Contract Law
Chapter Exam Questions
Course Introduction
Contract Law is a foundational course that explores the principles and rules governing the creation, interpretation, and enforcement of legally binding agreements. Students will examine essential elements such as offer, acceptance, consideration, capacity, and legality, as well as common defenses to contract formation and performance. The course also covers remedies for breach of contract and introduces the framework for analyzing both written and oral agreements, drawing on case law and statutory provisions. Through lectures, discussions, and case studies, students will develop a thorough understanding of how contracts operate in both commercial and personal contexts.
Recommended Textbook
Essentials of Business Law 4th Edition by
Jeffrey F. Beatty
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Page 2
Chapter 1: Introduction to Law
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Q1) Congress passed a law imposing penalties for displaying "indecent" material online where children could see it.If the U.S.Supreme Court subsequently rules that the statute conflicts with the First Amendment of the U.S.Constitution,the statute is void.
A)True
B)False
Answer: True
Q2) If Jack sues Leslie for negligently hitting his car while parking hers in a public parking ramp,it is a matter of public law.
A)True
B)False
Answer: False
Q3) The doctrine that requires a judge to decide a case based on previous rulings has its roots in:
A)the English common law.
B)English equitable remedies.
C)the US Constitution.
D)the civil law tradition.
Answer: A
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Chapter 2: Business Ethics and Social Responsibility
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Q1) Why should ethics be a concern to business?
A)Society as a whole benefits from ethical behavior.
B)People feel better when they behave ethically.
C)Unethical behavior can be very costly.
D)All of the above.
Answer: D
Q2) Compassion and integrity are generally not considered universal.
A)True
B)False
Answer: False
Q3) Which of the following values are considered almost universal?
A)Courage.
B)Compassion.
C)Integrity.
D)All of the above.
Answer: D
Q4) Unethical behavior can be costly.
A)True
B)False
Answer: True
Page 4
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Chapter 3: Dispute Resolution
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Q1) Which of the following is not an example of a trial court of limited jurisdiction?
A)A probate court.
B)A juvenile court.
C)A small claims court.
D)A general civil division court.
Answer: D
Q2) Briefly describe the process of jury selection.
Answer: the process of jury selection is called voir dire.the court's goal is to select an impartial jury.through a series of questions,attorneys for each side attempt to get the most favorable jury for their position.As potential jurors are questioned,either side may exclude a juror for cause (some reason to think the person may not be impartial)or via a limited number peremptory challenges,in which no reason must be stated for excluding a juror.
Q3) Discovery is a critical stage of both litigation and arbitration.
A)True
B)False
Answer: False
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Chapter 4: Common Law, statutory Law, and Administrative Law
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Q1) Discuss the role of money in the legislative process and the Congressional and Supreme Court controls on campaign spending since the 1970s.
Q2) The power of federal agencies is limited by:
A)statutory control in the enabling legislation and the Administrative Procedures Act.
B)political control by Congress and the President.
C)judicial review.
D)All of the above.
Q3) Which law regulates how federal agencies make rules,conduct investigations,hold meetings and hearings,obtain information,and reach decisions?
A)The 1964 Civil Rights Act.
B)The Clean Agency Act.
C)The Administrative Procedure Act.
D)The Freedom of Information Act.
Q4) If the President vetoes a bill and if both the House and Senate repass the bill by a two-thirds margin,the bill becomes law.
A)True
B)False
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Chapter 5: Constitutional Law
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Q1) The primary source of federal power to regulate business is the:
A)Supremacy Clause.
B)Commerce Clause.
C)Fifth Amendment
D)Privilege and Immunities Clause.
Q2) Identify the basic job of a President of the United States,the source of executive power,and three key powers associated with the position of President.
Q3) If there is a conflict between federal and state statutes,the federal law controls the issue.This is the application of:
A)the Due Process Clause.
B)the doctrine of preemption.
C)the doctrine of federalism.
D)the doctrine of federal superiority.
Q4) Obscene speech is protected by the First Amendment.
A)True
B)False
Q5) Discuss the Miller test to determine if a creative work is obscene.
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Chapter 6: Torts
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Q1) Opinion is generally a valid defense in a defamation lawsuit because it cannot be proven to be true or false.
A)True
B)False
Q2) Erika's arm is broken when Alice knocks her down during an argument.If Erika sues Alice for battery,what damages will Erika be likely to receive?
Q3) Res ipsa loquitur shifts the burden of proof from the defendant to the plaintiff to prove factual cause and foreseeable type of harm in order to establish negligence.
A)True
B)False
Q4) In a negligence case,the plaintiff must establish:
A)duty, strict liability, causation, and injury.
B)mens rea, breach, foreseeable harm, and injury.
C)duty, actus reus, foreseeable harm, and causation.
D)duty of due care, breach, causation, foreseeable harm, and injury.
Q5) Written defamation is called "libel."
A)True
B)False
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Chapter 7: Crime
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Q1) Elisa was suspicious of her neighbor,whom she thought was involved in selling illegal drugs.One day she arrived at her apartment and saw a large paper sack tied up with string in front of her neighbor's door.She took the bundle into her apartment,opened it,and discovered it was full of cocaine.She called the police and the neighbor was arrested.Could the neighbor claim that the evidence was illegally obtained under the Fourth Amendment?
Q2) Jeff picks up a piece of metal pipe and swings it at Gary,hitting him across the back of the head.In a case for criminal assault,the prosecution must prove what mens rea?
A)Specific intent.
B)Jeff voluntarily hit Gary.
C)Jeff intended to hit Gary.
D)Jeff intended to cause serious injury to Gary.
Q3) Which of the following statements about the exclusionary rule is correct::
A)Illegally obtained evidence is not permitted to be used at a criminal trial.
B)It is based on the Fourth Amendment.
C)Good faith is an exception to the rule.
D)All of the above.
Q4) Compare and contrast money laundering and embezzlement.Give an example of each.
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Chapter 8: International Law
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Q1) Explain what the General Agreement on Tariffs and Trade (GATT)is and give pro and con arguments concerning this agreement.
Q2) The Presidents of Oxtron,Inc.,a U.S.company,and Korgen,AG,a Swiss company,met in Beijing,China,during an international trade show.Oxtron and Korgen are direct competitors in over-the-counter medicines.The presidents agree to fix prices on their major products.This agreement does not violate U.S.antitrust law since the agreement was made in China.
A)True
B)False
Q3) International comity holds that the courts of one nation lack the jurisdiction to hear suits against foreign governments.
A)True
B)False
Q4) Identify the term for and discuss the legality of a government's taking of property owned by foreign investors.Discuss what action a company might take if it wants to do business abroad but is concerned about losing its property to a foreign government.
Q5) Explain the origin and purpose of the World Trade Organization.
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Page 10
Chapter 9: Introduction to Contracts
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Q1) Contracts for the sale of patents,automobiles,cleaning services and paper clips would all be governed by Article 2 of the Uniform Commercial Code.
A)True
B)False
Q2) The basic distinction between a bilateral contract and a unilateral contract is that:
A)only one promise is involved in a bilateral contract.
B)only one promise is involved in a unilateral contract.
C)the Statute of Frauds applies to one and not the other.
D)one is enforceable, the other is not.
Q3) Which of the following statements about quasi-contracts is true?
A)The plaintiff gave some benefit to the defendant.
B)The plaintiff reasonably expected to be paid for the benefit and the defendant knew this.
C)The defendant would be unjustly enriched if he did not pay.
D)All of the above.
Q4) Explain what the Restatement of Contracts is and describe the role it plays in contract law.
Q5) List and briefly describe the basic elements of a contract.
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Chapter 10: Agreement
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Q1) Jerry knows that Lucy has coveted his classic car for quite some time.Finally willing to sell it,he sends a letter to Lucy offering to sell the car for $15,000.Lucy responds by saying she needs time to arrange financing.Lucy offers Jerry $100 to keep the offer open for two weeks.Jerry agrees,taking the $100.Three days later,Roberta contacts Jerry saying she is interested in buying the car and has the cash to buy it outright.Jerry is concerned that if he doesn't sell the car to Roberta now,she may not be interested later.Furthermore,Lucy may never be able to arrange financing.Jerry is afraid he may end up with no buyer at all.He comes to you for advice.What do you advise?
Q2) Which of the following offers are considered to be irrevocable for a given period?
A)Firm offers.
B)Option contracts.
C)A writing signed by a merchant offering to hold open an offer for the sale of goods for a stated period.
D)All of the above.
Q3) Revocation is the withdrawal of an offer by the offeror.
A)True
B)False
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Page 12
Chapter 11: Consideration
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Q1) If Annie promises not to drink alcohol until she is 21 years of age in exchange for her aunt's promise of $1,000,the agreement is:
A)enforceable because Annie is giving up the right to do something she would otherwise be entitled to do.
B)enforceable because both parties made a valid promise.
C)not enforceable because Annie does not have a legal right to drink alcohol.
D)not enforceable because Annie's aunt doesn't receive anything of value in exchange for her own promise.
Q2) Agreeing not to open a competing business could be consideration.
A)True
B)False
Q3) Hilda owes Lex $3,000,which is an undisputed amount.If she offers him her car in full settlement of the debt and he accepts,the agreement is binding and he can no longer claim she owes him anything on the original debt.
A)True
B)False
Q4) What two exceptions did the UCC create for accord and satisfaction check cases?
Q5) Discuss the concept of consideration.
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Chapter 12: Legality
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Q1) The UCC deals with unconscionability in a contract by providing that a court may:
A)refuse to enforce the contract.
B)enforce the remainder of the contract without the unconscionable clause.
C)limit the application of any unconscionable clause as to avoid any unconscionable result.
D)All of the above.
Q2) Cherise contacted her insurance agent and said she was interested in purchasing several life insurance policies: (a)a policy on her own life for $100,000,naming her son and daughter as beneficiaries; (b)a policy on her neighbor's life for $100,000,since she had observed him engaging in reckless behavior,naming herself as beneficiary; (c)a $5,000 policy on another neighbor to cover a loan Cherise made to him,naming herself as beneficiary; and (d)a $250,000 policy on her business partner,naming herself as beneficiary.Discuss the legality of each of these potential contracts.
Q3) If a court finds as a matter of law that a clause in a contract was unconscionable at the time the contract was made,the court must refuse to enforce the contract as a whole.
A)True
B)False
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Chapter 13: Capacity and Consent
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Q1) Discuss two types of misrepresentation and how they differ.List the three things a party must show to rescind a contract based on misrepresentation.
Q2) In the case of Sepulveda v.Aviles,the New York Supreme Court,Appellate Division,found evidence of undue influence in:
A)the relationship based on family connection between Seals and Aviles.
B)Aviles's use of Seals' funds and credit cards.
C)opinions of Aviles and Seals' attorney about Seals' mental state at the property closing.
D)All of the answers are correct.
Q3) Pushy Pat,a persuasive salesman,talked Naive Nancy into purchasing something she didn't really need or want.Naive Nancy may rescind the contract because of undue influence.
A)True
B)False
Q4) Anne,a 15-year-old,has made several purchases at a department store.She bought frozen pasta dinners,a coat,two bars of soap and a cashmere scarf,as winter is here.A few days later,Anne returns the goods and demands her money.Will she be refunded?
Q5) Discuss the concept of a "material fact" in fraud situations.
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Chapter 14: Written Contracts
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Questions
Q1) Alice is president and sole shareholder of Best Fabrics,Inc.Best Fabrics,Inc.wishes to borrow money,but to do so,the bank requires Alice to orally agree to pay the debt of the corporation if Best Fabrics,Inc.cannot.Alice's guarantee to repay is:
A)unenforceable under the parole evidence rule.
B)enforceable because of the leading object rule.
C)enforceable because there is an insurable interest.
D)unenforceable because it is a collateral promise.
Q2) parole evidence refers to anything (other than the written contract itself)that was said,done,or written before or as the parties signed the contract.
A)True
B)False
Q3) J.T.Tidwell entered into an oral contract with Robert Anthony for the purchase of 100 head of cattle at a price of $500 each.When the oral contract was made,Tidwell gave Anthony a check for $1000 as "earnest money or good faith money towards the purchase of the cattle." Anthony sold the cattle to someone else.Tidwell sued,asking the court to either compel Anthony to perform the contract or to pay damages that Tidwell suffered from the alleged breach of contract.What issues do you see and how would you resolve those issues?
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Chapter 15: Third Parties
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Q1) Which statement most accurately describes third party beneficiary rights?
A)A beneficiary may enforce a contract if the parties intended to benefit him and if enforcing the promise will satisfy a duty of the promisee to the beneficiary.
B)If a promisee intended to make a gift to the beneficiary, the beneficiary may not enforce the contract.
C)An intended third party beneficiary has no enforceable rights in a contract.
D)Incidental beneficiaries have enforceable rights against both contracting parties.
Q2) Joan purchases a recreational vehicle on credit from RV World.RV World keeps a security interest in the vehicle.RV World then assigns the security interest to West First Bank.Explain what having a security interest means.Under the UCC,what defenses can Joan assert against West First Bank?
Q3) Brandon owes money to Jim.If Jim assigns to Rita his rights to Brandon's money,Jim is:
A)the obligor.
B)the assignee.
C)the assignor.
D)the beneficiary.
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Page 17
Chapter 16: Performance and Discharge
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Q1) Which of the following events would probably excuse performance of a contract based on commercial impracticability?
A)The price of a raw material increases slightly so that the contract will not be as profitable.
B)An unforeseeable trade embargo causes prices to triple.
C)The promisor of personal services dies.
D)The subject matter of the contract is destroyed.
Q2) In negotiating the purchase of a vehicle,the sales representative told Karla,"I guarantee that you will be personally satisfied with this car." The guarantee was written on the contract when Karla purchased the car.If a controversy arises over Karla's satisfaction,the court will apply a subjective standard,which means Karla's judgment must be reasonable.
A)True
B)False
Q3) The UCC recognizes commercial impracticability as a ground for discharge of a contract.
A)True
B)False
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18
Chapter 17: Remedies
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Q1) Larry wanted to buy a 1957 Cadillac once owned by Reggie Jackson.Larry entered into a contract with the owner agreeing to pay $102,000.The owner subsequently changed his mind.If Larry sues,what remedies are potentially available?
Q2) Under the UCC,the buyer is entitled to consequential damages if the seller could have reasonably foreseen them.
A)True
B)False
Q3) The concept that an injured party may recover consequential damages only if the breaching party should have foreseen them was established in:
A)Bi-Economy Market, Inc.v.Harleysville Ins.Co.of New York.
B)Putnam Construction & Realty Co.v.Byrd.
C)Hadley v.Baxendale.
D)Toscano v.Greene Music.
Q4) Expectation interest refers to what the injured party reasonably thought she would get from the contract.
A)True
B)False
Q5) Discuss the remedy of specific performance.
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Chapter 18: Introduction to Sales
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Q1) Tri,a full-time college student,sold his car to Don,another student.In the performance of this contract,Tri:
A)has a duty of good faith which means honesty in fact and the exercise of good judgment.
B)has a duty of good faith which means honesty in fact.
C)has a duty of good faith which means honesty in fact and the exercise of reasonable commercial standards of fair dealing.
D)does not have a duty of good faith.
Q2) Discuss the UCC good faith requirement.Does it apply differently depending on whether the parties are merchants or not?
Q3) Section 2-207 of the UCC:
A)provides for a strict application of the mirror image rule.
B)allows for additional or different terms to become part of a contract for the sale of goods.
C)prohibits merchants from leaving the price term open.
D)defines the obligations of the merchant buyer.
Q4) The UCC imposes a duty of good faith in the performance of all contracts.
A)True
B)False
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Chapter 19: Ownership and Risk
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Q1) In January,Eddie contracts to sell 100 bushels of soybeans that fall.This contract:
A)is void.He cannot contract to sell a crop before it is even planted; the goods must be in existence.
B)is void.The soybeans must be identified to the contract at the time he contracts to sell them.
C)can be valid; but title to the soybeans cannot pass until the soybeans exist.
D)can be valid, and title to the soybeans passes when the contract is signed.
Q2) More than one party can have an interest in particular goods.
A)True
B)False
Q3) What are the requirements for the doctrine of entrustment to apply?
A)The goods must be entrusted to a merchant who deals in goods of the kind.
B)The entrustee may transfer the rights of the entruster only if the buyer is a purchaser in ordinary course.
C)The owner must have delivered the goods to a merchant or permitted him to retain them.
D)All of the above.
Q4) Discuss the concept of entrustment.
Q5) Discuss the concept of insurable interests.
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Chapter 20: Warranties and Product Liability
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Q1) Mark,a power tool salesman,promises Jill,a customer,that the Turbo Power Hedge Trimmer 1000 will easily cut through bamboo up to 3 inches thick.Mark's statement constitutes an express warranty if Jill purchases the hedge trimmer.
A)True
B)False
Q2) In the case Goodman v.Wenco Foods,Inc.,the Supreme Court of North Carolina addressed the issue of:
A)Implied warranty of title.
B)Implied warranty of merchantability.
C)Implied warranty of fitness for a particular purpose.
D)Strict product liability.
Q3) Under which of the following warranties must the seller be a merchant?
A)Express warranties.
B)Implied warranty of merchantability.
C)Implied warranty of fitness for a particular purpose.
D)Both b and c.
Q4) Under the UCC,no warranty of title arises unless the contract is in writing.
A)True
B)False
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Chapter 21: Performance and Remedies
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Q1) Identify six possible remedies for a seller when the buyer breaches a contract.
Q2) If the buyer rejected the goods,the seller may reasonably resell them and obtain the difference between the resale price and the contract price.
A)True
B)False
Q3) A buyer who properly rejects goods:
A)can do so by sending the goods back in any manner.
B)must notify the seller of the rejection within a reasonable time.
C)must pay the costs of returning the rejected goods.
D)None of the above.
Q4) Assume that Sherrie's Cherries contracts with Dessert World to sell and ship 600 pounds of cherries in three equal installments of 200 pounds each.If the first installment arrives with 5 pounds of spoilage,then Dessert World may:
A)reject the installment shipment because of the perfect tender rule.
B)not reject the installment if those in the food industry expect a small percentage of spoilage with fresh fruits or vegetables.
C)reject the entire contract.
D)declare a breach and "cover."
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Page 23
Chapter 22: Creating a Negotiable Instrument
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Q1) Sprock is a holder in due course on an instrument issued by a Klingon.Which of the following defenses could be successfully raised by the Klingon?
A)Forgery.
B)Prior payment.
C)Breach of contract.
D)Fraud in the inducement.
Q2) With non-negotiable commercial paper,a transferee's rights are conditional.
A)True
B)False
Q3) In good faith,Clinton gave Jane $500 for a negotiable promissory note made out to Jane for $550.She needed some money before the due date on the note,and Clinton had no notice of outstanding claims or other defects of the note.Clinton:
A)has more rights than Jane.
B)has the same rights as Jane.
C)has only conditional rights because they depend on Jane's rights.
D)cannot transfer the note to anyone else.
Q4) Explain the shelter rule.
Q5) Define commercial paper and explain what it is used for.
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Chapter 23: Liability for Negotiable Instruments
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Q1) Cecilia made a check out to Gideon for $15.Gideon fraudulently changed the check to read $150,and cashed it at Corner Bank.Is Cecilia discharged from liability on the check?
A)Yes, Cecilia owes nothing on the check because alteration of a check is a real defense and real defenses are good even against holders in due course.
B)No, Cecilia pays $150 because of the impostor rule.
C)No, Cecilia pays $150 because she in not an indorser or accommodation party.
D)Yes, Cecilia owes nothing unless Corner Bank is a holder in due course in which case she owes the original $15.
Q2) Which of the following will discharge an instrument?
A)A payor tenders payment in full.
B)The parties agree to a discharge.
C)The terms of the instrument are intentionally changed.
D)All of the above.
Q3) Which of the following parties has primary liability on a draft?
A)The drawee.
B)The acceptor.
C)The drawer.
D)None of the above.
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Page 25
Chapter 24: Liability for Negotiable Instruments: Banks and Their Customers
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Q1) On May 10,Klaus received his bank statement.Explain why Klaus should examine the bank statement within 30 days.
Q2) Elian wrote a $5000 check payable to his nephew Jose on January 1.Elian gave Jose the check on January 3.Elian died January 6.The drawee bank learned of Elian's death on January 7.There is no stop payment order on the check.Which statement is correct?
A)The bank can pay the check only until January 10.
B)The bank can pay the check only until January 16.
C)The bank can pay the check until January 17.
D)The bank cannot pay the check.The bank must freeze Elian's account.
Q3) The Electronic Fund Transfer Act was passed to protect:
A)consumers.
B)financial institutions.
C)businesses.
D)all of the above.
Q4) Discuss warranty liability of a bank that transfers or presents an electronic or substitute check.
Q5) Discuss a bank's liability for both stale checks and post-dated checks.
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Chapter 25: Secured Transactions
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Q1) Danson Corp.sends 15 snow blowers by rail to Gene Hardware.To show where the goods will be shipped and who gets them when they arrive,Danson will obtain ____,which can be used as collateral in a secured transaction.
A)a warehouse receipt.
B)chattel paper.
C)a bill of lading.
D)a certificate of deposit.
Q2) In the case In Re CFLC,Inc.,the court ruled that Expeditors had a security interest in Everex's goods.
A)True
B)False
Q3) A PMSI can be created only in goods and software.
A)True
B)False
Q4) A buyer in ordinary course of business takes the goods free of a security interest unless the security interest is perfected.
A)True
B)False
Q5) Explain the difference between attachment and perfection.
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Chapter 26: Bankruptcy
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Q1) The Bankruptcy Code uses the term "bankrupt" for a person who cannot pay his debts.
A)True
B)False
Q2) In the In Re Fox case,the court:
A)decided that Fox's plan of reorganization was not feasible.
B)imposed a cramdown.
C)refused to impose a cramdown.
D)refused to discharge Fox's income tax debt.
Q3) According to the case In Re: John & Julie Hoffman,a court:
A)cannot approve a reaffirmation agreement under Chapter 7.
B)may void reaffirmation agreements under Chapter 13.
C)will approve a reaffirmation agreement provided there is proof that the debtor can make the required payments.
D)will approve a reaffirmation agreement if it is signed by a financial institution.
Q4) What are the three main purposes of the federal Bankruptcy Code? How are these purposes supported and fostered in the Code?
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Chapter 27: Agency
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Q1) Discuss the principal's remedies when the agent breaches a duty.
Q2) Nikki was a tax accountant with HBR Accounting.Nikki decided to do some tax consulting in the evenings and on weekends.HBR is unaware of Nikki's consulting work.Which statement is correct?
A)Nikki has not breached a fiduciary duty to HBR since her consulting is done after her work for HBR.
B)Nikki has not breached a fiduciary duty to HBR since her behavior does not reflect badly on the accounting firm.
C)Nikki has not breached a fiduciary duty to HBR since Nikki has a contractual relationship with her clients, not her employer.
D)Nikki has breached a fiduciary duty to HBR since she is competing with HBR.
Q3) In order to determine whether the agent is an employee or an independent contractor,a court will consider which of the following?
A)Whether the principal supplies the tools and place of work.
B)Whether the agent works full time for the principal.
C)Whether the principal controls details of the work.
D)All of the above.
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Chapter 28: Employment Law
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Q1) Betty wants to hire a secretary who is "mature." In particular,she wants to hire a woman with experience and whose children are grown (so she will not have to be staying home with sick children,etc.).She also wants to make sure the woman is of "sound,Christian character,with solid morals."
To find such an employee,she ran the following ad in the newspaper: "Secretary.Excellent Pay.Quiet professional office.Must have grown family.Must not be opposed to Christian work ethic.References required.555-1111 or write to P.O.Box 114,Ourtown,USA."
Discuss the legal issues raised by Betty's ad.
Q2) Heather applied for a promotion,but her manager promoted a co-worker because the manager knew Heather was seven months pregnant.The manager did not want to promote someone who would probably be taking time off of work for childbirth and child care.The manager has acted legally and reasonably to protect her company's interests.
A)True
B)False
Q3) Define sexual harassment.
Q4) Discuss the requirements of the Family and Medical Leave Act.
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Chapter 29: Starting a Business: Llcs and Other Options
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Q1) Compare and contrast the following forms of business organization: sole proprietorship,general partnership,limited partnership,limited liability company,and corporation as to ease of formation,liability of owners,management,and tax implications.
Q2) Becoming a franchisee is a compromise between being an entrepreneur and being an employee.
A)True
B)False
Q3) Murray was a partner in a large firm.He died unexpectedly.His son,Frank,wanted to take over for his father in the partnership and was well qualified to do the work his father had done.Which statement best describes Frank's rights in the partnership if he inherits the interest?
A)Frank has a right to take over for his father in the partnership.
B)Frank is entitled to the value of his father's interest in the partnership, but not to become a full partner.
C)Frank has no rights to his father's partnership interest.
D)None of the above.
Q4) What are the advantages of electing Subchapter S status? What are the requirements?
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Chapter 30: Corporations
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Q1) Jerry works for a SpringBrook nursing home.He signs a contract on behalf of the nursing home with Sunny Floral to have fresh flowers delivered every week.No one at SpringBrook knows that,with three other family members,Jerry owns Sunny Floral.This is an issue of:
A)violation by Jerry of his duty of care.
B)violation of the business judgment rule.
C)self dealing.
D)fraud.
Q2) In the late 1960s a shareholder of the company that owned the Chicago Cubs baseball team sued the company because the directors refused to install lights in Wrigley Field.The court decided that the directors:
A)had a rational purpose for not installing lights and were not liable for doing anything improper.
B)were not protected by the business judgment rule.
C)had not acted with any rational purpose and were liable to its shareholders for damages caused by their actions.
D)None of the above.
Q3) What is the business judgment rule and what is its purpose?
Q4) Discuss how a corporation is terminated.
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Chapter 31: Securities Regulation
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Q1) MegaCorp wishes to sell $25 million of securities.The only investors will be 20 institutional buyers.Which of the following applies to this offering?
A)Rule 504 of the 1933 Act.
B)Rule 505 of the 1933 Act.
C)Rule 506 of the 1933 Act.
D)None of the above apply to this $25 million offering.
Q2) Section 10(b)of the 1934 act prohibits fraud in connection with the purchase and sale of any security as long as the latter is registered under the Act.
A)True
B)False
Q3) The Securities Act of 1933 established the Securities and Exchange Commission. A)True
B)False
Q4) What is the purpose of a registration statement and what information must be contained in it?
Q5) Identify and explain three options that ease the process of complying with state securities requirements.
Q6) What are the three primary ways the SEC creates law?
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Chapter 32: Property
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Q1) The purpose of recording a deed or other real estate transaction is to:
A)establish the rights between the grantor and the grantee.
B)assure the grantee that a transfer of real property is now complete.
C)establish the type of deed granted (i.e.warranty deed, special warranty deed, or quitclaim deed).
D)put the rest of the world on notice that the transaction occurred between the grantor and the grantee.
Q2) Discuss the tenant's and the landlord's basic duties under a landlord-tenant relationship.
Q3) Which of the following is a possessory interest in land?
A)Fee simple absolute.
B)Easement.
C)Profit.
D)License.
Q4) Wearever Builders constructs new houses in the Oak Grove subdivision.Unless it expressly gives a warranty to buyers,Wearever does not guarantee the adequacy of materials and good workmanship in its new houses.
A)True
B)False
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Chapter 33: Cyberlaw
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Q1) Explain the difference between an ISP and a Web host,and discuss whether they are treated alike under the Communications Decency Act (CDA).
Q2) Under the Electronic Communications Privacy Act:
A)violators are subject to both criminal and civil penalties.
B)violators may be subject to civil, but not criminal, penalties.
C)only the unauthorized disclosure of e-mail messages constitutes a violation.
D)only the unauthorized interception of e-mail messages by the government or an ISP constitutes a violation.
Q3) Which of the following protects e-mail messages from unauthorized interception?
A)The Fourth Amendment.
B)The GLB Privacy Act of 1999.
C)The Electronic Communications Privacy Act.
D)COPPA.
Q4) Lois receives an e-mail asking her to update her personal information on a Web site that is an illegal imitation of a legitimate site.This practice:
A)is a crime called phishing.
B)is a tort called information theft.
C)is a breach of contract action known as shilling.
D)may be prosecuted under the GLB Privacy Act.
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Chapter 34: Intellectual Property
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Q1) The Metro-Goldwyn-Mayer Studios Inc.v.Grokster,Ltd.is about:
A)patent infringement.
B)violation of copyright law on the Internet.
C)trademark dilution.
D)None of the above.
Q2) Unlike with patents,the ideas underlying copyrighted material need not be novel.
A)True
B)False
Q3) Jason and Stacey go to the movie theater and decide to use a camcorder to film the show so they can watch it again with their friends later at home.They have:
A)made an ethical, legal, wise economic decision since the cost of viewing the movie in the theater again is too high for their limited budget.
B)violated the Family Entertainment and Copyright Act, and committed a criminal offense.
C)violated the No Electronic Theft Act.
D)committed an ethical but illegal act by violating the Digital Millennium Copyright Act.
Q4) Describe what copyright infringement means.
Q5) Briefly discuss a patent,copyright,and trademark.
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