Farmer Elvin is holding 200 pounds of potatoes in storage for Chef Noble but Chef
Noble has breached the contract by failing to pay for the potatoes. If Farmer Elvin sells
the potatoes to a local diner to make potato soup and salad, then this action would be
considered
a. a reasonable mitigation of damages.
b. an attempt to maximize damages.
c. an attempt to realize an unwarranted profit.
d. an attempt at reformation.
What are the two types of moral relativism noted in your text?
a. absolute and relative
b. individual and societal
c. cultural and individual
d. practical and theoretical
The concept that an injured party may recover consequential damages only if the
breaching party should have foreseen them was established in
a. Bi-Economy Market, Inc. v. Harleysville Ins. Co. of New York.
b. Putnam Construction & Realty Co. v. Byrd.
c. Hadley v. Baxendale.
d. Toscano v. Greene Music.
Generally, filing bankruptcy stops the collection activity of creditors.
a. True
b. False
Virginia borrowed money from G & L Lending at 35% interest per year. The state
maximum interest rate is 20% per year. Virginia defaulted on the loan. What amount
can G& L collect from Virginia?
a. G & L will be able to collect the principal plus 20% interest per year.
b. G & L will be able to collect the principal but not any interest.
c. G & L will not be able to collect either the principal or interest.
d. Any one of the above may be correct. The answer depends on the particular state law.
Parents may not disinherit their minor children without good reason.
a. True
b. False
An unliquidated debt can be described as
a. a debt in which both its existence and amount is in dispute.
b. a debt in which the existence or amount is in dispute.
c. a debt disputed by the creditor but not the debtor.
d. a debt undisputed by either party.
Most contracts are discharged by mutual agreement of the parties.
a. True
b. False
Percival takes his computer to a repair shop to have the disk drive repaired. This is most
likely a
a. bailor benefit bailment.
b. bailee benefit bailment.
c. mutual benefit bailment.
d. leasehold arrangement.
The landlord’s duty to provide quiet enjoyment of the premises and the landlord’s duty
to deliver and maintain the premises in a habitable condition are one and the same.
a. True
b. False
A company’s collective bargaining agreement has expired and negotiations are
underway for a new one. After one exhausting session, union leaders have decided
management will not bargain in good faith. The union declares it will be going out on
strike the following midnight if an agreement is not reached. The union
a. is allowed to go out on strike the following midnight.
b. must give the employer at least seven days’ notice before going out on strike.
c. must give the employer at least 30 days’ notice before going out on strike.
d. must give the employer at least 60 days’ notice before going out on strike.
Brahma entered into an oral agreement to sell 50 jet skis to Summer Sports. Brahma
delivered 20 of the skis on May 1. On June 1, Summer Sports notified Brahma that it
will not honor the agreement. Which statement is correct?
a. The contract is void since it was oral.
b. The contract is enforceable for 20 jet skis.
c. The contract is enforceable for the 50 jet skis
d. The contract is obsolete.
Pamela is planning to sell her home decorating store to her daughter. Pamela has
a. a greater duty to reveal problems in the business because her daughter assumes she
will be honest.
b. no duty to disclose hidden defects in the business.
c. a lesser duty to reveal problems in the business because she has a relationship of trust
with the buyer.
d. a duty to report only any latent defects she knows about that her daughter should not
be expected to discover herself.
Grand Lighting Co. has filed a petition for voluntary bankruptcy under Chapter 7 of the
Code. Which of the following will prohibit creditors from collecting debts that Grand
Lighting incurred before the petition was filed?
a. An automatic stay
b. A proof of claim
c. A voluntary petition
d. A discharge statement
Jacob has been quite ill. When three of his neighbors come to visit one day, he tells
them that he is dying and that he wants them to witness his oral will. In some states, he
can validly dispose of his personal property by his witnessed, oral statements.
a. True
b. False
A claim in recoupment can be used against a holder in due course.
a. True
b. False
A court may, at times, discharge a party who has not performed.
a. True
b. False
Myron had two children, Cheryl and Pete, who predeceased him. Cheryl had three
children and Pete had one child. Myron had a will. Which of the following is true?
a. If Myron’s will indicates that the issue are to inherit per stirpes, Pete’s child will
receive one half of Myron’s estate.
b. If Myron’s will indicates that the issue are to inherit per stirpes, Pete’s child will
receive one fourth of Myron’s estate.
c. If Myron’s will indicates that the issue are to inherit per capita, Pete’s child will
receive one half of Myron’s estate.
d. If Myron’s will indicates the issue are to inherit per capita, each of Cheryl’s children
will receive one sixth of Myron’s estate.
In the Tannenbaum v. New York Dry Cleaning, Inc. case,
a. there was a bailment for hire, and the fact that the bailee was unable to return the
bailed item except in a damaged condition created an irrebuttable presumption that the
damage to the item was attributable to the bailees negligence.
b. the court stated that a company cannot, under New York law, use an exculpatory
clause to relieve itself from liability for the consequences of its own negligence.
c. the court found that the claimant was not bound by the terms of the dry cleaning
companys limitation clause because, even if it applied to the situation before the court,
the claimant had not read the clause nor had he assented to its terms.
d. the court found that the claimant was negligent in not reading the limitation clause on
the back of his claim ticket, so he could not recover the cost of his shirt.
Incorporators are required to sign the charter, deliver it to the proper state officials, and
purchase a certain percentage of the initial stock offering.
a. True
b. False
A PMSI in consumer goods perfects automatically, without filing.
a. True
b. False
In January, Eddie contracts to sell 100 bushels of soybeans in the fall. This contract
a. is void. He cannot contract to sell a crop before it is even planted; the goods must be
in existence.
b. is void. The soybeans must be identified to the contract at the time he contracts to sell
them.
c. can be valid; but title to the soybeans cannot pass until the soybeans exist.
d. can be valid, and title to the soybeans passes when the contract is signed.
In which of the following situations is it likely that you may NOT need a written
contract?
a. You are dealing with a party you do not know well, so you need to remain flexible.
b. You are buying land from a member of your family.
c. The terms of the agreement are simple and the value of the transaction is small.
d. You have negotiated with the other party enough that you both know what the other
person intends.
Which of the following makes it illegal for U.S. companies and citizens to bribe foreign
officials to influence a governmental decision?
a. OSHA
b. RICO
c. CFAA
d. FCPA
Larry has the largest pizza business in the city. He learns that Henry is thinking of
opening a competing pizza and pasta delivery business. Larry gives Henry $25,000 to
not open his proposed business in the same city. Which statement is correct?
a. The contract is voidable at Larry’s option.
b. The contract is void for lack of consideration.
c. The contract is illegal and void.
d. The contract is enforceable.
A sales representative at Oxtren, Inc. orally told the purchasing agent at Wety, Inc. that
its industrial saw is exceptional. Which statement is correct concerning the claim that
the saw is exceptional?
a. The claim is an express warranty.
b. The claim is an implied warranty of merchantability.
c. The claim is not a warranty because it is not in writing.
d. The claim is not a warranty because it is sales puffery.
The Consumer Product Safety Commission (CPSC) is an independent administrative
agency. Which statement is correct about the chairperson?
a. The chairperson serves at the whim of the President and can be fired at any time.
b. The chairperson can only be fired by the President for good cause.
c. The chairperson cannot be fired by the President since the CPSC is an independent
agency.
d. The chairperson has a lifetime appointment and cannot be fired.
Carswell, a contractor, enters into a contract with Helen, a homeowner, to remodel her
bathroom. The contract provides a specific completion date. The contract provides that
if Carswell does not have the job finished by the date, Helen may deduct $200 per day
from the contract price until the job is finished. This is an example of liquidated
damages.
a. True
b. False
If an offer specifies no time limit in which to accept,
a. the offeree has 30 days to respond.
b. the offeree has 10 days to respond.
c. the offer is not valid and therefore it does not matter when the offeree responds.
d. the offeree has a reasonable period during which to accept.
A landlord’s substantial interference with a tenant’s use of the property is considered
a. a constructive eviction.
b. a tort.
c. a violation of federal housing law.
d. permissible in a periodic tenancy.
The life expectancy of residents in cities with the dirtiest air is on average two years
shorter than those in the cleanest cities.
a. True
b. False
A public offer to buy a block of stock directly from shareholders is called a tender offer.
a. True
b. False
The power to create laws regulating international commerce is given jointly to
Congress and the states under the U.S Constitution.
a. True
b. False
Which of the following statements concerning liquidated damages is NOT TRUE?
a. A liquidated damages clause will be enforced, if, when the contract was made, it was
difficult to estimate actual damages.
b. The amount of liquidated damages must be a reasonable estimation of the actual
harm resulting from a breach.
c. Nominal damages are not the same thing as liquidated damages.
d. Liquidated damages are enforceable even if the amount is considered to be a penalty
on the breaching party.
A spouse who is named the beneficiary of a life insurance policy would ordinarily be
a. a creditor beneficiary.
b. an incidental beneficiary.
c. an intended beneficiary.
d. a debtor beneficiary.
Identify the main provisions of the Digital Millennium Copyright Act and two
arguments opponents of the Act raise.
Briefly describe the process of jury selection.
On March 1 Donna wrote a check for $296 to Sun Services. When will the check be
overdue? What is the effect of the checks being overdue? What is the effect if the check
is stamped “Insufficient Funds by Donnas bank?
Nancy is an auditor. She works in a state that uses the Ultramares Doctrine. She
fraudulently prepared financial documents for her client, Star, Inc. Her client presented
the information to Moonglow, Inc. Moonglow was a potential creditor of Star, Inc., and
was seriously damaged by the fraudulent financial information. Moonglow sued Nancy.
She claims she is not liable to Moonglow, a third party, since she was not provided with
its name at the time the audit was prepared. Is she liable to Moonglow? Explain.
Jackie learned of insider trading information while talking to Mark, a director of a large
corporation. She took advantage of the information to buy stock and make a huge
financial gain. If she is accused of violating securities law, what must the government
prove in order to gain a conviction against Jackie?
Discuss the concepts of contributory negligence and comparative negligence.
Fast Auditors prepared audited financial statements for Mega Company’s registration
statement in compliance with the 1933 Securities Act. John bought stock in Mega
Company. It was discovered that the financial statements prepared for the registration
statement contained some important omissions. John sued Fast Auditors to recover his
investment when Mega Company turned out to be a bad investment. What must John
prove to recover from Fast Auditors?
What is the “perfect tender rule” and what restrictions has the UCC put into place that
limit the perfect tender rule’s effect?
Village Bank believed that Spencer and Nadia were partners in an e-business. Spencer
and Nadia were not partners. Spencer owned the business as a sole proprietor. Nadia,
however, was a close friend of Spencer. When Spencer visited Village Bank in an effort
to obtain a $10,000 loan, Nadia went with him. During the conversation with the
banker, Spencer referred to Nadia as “my partner.” Village Bank made the business loan
believing that Spencer and Nadia were partners. Spencer defaulted on the loan. Village
Bank claims that both Spencer and Nadia are liable on the loan. Will Nadia be liable on
the loan?
Briefly discuss the the major restrictions placed on an “S” corporation.
Identify and describe the four principal contract interests a court may seek to protect.
Abigail signed a contract to purchase a new car from Wolf’s Auto Sales Company. The
seller breached its agreement by not delivering the car. Abigail went to another car
dealer and purchased the same model of car at the same price. Although she had
experienced a legal injury, Abigail has no actual financial or other damages as a result
of the breach. If Abigail sues and wins, what type of damages will she be awarded?
Jasmine agrees to purchase 1500 tons of recycled glass from Louie, the price to be
determined at the time of delivery. Is such an agreement enforceable? Compare the
common law with Article 2 of the UCC.
Larry wanted to buy a 1957 Cadillac once owned by Reggie Jackson. Larry entered into
a contract with the owner agreeing to pay $102,000. The owner subsequently changed
his mind. If Larry sues, what remedies are potentially available?
When must an environmental impact statement be prepared and what must it discuss?