Burst-o”-Flavor Burger Restaurant Corporation merges with Chick-E Chicken
Franchise Corporation, with Burst-o”-Flavor absorbing Chick-E Chicken. After the
merger
a. a different, new entity is the surviving corporation.
b. Burst-o”-Flavor and Chick-E Chick”n are both surviving corporations.
c. Burst-o”-Flavor is the surviving corporation.
d. Chick-E Chicken is the surviving corporation.
Ada is the maker of a note, on which Bart is secondarily liable. Credit Instruments
Company is the current holder of the note. Bart will be obligated to pay the note if
a. Ada defaults on the note.
b. Credit Instruments breaches a transfer warranty.
c. Credit Instruments negotiates the note to Delta Collection Agency, a third party.
d. Credit Instruments presents the note for payment.
Personnel Employment, Inc., has been ordered to appear at a hearing before an
administrative law judge of the Social Security Administration. A significant difference
between a trial and an administrative hearing is that
a. attorneys are not allowed to attend administrative hearings.
b. clients are not allowed to communicate with their attorneys during administrative
hearings.
c. hearsay can be introduced as evidence in an administrative hearing.
d. the burden of proof is on the charged party to prove innocence.
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. This
is
a. a certificate of deposit.
b. a cashier’s check.
c. none of the choices.
d. a draft.
Barlow owns the surface rights for Canyon Ranch, but does not own the subsurface
rights. Dusty owns the subsurface rights. Canyon Ranch includes a house, a bunkhouse,
and two barns, which are damaged when Dusty is excavating for minerals under the
surface. Most likely responsible for the damage is
a. Dusty.
b. Barlow.
c. Dusty and Barlow.
d. no one.
Beginners Run Ski Shop sells a pair of skis to Crystal. When Crystal first uses the skis,
they snap in two. The cause is something that Beginners Run did not know about and
could not have discovered. Beginners Run breached
a. the merchant’s implied duty of inspection.
b. the implied warranty of merchantability.
c. no duty or warranty because Beginners Run knew nothing about the defect that made
the goods unsafe.
d. no duty or warranty because consumers should reasonably expect to occasionally
find a product that does not work as warranted.
A failure of the U.S. Drug Enforcement Administration to comply with a request under
the Freedom of Information Act (FOIA) may be challenged in
a. a federal district court.
b. a hearing before the U.S. Freedom of Information Agency.
c. a meeting with Congress’s FOIA subcommittee.
d. a special conference with the president of the United States.
Hillside Vineyards is a family limited liability partnership. All of the partners must be
a. natural persons only.
b. natural persons or persons acting as fiduciaries for natural persons.
c. persons acting as fiduciaries for natural persons only.
d. related.
Condos & Course Development, Inc., fills a wetlands area that it owns without a permit
from the U.S. Army Corps of Engineers. Condos & Course Development plan to build a
golf course and residences on the site. Under the Clean Water Act, this is most likely
a. a violation.
b. not a violation because a permit is not needed to fill wetlands.
c. not a violation because the area was filled before construction.
d. not a violation because there was no discharge of pollution.
Fact Pattern 20-1B
Michael contracts with Jill to fix the brakes on her Honda Civic. Jill leaves her car with
Michael, but refuses to pay when the work is done.
Refer to Fact Pattern 20-1B. Michael refuses to return the car to Jill until she pays for
the brake work. This is
a. a garnishment order.
b. a mechanic’s lien.
c. an artisan’s lien.
d. a violation of most states’ laws.
Rodney is an employee of Security Services, Inc. In deciding whether Rodney acted
within the scope of his employment when he committed a tort against Tracy, a court
will not consider whether
a. Rodney indicated that he was acting on behalf of Security Services.
b. Security Services authorized the act.
c. Security Services furnished the means by which the injury was inflicted.
d. the act is one commonly performed by employees for their employers.
Glassworx Corporation has exclusive control over the market for its products. Under
antitrust law, this is
a. a per se violation.
b. a violation if it acquired this power through “business judgment.”
c. a violation if it acquired this power through “anticompetitive means.”
d. not a violation.
Investment Sales Corporation wants to monitor its employees’ electronic com-
munications. Investment Sales’s best course of action to avoid liability under laws
related to employee monitoring is to notify
a. no one.
b. its employees.
c. its clients.
d. the public generally.
Melanie files an employment discrimination suit against Natural Resources Industries
Corporation under the Civil Rights Act of 1964 on a disparate-impact theory. To
succeed, Melanie must show that members of a protected class are adversely affected
by any of the following except the employer’s
a. practices.
b. procedures.
c. tests.
d. seniority system.
Fact Pattern 29-1B
Stores & Shops, Inc., leases space in a certain mall to Trends Clothing Company and
Unique Fashions Store. Later, Unique Fashions begins to sell items that are similar to
Trends Clothing’s goods, and Trends Clothing abandons its space before the end of the
lease term.
Refer to Fact Pattern 29-1B. In some jurisdictions, Stores & Shops would be
a. entitled to damages from Unique Fashions for its business decision.
b. entitled to increase other tenants’ rent to cover Trends Clothing’s unpaid rent.
c. entitled to the unpaid rent from Trends Clothing.
d. required to mitigate its damages.
Flores forges Grendel’s signature on a check “payable to the order of Flores” drawn on
Grendel’s account in Harbortown Bank. Most likely, if the bank pays the check
a. the Federal Reserve will reimburse all parties for their costs.
b. Grendel and the bank will each suffer half of the amount of the loss.
c. Grendel will be liable for the amount.
d. the bank will have to recredit Grendel’s account.
Lucy takes out a student loan from Midtown Bank. When she fails to make the
scheduled payments for six months, Midtown advises her of further action that it will
take. This violates
a. no federal law.
b. the Fair and Accurate Credit Transactions Act.
c. the Fair Debt Collection Practices Act.
d. the Truth-in-Lending Act.
Reliable Insurance Company employs Stuart as an agent. To terminate Stuart’s
authority, Reliable Insurance must notify
a. only third parties who are aware of the agency relationship.
b. the public generally.
c. Stuart and any third parties who are aware of the agency relationship.
d. Stuart only.
Jordan is a surety for Kelly’s loan from Lenders Credit Corporation. When the loan
comes due, Kelly tries to pay Lenders Credit, but the creditor rejects the payment.
Jordan is
a. released from any obligation on the debt.
b. required to pay the amount of the debt to Lenders Credit.
c. required to pay up to half of the amount of the debt to Lenders Credit.
d. required to pay the amount of the debt to Kelly.
Builders Construction Company performs a contract with Christina to add a sun porch
to her house, but she does not pay. In most states, Builders Construction could create a
lien and place it on Christina’s property by filing
a. a creditor’s composition agreement.
b. a writ of attachment.
c. a writ of execution.
d. a written notice of lien.
Free-Flo Pipes & Plumbing Corporation is a private employer involved in an
employment discrimination suit under the Civil Rights Act of 1964. Punitive damages
may be recovered against Free-Flo only if the employer
a. acted with malice or reckless indifference.
b. can easily afford to pay the amount.
c. has one hundred or more employees.
d. consents.
Logan borrows Morris’s bike to ride over mountain trails. The bike is damaged during
the ride. Liable for the cost of repairing the bike is
a. Logan and Morris in equal measure.
b. Logan.
c. Morris.
d. all of the choices.
Fact Pattern 13-1B
Destiny obtains a check payable to her order from Eugenia. Destiny signs the back and
adds the notation “without recourse.”
Refer to Fact Pattern 13-1B. By writing “without recourse” with her signature, Destiny
a. avoids the risk of loss from theft of the instrument.
b. relieves herself of liability on the instrument.
c. converts the check into a nonnegotiable instrument.
d. locks the instrument into the bank collection process.
Craig is an accountant whose clients include Deep 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 Deep Excavation are owned by
a. Craig.
b. Deep Excavation.
c. Elbert.
d. no onethe papers must be destroyed immediately after use.
Elinor performs ten hours of house cleaning for Floyd in exchange for a promissory
note for $400. At the time that Elinor accepts the note, she is aware that bankruptcy
proceedings are being filed against Floyd. Elinor can
a. obtain HDC status.
b. not obtain HDC status, because she knows that there are bankruptcy proceedings
against Floyd.
c. not obtain HDC status, because she did not fulfill the value requirement.
d. not obtain HDC status, because she did not fulfill the good faith requirement.
Dru signs a check “pay to the order of Eppie” drawn on Dru’s account in First State
Bank. Greta forges Eppie’s indorsement. First State pays the check. Most likely
a. Dru will be liable for the amount.
b. Eppie will have to pay Dru for the amount.
c. First State will have to recredit Dru’s account.
d. the Federal Reserve will reimburse all parties for their costs.
Fiona writes a check “pay to the order of Gerri” drawn on Fiona’s account at Home
State Bank. Gerri presents the check for payment to Home State, which accepts it.
Primarily liable on the check is
a. Fiona.
b. Gerri.
c. Home State.
d. none of the choices.
Oh! Wow! Markets, Inc., rejects a shipment of turkey that does not conform to its
contract with Poultry Processing Corporation, but is unable to obtain instructions from
the seller. Oh! Wow! Markets can
a. destroy the goods.
b. cure the goods to make them conform to the contract.
c. retain the goods without paying for them.
d. reship or store the goods for the seller.
Secure Loan Company has notice that a promissory note is overdue if the note is a
demand instrument and Secure Loan takes it
a. an unreasonable time after its due date.
b. before its due date.
c. on its due date.
d. without noticing its due date.
Steel Production Industries, Inc., employs five hundred workers. For the Occupational
Safety and Health Administration, Steel Production must do all of the following except
a. keep occupational injury and illness records for each employee.
b. report any work-related diseases.
c. report any employee death due to a work-related incident within eight hours.
d. pay employees higher wages for working in more dangerous areas.
Silvano owns Textbooks Plus, a sole proprietorship that sells textbooks and other school
supplies. When Silvano dies, Textbooks Plus will automatically
a. dissolve.
b. pass to Silvano’s heirs.
c. pass to the state.
d. be offered for sale to its creditors and competitors.
Largo is an agent for MaryElise. MaryElise gives Largo clear instructions to enter into
contracts on her behalf only on Mondays, Wednesdays, or Fridays. Largo enters into a
contract on her behalf on Tuesday. Largo has breached
a. the duty of performance.
b. the duty of loyalty.
c. no duty.
d. the duty of obedience.
Sweet Fruits contracts with Fruits to You, Inc. for a delivery of two hundred pounds of
strawberries to be delivered by Keep Kool Trucking, a trucking company with
refrigerated trucks. On the day of delivery, the refrigeration units on Keep Kool’s trucks
are not working. Fruits to You
a. may ship the goods to Sweet Fruits using another trucking company with refrigerated
trucks.
b. must refund Sweet Fruits’ money and cancel the contract.
c. must wait to ship the strawberries until Keep Kool has fixed its trucks.
d. must ship the goods through a different carrier and pay Sweet Fruits incidental
damages.
Fletcher buys a Great Big Burgers, Inc., franchise. Great Big Burgers requires that its
franchisees buy its products exclusively for every phase of their operations. Because
Fletcher wishes to buy less expensive products, he challenges the requirement. His best
argument is probably that the requirement violates
a. the implied covenant of good faith and fair dealing.
b. the Federal Trade Commission’s Franchise Rule.
c. federal antitrust laws.
d. Great Big Burgers’s marketing image.
Primary liability on a negotiable instrument is conditional.
Any lawsuit against the business or its employees does not lead to unlimited personal
liability for the owner of a sole proprietorship.
Every state has it own corporate securities laws that regulate the offer and sale of
securities within tis borders.
A license is a right to go onto land owned by another and take away some part of the
land itself or some product of the land.
Federal Bank is a secured party on a $50,000 loan to Gigi, who owns Home
HealthCare, an assisted living facility. When Gigi experiences financial difficulty,
creditors other than Federal Bank petition her into involuntary bankruptcy. The value of
the secured collateral has substantially decreased in value. On its sale, the debt to
Federal Bank is reduced to $25,000. Gigi’s estate consists of $100,000 in exempt assets
and $20,000 in nonexempt assets. After the bankruptcy costs and back wages to Gigi’s
employees are paid, nothing is left for unsecured creditors. Gigi receives a discharge in
bankruptcy. Later she decides to go back into business. By selling a few exempt assets
and getting a small loan, she is able to buy Indulgence, a small, profitable nightclub.
Gigi goes to Federal Bank for the loan. The bank claims that the balance of its secured
debt was not discharged in Gigi’s bankruptcy. She signs an agreement to pay Federal
Bank the $25,000, and the bank makes a new unsecured loan to her. Is Federal Bank
correct that the balance of its secured debt was not discharged in bankruptcy? What is
the legal effect of Gigi’s agreement to pay the bank $25,000 after the discharge in
bankruptcy?
The government does not need a subpoena or a warrant to inspect an employer’s file of
I-9 forms.
The Food and Drug Administration does not have the authority to directly recall any
food products that it suspects are tainted but must rely on the producers to recall items.
Advertising that appears to be based on factual evidence will not be deemed deceptive
even if it is not reasonably supported by evidence.
An agency by estoppel arises when the principal’s actions have created the appearance
of an agency that does not in fact exist.
Any explicit understanding between the buyer and the seller determines when title
passes.
National effluent (pollution) standards are set by the Environmental Protection Agency
for each industry.
Simply finding something and holding onto it gives the finder legal rights in the
property.
Usually, indorsements are qualified indorsements.
An accountant is not liable for an omission in a registration statement to a purchaser of
securities if the omission had no causal connection to the purchaser’s loss.
Misstatements or misrepresentations in an application for insurance can affect the
amount of a premium but cannot void a policy.
The content of a family-fisherman bankruptcy plan is very different from that of a
repayment plan.
Corporate accountability can be increased by imposing strict disclosure requirements
and harsh penalties for securities laws.
A bank may contractually shift to the customer the risk of forged checks created
electronically or by the use of nonmanual signatures.
Any agreement that restricts output among competitors is a per se violation of Section 1
of the Sherman Act.