1) A party seeking to recover in quasi contract must show that he or she acted as a
volunteer in conferring a benefit on another party.
2) An accountant is not required to discover every impropriety, defalcation, and fraud in
a client’s books.
3) When more than one party claims an interest in the same collateral, a perfected
secured party’s interest has priority over the interest of most other parties.
4) Most securities can be resold without registration.
5) Hearsay evidence is what someone heard someone else say.
6) A corporation has perpetual existence unless the articles of incorporation state
otherwise.
7) The study of business ethics is concerned with the purposes of a business and how
that business achieves those purposes.
8) The words used in an insurance contract are given their ordinary meanings in light of
the nature of the coverage involved.
9) In the absence of express constitutional, statutory, or other provisions, the
corporation has no implied powers.
10) The officers and other employees of each corporation involved must approve a
merger or share exchange plan
11) Merchants are held to a higher standard of performance or duty than are
nonmerchants.
12) Perfection is usually accomplished without filing a financing statement.
13) International contracts rarely include arbitration clauses.
14) The U.S. Constitution is the basis of all law in the United States.
15) On an automated teller machine (ATM) belonging to USA Bank, Sven placed a
card-skimming device to pull information from the magnetic strips of users’ debit cards.
The device then transmitted the stolen data to thieves who used it to gain access to, and
empty, the bank accounts of the users, including Megan. Megan learned of the theft the
next day and promptly notified USA. Is Megan entitled to a recredit of her account for
the most of the loss due to the theft? Explain.
16) Custom Auto Body & Detailing, LLC, is a limited liability company. Unless indi-
cated otherwise on the Custom Auto’s federal tax form, the firm will be taxed as
a.a cooperative.
b.a corporation.
c.a joint venture.
d.a partnership.
17) To complain about Discount Retail Corporation’s products, Edsel opens a Web site
with the domain name “discountretailcorporationsucks.com.” Discount Retail files a
suit against Edsel. If the court rules in the defendant’s favor, it will most likely be on the
basis of
a.a likelihood of confusion.
b.a right to privacy.
c.the freedom of speech.
d.trademark law.
18) ClearCall Corporation makes phones, which are sold to consumers by DefDeals
stores. Erna files a product liability suit against ClearCall, alleging a design defect. In
deciding whether to hold ClearCall liable, the court may consider
a.Erna’s intended use for the phone.
b.DefDeals’ method of accounting.
c.ClearCall’s quality control efforts.
d.an available alternative design.
19) Gary dies without a will. His survivors include his spouse Helen and his two
children, Irene and John. Under applicable laws, of Gary’s estate, Helen will probably
receive
a.everything.
b.nothing.
c.one-half.
d.one-third.
20) Fact Pattern 32-1B
Margo works as an administrator and receptionist in Neon’s Garage Door Store. Neon
withholds federal taxes from Margo’s pay, and controls the methods and details of the
performance of her work. Margo is not authorized to modify the prices or other terms of
a sale at the store. Omar installs Neon’s Garage Door products at the buyers’ locations.
Refer to Fact Pattern 32-1B. At the shop, Margo is
a.an independent contractor.
b.Neon’s employee only.
c.Neon’s employee and agent.
d.Neon’s principal.
21) Digital Devices is a retail seller of entertainment media. Digital Devices sells a 3D
HD TV set to Edmund. Edmund cannot pay cash, so he signs a security agreement,
paying a certain amount down and agreeing to pay the balance in twelve equal
installments. The security agreement gives Digital Devices a security interest in the set.
Edmund makes six payments on time then goes into default because of unexpected
financial problems. Digital Devices repossesses the set. Can the creditor keep it in full
satisfaction of the debt? Explain.
22) With respect to Italo’s bottomland, Jacob has an easement, Kristin has a profit, and
Leopold has a license. A right to possess the bottomland is owned by
a.Italo.
b.Jacob.
c.Kristin.
d.Leopold.
23) Refer to Fact Pattern 42-1B. Under the Securities Exchange Act of 1934, Geoff is
most likely
a.liable for insider trading.
b.not liable because Geoff is only a tippee, not a tipper.
c.not liable because Geoff is too far down the chain of disclosure.
d.not liable because Geoff traded on the basis of a material fact.
24) A franchise agreement between Grid Tools Company and Hometown Hardware,
Inc., is silent on a time for termination of the franchise. Grid Tools may
a.never terminate.
b.terminate at any time.
c.terminate on reasonable notice.
d.terminate on three days notice.
25) Fact Pattern 25-1B
Thalia signs an instrument unconditionally promising to pay to “Union Bank” $7500
with interest in installments with the final payment due June 1, 2017 .
Refer to Fact Pattern 25-1B. With respect to this instrument, Union Bank is
a.the drawee.
b.the indorser.
c.the maker.
d.the payee.
26) Roadbuilders, Inc., uses dynamite in its operations. Sky-Hi Fireworx, Inc., stores
explosives in its warehouses. Most likely liable under the doctrine of strict liability for
any injury caused by an abnormally dangerous activity will be
a.none of the choices.
b.Roadbuilders and Sky-Hi.
c.Roadbuilders only.
d.Sky-Hi only.
27) 6.To bid on a job, RoadCrew Construction Company relies on the oral promise of
Surface Paving, Inc., to perform certain work at a certain price. Smooth Paving fails to
perform. RoadCrew Construction can
a.not recover due to the principle of freedom of contract.
b.not recover due to the Statute of Frauds.
c.recover under the concept of unconscionability.
d.recover under the doctrine of promissory estoppel.
28) Hamid makes a will leaving a specific sum of money to each surviving relative. The
assets of Hamid’s estate are not enough to make all of the gifts in full. This situation
requires
a.an abatement.
b.a constructive trust.
c.a residuary.
d.a revocation.
29) 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.
30) Bette backs out of City Parking Garage, colliding with Dill’s car and thereby
causing damage to the vehicle. Dill may recover the cost of repair if Bette failed to act
as
a.a blameless person.
ba faultless person.
c.a professional person.
d.a reasonable person.
31) Muni Investment Company signs a check payable to Enterprise Lenders, Inc., to
buy a promissory note executed by Fallow Corporation. This check
a.does not constitute sufficient consideration for HDC status.
b.does not satisfy the value requirement for HDC status.
c.satisfies the consideration requirement for HDC status.
d.satisfies the value requirement for HDC status.
32) Effortless Workouts, Inc., offers to sell a treadmill to Farouk and sends it to him on
a trial basis. This is
a.a bailment.
b.a delivery ex-ship.
c.a sale on approval.
d.a sale or return.
33) 3.
Fact Pattern 15-B2
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
Bottomland is still willing to sell the land, but under these circumstances the deal would
adversely affect Organic Farms.
Refer to Fact Pattern 15-B2. Because of the parties’ belief about the adjacency of the
property, their contract is
a.unavoidable.
b.unconscionable.
c.unenforceable.
d.voidable.
34) Elsa participates in an investigation into possible violations of the Civil Rights Act
of 1964 at Fabrication Foundry, Inc., where she works. As a result, Elsa’s employer
demotes her. Elsa can file a
a.harassment complaint.
b.retaliation claim.
c.constructive discharge claim.
d.disparate-impact discrimination claim.
35) On dissolution, the creditors of the partnership, but not the creditors of the
individual partners, can make claims on the partnership’s assets.
36) A court of appeals does not hear any evidence.
37) If a contract condition is not satisfied, the obligations of the parties are suspended.
38) Because corporations are not considered legal persons, courts use different
principles to determine whether it is fair to exercise jurisdiction over a corporation.
39) An assignee has a right to demand performance from the obligor.