Kari, a real estate agent, assures Linc that a certain parcel of commercial property fronts
on the most highly trafficked street in Metro City. Linc buys the property and then
discovers that the street has no more traffic than any other in its vicinity. Lincis most
likely a victim of
a. opinion.
b. fraud.
c. mistake.
d. nothing.
Cruz, a sugar cane farmer in Brazil, forms an alliance with Alexis, an importer and
marketer in the United States. Their products carry a Fair Trade label. This means that
Cruz
a. is willing to fairly trade goods instead of cash for his products.
b. receives a stable minimum price for his products.
c. employs forced labor at a fair price whenever possible.
d. produces crops as cheaply as possible to keep his prices minimal.
On April 1, Construction Contractors, Inc., contracts to build a store for Discount
Retail, Inc., at a specific location in Electro City. On April 10, Electro changes its
zoning law to prohibit the construction of a commercial building at that location.
Discount Retail files a suit against Construction Contractors. In this situation
a. Construction Contractorsis in breach of contract.
b. Discount Retail is in breach of contract.
c. the contract is discharged.
d. the contract is suspended.
Jackie, an accountant, distributes a flyer to her business clients and potential
customersthat accuses her competitor Ked of being a convicted thief. The statement is
defamatory if
a. arecipient of one of the handbills repeats it.
b. Ked suffers emotional distress.
c. the statement is true.
d. the statement is false.
Ripe Produce, Inc., and Southeast Asian Bistro & Market enter into a contract for the
delivery of locally grown fruits and vegetables. The parties use a standard Ripe Produce
form that contains some of the terms the parties agree on but not others. Some of the
produce spoils before it can be cooked, served, and eaten, or sold. Southeast Asian
refuses to pay for the spoiled goods.
Southeast Asian contends that the practice in the trade with respect to payment for
spoiled produce justifies its refusal to pay. Southeast Asian is arguing that the court
should take into account
a. the course of dealing.
b. the course of performance.
c. the usage of trade.
d. a rule of construction.
Maura enters a gas station and points a gun at the clerk Nate. She then forces Nate to
open the cash register and give her all the money. Maura can be charged with
a. burglary.
b. robbery.
c. larceny.
d. receiving stolen property.
Household Appliance Corporation sells Ideal-brand vacuum cleaners to Jolly Discount
Stores and other retailers. Household Appliance will have an insurable interest in the
players as long as
a. Household Appliance remains in business.
b. Household Appliance retains title to the goods.
c. the goods are in existence.
d. there is no risk of loss.
Posy brings a lawsuit againstQuisa over a sale of 350 acres of farmland. During the
trial, Quisas attorney asks questions of the plaintiffs witness Raina. This is
a. a cross-examination.
b. a deposition.
c. a direct examination.
d. an interrogatory.
Kay and Leo enter into a contract that falls within the provisions of the UETA. Under
the UETA, “an electronic sound, symbol, or process attached to or logically associated
with a record and executed or adopted by a person with the intent to sign the record is
a. an e-document.
b. an e-signature.
c. an e-transaction.
d. a record.
Stan, an air-conditioning and heating technician, files a suit against Temp-Set
Corporation, alleging that its thermostats are unreasonably dangerous due to the
possibility of electrical shock. Temp-Sets best defense is most likely
a. assumption of risk.
b. knowledgeable user.
c. commonly known danger.
d. none of the choices.
Edgar, Jon, and Phoebe do business as partners in Reliable Movers. Phoebe develops a
debilitating illness and can no longer work. Phoebe
a. may dissociate from the partnership.
b. may not dissociate from the partnership without the other partners consent.
c. must dissociate from the partnership.
d. may terminate the partnership.
Readymade Credit Company loans Start-Up Enterprise, Inc., $150,000 to invest in new
equipment. If Start-Up fails to pay the loan within a specified period, Readymades
recovery of the debt will be barred by
a. the preexisting duty rule.
b. the doctrine of promissory estoppel.
c. a statute of limitations.
d. none of the choices.
Clark hires Dimitri to act as his agent to purchase Expo Sports Arena, Inc. Clark tells
Dimitri to reveal that he is buying the firm and its assetson behalf of a third party and to
tell the seller who that third party is. Clark is
a. a disclosed principal.
b. an apparent principal.
c. an undisclosed principal.
d. a partially disclosed principal.
Moses sells an apartment building to Noellewith a promise to install a newheating and
air conditioning systembefore September 1. The following February 1, Moses sends
Ollie, anHVAC technician, to begin the installation. Noelle orders Ollieto leave and
refuses to make further payments to Moses, who files a suit against Noelle.
Noelles refusal to make further payments is most likely
a. a material breach.
b. complete performance.
c. excused by Mosess failure to timely install the ventilation system.
d. substantial, but not complete, performance.
Motor Vehicles Service Company orders NoBounce-brand shock absorbers from Parts
& Tools, Inc., to be delivered by the seller. Before Parts & Toolstruck arrives with the
goods, Motor Vehicles tells Parts & Toolsit will not pay. The shock absorbers are
destroyed in transit. The loss is suffered by
a. all of the parties insurance companies pro rata.
b. NoBouncesinsurance company.
c. Motor Vehicles to the extent of a deficiency in Parts & Toolsinsurance coverage.
d. Parts & Toolsto the extent of a deficiency in Motor Vehicles insurance coverage.
Sauces n Syrups, Inc., and Thads Sweet & Spicy Bottling Planthave a manufacturing
franchise arrangement. This involves the transfer of
a. a license.
b. a trade name.
c. the formula to make a certain product.
d. the ownership of the business.
iSharp, Inc., and Jenene, the owner of a Kitchen Time shop, orally agree to a sale of
knives and other utensils for $12,000. Jenene gives iSharp a check for $4,000 as a
partial payment. This contract is
a. enforceable to the extent of $4,000.
b. fully enforceable because it is for specially selected goods.
c. fully enforceable because it is oral.
d. not enforceable.
OntheWeb Company is an Internet service provider. OntheWebs customer Phoebe
commits copyright infringement. OntheWeb is not liable for Phoebes activity
a. unless OntheWeb is aware of Phoebes violation.
b. unless OntheWeb is not aware of Phoebes violation.
c. unless OntheWeb shuts down Phoebe after learning of the violation.
d. under any circumstances.
Shanes Auto Parts orders twenty tires from Tough Tires, Inc. The truck delivering the
tires to Shanes is involved in an accident and ten of the tires are damaged. Shanes Auto
Parts
a. cannot reject the entire shipment.
b. must still pay for all twenty tires at the original contract price.
c. may inspect the tires and accept the shipment with a reduction in price.
d. must reject the entire shipment.
FreezE Yogurt Corporation provides its prospective franchisees with projected earnings
figures based on actual data. FreezE Yogurt must also disclose
a. the number and percentage of franchisees that achieved the figures.
b. hypothetical examples of potential earnings.
c. an answer to the entrepreneurs question, “How much will I make?
d. none of the choices.
Bernard is an expert on exotic flowers. Custom Floral Arrangements, Inc., hires
Bernard to order exotic flowers for its arrangements. Bernard does not examine the
quality of the flowers he orders on behalf of Custom Floral. Bernard has breached
a. the duty of performance.
b. the duty of loyalty.
c. no duty.
d. the duty of notification.
Operational Processes, Inc., appeals a decision against it, in favor of Precision
Manufacturing Corporation, from a lower court to a higher court. Operational
Processesis
a. the appellant.
b. the appellee.
c. the defendant.
d. the respondent.
Sashacontracts to buy a franchise from TrustMe Financial Consultants, Inc. The
contract is silent on the issue of territorial rights. When TrustMe allows a competing
franchise to be established near Sashasoffice, she suffers a significant loss in profits.
This is most likely a violation of
a. no law.
b. the ban on certain types of anticompetitive agreements.
c. the Federal Trade Commissions Franchise Rule.
d. the implied covenant of good faith and fair dealing.
Moving &Storage Company holds goods for National Distribution Corporation, which
contracts to sell them to Omni Stores, Inc. The goods are to be delivered without being
moved and are represented by a negotiable bill of lading. The risk of loss passes to
Omni Stores
a. ifMoving & Storage refuses to honor the bill of lading.
b. ifNational Distribution gives the bill of lading to Moving & Storage.
c. if the goods are lost due to an “act of God.
d. whenOmni Stores receives the bill of lading.
Ralph is interested in buying a franchise from Sparkle Beverages Inc. For Ralph to
make an informed decision concerning this purchase, Sparkle Beverages must disclose
in writing or online
a. general estimates of costs and sales, but not the basis for them.
b. material facts such as the basis of projected earnings figures.
c. no information.
d. start-up requirements, but not renewal conditions.
Lauren, Marcella, and Norellform a syndicate to buy a professional soccer franchise.
This syndicate could be set up as
a. a joint venture.
b. a corporation.
c. a sole proprietorship.
d. a limited liability company.
Loading Ramps Plus,Inc., contracts to sell sixteen aluminum loading ramps to Moving
Services, Inc. Loading Ramps ships the ramps, which Moving Servicesaccepts but does
not pay for. Loading Ramps can
a. sue to recover the purchase price plus incidental damages.
b. sue to recover the purchase price minus incidental damages.
c. resell the ramps to any buyer willing to reclaim them from Moving Services.
d. requireMoving Servicesto revoke its acceptance of the ramps.
Business Computer Solutions Education Service enters into a contract to employ
Chandra as an instructor for two years to begin June 1. One month before the term
begins, Business Computer is underbid by a competitor and loses a major client, Debt
Consolidation Corporation. Business Computer now refuses to hire Chandra.
Under the circumstances, with respect to damages, Chandracan
a. bring an action immediately.
b. bring an action only after the contracts two-year term begins.
c. bring an action only after the contracts two-year term ends.
d. do nothing.
In advertising circulars, Lo-Price Autos falsely accuses Hi-Value Vehicles, a competitor,
of selling stolen cars. Hi-Values sales decrease. Lo-Price has most likely committed
a. slander of quality.
b. slander of title.
c. wrongful interference with a business relationship.
d. none of the choices.
Megan, an agent for a department store, orders one hundred dresses from Sals Clothing
Shop for the Spring Blossom Sale. There is no specific agreement in the sale contract
indicating when title will pass to the department store. The title will pass to the
department store when
a. Megan signs the contract.
b. Megan and the Sals Clothing Shop agent sign the contract.
c. Sals Clothing Shop physically delivers the dresses to the department store.
d. Megan pays Sals Clothing Shop for the dresses.
The franchise is not strictly speaking a business organizational form.
A product liability action based on negligence does notrequire privity of contract
between the injured plaintiff andthe defendant-manufacturer.
Most states apply to a foreign limited liability company (an LLC formed in another
state) the law of the state where the LLC was formed.
When an anticipatory repudiation occurs, it is treated as a material breach of a contract.
Lunch Trucks, Inc., contracts to deliver and serveMeals Catering Services products to
its clients for $5,000 per event, payable in advance. Meals Catering pays the money, but
Lunch Trucks fails to perform. Can Meals Catering rescind the contract? Can Meals
Catering also obtain restitution? What does it mean to “rescind a contract? How is a
contract rescinded? What is restitution? How is restitution accomplished? Explain.
Generally, government inspectors do nothave the right to enter business premises
without a warrant.
Anything less than complete performance is a material breach of contract.
A franchisee ordinarily does not pay a fee for a franchise license (the privilege of being
granted a franchise).
Intended beneficiaries can sue to enforce a contract.
Article 2A of the UCC covers any transaction that creates a lease of goods or a sublease
of goods.
The theft of trade secrets is a civil wrong but not a crime.
The corporation is a creature of the common law.
Voting rights in a corporation apply only to the election of the firms board of directors.
A limited liability company can be held liable for any loss or injury caused by the
wrongful acts or omissions of its members.
To obtain a search warrant, law enforcement officers must convince a judge that they
have reasonable grounds to believe a search will reveal evidence of a specific illegality.
The Sarbanes-Oxley Act requires companies to set up confidential systems so that
employees and others can “raise red flags about suspected illegal or unethical auditing
and accounting practices.
A determination of whether consideration exists depends on a comparison of the values
of the things exchanged.
An employee may take up to twenty-six weeks of military caregiver leave within a
twelve-month period to care for a family member with a serious injury or illness
incurred as a result of military duty.