Business Law:

Unit 1 Review:

1.A law that restricts a fundamental right violates substantive due process unless it promotes a compelling or overriding state interest. TRUE

2. Owen claims that a Pennsylvania state statue infringes on his “substantive due process” rights. This claim focuses on: the content of the statute

3. A Rhode Island state statute imposes a prison term, without a trail, on all street vendors who operate in certain areas. A Court would likely hold this statute to be : unconstitutional under the due process clause

4. Leo, a resident of Missouri, owns a warehouse in Nebraska. A dispute arises over the ownership of the warehouse with Opal, a resident of Kansas. Opan files a suit aagainst Leo in Nebraska.  Regarding this suite, Nebraska ask: in rem jurisdiction

5. Carol files a suit against Delta Corporation.  Delta responds that it appears from the pleading the parties do not dispute the facts and the only question is how the law applies to those fact. Delta support this response with witnesses; sworn statements: a motion of summary judgement


Unit 2 Review:

1. In tort law, an actor who knows the substantial certainty that certain consequences will result from an act has intent. TRUE

2. False imprisonment is a tort only if confinement is unjustified. TRUE

3. Mary is accused of slander. Slander includes: oral defamatory statements only

4. Leo hears Mona falsely accuse Nick of stealing from their employer. The statement is defamatory: because Leo heard it.

5. Todd files a suit against United Media Corporation for defamation. Actual malice must be shown for recovery of damages if Todd is: a  public figure

6.  Sam, an engineer, supervises the construction of a new bridge. When the bridge collapses due to faculty construction, Sam is sued by those injured in the collapse. As a professional, Sam is held to the same standard of care of: other engineers.

7. Beth is injured in a car accident and sues Curt, alleging negligence. Curt claims that Beth was driving more carelessly than he was. Comparative negligence my reduce Beth’s recovery: even if Beth was only slightly at fault.

8. Sue writes a defamatory article about Tony. The article is disseminated through the print media, via newspapers, and online, via an Internet service provider (ISP). Most likely to be held liable for the article are Sue and: the newspaper only.

9. Good Tire Company designs and manufacturers car and truck tires. In a product liability suit based on negligence, Good Tire could be liable for violating its duty of care with respect to : the design or the manufacture of the tires.

10. Silicon Computers manufactures hard drivers. Dave discovers that his Silicon drive is defective. Dave sues Silicon for product liability based on misrepresentation.To win, Dave must show that: Dave suffered an injury caused by the defect.


Unit 3 Review:

1. A contract is formed when two parties promise to perform an act in the future: TRUE

2. An advertisement is generally an invitation to negotiate: TRUE

3. Jill make s promise to Ken. Ken is: a promisee

4. Jill promises to pay Kyle $500 because “he does not have as much money as other people.” Jill promise is: not enforceable because Kyle has not given consideration in return.

5. Doug, a minor, signs a contract to buy a truck from Eagle Autos by misrepresenting his age to be twenty-one. When Doug fails to make the payments, Eagle sues, and Doug tries to dis-affirm the contract. Doug: can return the truck and avoid any further liability.

6. Dina, en employee of Eagle Industries, is injured in a work-related accident. Based on the diagnosis of Frank, a doctor accepts $50,000 from Eagle and waives the right to future claims. Frank’s diagnosis later proves to have been wrong. According to the reasoning of the court in case 10.1, Roberts v. Century Contractors, Inc. Frank’s misdiagnosis is, in terms of its impart on Dina’s agreement with Eagle:  a mutual mistake of fact.

7. Sam contract to harvest Tina’s crop on August 1. Due to bad weather, Sam cannot perform on the specified date. In this situation: the contract is suspended.

8. On April 1, KO Contractors, Inc. Contracts to build a store for Lo-Cost Jewelry a specific location in Metro City.  On May 1, Metro changes its zoning laws to prohibit the construction of a commercial building at the location. Lo-Cost files a suit aagainst KO. In this situation: the contract is discharged.

9.Carol pays Dick $10,000 for Dick to design an advertising campaign for Carol’s health club. The next day, Dick tells carol that he has accepted a job in New York an cannot design the campaign. Carol files a suit against dick. Carol can recover: $10,000.

10. Dan hires Eve to perform at Dan’s Club, but Eve later breaches the agreement to accept a higher-paying job at First Star Arena. Dan files a suit gainst Eve. The court will most likley: award damages to Dan.


Unit 4 Review:

 1. Under the UCC, a sale occurs when title passes from a seller to a buyer for a price. TRUE

2. Patents and copyrights are “property” that does not come under Article 2. TRUE

3. NuTech Company agrees to sell computer equipment to Office Stores, inc (OSI) for OSI to make to its customers. Their construct will be unenforceable if it does not include: the quantity of the goods.

4. United Farms offers to sell Value Bakeries, Inc., fifty bushels of wheat.  values’ representative Wendy responds, “We agree to buy fifty bushels only if the wheat is Grade A quality. “Wendy’s statement is: a counteroffer.

5. Kelly offers to buy 1,000 gallons of oil from Jim for fifty cents per gallon. Jim believes Kelly offers $1 per gallon and orally agrees to the sale and promptly ships the oil. When the parties later dispute the price in court. Jim’s claim of $1 and Kelly’s testimony that she offered fifty cents: support an enforceable contract for a price of fifty cents per gallon.

6. Fresh Produce, Inc., and Great Grocery Stores dispute the interpretation of an ambiguous phrase int heir contract. In a suit between the parties to construe the contract, a court may accept evidence lf: consistent additional terms only.

7. Sweet Produce Company contracts with Tasty Restaurant to ship six hundred heads of lettuce in three equal installments. When the first installment arrives, ten head of lettuce are rotten. Tasty may: reject the first installment only.

8. Gamma Company contracts to provide several manufacturers with tin. A cartel of tin-producing countries embargoes future shipments of tin to Gamma so that it cannot fulfill its contracts. Gamma: is excused from the performance of its contracts.

9. On May 1, A-Plus Auto Sales agrees to sell a car to Bob. Five days later, Bob cancels the contract. A-Plus is entitle to: resell  the car and recover any resulting damages from Bob.

10. Acme, Inc. buys scarp metal from Beta Resources, Inc. to process and sell. Their contract provides for an annual review of the price. When the processed scrap’s market value decreases, the parties continue to ship and process the scrap  and process the scrap while the review the price. During the negotiations, Acme does not pay Beta. Unable to agree on a price, Beta ends the deal, retrieves the scrap that was shipped and processed but not paid for, and sells it. According to the court’s ruling in Case 16.3, Utica Alloys, Inc. V Alcoa INc. beta is entitle to the proceeds from this sale and: the difference between the contract price and the market price for unprocessed scrap.


Unit 5 Review:

1. State agency regulations take precendence over conflicting federal agency regulations: FALSE

2. Generally, a state court can exercise jurisdiction over anyone within the boundaries of the state: TRUE

3. Cyberspace is its own juridiction: FALSE

4.  Doing substantial  business in a jursidiction exclusively over the Internet is not enough to support jurisdiction over an out-of-state defendant.FALSE

5. An arbitrator can never render a legally binding decision. FLASE

6. A battery occurs only if the citim suffers physical harm: FALSE

7. Defamation is one person’s use of another’s name without permission: FALSE

8. For purposes of establishing negligence, causation in fact exist if an injury  would have occured even without the defendant’s act. : FALSE

9. Strict liability is liability without fault: TRUE

10. An offeree is a person who make san offer: FALSE

11. Offers may not be revoked before they are accepted: FALSE

12. An oral contract is an implied-in-fact contract:FALSE

13. An otherwise valide conract may be unenforceable if it is not in writing.TRUE

14. An offer does not need to be communicated to the offeree to be effective: FALSE.

15. A person who does not know about a reward cannot claim it: TRUE

16. A minor may dissafirm a contract entered into with an adult: TRUE

17. Clothing is not something that the courts have been willing to define as “necessary.”: FALSE

18. A minor’s failure to peform an executory contract within a reasonable time afer reaching the age of majorityimplies dissafirmance. TRUE

19. A convenat not to compete is never enforceable. FALSE

20. No contract for a sale of goods needs to be in writing to be enforceable.: FALSE

21. When one party substantially performs his or her duties under the contract, the other party is required to fully perfom: FALSE

22. Under the UCC< a sale occurs when title passes from a seller to a buyer for a price.TRUE

23. The UCC imposes some different rules of conduct on merchants and consumers: TRUE

24. Under a shipment contract involving perishable goods, the seller is responsible for making sure that the good are shipped properly. TRUE

25.  Until a buyer actually inspects goods, no acceptance will be presumed. FALSE

26. In a suit against Adam, beth obtains a remedy, which is the means given to a party: to recover a right to redress a wrong.

27. In a suit against Charles, Diana obtains the cancellation of a contract, which is: recission.

28. Harry disseminates obscene materials. This is: a crime

29. The Ohio state legistlature passes a law to regulate local delivery services. The final authroity regardint eh constitutionality of the law: are the courts.

30. Don files a suit against Eagle Sales, Inc., in a Florida state court based on a Web site through which Florida residents can do business with Eagle. The court will likely excerise juridiction over Eagle if the interactivity of the site is seen as: a “substantial enough” connection with the state.

31. Linda files a suit against Kate. Kate denies Linda’s charges and sets forth her own claim that LInda breached their contract and owes Kate money for the breach. This is : a counterclaim.

32.  In business negotiations, Christ, the chief executive officer of Design Associates, Inc., follows “The Goldern Rule,” which: mandates compassionate treatment of others in all situations.

33. Mary is accused of slander. Slander includes: oral defamatory statements only

34.  Leo hears Mona falsely accuse Nick of stealing from their employer. The statement is defamatory: because Leo heard it.

35. Sam, an egineer, supervises the construciton of a new bridge.  When the bridge collapses due to faulty construction, Sam is sued by those injured in the collapse. As a professional , Sam is held to the same standard of care of: other egineers.

36. Britney promises to deliver a certain couch to Dan, who promises to pay for the services. Briney does not perfrom. she may be required to: pay damages.

37. Laura and Mike enter into what Laura later claims is a constract. In deciding whether a valid contract was formed, a court will not look at: the parties’ subjective beliefs at the time of the alleged contract.

38. Ann promises to buy a house from ben, who promises to vacate the property on July 1. If hese promises are in writing, they are most likley: enforeacable.

39. State Trucking Company mails to Transport delivery, Inc. and offer to sell a delivery truck and to hold the offer open for five days. The five-day period begins to run when the offer is: received.

40. Tasty Pastties, Inc. and other bakers refer to a “baker’s dozen” as consisting of a collection of thirteen baked goods. This is an example of: usage of trade.

41. Sweet Produce Company contract with Tasty Restaurant to ship six hundred heads of lettuce in three equal installments. When the first installment arrives, then heads of lettuce are rotten. Tasty may: reject the first installment only.

42. Pretty Jewels Company contracts to buy diamonds from Quality Gems, Inc. but wrongfully refuses to accept the goods.  Quality can recover damages equal to difference between the contract price and the market price at the time: and place of tender.

43.  Alpha Commodities, INc. agrees to deliver ten tons of sheet metal to Bta builders Corporation. The agreement states that delivery is to be within “3” days, although the parties intend “30” days. Alpha cannot convince beta to amend the contract. Alpha should seek: reformation.

44. Ann, the owner of Ann’s Bicycle Store, sells a preowned motorcycle to Cody. Ann is a merchant for purposes of the UCC is she: holds herself out by occupation as having knowledge and skill unique to motorcycles.

45. All-Rite clothiers, Inc., sells t-shirts to brand Name Stores, Inc., under an existing contract. When textile cost increase, brand agrees to a price increase, but later wants to cancel the contract. Brand may: not cancel the contract.

46. Owen buys a motorcycle while still a minor and continues wo maintain and operate it after reaching the age of majoirty. Most courts would hold that he had: ratified the contract.

47. Jay is mentally incompetent but has not been so adjudged by a court. Any contract Jay enters into is voidable: if he either does not know it is a contract or does not comprehend the consequences.

48. Alan owns two motorcycles, worth $1,000 and $500, respectively. Alan and Britney enter into a contract for the sale of “Alan’s motorcycle” for $750. Alan believes, in good faith, that he is selling the $500 motorcycle.  Britney believes, also in good faith, that she is buying the $1000 motorcycle. Due to their mistake: there is not contract.

49. Under the objective theory of contracts, the intention to enter into a contract is judged by outward, objective facts as interpreted by a reasonable person: TRUE

50. Three elements-agreement, consideration, and contractual capacity–are sufficient to form a binding contract: FALSE.


Unit 6 Review:

1.To create an enforceable security interest, the secured party must give vlaue: TRUE

2. A financing statement is effective only if it is filed electronically: FALSE

3. An employee can discharge an employee due to garnishment:FALSE

4. If the assets in a debtor’s estate in bankruptcy are insufficient to pay fully all creditor’s, none of the creditors re paid:FALSE

5.Qwik Credit Corporation lends $20,o00 to Ross. A financing statement is filed on May1,but the security agreement is not signed until Ross gets money on May 4. Ross  also borrows money from State Bank, which advance funds, files a financing statements, and signs a security agreement on May 2. Ross used the same property as collateral for both loans. In a dispute between the lenders over  rights to the collateral Qwick Credit will: lose, because State Bank perfected first.

6. Green Landscape Company buys a backhoe on credit from Heavy Equipment Corporation, but does make a payment  on the loan for several months. Heavy repossesses the backhoe by towing it from a public street, Green sues Heavy for breach of the peace. Green will probably: not prevail, because the repossession was not a breach of the peace.

7. Easy Credity, Inc., repossesses a  television  set(a consumer good that is not a purchase money security interest) from Fiona, intending to install it is Easy’s office instead of reselling it. Easy notifies Fiona of this intent. Easy must notify: secured parties who have notified Easy of claims to the set and those whose claims are in the public records.

8.Owen borrows money from Pat. Owen defaults. To use attachment as remedy, Pat must first: file a suit against Owen.

9. Brenda files a Chapter  petition for bankruptcy. She must include with the petition: a list of her creditors and the amount of the debt owed to each, a list of her property, and a statement of her financial affairs.

10. Phil’s voluntary petition for bankruptcy is found to be proper. The order for relief is effective as soon as : Phil files the petition.


Chapter 7 Review:

1. Employees who deal with third parties are agents of their employers. TRUE

2. A principal can ratify an agreement made without authorization on his or her behalf by one who is not his or her agent: TRUE

3. Lynn may hire  employees to work in the computer store she manges despite the fact that her employment agreement with the owner says nothing about her being able to hire employees. This is: implied authority.

4. Carol hires Dick to act as her agent in the purchase of an office building.  carol does not want the seller to kow that she is the buyer, so she asks Dick to represent that he is buying the building for himself. Carol is: an undisclosed principal.

5. Molly drives a truck as an employee for National Delivery, Inc. Moll would probably be considered acting outside the scope of her employment if she: crashed into a car at the airport while off duty.

6. Girl is purchasing agent for H&H Ranch  with the authority to buy cattle at a certain auction. After the cattle have been bought, the agency relationship terminates: automatically.

7. Pat files an employment discrimination suit aagainst Quantity Properties, Inc. (QPI), under Title VII of the Civil Rights Acts of 1964, based on QPI’s discharge of Past, In these circumstances, relief under Title VII may include: damages or job reinstatement.

8. Gina has cerebral palsy, Hal is kleptomania, and both work for Investment Insurance Company. Considered disabled under the Americans Disabilities Act of 1990: is Gina only

9. Ace manufacturing Company requires its worker to have a high school diploma . In a suit aaagainst Ace under Title VII of the Civil Rights Act of 1964, this requirements won to have a discriminatory effect. Ace defends aagainst the suit on the ground that there is a definite connection between a high school education and job performance: a business necessity defense.

10. Eagle Equipment Corporation discharges Jay, who then sues Eagle for employment discrimination under Title VII of the Civil Rights Acts of 1964. Eagle learns that jay lied on his job application and argues that, had Eagle known of the lie, it would have fired him. This is: no defense.


unit 8 Review:

1. The income of a sole proprietor taxed as his personal income: TRUE

2. In a limited liability company, members are barred from participating in its management. FALSE

3. Any power set out in a corporation’s bylaws is ultra vires. FALSE

4. Bob, the owner of Best Bookkeeping, a sole proprietorship, wishes to increase his business capital while maintaining control. This can best be accomplished by: borrowing funds.

5. Ham is admitted to Investment Associates, an existing partnership. A partnership debt incurred before the date of his admission comes due. Ham is only : liable for the debt up to the amount of his capital contribution.

6. Alice, Bob, and Carol want to form a limited partnership to manage two restaurants; Alice’s Restaurant and Bob’s Deli. In most states, a limited partnership is created when: a certificate of limited partnership is filed.

7. The shares of Capital Corporation are publicly traded in securities markets. capital Corporations is: a publicly held corporation.

8. Owrld Tech Corporation is in the process of ending its existence. The legal death of the artificial “person” of the corporation is know as: dissolution

9. Even is as director of Fine Stuff Corporation. Without information Fine, Eve goes into business with Great Thins, Inc. in competition with Fine. Eve is liable for breach of: the duty of loyalty.

10. Ames Enterprise, a close corporation, may limit the sale of its shares to outsiders: by reasonable restrictions on the shares transferability.


Unit  9 Review:

1. Person who share property ownership rights simultaneously are concurrent owners: TRUE

2.Property acquired by gift during a marriage is community property: FALSE

3. A promise to deliver a gift constitutes constructive delivery: FALSE

4. Inadvertently, Britney leave her briefcase at Clean’n Dry Launderers when she stops to pick up her clothes, The briefcase is: milaid property.

Collateral is not the subject of a security interest.: FALSE

For a creditor to have an enforceable security interest, the debtor must have rights in the collateral. TRUE


A security agreement’s description of collateral as “all the debtor’s assets” is sufficiently identifies the property.: FALSE


A purchase-money security interest in consumer goods is perfected automatically at the time of a credit sale.:TRUE


An employer can discharge an employee due to garnishment. :FALSE


An agent can take advantage of an agency relationship to make a “secret” profit.: FALSE


If a principal does not ratify an otherwise unauthorized contract, the principal is not bound: TRUE


If an agent acts within the scope of authority, a partially disclosed principal is liable to a third party for contracts made by the agent.: TRUE


If an agent acts within the scope of authority, an undisclosed principal is liable to a third party for contracts made by the agent.: TRUE


Right-to-work laws make it illegal for employers to discriminate in their hiring practices on the basis of race, color, sex, national origin, religion, or age.: FALSE


There are criminal penalties for violations of employee health and safety regulations.: TRUE


Employers are required to establish retirement plans for their employees.: FALSE


Many of the same remedies available under Title VII of the Civil Rights Act of 1964 are available under the Americans with Disabilities Act of 1990.: TRUE


Unless the partnership agreement states otherwise, general partners share profits in the same ratio as capital contributions.: FALSE


In a limited liability company, members do not have to participate in its management.: TRUE


The approval of shareholders is required to authorize amendments to articles of incorporation.: TRUE


A person must be a shareholder of a corporation to serve as a director.: FALSE


A board of directors generally conducts business without holding formal meetings.: FALSE


Corporate directors and officers are insurers of business success.: FALSE


Tangible personal property has physical substance.: TRUE


Co-ownership in which each of two or more persons owns an undivided fractional interest in property is a tenancy in common.: TRUE


Delivery of intangible personal property must be done by symbolic delivery.: TRUE


One who finds lost property acquires title to it, good against the whole world, including the original owner.: FALSE


Property that is voluntarily placed somewhere by its owner with no intention off reclaiming it is abandoned property.: FALSE


In a bailment, title to the property is transferred to the bailee.: FALSE


Dependable Credit Corporation asks Eagle Supply Company to agree to a security agreement that provides for coverage of the proceeds from the sale of after-acquired property. This is: FLOATING LIEN



Amy signs a lease on behalf of Business Start-up, Inc. (BSI), with Cool Properties, Inc. As part of the lease, Amy signs a document titled “GUARANTY,” which states that it is “an absolute guaranty” of the lease’s performance. If BSI stops paying the rent, under the decision of the court in Case 21.1, JSV, Inc. v. Hene Meat Co., it is most likely that liability for the unpaid rent will be assessed against: AMY and BSI


A petition for a discharge in bankruptcy under Chapter 11 may be filed by: Gina, Interstate Carrier, and Jiffy Railroad


Owen drops out of school before he completes his college education and starts his own business. Five years later, Owen files for bankruptcy under Chapter 13. Owen will obtain a discharge of all debts provided for by the Chapter 13 plan if the value of the property distributed under the plan is greater than what would have been available in a liquidation and: if he fails to make all payments due to events beyond his control


National Computer Corporation (NCC) employs Cynthia as an agent. NCC gives her an exclusive territory in which to sell NCC products. NCC cannot compete with her in that territory under the duty of: cooperation.


Without authorization, Kim contracts on behalf of Lee to have Mona paint the interior and exterior of Lee’s house. Lee wishes to paint only the interior. Lee’s attempt to rescind that part of the contract relating to the exterior and ratify that part of the contract relating to the interior will be: totally unsuccessful


Consolidated Computers, Inc., lays off fifty of its five hundred workers, including Don. Consolidated can eliminate Don’s medical insurance coverage: if Consolidated completely eliminates its group benefit plan


Ken, who is Hispanic, applies for a job at Local Plant, Inc. The interviewer says that Local Plant does not hire Hispanics. This is: impermissible discrimination on the basis of race.


Gina has cerebral palsy, Hal is kleptomania, and both work for Investment Insurance Company. Considered disabled under the Americans with Disabilities Act of 1990: is Gina only.


Eagle Equipment Corporation discharges Jay, who then sues Eagle for employment discrimination under Title VII of the Civil Rights Act of 1964. Eagle learns that Jay lied on his job application and argues that, had Eagle known of the lie, it would have fired him. This is: no defense.


Alan and Beth agree while talking on the phone to form a partnership to run a carpentry shop. Their partnership agreement is legally binding: without more.


Holly holds herself out as the managing partner of Interstate Investments, a partnership, even though she has no connection to the firm, and obtains a loan based on this misrepresentation. Holly’s default on the loan results in:Holly’s sole liability for the amount.


Paul is Quik Corporation’s promoter. Before Quik’s formation, Paul contacts Ross, who agrees to buy stock in Quik. This agreement is: a subscription agreement


Stan is a registered agent for Transport, Inc., which incorporated in Utah. As a registered agent, Stan: receives legal documents on behalf of Transport.


Quik Company claims to be a corporation but it is not. Pam signs a contract with Quik that is not performed. In Pam’s suit against Quik, a court will likely recognize the firm as: a corporation by estoppel


Cody and Dina form Eagle Corporation. Eagle has a board of directors, a chief executive officer, a chief operating officer, and fifty-two shareholders. Eagle is governed by its: board of directors


Ann and Bill form Consumer Sales, Inc. Ultimate responsibility for policy decisions necessary to the management of corporate affairs rests with Consumer’s: board of directors


Carol is a director of Diners Restaurants, Inc. Carol would breach her duty of loyalty if she: buys stock in Great Foods Corporation, a competing firm.


April owns six 1967 Ford Mustangs in fee simple. April can: use, transfer, or dispose of the cars, as she chooses.


Gary owns Handy Hardware Store. He sells the store to Irma and Jake, who write on the documents of transfer that they own the store as “joint tenants with right of survivorship, and not as tenants in common.” Irma and Jake: are co-owners of the store as joint tenants.


Gail and Hal are married and own a van in such a way that neither may transfer separately his or her interest during his or her lifetime. Gail and Hal own the van as: tenants by the entirety


Ira is declared mentally incompetent. Jay, Ira’s son, is named his guardian. At Jay’s insistence, Ira transfers his assets to Jay “for safekeeping.” A court might conclude that this gift is not effective on the ground that there was no: donative intent


Lee wants to give a pearl necklace to his sister May. Lee delivers the necklace to Nora and tells her to give it to May. Nora delivers the necklace to May the next day. In these circumstances, the gift is: effective when Nora delivers the necklace to May.


Idaho Farms mistakenly puts its potatoes in Jolly Harvest’s storage bin, which already contains Jolly Harvest’s potatoes. It is impossible to tell which potatoes originally belonged to either party. This is: confusion


Bob rents a golf cart at Country Club Golf Course. The brakes are worn, and while Bob is driving the cart, they fail. The cart crashes into a tree, and Bob is injured. Country Club could have discovered, with reasonable diligence, that the brakes were worn. Liability for Bob’s injuries most likely rests with: Country Club only.