1) Courts are not obligated to follow precedents.
2) The most common way to acquire personal property is to produce it.
3) A buyer’s failure to cover will bar him or her from using any other remedies available
under the UCC.
4) Usually, the shareholder who receives watered stock must pay the difference between
the price paid for the shares and their fair market value to the corporation.
5) Certain employers must provide advance notice of a layoff to the affected workers or
their representative (if the workers are members of a labor union).
6) If a buyer or lessee fails to reject the goods within a reasonable amount of time,
acceptance will be presumed.
7) For federal income tax purposes, one-member limited liability companies are not
taxed.
8) There are no important consequences if the procedures for incorporation are not
followed precisely.
9) Generally, an offering corporation must notify the Securities and Exchange
Commission and the target corporation’s management at the time a tender offer is made.
10) An insurer has a duty to avoid paying a claim even if it means acting in bad faith.
11) For a union election to be held, at least 30 percent of the workers to be represented
must support a union or an election on unionization.
12) A finder of mislaid property becomes the caretaker of the property.
13) Few countries guarantee compensation to foreign investors if their property is
taken.
14) Lucas, a dairy farmer in Minnesota, and Northland Dairy Products, Inc., enter into a
contract for the sale of a certain quantity of fresh milk. Although not expressly stated, a
concept that is read into this contract is the concept of
a.good faith.
b.impracticability.
c.square dealing.
d.unconscionability.
15) April is an accountant whose clients include Bistro Restaurants Inc. If April is
negligent in her work for Bistro, most courts would hold her liable to Bistro and
a.any third party.
b.no third party.
c.third parties who are foreseen users of the work.
d.third parties who are reasonably foreseeable users of the work.
16) Bob€s Big Burgers n€ Shakes Restaurant brings a suit, seeking a remedy at law. A
remedy at law is
a.monetary damages.
b.a decree of specific performance.
c.a judicial proceeding for the resolution of a dispute.
d.an injunction.
17) Todos, Ltd., agrees to market the products of United Sales, Inc., in Venezuela.
When the government is unexpectedly overthrown in a revolution, Todos can continue
to fulfill its contract but only for a much higher price. United agrees to pay but later
files a suit to recover the difference. The court will most likely rule that
a.a change in government is a risk ordinarily assumed in business.
b.an unforeseen difficulty supported the contract modification here.
c.Todos engaged in extortion or the so-called holdup game.
d.Todos had a preexisting duty to supply the goods at the initial price.
18) Mieko is a shareholder of Natural Gas, Inc. Natural Gas uses cumulative voting to
elect directors. This means that the number of Mieko’s votes is determined by the
number of
a.years that Mieko has been a shareholder.
b.members of the board to be elected multiplied by the total number of voting shares
that Mieko holds.
c.shareholders present at the shareholders’ meeting.
d.shareholders’ meetings that Mieko has attended.
19) Operational Processes, Inc., appeals a decision against it, in favor of Precision
Manufacturing Corporation, from a lower court to a higher court. Operational Processes
is
a.the appellant.
b.the appellee.
c.the defendant.
d.the respondent.
20) 6.Bay City Merchants Corporation has six shareholders, four of whom are members
of the same family. All of Bay City’s shareholders agree in writing to operate without
shareholders’ meetings. Under the Revised Model Business Corporation Act, this most
likely warrants
a.no penalties or sanctions.
b.the imposition of a fine on Bay City.
c.the imprisonment of Bay City’s shareholders.
d.the piercing of Bay City’s corporate veil.
21) To Sam, the written law of a particular society at a particular time is most signifi-
cant. Sam is a
a.legal positivist.
b.person who adheres to the historical school of legal thought.
c.legal realist.
d.person who adheres to the natural law tradition.
22) Insurance Sales Corporation gives preferential treatment in hiring and promotion to
the members of all protected classes. This treatment results in discrimination against
members of the majority. This is
a.disparate-impact discrimination.
b.gender discrimination.
c.notdiscrimination.
d.reverse discrimination.
23) Emily and other users of Facebook and other social networking sites post messages,
images, and other materials on these sites. Social media posts are routinely included in
discovery in litigation to
a.establish a person ‘s intent.
b.establish what a person knew at a particular time.
c.reduce damages awards.
d.all of the choices.
24) Mouth & Gums, Inc. (CSI), engages in deceptive advertising when it markets its
product Oral Rinse as able to kill germs over long periods of time. In an action against
Mouth & Gums, the firm is ordered to stop its false advertising of Oral Rinse and other
products. This is
a.a counteradvertising order.
b.a multiple product order.
c.a “cooling-off” law.
d.a validation notice.
25) Randi, an accountant, includes a false statement in a report for Social Media
Marketing, Inc., that is filed with the Securities and Exchange Commission. When Theo
buys stock in Social Media Marketing and loses money on the investment, he files a
suit against Randi, alleging fraud under the 1934 Securities Exchange Act. To avoid
liability, Randi can show that she
a.intended to defraud Social Media Marketing, not Theo.
b.intended to profit on stock trades generally, not only Theo€s.
c.is an otherwise competent accountant.
d.was not aware her statement was false.
26) Dina asks Edie to co-sign a credit application so that she can borrow money and
buy a piano from First Chair, a musical instruments and supplies seller. If, after the loan
agreement is signed, Dina agrees to a higher rate of interest without telling Edie, then
Edie is
a.discharged from the agreement.
b.liable at the higher rate of interest.
c.liable at the lower rate of interest.
d.liable for the principal only.
27) Fact Pattern 3–B1
Destiny and Enzo engage in a business transaction for the creation and baking of a cake
and other pastries and desserts for Destiny’s wedding dinner and reception. When a
dispute arises, Destiny initiates a lawsuit against Enzo by filing a complaint.
Refer to Fact Pattern 3-B1. If Enzo files a motion to dismiss, he is asserting that
a.Destiny did not state a claim for which relief can be granted.
b.Destiny’s statement of the facts is not true.
c.Destiny’s statement of the law is not true.
d.Enzo suffered greater harm than Destiny.
28) Ingmar asks Jessie to contract with Jessie’s high school classmates to babysit
Ingmar’s new baby. Jessie orally agrees to do so. This is
a.an agency by agreement.
b.an agency by estoppel.
c.an agency by ratification.
d.not an agency relationship.
29) Metro Loan Center refuses to offer mortgages to borrowers, often members of
minority groups, who live in poorer neighborhoods. This is
a.legal lending criteria.
b.reverse redlining.
c.redlining.
d.legitimate wealth-protection.
30) Einar owns a 1967 Ford Mustang, which Ginny customizes and details to Einar’s
specifications. The car earns an award at the Regional Motorsports Customizing
Convention. The result of Ginny’s efforts is
a.accession.
b.confusion.
c.conversion.
d.production.
31) A warranty of good title means that a seller warrants that he or she has valid title to
the goods and that transfer of the title is rightful.
32) Creditors who have a perfected security interest in a debtor’s property normally take
priority over mechanic’s and artisan’s liens.
33) Personal property that is most often exempt from satisfaction of judgment debts
does not include equipment that the debtor uses in a business or trade.
34) To recover for fraud, a plaintiff must be twenty-one or more years of age.
35) A full warranty requires free repair or replacement of any defective part.
36) One element that normally must exist for a person to be convicted of a crime is the
performance of a prohibited act.
37) A lessee is a party who transfers a right to the possession and use of goods under a
lease.