Sigrud buys spiked mountain-climbing shoes from Rockridge Gear store, telling the
clerk that she wants the shoes to climb Mount Sharptop. The spikes come out of the
shoes when Sigrud is on the side of the mountain, causing her to be injured in a fall.
Rockridge most likely breached
a. an express warranty.
b. an implied warranty of fitness for a particular purpose.
c. an implied warranty of merchantability.
d. a warranty of title.
Realty Credit Company and Security Mortgage Corporation plan to consolidate. Most
likely, the articles of consolidation will be filed with
a. the county recording office.
b. the local realtors association.
c. the states secretary of state.
d. the federal Bureau of Land Management.
Logan is a director for Metal Masters Company. Ordinarily, Logan owes fiduciary
duties only to
a. himself.
b. Metal Masterss creditors.
c. Metal Masterss personnel.
d. Metal Masterss shareholders.
Fact Pattern 37-1A
Desi starts up eSites, an Internet service, and leases office space in a building owned by
Fred. The lease requires Desi to pay Fred a base rental of $1,250, plus 10 percent of
eSites profits, each month. The term is two years. Desi hires Gwen to work at eSites
tech support desk at an hourly wage of $12.50, plus a commission of 10 percent of the
profits. The term is also two years.
Refer to Fact Pattern 37-1A. Desi and Fred are
a. not partners, because Fred does not have an ownership interest or management rights
in eSites.
b. not partners, because the lease includes a “base rental.
c. not partners, because the rent includes only 10 percent of the profits.
d. partners in a partnership for two years.
Region Construction Company has a right to drive its trucks across Staple Business,
Inc.s property, which is adjacent to Regions office. This right is
a. a leasehold estate.
b. a license.
c. an easement.
d. a profit.
Build-Rite Construction Corporation and Deals-R-Us, Inc., combine their efforts to
build an entertainment complex. Their form of business organization is
a. a business trust.
b. a joint stock company.
c. a joint venture.
d. a syndicate.
Curtis enters into a contract with Drive-Away Lease Company for a three-year lease of
a car. This contract is subject to
a. Article 2 of UCC.
b. Article 2A of the UCC.
c. Article 11 of the CISG.
d. the common law only.
Thalia is an employee of Universal Insurance Company. Universals employee manual
states that workers will be dismissed only for good cause. 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.
Domestic Auto Sales, Inc., promises its salaried employees a bonus at the end of the
year if management thinks it is warranted. This promise is
a. enforceable.
b. unenforceable because it is not supported by consideration.
c. unenforceable because the dollar amount is missing.
d. unenforceable because the employees are paid salaries.
Jesse arrests Imelda on suspicion of embezzlement. According to the United States
Supreme Court in Case 2, Miranda v. Arizona, Imelda must be apprised of certain of her
rights
a. after any questioning.
b. at any time during questioning.
c. only in the absence of questioning.
d. prior to any questioning.
Jackson files a suit against Lance. Before going to trial, the parties, with their attorneys,
meet to try to resolve their dispute. A third party suggests or proposes a resolution,
which the parties may or may not decide to adopt. This is
a. arbitration.
b. mediation.
c. negotiation.
d. not a legitimate form of dispute resolution.
Rondas debt to Skye is past due. Skye brings a legal action against Ronda to collect the
debt. To ensure that a judgment in Skyes favor will be collectible, Skye asks the court to
order the seizure of Rondas property. Exempt from such an order in most states would
be
a. all of Rondas real property.
b. as much of Rondas real property as Ronda opts to exempt.
c. none of Rondas real property.
d. Rondas family home in its entirety or up to a specified amount.
Bret is convicted of arson for burning down his warehouse to collect the insurance. On
an application for insurance from Cover-All Insurance Company on a new building, in
answer to a question about prior convictions, Bret does not disclose his conviction. This
makes the contract
a. binding because the omission is immaterial to Cover-Alls decision to issue coverage.
b. binding due to Cover-Alls failure to discover Brets conviction.
c. voidable by Bret because the omission is immaterial to Cover-Alls decision to issue
coverage.
d. voidable by Cover-All because the omission is material to its decision to issue
coverage.
From a location in Asia, Basil sends spam to U.S. e-mail addresses touting a variety of
deceptive scams in an attempt to dupe unwitting recipients into revealing their bank
account and credit card numbers. Under the U.S. Safe Web Act, the Federal Trade
Commission can
a. authorize the scamming of citizens in Asia.
b. do nothing.
c. share information with foreign agencies to investigate and prosecute.
d. undertake secret activities to destroy Asian servers.
Mick starts a business to market nationally long-distance phone time as Micks Minutes.
Registering his trademark with the U.S. Patent and Trademark Office provides
nationwide protection for the mark
a. if the mark is currently in use.
b. only if the mark has not yet been used.
c. only if the mark will not be used for at least six months.
d. only if the mark is currently in national use.
Rangle contracts with Siena to buy a certain horse for her. Rangle makes a deal with
Timberline Stables, the owner of the horse, and makes a down payment. Siena fails to
pay the rest of the price. Timberline sues Rangle for breach of contract. His right to
hold Siena liable for any damages that he has to pay is the right of
a. avoidance.
b. cooperation.
c. indemnification.
d. reimbursement.
United Sales Corporation hires Victor to act as its agent. Uniteds right not to perform a
contract entered into by Victor, if Victor breaches their agency agreement, is the right of
a. avoidance.
b. indemnification.
c. nullification.
d. termination.
First Editions, Inc., a book dealer based in Texas, does business in all fifty states
exclusively online. According to a decision of the United States Supreme Court, for an
individual state to compel an out-of-state business to collect and remit state taxes, the
business must have in that state
a. a substantial physical presence.
b. a potential marketing base.
c. an accessible Web site.
d. a party paid to solicit business for its products.
Gina writes and signs a check payable to “Happy Market. Ira, Happys manager,
indorses the check “For deposit only. This is
a. a blank indorsement.
b. a qualified indorsement.
c. a restrictive indorsement.
d. a special indorsement.
Ida, Jerzy, and Kit are the directors of Liberty Convenience Stores, Inc. Liberty has nine
officers and forty-six shareholders. Dividends are ordered by the firms
a. board of directors.
b. incorporators.
c. officers.
d. shareholders.
Seymour borrows $350,000 from Reliable Bank to buy a home. Seymour stops making
payments on the loan ten months later. After the bank repossesses the property securing
the loan but before it is sold, Seymour wants to buy it. This is
a. a deficiency judgment.
b. a reverse mortgage.
c. a violation of the law.
d. the right of redemption.
Sharon, the human resources director for Tempo Corporation, attempts to comply with
the law in dealing with applicants and employees. One of the challenges Sharon faces is
that the legality of an action is
a. always clear.
b. never clear.
c. sometimes clear.
d. usually clear.
Maia hires Nero, a real estate broker, to sell her warehouse. The warehouse burns down
before being sold. Nero is
a. Maias agent until Maias insurer pays Neros commission.
b. Maias agent until the burnt warehouse is sold.
c. Maias agent until the warehouse is rebuilt and sold.
d. no longer Maias agent.
Jock hires Kym to act as his agent to purchase Lifetime Gym & Fitness, Inc. Jock tells
Kym to reveal that she is buying the firm on behalf of a third party and to tell the seller
who that third party is. Jock is
a. a disclosed principal.
b. an apparent principal.
c. an undisclosed principal.
d. a partially disclosed principal.
Tilly, the chief financial officer for USA Products Corporation, attempts to apply
Christian precepts in making ethical decisions and in doing business. In applying
duty-based ethical standards that are derived from a religious source, Tilly would
consider the motive behind an act to be
a. irrelevant.
b. the least important consideration.
c. the most important consideration.
d. the only consideration.
Fact Pattern 12-A2
Cut-Rate Construction Company (CCC) begins building a restaurant for Diners
Restaurants, Inc., but after two months demands an extra $100,000. Diners agrees to
pay.
If CCC offers no reason for the extra $100,000, but says only that it will otherwise stop
construction, the agreement is
a. enforceable as an accord and satisfaction.
b. enforceable because of unforeseen difficulties.
c. unenforceable as an illusory promise.
d. unenforceable due to the preexisting duty rule.
Edie is the payee of a bearer instrumenta promissory note in the amount of $1,000.
Frank offers to irrigate Edies ranch next week in exchange for the note. Edie agrees and
delivers the note to Frank. Frank is
a. an HDC, because he promised to perform services at a future date.
b. not an HDC, because he did not take the instrument without notice.
c. not an HDC, because he did not acquire the instrument in good faith.
d. not an HDC, because he did not yet give value for the instrument.
Fact Pattern 19-B1
Fruits & Vegetables, Inc., and Grovers Market enter into a contract for the delivery of
locally grown produce. The parties use a standard Fruits & Vegetables form that
contains some of the terms the parties agree on but not others. Some of the produce
spoils before it can be sold. Grovers refuses to pay for the spoiled goods.
Refer to Fact Pattern 19-1. Fruits & Vegetables files a suit against Grovers, claiming
that the buyer assumed the risk of the spoilage of the unsold produce. The court may
allow evidence of this term if it finds that the parties contract is
a. fully integrated.
b. not fully integrated.
c. not supported by consideration.
d. a complete and final statement of their agreement.
Olivia files a suit against Parker. If this suit is like most cases, it will be
a. dismissed during a trial.
b. dismissed or settled before a trial.
c. resolved only after a trial.
d. settled at a trial.
Miracle Vacuum, Inc., is a private, for-profit corporation that (1) was formed for the
purpose of manufacturing and distributing a newly patented appliance, (2) is owned by
five shareholders, (3) is subject to double taxation, and (4) has made no public offering
of its shares. Miracle is
a. an S corporation.
b. a closely held corporation.
c. a nonprofit corporation.
d. a professional corporation.
In an auction, a bidder is an offeror.
Best Engineering, Inc., performs computer programming services for Complex
Products Corporation (CPC). When CPCs computer system crashes, it loses $250,000
worth of business and pays $50,000 to have the system reprogrammed. CPC announces
to the media that the crash was due to Bests incompetence and files a complaint in a
federal court against the firm. In response, what are Bests options?
Every person who signs a negotiable instrument is liable for payment of that instrument
when it comes due.
The Environmental Protection Agency can regulate a substance that poses an imminent
hazard but cannot prohibit the use of a substance altogether.
Transfer of an order instrument by indorsement and delivery extends warranty liability
to any subsequent holder who takes the instrument in good faith.
A director must make a full disclosure of any potential conflict of interest that might
arise in any corporate transaction.
A partnership agreement can include almost any terms that the partners wish.
In a fee simple absolute, the owner has the greatest aggregation of rights, privileges,
and power possible.
An assignment is effective immediately, whether or not notice is given.
Under the “danger invites rescue doctrine, a person who tries to rescue another
individual from harm is liable for any injuries to the individual.
A will must normally be attested to by two or three mentally competent witnesses.
A defense available in an action based on a negligence theory is that the plaintiff failed
to prove one or more of the required elements.
Vicarious liability is direct liability.
Shareholders meetings need not occur at any certain interval.
An agent does not have the power to act without communicating with the principal even
if an unforeseen emergency demands action.
State securities laws apply mainly to intrastate transactions.
Informal contracts include all contracts other than formal contracts.
A trade name cannot be protected if it is unusual or fanciful.