Organicos Café orders five gallons of PureMaid-brand transfat-free olive oil from
Quico Cooking Supplies, Inc. Quico mistakenly ships soy oil, which Organicos keeps,
despite the nonconformity. The oil is destroyed in a fire. The loss is suffered by
a. all of the parties as tenants in common in equal measure.
b. PureMaid.
c. Organicos Café.
d. Quico Cooking Supplies.
StartUp Investors, LLC, is a limited liability company without a written operating
agreement. Among the members, a dispute arises concerning the division of profits.
Under most LLC statutes, the profits will be
a. distributed according to the members proportionate shares of ownership in the firm.
b. divided equally among the members.
c. forfeited to the state.
d. reinvested in the business until the dispute is resolved.
Demario and Evander want to form and do business as a corporationFarm-2-Fork
Restaurant, Inc. A corporation is
a. a natural being.
b. a tangible thing.
c. an artificial person.
d. ultra vires.
Transworld Import Company and USA Export, Inc., form a business organization to
engage in importing and exporting. Its property is held in the names of the members
and its shareholders have personal liability. This organization is
a. a business trust.
b. a joint stock company.
c. a joint venture.
d. a syndicate.
Organic Farms Company contracts to buy two tracts of land from Prime Bottomland,
Inc. Both parties believe that the two tracts are adjacent, but in fact they are not. Prime
Bottomlandis still willing to sell the land, but under these circumstances the deal would
adversely affect Organic Farms.
The parties belief about the adjacency of the property is
a. a bilateral mistake.
b. a fraudulent misrepresentation.
c. a unilateral mistake.
d. unconscionable.
Dyan, the owner of Expert Restoration Services, Inc., adheres to the “principle of rights
theory. Under this theory, a key factor in determining whether a business decision is
ethical is how that decision
a. compares to religious principles.
b. affects the rights of others.
c. effects consequences that would follow if everyone in society acted the same way.
d. supports the right to make a profit.
Congress enacts a law prohibiting toys made in Indonesia from being sold in the United
States. The Washington state legislature enacts a law allowing the sale of
Indonesian-made toys. Washingtons law will most likely be
a. rendered invalid under the supremacy clause.
b. held to be valid under the equal protection clause.
c. struck down under the taxing and spending clause.
d. upheld under the commerce clause.
Able Contractors, Inc., enters into a contract with Beau to repair, rebuild, and remodel
Coastal Marina & Boardwalk, using products from Delta Lumber & Marine. Eatwell
Café is next to Coastal Marina.
Delta Lumber will realize a profit from the sale of products to Bayside to remodel
Coastal Marina. Delta Lumber is
a. a delegatee.
b. an assignee.
c. an incidental beneficiary.
d. an intended beneficiary.
BBQ, Inc., makes and sells grills to Cooks Choice and Grill Mart, retailers of kitchen
appliances, outdoor cooking equipment, and related utensils. Their contracts limit
consequential damages when the loss is commercial in nature. This is prima facie un-
conscionable with respect to
a. BBQ.
b. Grill Mart.
c. Cooks Choice.
d. none of these parties.
Bay City Mall requires its tenants to sign a lease that includes a clause releasing Metro
from liability in the event of monetary or physical injury no matter who is at fault.
Cocos Chocolate Creations signs a lease with Bay City that contains the clause.
The clause is most likely
a. enforceable as a matter of public policy.
b. enforceable if either party is considered to be a business for essential services.
c. enforceable if the lease also involves residential property.
d. unenforceable.
Lowell runs Medical Debt Collection Agency. He collects debts by misrepresenting the
facts and pretending to be licensed to perform various occupations. Lowells conduct
most likely warrants
a. an admonition for unethical behavior but no other sanctions.
b. an injunction plus other sanctions.
c. no sanctions but no praise.
d. praise for the aggressive approach to collecting debts.
Great Gear, Inc., enters into a contract to sell sports clothing and equipment to
Healthways Workout store, which in turn sells a pair of bike shorts to Ilene, a consumer.
In comparison to standards that apply to consumers, the UCC imposes on merchants
a. less strict legal standards.
b. special business standards.
c. stricter ethical standards.
d. the same overall standards.
Blayne is an employee of Chemical Refinery, Inc. Blayne is threatened with a discharge
when he refuses a transfer to a Chemical Refinery department in which several
employees suffered serious injuries from exposure to hazardous chemicals. Blayne may
be entitled to protection from discharge under
a. no law.
b. the Family and Medical Leave Act.
c. the Occupational Safety and Health Act.
d. the state workers compensation act.
Coletteand Dealership Auto Sales Company enter into an oral contract under which
Dealership Auto agrees to provide Colette with lifetime employment. This contract may
be enforceable by
a. Colette only.
b. Dealership Auto only.
c. any interested third party, such as a Dealership Auto customer.
d. either Colette or Dealership Auto.
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.
The government of Korea sets a limit on the amount of rice that can be imported from
the United States. This is
a. a dumping duty.
b. an antidumping duty.
c. a quota.
d. a tariff.
Nina contracts with Office Suites Corporation to buy a suite in its Prospect Point Tower
at a premium for its view of Quay Harbor. Unforeseeably, the town of Quay Harbor
changes its zoning law, and Resort Hotels, Inc., constructs Seaview Resort, blocking
what would have been Ninas view. Ninas best argument for a change in the Office
Suites contract or its price is
a. frustration of purpose.
b. objective impossibility of performance.
c. anticipatory repudiation.
d. commercial impracticability.
Ingmar asks Jessie to contract with Jessies high school classmates to babysit Ingmars
new baby. Jessie orally agrees to do so. This is
a. an agency by agreement.
b. an agency by estoppel.
c. anagency by ratification.
d. not an agency relationship.
Alainand Briesign a contract for the sale of Alains Coffee Café to Brie. The parties
intend their written contract to be a final statement of most, but not all, of the terms of
their agreementAlain must first buy the building from Developed Commercial
Properties, Inc., after which Alain and Brie will negotiate a price.
Brie later disputes some of the provisions of the deal with Alain. If the dispute results in
litigation, a court will most likely admit evidence of additional terms that are
a. ambiguous.
b. consistent.
c. contradictory.
d. clear.
Fuel Connector Products, Inc., agrees to sell Go-Flo, Inc., a certain quantity of hose
couplings and fittings, but the contract does not specify a place of delivery. Go-Flo is
expected to pick up the goods. The place of delivery is
a. Fuel Connectors place of business.
b. Go-Flos place of business.
c. thecurrent location of the hose couplings and fittings.
d. the U.S. Postal Service office nearest to Go-Flos place of business.
Transcontinental Tours, a U.S. firm, and Victoria Hotels, Ltd., a Canadian firm, enter
into a contract that does not have a forum-selection or choice-of-law clause. Litigation
between Transcontinental and Victoria over a dispute involving this contract may occur
in
a. Canada only.
b. Canada or the United States, but not both.
c. Canada, the United States, or both.
d. the United States only.
Quiana, an employee of Reservations for Less, Inc., pays Svetlana, an employee of
Reservations for Less competitor Travel Cheap, Inc., for Reservations for Lesssecret
pricing schedule. This may be
a. an effective marketing strategy.
b. commercial bribery.
c. insider trading.
d. money laundering.
In making business decisions, Ridgeline Utility Service Company and other
corporations should strive to be “good citizens by evaluating
a. the legal implications of each decision.
b. the public relations impact.
c. the safety risks for consumers and employees.
d. all of the choices.
Discount Retail Corporations social media policy directs its employees to “avoid
negative public comments about your company. Elin is an employee of Discount Retail.
When Elin criticizes fellow employees online, Discount Retail fires her. Elin then files a
suit against the employer, seeking reinstatement. The court will most likely
a. awardElin reinstatement.
b. upholdDiscount Retails right to terminate Elin.
c. order the parties to submit toonline dispute resolution.
d. refer the issue to a higher court.
Sea Harvest Fish Company and Temp Refrigerated Storage Company enter into a
long-term lease for a warehouse.To be enforceable, the lease must be in writing
a. only if the amount of the rent to be paid is less than $500.
b. only if the amount of the rent to be paid is more than $500.
c. only if the amount of the rent to be paid is more than $5,000.
d. regardless of the amount of the rent to be paid.
Grain Farms, LLC, and Harvest-to-Market Truck & Transport Company sign a written
contract that does not involve a sale of goods. To be enforceable, the writing must
include
a. a correct title, such as “Shipment Contract.
b. all essential and nonessential terms.
c. a statement of the consideration.
d. a description of the parties businesses.
Handcrafts & Hobbies Store agrees to hire Iliana for one year at a salary of $600 per
week. When Handcrafts & Hobbies cancels the contract, Iliana spends $150 to obtain a
similar job that pays $450 per week for a year. Iliana is entitled to recover
a. the amount of the wages that Handcrafts & Hobbies promised only.
b. the difference between the wages at the two jobs only.
c. the difference between the wages at the two jobs plus $150.
d. $150 only.
Tech Personnel, Inc., is a corporation. Tech Personnels implied powers enable it to
a. none of the choices.
b. depart significantly from traditional corporate formalities.
c. bind the corporation to an action that will greatly affect its purpose.
d. borrow funds and lend funds.
Fine Motor Company buys gas pedals and other parts from General Mechanix, Inc., and
puts them in its vehicles without changing their composition. If the pedals or other parts
are defective, strictly liable for any damage caused by the defects are
a. Fine Motor only.
b. no one.
c. Fine Motor and General Mechanix.
d. General Mechanix only.
Isaac holds one ton of perishable fruit in storage for Juice Smoothies Corporation. Juice
Smoothies does not pay for the storage. Isaac sells the fruit to Kayo Beverage
Company. This sale represents
a. a breach of contract.
b. a mitigation of damages.
c. liquidated damages.
d. a quasi contract.
A publicly held corporation is any corporation whose shares are publicly traded in a
securities market.
If a members dissociation froma limited liability company is rightful, normally the
dissociated member has the right to force the LLC to dissolve.
Statutes of limitations in all states require a debtor to pay a debt within a specified
period of time.
Ordinarily, a waiver by a contracting party will not operate to waive subsequent,
additional, or future breaches of contract.
A sole proprietor is free to make any decision he or she wishes concerning the business.
Clothing is a “necessary.
Equipment Manufacturing Company tells First Choice Supplies, Inc., that it needs an
adhesive to do a particular job. First Choice provides a certain brand. When it does not
perform to Equipment Manufacturings specifications, Equipment Manufacturing sues
First Choice, which claims, “We didnt expressly promise anything. What should
Equipment Manufacturing argue?
The act of state doctrine provides that the judicial branch of one country will examine
the validity of public acts committed by a recognized foreign government within the
latters own territory.
In contract law, the term considerationrefers to the serious thought that underlies a
partys intent to enterinto a contract.
If a franchisee is induced to enter into a franchise contract by the franchisors fraudulent
misrepresentation, the franchisor may be liable for damages.
The most common way to discharge ones contractual duties is by breach of contract.
In most situations, when a breach of contract occurs, the innocent injured party is held
to a duty to mitigate the damages.
An agreement that includes an option to purchase real property must be in writing for
the option to be enforced.
Limits on a partners authority normally are effective only with respect to third parties
who are notified of the limitation.
No partner is deemed to be an agent of the other partners and of the partnership.