Contract Law Exam Bank
Course Introduction
Contract Law explores the foundational principles governing the formation, interpretation, and enforcement of agreements between parties. The course covers essential topics such as offer and acceptance, consideration, contractual capacity, legality, and the consequences of breach, including remedies and damages. Students will analyze case law to understand the doctrines that shape contractual relationships and address issues related to misrepresentation, duress, undue influence, and mistake. Through practical examples and legal reasoning, the course provides a comprehensive understanding of how contracts are created, upheld, and challenged within various legal systems. Recommended Textbook
Fundamentals of Business Law Summarized Cases 9th Edition by Roger LeRoy Miller
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Page 2
Chapter 1: The Legal and Constitutional Environment of Business
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Q1) Krystal is a federal judge.Krystal's judicial decisions are part of case law.This law includes interpretations of primary sources of law.These sources include
A)administrative regulations.
B)articles in law reviews and other legal journals.
C)compilations summarizing court decisions on particular topics.
D)legal encyclopedias.
Answer: A
Q2) Theoretically,Congress can regulate every commercial enterprise in the United States.
A)True
B)False
Answer: True
Q3) Federal statutes apply to all states.
A)True
B)False
Answer: True
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Chapter 2: Traditional and Online Dispute Resolution
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Q1) Refer to Fact Pattern 2-1.Resolving the dispute between Java and Kaffe by having a neutral third party render a binding decision is one of the advantages of A)arbitration.
B)conciliation.
C)intervention.
D)mediation.
Answer: A
Q2) During the trial phase of Fuel Corporation's suit against Gas Stations,Inc. ,their attorneys engage in voir dire.This is
A)the assessment of the arguments on the issues.
B)the determination of the issues to be argued.
C)the litigation of the issues and arguments.
D)the selection of jurors.
Answer: D
Q3) A lawsuit involving a federal question can originate in a federal court.
A)True
B)False
Answer: True
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4
Chapter 3: Ethics and Business Decision Making
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Q1) Under no view does a corporation owe an ethical duty to a group other than its shareholders.
A)True
B)False
Answer: False
Q2) Made4U Goods,Inc. ,asks its employees,many of whom are members of the National Machinists Union,to apply the utilitarian theory of ethics.This theory does not require
A)a choice among alternatives to produce the maximum societal utility.
B)a determination of whom an action will affect.
C)an assessment of the effects of alternatives on those affected.
D)the acquiring of the means of production by workers.
Answer: D
Q3) In deciding questions of corporate social responsibility,Valley Disposal & Recycling,Inc. ,is concerned with
A)how the corporation can best fulfill any ethical duty to society.
B)the effect on corporate profits of ignoring any ethical duty to society.
C)whether the corporation owes any ethical duty to society.
D)all of the choices.
Answer: D
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Page 5
Chapter 4: Torts and Cyber Torts
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Q1) Under a dram shop act,liability can be imposed without proof of negligence.
A)True
B)False
Q2) Kai files a suit against Lana based on one of Lana's statements that Kai alleges is fraudulent.To give rise to fraud,the statement must be one of A)emotion.
B)fact.
C)illusion.
D)opinion.
Q3) Liu enters Mountain Triathlon,an athletic competition in which Liu has never competed.Regarding the risk of injury,Liu assumes the risks A)attributable to the Triathlon in any way.
B)different from the risks normally associated with the Triathlon. C)greater than the risks normally associated with the Triathlon.
D)normally associated with the Triathlon.
Q4) A party cannot recover damages for severe emotional distress absent a showing of physical injury.
A)True
B)False
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Chapter 5: Intellectual Property and Internet Law
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Q1) Li'l Canine Company (LCC)uses a trademark that neither LCC nor anyone else has registered with the government.Under federal trademark law,LCC
A)can register the mark for protection.
B)cannot register a mark that has been used in commerce.
C)has committed trademark infringement.
D)must put off registration until the mark is out of use for six months.
Q2) A person can reproduce copyrighted material for purposes such as teaching,including multiple copies for classroom use,without paying royalties.
A)True
B)False
Q3) Phil invents "PhutureNow," new Web site design software,and applies for a patent.If Phil is granted a patent,his invention will be protected
A)for ten years.
B)for twenty years.
C)for the life of the inventor plus seventy years.
D)forever.
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Chapter 6: Criminal Law and Cyber Crime
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Q1) It may be a crime to take another's property,but it is not a crime to receive stolen goods.
A)True
B)False
Q2) It is not a crime to defraud the public through the use of ads on television.
A)True
B)False
Q3) Domino causes a disturbance at El Nino Cafe.He is arrested and charged with disorderly conduct,a misdemeanor.A misdemeanor is a crime punishable by A)a fine only.
B)imprisonment up to one year.
C)imprisonment up to six months.
D)imprisonment up to ten days.
Q4) Thinking about killing someone constitutes the crime of attempted murder. A)True
B)False
Q5) Only private attorneys prosecute criminal defendants. A)True
B)False
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Chapter 7: Nature and Classification
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Q1) An otherwise valid contract may be unenforceable if it is not in writing.
A)True
B)False
Q2) Livewire Company and Kitchen Products,Inc. ,sign a document that states Livewire agrees to design a Web site for Kitchen Products,which agrees to pay for the service.Livewire and Kitchen Products have made
A)an express contract.
B)an implied contract.
C)a quasi contract.
D)no contract.
Q3) One of the requirements of a valid contract is a fair price.
A)True
B)False
Q4) Informal contracts are usually based on substance rather than form.
A)True
B)False
Q5) Contract law shows what excuses our society accepts for breaking certain types of promises.
A)True
B)False
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Chapter 8: Agreement in Traditional and E-Contracts
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Q1) Final Foto,Inc. ,makes photo and video editing software,which includes a shrink-wrap agreement.Gert buys a package of the software.With respect to the contract for the software's purchase,the shrink-wrap agreement may not be enforced if
A)Gert does not read it.
B)Gert learns of it after contracting.
C)Gert learns of it before contracting.
D)the quality of the software is poor.
Q2) In an auction,the auctioneer is an offeree.
A)True
B)False
Q3) The UETA covers only e-records and e-signatures relating to a transaction. A)True
B)False
Q4) A person who does not know about a reward can still claim it.
A)True
B)False
Q5) No offer can be accepted by silence.
A)True
B)False
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Chapter 9: Consideration,capacity,and Legality
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Q1) Inadequate consideration may indicate undue influence.
A)True
B)False
Q2) Contractual capacity refers to the legal ability to enter into a contract.
A)True
B)False
Q3) Refer to Fact Pattern 9-2.If,as Brad claims,the consideration in this problem is inadequate,it may indicate a lack of
A)accord in Brad's satisfaction with the value of the deal.
B)bargained-for exchange or mutual assent.
C)flexibility on the part of College Credit to accommodate Brad's needs.
D)"heft," "substance," or "weight" in the terms of the contract.
Q4) An adult may avoid any contract with a minor.
A)True
B)False
Q5) For consideration to have "legally sufficient value," it must consist of goods or money.
A)True
B)False
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Chapter 10: Defenses to Contract Enforceability
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Q1) Consumer Goods,Inc. ,and Delta Distribution,Inc. ,sign a written contract for a sale of goods.To be enforceable,this written contract must include
A)a correct title,such as "Purchase Order" or "Sales Invoice."
B)a declaration of the subject matter.
C)a quantity term.
D)the parties' names.
Q2) All mistakes of fact are material.
A)True
B)False
Q3) A bilateral mistake is a mutual misunderstanding.
A)True
B)False
Q4) Refer to Fact Pattern 10-4.The writing that Kelly and Lucas signed is A)a completely integrated contract.
B)a conditionally integrated contract.
C)an agreeably integrated contract.
D)an obviously integrated contract.
Q5) To recover for fraud,a plaintiff must be under twenty-one years of age.
A)True
B)False
12
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Chapter 11: Third Party Rights and Discharge
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Q1) An obligor is a person to whom a duty is owed.
A)True
B)False
Q2) A novation revokes and discharges a prior contract.
A)True
B)False
Q3) A transfer of contract rights to a third party is a delegation.
A)True
B)False
Q4) All rights can be assigned.
A)True
B)False
Q5) Any breach of contract discharges the breaching party.
A)True
B)False
Q6) A condition subsequent terminates a party's promise to perform.
A)True
B)False
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Chapter 12: Breach and Remedies
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Q1) Liquidated damages are damages that are certain in amount.
A)True
B)False
Q2) Fashion Retail Center enters into a contract with Great Promotions,Inc. ,to provide Fashion with a plan to retool its merchandising strategy.If Great Promotions breaches the contract,Fashion has a duty to
A)reduce the damages that Fashion might otherwise suffer.
B)reduce the loss that Great Promotions might otherwise suffer.
C)punish Great Promotions and deter others from similar acts.
D)take no action.
Q3) Creekside Property Corporation enters into a contract with Downstream Management Associates to manage and maintain Creekside's apartment complex.Their contract provides that neither party can recover damages for a non-fraudulent or unintentional breach.This is
A)a limitation-of-liability clause.
B)an exculpatory clause.
C)an illegal clause.
D)a quasi contract.
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Chapter 13: The Formation of Sales and Lease Contracts
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Q1) Rikki and Sid enter into a sales contract.With respect to the specific contractual provisions set out in the UCC,Rikki and Sid may
A)agree to different terms only to a reasonable extent.
B)agree to different terms unless they "get caught."
C)agree to whatever terms they wish.
D)not agree to different terms.
Q2) Home Products Store buys furniture from Relax Furniture,Inc.The parties agree that the furniture will be shipped "F.O.B.Relax's warehouse" to Home Products via Swifty Shipping Corporation.The furniture is lost in transit.The loss is suffered by
A)Home Products and Relax Furniture,but not Swifty Shipping.
B)Home Products,Relax Furniture,and Swifty Shipping.
C)Home Products only.
D)Relax Furniture only.
Q3) An unconscionable contract is a contract so one-sided and unfair at the time it is made that enforcing it would be unreasonable.
A)True
B)False
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Page 15
Chapter 14: Performance Breach of Sales Lease Contracts
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Q1) Relax Chair Company contracts to deliver 100 chairs to Stuffy Furnishings Store on May 1 for which Stuffy agrees to pay.Relax tells Stuffy on April 15 that delivery will be delayed until June 1.Stuffy may
A)await performance,sue Relax,or suspend its own performance.
B)only await Relax's performance for a commercially reasonable time.
C)only sue Relax for breach of contract.
D)only suspend its own performance.
Q2) Primo Pools Company and Aquatic Recreation,Inc. ,enter into a contract for a sale of prefabricated swimming pools.Under either a shipment contract or a destination contract,the seller must
A)allow the buyer to reject the goods for any reason.
B)deliver the goods to a particular destination.
C)place the goods into the hands of a carrier.
D)provide the buyer with any necessary documents of title.
Q3) An installment contract is breached if a buyer accepts any nonconforming goods.
A)True B)False
Q4) Tender must occur at a reasonable hour and in a reasonable manner. A)True B)False
Page 16
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Chapter 15: Warranties and Product Liability
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Q1) In many states,the plaintiff's negligence is a defense that may be raised in a product liability suit based on strict liability.
A)True
B)False
Q2) Promises of fact made during the bargaining process are not express warranties.
A)True
B)False
Q3) Bob is shopping in Carl's Hardware Store when a nail gun in use by Dan,one of Carl's employees,fires without warning and hits Bob in the leg.Carl checks the gun and discovers that it was assembled improperly.Bob files a suit against Eagle Tools,Inc. ,the manufacturer of the gun,for product liability,on the ground of strict liability.What are the elements for an action based on strict liability? In whose favor is the court likely to rule and why?
Q4) Only a statement made after a contract is entered into can be an express warranty.
A)True
B)False
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Chapter 16: Negotiability,transferability,and Liability
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Q1) An instrument is nonnegotiable unless the word "negotiable" is printed on it.
A)True
B)False
Q2) Presentment warranties protect the person who presents an instrument for payment.
A)True
B)False
Q3) Eppie gives a check to Fund Investments to buy 100 shares of stock in GR8 Tech Corporation for Eppie.The price of the shares is constantly fluctuating.Fund Investments asks Eppie to leave the amount of the check blank and allow it to fill in the price when making the purchase.Eppie agrees.Fund Investments buys the stock when the price is $4,000,but fills in the check for $5,000.The check is negotiated as payment for a $5,000 debt to Hasty Accounting Services,which takes the check in good faith and without notice of Fund Investments's act.Hasty later learns that Fund Investments was not authorized to fill in the check for $1,000 over the price.Is Hasty an HDC? If so,for how much?
Q4) An instrument is not defective simply because it is overdue.
A)True
B)False
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Chapter 17: Checks and Banking in the Digital Age
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Q1) A bank cannot recover from a holder who cashes a check bearing a forged indorsement once the bank has accepted and paid the item.
A)True
B)False
Q2) John writes a check to Kay as payment for a DVD player but soon discovers the player is broken.He goes to the drawee bank and orally authorizes Larry,a bank officer,to stop payment on the check.This order is valid for A)fourteen days.
B)fourteen months.
C)thirty days.
D)six months.
Q3) Dora writes a check for $100 drawn on Eastern Bank and presents it to Fast Cash,Inc. ,for payment.If the check is not backed by sufficient funds,Dora may be prosecuted for A)forgery.
B)fraud.
C)negligence. D)robbery.
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Chapter 18: Security Interests in Personal Property
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Q1) An improper filing renders a secured party unperfected.
A)True
B)False
Q2) The payment of Mo's debt to Neil is guaranteed by Mo's personal property.This is
A)governed by Article 2 of the UCC.
B)governed by Article 3 of the UCC.
C)governed by Article 9 of the UCC.
D)not governed by the UCC.
Q3) A purchase-money security interest in consumer goods is perfected automatically at the time of a credit sale.
A)True
B)False
Q4) Hal's Hardware store defaults on a debt to Intrastate Bank,which takes possession of the collateral securing the debt.Intrastate sells the collateral.The proceeds from the sale are applied first to
A)Hal's debt to Intrastate.
B)Hal's debts to other creditors.
C)Intrastate's fees for the sale.
D)payments Hal's made on the debt to Intrastate.
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Chapter 19: Creditors Rights and Bankruptcy
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Q1) Nikita operates a sole proprietorship,a corporation,and a partnership.Nikita wants to obtain relief for her individual debts and the debts of her corporation and partnership.For each of these,Nikita may file a petition in bankruptcy for relief through A)a liquidation.
B)a reorganization.
C)a repayment plan.
D)a family-farmer bankruptcy plan.
Q2) A writ of execution is a court order to execute a debtor after the entry of a final judgment in a creditor's lawsuit against the debtor.
A)True
B)False
Q3) A creditor's composition agreement is usually held to be unenforceable. A)True B)False
Q4) An individual debtor is allowed to exempt certain property from the bankruptcy. A)True B)False
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Chapter 20: Mortgages Foreclosures After the Recession
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Q1) Hubert borrows $100,000 from Integrity Mortgage Mart to buy a home.Soon after obtaining the mortgage,Integrity convinces Hubert to refinance.This is
A)a short sale.
B) a subprime mortgage.
C)loan flipping.
D)steering and targeting.
Q2) A lender can make a higher-priced mortgage loan based on the value of the consumer's home without verifying the consumer's other credit obligations.
A)True
B)False
Q3) Seymour borrows $350,000 from Reliable Bank to buy a home.Seymour stops making payments on the loan ten months later.After the bank repossesses the property securing the loan but before it is sold,Seymour wants to buy it.This is
A)a deficiency judgment.
B)a reverse mortgage.
C)a violation of the law.
D)the right of redemption.
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Chapter 21: Agency Relationships
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Q1) Jock hires Kym to act as his agent to purchase Lifetime Gym & Fitness,Inc.Jock tells Kym to reveal that she is buying the firm on behalf of a third party and to tell Lifetime's seller who that third party is.Jock is
A)a disclosed principal.
B)an apparent principal.
C)an undisclosed principal.
D)a partially disclosed principal.
Q2) A principal is responsible for all intentional torts committed by an agent.
A)True
B)False
Q3) A fiduciary relationship allows parties to avoid obligations without liability.
A)True
B)False
Q4) Express authority is authority declared in clear,direct,definite terms.
A)True
B)False
Q5) An independent contractor's physical conduct is controlled,or subject to control,by his or her employer.
A)True
B)False
23
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Chapter 21: Management Perspective:
Independent-Contractor Negligence
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Q1) Gass Propane Company hires Hick,an independent contractor,to make deliveries.During a delivery,Iggy is killed in an accident caused by Hick's negligence.Iggy's widow Jade files a suit against Gass,asserting that the employer is liable.Gass argues that it had no control over the manner in which Hick did his work.The court is most likely to hold that Gass is
A)liable because Gass employed Hick.
B)liable because Gass should have investigated Hick's qualifications.
C)not liable because Gass did not control Hick's work.
D)not liable because the delivery vehicle was probably faulty.
Q2) AgriEquip Service & Supply,Inc. ,sends Merilyn an e-mail in which AgriEquip offers to employ her for certain hours and a specific amount of money over a limited period of time.She responds with a counteroffer that reduces the hours and increases the money.AgriEquip e-mails an acceptance.Merilyn performs,but AgriEquip refuses to pay.She files a suit against AgriEquip for breach of contract.The court is most likely to rule that the e-mail
A)showed only an agreement to agree.
B)was an agreement to the essential terms of an employment contract.
C)constituted an unenforceable,non-existent contract.
D)contained a contract but is unenforceable because it is electronic.
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Chapter 22: Employment, immigration, and Labor Law
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Q1) Eton files a suit in a federal district court against Florida,alleging employment discrimination under the Age Discrimination in Employment Act of 1967.The state asks the court to dismiss the suit.The court is most likely to rule that
A)the state is immune from the suit.
B)the suit can proceed.
C)Eton is immune from any defense the state might offer.
D)the court is immune from such request.
Q2) Personnel Staffing Corporation meets all of the requirements to be subject to the federal employment discrimination laws.Among these,the most important statute prohibiting discrimination against members of protected classes is
A)the Age Discrimination in Employment Act of 1967.
B)the Americans with Disabilities Act of 1990.
C)the Pregnancy Discrimination Act of 1978.
D)Title VII of the Civil Rights Act of 1964.
Q3) Certain employers must provide their employees with up to twelve weeks of family or medical leave during any twelve-month period.
A)True
B)False
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Chapter 23: Sole Proprietorships, partnerships, Limited Liability Co
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Q1) The liability of the members of a limited liability company is limited to the amount of their investments.
A)True
B)False
Q2) Refer to Fact Pattern 23-1.Desi and Fred are
A)not partners,because Fred does not have an ownership interest or management rights in eSites.
B)not partners,because the lease includes a "base rental."
C)not partners,because the rent includes only 10 percent of the profits.
D)partners in a partnership for two years.
Q3) A limited liability company is not a citizen of any state.
A)True
B)False
Q4) Refer to Fact Pattern 23-2.Luann signs a contract with Oleo Chips,a retail component supplier,apparently on Networx's behalf.The contract is binding on
A)Luann,Mace,and Networx.
B)Luann only.
C)Networx only.
D)Oleo only.
Page 26
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Chapter 24: Corporate Formation, financing, and Termination
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Q1) Wild & Scenic River Tours,Inc. ,is a corporation.Wild & Scenic has the implied power to A)issue stocks and bonds.
B)execute contracts and negotiable instruments.
C)buy and sell (or lease)property.
D)perform all acts reasonably appropriate and necessary to accomplish its corporate purposes.
Q2) A court will not pierce the corporate veil of a corporation that is formed merely to evade an existing legal obligation.
A)True
B)False
Q3) Marbled Meats Corporation (MMC)proposes to combine with Natural Farms,Inc. ,and asks MMC shareholders to vote on the proposal.Omar,an MMC shareholder,votes against it,but is outvoted by the other shareholders.Is there an action that Omar can take to avoid being forced to go along with the transaction If so,what can he do? After the combination,Natural Farms ceases to exist.MMC is the surviving firm.What type of combination is this?
Q4) Incredible eSales Corporation is a new Internet business.How can Incredible eSales obtain capital to finance its operations?
Page 27
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Chapter 25: Corporate Directors, officers, Shareholders
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Q1) Flite-Craft Corporation makes and sells aircraft parts.In most states,the minimum number of directors that must be present before Flite-Craft's board can transact its business is
A)all of the directors authorized in the articles or bylaws.
B)a majority of the number authorized in the articles or bylaws.
C)any odd number.
D)one.
Q2) Rocco is a director of Spa Lids & Tubs,Inc.Under the standard of due care owed by directors of a corporation,Rocco's decisions must be
A)unwavering and unquestionable.
B)arguable and defensible.
C)informed and reasonable.
D)perfect and unassailable.
Q3) Clark is a shareholder of Bedrest Mattress Company.Clark will be deemed to have a fiduciary duty to Bedrest and its minority shareholders if he has A)preferred stock.
B)a right of first refusal.
C)a sufficient number of shares to exercise de facto control.
D)watered stock.
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Chapter 26: Investor Protection, insider Trading, Corp Gov
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Q1) Bild-It-Rite Corporation is a public company that is preparing to issue securities that do not qualify for an exemption from registration.This means that Bild-It-Rite must
A)file a registration statement with the SEC.
B)issue the securities through an online registration site.
C)refrain from issuing the securities to unregistered investors.
D)register the securities with a national stock exchange.
Q2) Kitsch Niche Corporation is a noninvestment company that wants to issue $3 million of stock in a twelve-month period.Kitsch Niche,with less than $20 million in annual sales,qualifies as a small business issuer.Before Kitsch Niche sells the stock,it must provide investors with
A)an offering circular.
B)a notice of the issue.
C)a red herring prospectus.
D)a tombstone ad.
Q3) Private offerings of securities in unlimited amounts can be exempt from the registration requirement of the Securities Act of 1933.
A)True
B)False
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29
Chapter 27: Personal Property and Bailments
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Q1) Stan is liable for the conversion of Tyler's business law textbook
A)if Tyler proves that the book was in Stan's possession when it disappeared.
B)if Tyler proves that the book is now in a third party's possession.
C)if Tyler proves that the book was not in his possession when it disappeared.
D)under no circumstances.
Q2) Nouri is declared mentally incompetent.Omar,Nouri's friend,insists that she transfers her assets to him "for safekeeping." A court might conclude that this gift is not effective on the ground that there was no
A)acceptance.
B)delivery.
C)donative intent.
D)relinquishment of control.
Q3) John steals an old,battered bicycle that is parked,unlocked,in front of a convenience store.He repairs,paints,and replaces parts on the bike until it is like new.The original owner,Kim,claims the bike.The bike belongs to
A)John and Kim as tenants in common.
B)John because he made substantial improvements to it.
C)John because Kim claimed it only after John improved it.
D)Kim because John stole it.
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Page 30
Chapter 28: Real Property and Landlord-Tenant Law
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Q1) A recording statute allows deeds to be recorded to give notice to the public.
A)True
B)False
Q2) The possession of land without right is a tenancy at will.
A)True
B)False
Q3) Generally,contract doctrines apply to a landlord-tenant relationship.
A)True
B)False
Q4) Consumer Shops,Inc. ,signs a lease for a storefront owned by Downtown Building Company.Unlike a purchaser of real property,Consumer Shops
A)acquires only temporary possession of the premises.
B)enjoys exclusive possession of the premises.
C)holds only temporary title to the premises.
D)retains temporary,exclusive possession and title to the premises.
Q5) A license is the revocable right of a person to come onto another person's land.
A)True
B)False
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Chapter 29: Insurance, wills, and Trusts
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Q1) An applicant for insurance has a duty to disclose only material facts that the insurer asks for.
A)True
B)False
Q2) A divorce necessarily revokes an entire will.
A)True
B)False
Q3) The trustee is the person for whose benefit a trust is held.
A)True
B)False
Q4) Benny dies without a will,with no surviving spouse or child.Benny's survivors include his granddaughter Callie,his nephew Duncan,and his cousin Earl.In most states,his estate would pass to
A)Callie.
B)Duncan.
C)Earl.
D)the state.
Q5) To "publish" a will means to release it to the media. A)True
B)False
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Chapter 30: Liability of Accountants Other Professionals
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Q1) Penalties for aiding or assisting in the preparation of false tax returns are limited to one penalty per taxpayer per tax year.
A)True
B)False
Q2) Filtration Products,Inc. ,files a suit against Emmett,its former accountant,alleging constructive fraud.Emmett may be held liable
A)if Filtration cannot prove actual fraud.
B)if Emmett was grossly negligent in the performance of his duties.
C)only if Emmett acted with fraudulent intent.
D)only if Emmett impersonated someone else who could be liable for fraud.
Q3) An accountant normally will be held liable to the client for incorrect judgment.
A)True
B)False
Q4) Lebron,an attorney,allows a statute of limitations to lapse on a claim by Midwest Metal Fabrication Company,a client.Lebron
A)can be held liable for malpractice.
B)has violated an ethical standard but cannot be held liable.
C)is subject to criminal penalties under the statute of limitations.
D)will be automatically disbarred.
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Chapter 31: International Law in a Global Economy
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Q1) The government of Iran violates an international law.Persuasive tactics to remedy the situation fail.The only recourse of other nations is to
A)approve the European Union's enforcement of the law.
B)ask the International Court of Justice to enforce sanctions.
C)seek enforcement of the law through the United Nations.
D)take coercive action-sever relations,impose boycotts,go to war.
Q2) Under the act of state doctrine,a firm whose assets a foreign government has expropriated may not recover compensatory damages in a U.S.court.
A)True
B)False
Q3) Congressman Walden and other politicians want to prohibit the import of certain agricultural products that pose a danger to domestic crops.With respect to these products' import,Congress can
A)do nothing.
B)impose quotas,but not tariffs.
C)impose tariffs,but not quotas.
D)prohibit the imports.
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Chapter 32: Adapting the Law to the Online Environment:
The Supreme Court Upholds a Law That Prohibits Pandering
Virtual Child Pornography
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Q1) In Smartphone Games Inc.'s suit against Thermopylae Apps Corporation,Thermopylae seeks to discover electronically stored information (ESI)that should be in Smartphone's possession.If Smartphone did not preserve the ESI despite a clear duty to do so,the company should most likely
A)ask the court to sanction Thermopylae for an unreasonable request.
B)reconstruct the ESI to the best of its ability.
C)refuse to provide the ESI on the ground that it is confidential.
D)settle the dispute.
Q2) Arnie posts online a note that "I have good pix of child & me" with a link to several pictures of minors engaged in sex.Arnie is charged with violating a statute that makes it a crime to distribute material intended to make others believe it is child pornography.He argues that the statute is unconstitutional.The court is most likely to hold that the statute is
A)unconstitutional because it criminalizes speech.
B)unconstitutional because it is overbroad.
C)unconstitutional because it is impermissibly vague.
D)valid because it does not prohibit a substantial amount of protected speech.
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Chapter 33: Adapting the Law to the Online Environment:
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Q1) OmniChem Corporation applies for a patent for a certain chemical compound.Meanwhile,OmniChem licenses its products,including the compound,to Pharmo,Inc. ,which uses the compound to make an anti-cancer prescription drug.Under the terms of the license,Pharmo agrees to pay royalties on OmniChem's "patented" products.When a patent is granted on the compound,OmniChem asks Pharmo to pay royalties on the sales of the anti-cancer drug or stop selling it.Pharmo files a challenge to the validity of OmniChem's patent.Both firms assert their claims less from an interest in profit than a belief in the "rightness" of their respective causes.This position might arguably be
A)illegal.
B)optimal.
C)socially irresponsible.
D)unethical.
Q2) According to the dissent in MedImmune,Inc. ,v.Genentech,Inc.case,a patent licensee can challenge the validity of a licensed patent
A)only after breaching the license agreement.
B)only before breaching the license agreement.
C)without breaching the license agreement.
D)under no circumstances.
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Chapter 35: Management Perspective: E-Mailed
Credit-Card Receipts
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Q1) Dani asks her cousin Cedric to sacrifice his career,move his home and family,and provide services,at a lower salary than usual,to Dani's new Commercial Shipping Company.Dani tells Cedric that he will jointly own and run the firm.Cedric agrees.Later,after the firm gains the benefit of Cedric's services,Dani forces Cedric out.According to the majority in the Braddock case,these facts sufficiently allege the elements of a claim for
A)damages based on quasi contract.
B)recovery in fraud.
C)relief from a unilateral mistake.
D)none of the choices.
Q2) In the Braddock case,in weighing the facts that made up the elements of the plaintiff's claim,the majority cited as a significant factor
A)assurances that were not incorporated into written documents.
B)the arms' length business transactions between the parties.
C)the expectation of the good faith of a family member.
D)the plaintiff's business and professional experience in the industry.
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Page 37
Chapter 34: Case Study With Dissenting Opinion: Prestridge
V Bank of Jena
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Q1) More than thirty days after Rhett receives his account statement from Silverado Bank,he notifies the bank that Thalia forged Rhett's name on some of the checks that the bank has cashed.The majority in Prestridge v.Bank of Jena would most likely hold Silverado liable for A)all checks.
B)checks that were cashed less than thirty days after the statement. C)checks that were cashed more than thirty days after the statement. D)no checks.
Q2) In the situation set out in either of the previous questions,the dissent in the Prestridge case would most likely hold Silverado liable for A)all checks.
B)checks that were cashed less than thirty days after the statement. C)checks that were cashed more than thirty days after the statement. D)no checks.
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Chapter
of Taxing Internet Sales
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Q1) According to the dissent in Casserlie v.Shell Oil Co. ,an inquiry into a seller's motive in setting prices is necessary to determine if the seller acted
A)in good faith.
B)with the motive of driving competitors out of business.
C)with the intent of making the most profit in the least time.
D)to set commercially unreasonable and discriminatory prices.
Q2) Fizzical Fitness,a gym,leased its facilites and equipment from Gym Gear Inc.Fizzical agreed to buy towels and other supplies only from Gym Gear at prices set by the seller at the time of delivery.Later,Fizzical filed a suit against Gym Gear,alleging that the prices were set improperly.According to the majority in Casserlie v.Shell Oil Co. ,an inquiry into Gym Gear's motive in setting the prices is not necessary if it acted A)in good faith.
B)with the motive of driving competitors out of business.
C)with the intent of making the most profit in the least time.
D)to set commercially unreasonable and discriminatory prices.
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Page 39
The Debt That Never Goes Awayits Discharged in
but Still on the Debtors Credit Report
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Q1) In the facts of the first question,according to the reasoning of the dissent in the Central case,the prevailing party would be
A)both Vance and WSU.
B)neither Vance nor WSU.
C)Vance.
D)WSU.
Q2) Orly's debts are discharged in a liquidation bankruptcy.Pester & Recover,Inc. ,buys the discharged debt obligations.With respect to these debts,Pester A)can do nothing.
B)can pressure Orly into paying them.
C)must give Orly additional help to rebuild her life after the discharge.
D)must report the debts to credit reporting agencies as "discharged."
Q3) In the facts of the previous question,according to the court in the Central case,a party that would prefer a different result should seek relief from A)Congress.
B)the courts.
C)the president.
D)the students of WSU and other state schools.
Page 40
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Chapter 38: Adapting the Law to the Online Environment:
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Q1) First Editions,Inc. ,a book dealer based in Texas,does business in all fifty states exclusively online.According to a decision of the United States Supreme Court,for an individual state to compel an out-of-state business to collect and remit state taxes,the business must have in that state
A)a substantial physical presence.
B)a potential marketing base.
C)an accessible Web site.
D)a party paid to solicit business for its products.
Q2) Rewind Investments Inc.owns 90 percent of Swift Blades Inc.(SBI).Rewind's majority shareholders are also its directors and the directors of SBI.SBI's business is the design and assembly of wind-driven turbines.SBI is offered the opportunity to buy Typhoon Turbines,Inc. ,a competitor,but SBI's board turns it down.Within six months,Rewind buys Typhoon.Based on the court's reasoning in Notz v.Everett Smith Group,Ltd. ,,a minority SBI shareholder could bring
A)a claim against Typhoon's former directors.
B)a direct claim against SBI's majority shareholders.
C)a shareholder's derivative suit against Rewind.
D)no claim.
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Chapter 39: Case Study With Dissenting Opinion: Kovarik V
Kovarik
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Q1) Glen and Heidi are married.Later,Heidi's parents invest their savings in certificates of deposit (CDs)in the names of Heidi and her sister Irene.Their parents keep the CDs.When Glen files for divorce from Heidi,he lists the CDs as marital assets.Before the court divides the assets,Irene cashes in the CDs at her parents' instruction without sharing the proceeds with Heidi.Under the reasoning of the majority in Kovarik v.Kovarik,the court will most likely rule that,with respect to Glen and Heidi's marital estate,the CDs are
A)not included because Heidi's parents did not intend to give them to her.
B)not included because Irene cashed them without sharing the proceeds.
C)included because Glen and Heidi were married when the CDs were acquired.
D)included because Heidi's parents gave up control when the CDs were placed in the names of Heidi and Irene.
Q2) In the facts in the previous question,if the CDs are seen as the property of Heidi and Irene,the sisters are most likely
A)joint tenants.
B)tenants at sufferance.
C)tenants by the entirety.
D)tenants in common.
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Page 42
Chapter 40: Unit Case Study With Dissenting Opinion: Dole
Food Co V Patrickson
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Q1) In the facts of the previous questions,a U.S.court might pierce Amigos and Bueno's corporate status to impose liability on their owners,including the government of Chile,if the firms failed to follow or be involved in
A)business activities.
B)corporate formalities.
C)ethical practices.
D)foreign affairs
Q2) Amigos,Ltd. ,and Bueno,S.A. ,are Chilean firms.Amigos owns a majority of the shares of Bueno.The government of Chile owns a few shares of Amigos.Under the decision in Dole Food Co.v.Patrickson,parties who are immune from suit in U.S.courts under the Foreign Sovereign Immunities Act,as instrumentalities of foreign states,would include
A)Amigos and Bueno.
B)neither Amigos nor Bueno.
C)only Amigos.
D)only Bueno.
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Page 43