty.
Donald applies for a life insurance policy with Equity Insurance Company through
Fletch, an agent who works for Equity. Donald pays the initial premium. Fletch writes a
binder, which
a. acknowledges the application and promises to consider it.
b. attests to the truth of each statement in the application
c. evidences receipt of the payment of the initial premium.
d. indicates that a policy is pending and states its essential terms.
Wild & Scenic River Tours, Inc., is a corporation. Wild & Scenic has the implied power
to
a. issue stocks and bonds.
b. execute contracts and negotiable instruments.
c. buy and sell (or lease) property.
d. perform all acts reasonably appropriate and necessary to accomplish its corporate
purposes.
Consumer Payments Processing Corporation (CPPC) and Mall Kiosk Company make a
deal for CPPC’s services, via e-records. Under the UETA, an e-record is considered
received when
a. it enters the recipient’s processing system in a readable form.
b. the recipient is aware of its receipt.
c. the recipient is aware that it has been sent.
d. it leaves the sender’s control.
Oklahoma 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. PriceLess 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.
Congress leaves it to the Bureau of Prisons to oversee the promulgation of detailed
regulations in areas under the agency’s jurisdiction. This is
a. divine right.
b. the delegation of legislative powers.
c. gap-filling power.
d. unconstitutional conduct.
Consequential damages are awarded to cover all of the remote consequences of
whatever injury a nonbreaching party suffers.
A corporate officer is not expected to be informed on corporate matters.
On a contract breach, the nonbreaching party’s only option is to refuse to perform.
An agency must conduct a regulatory flexibility analysis whenever a new regulation
will have an impact on a ‘small number of substantial entities.”
An employer must modify its job-application process so that those with disabilities can
compete for jobs with those who do not have disabilities.
Any judgment is enforceable.
A contract with an unlicensed professional is never enforceable.
A business takes a risk by electronically storing its customers’ credit account numbers.
A limited partner who gives a general partner advice on matters relating to the
management of the partnership cannot be liable as a general partner.
The person who owes the payment of a secured obligation is the secured party.
If a buyer wrongfully refuses to accept goods that conform to a contract, the seller may
recover damages.
Most limited liability company statutes have strict provisions regulating members’
meetings.
An innocent party who has fully performed an illegal contract may sometimes enforce it
against a guilty party.
Misrepresentation of a material fact can occur through words alone.
If a minor disaffirms a contract, he or she must disaffirm the entire contract.
An agreement is evidenced by a single event: an acceptance.
Employers who provide pension plans for retired workers must comply with certain
standards in managing the plans.
Under the covenant of quiet enjoyment, a landlord promises that a tenant will not be
disturbed in the possession of the premises.
Certain liquidation cases may be converted to repayment plan cases with the consent of
the debtor.