BUL
Sometimes, when a buyer breaches a contract for a sale of goods and the seller has not yet produced the goods, the seller can recover the lost profits.
True
Carmen and Diego are shareholders of Espresso Inc. Carmen's written authorization to Diego to vote her shares at a shareholders' meeting is
a proxy.
An insurable interest is
an interest in goods permitting a party to insure against their damage.
Denny, a certified public accountant and an investor, and Ethel, an insurance salesperson and a realtor, may create an agency relationship for
any legal purpose.
East Bay Café orders seafood from Fresh Catch Company. Fresh places the goods at East's disposal. Fresh's performance under the contract is
complete.
Holiday Corporation sells Idyll-brand campers and trailers. Under most circumstances, Holiday will be presumed to have warranted that its title to the goods is
good and valid.
The major features of an LLP are that it limits the personal liability of the partners and
it allows the partnership to continue as a pass-through tax entity.
Roy is a director of Sales Inc. Sales enters into a contract with TeleCenter Corporation in which Roy has a personal interest. Roy must
make a full disclosure of the conflict of interest.
Bianca, a minor, enters into a contract to buy two all-season passes from Chalet Ski Park. The contract will be made enforceable if, after reaching the age of majority, Bianca
ratifies it.
Daisy is a director of Excavation Corporation. She opposes an offer to merge Excavation with Fill Inc. because she would lose her board position. Daisy is most likely liable for breach of
the duty of loyalty.
Minh owns a beach house that she rents to vacationers. Minh gives her son Ngo a trip to Omaha on his graduation from community college. Minh sells her car to her neighbor Phan for $4,500. UCC Article 2 covers
the sale to Phan.
Welding Corporation makes a good faith attempt to incorporate but there Is a defect in its incorporation. Welding undertakes business as a corporation. In this circumstance, the firm's existence may be challenged by
the state.
'Olin is a partner in Precision Plumbing. When the partners decide to dissolve the firm, Olin collects and distributes the assets. This results in
the termination of the firm's legal existence.
Under the doctrine of respondeat supenior, a corporation can be hold liable for
torts committed by its agents or officers.
Deb is a director and Erv is an officer of Fast Food Inc. Liability for the firm's intentional disregard of consumer-protection statutes may extend to
Deb and Erv
A private and informal agreement usually suffices to form a limited partnership.
False
Any business-except a sole proprietorship-need not file an income tax return.
False
Without copyright or patent protection, a business firm's competitor cannot simply copy the firm's product.
False
Mikios employs Nathalie to handle a list of financial transactions on Miklos's behalf. This power will terminate.on
Mikios's death or incapacity.
Holes Inc. begins digging a foundation at a construction site for Investment Company under a contract for a certain price. After six months, Holes demands a higher price because of extraordinary difhoulibes that were totally unforeseen at the time the contract was formed. An agreement to pay the higherance is
Enforceable due to unforeseen difficulties.
'In an agency relationship, one party called the principal agrees to represent or act for another called the agent.
False
On a contract-"F.O.B. New York"-for a sale of almonds by a broker in California, the risk of loss passes to the buyer when conforming goods are placed in the possession of the carrier.
False
Only a mistake of value or quality makes a contract voidable.
False
The agent must maintain separate accounts for the principal's funds and for the agent's personal funds, but may intermingle these accounts.
False
The measure of compensatory damages does not vary by type of contract.
False
Unlike a sole proprietorship or a partnership, a limited liability company cannot be held liable for a loss caused by the wrongful acts of its members.
False
A buyer will be deemed to have accepted delivered goods if, after a reasonable opportunity to inspect the goods, the buyer does not reject them.
True
Every act of a partner concerning partnership business binds the firm.
True
Identification is the express designation of the goods provided for in a contract, and the parties to the deal can agree in their contract when this will take place.
True
If a seller fails to deliver conforming goods, the measure of recovery in the buyer's suit for damages is the difference between the contract price and the market price at the time the buyer learns of the breach.
True
The Age Discrimination in Employment Act extends to federal government employees but state employers are usually immune from age-based claims.
True
When a buyer breaches a contract for a sale of land, the seller can recover the difference between the contract price and the market price of the land.
True
Architect LLC enters into a contract with Barn & Silo Inc. to provide designs for a certain number of farm buildings. Architect provides fewer than half of the designs by the time specified in the contract because the firm is busy with other projects. Architect's performance is most likely
a material breach.
Drain Equipment Inc. contracts to sell its assets to Excavation Corporation. Before either party has performed, rescission of this contract requires
a mutual agreement to rescind.
Sean buys a franchise from Taco Mission Inc. This relationship, like all other franchise relationships, is governed by
all of the choices.
Rene is a delivery driver for Siciliah Pasta Company. Rene does exactly what the company tells her. Rene s
an emplovee.
Ensure Care LLC's owners are Fez and Guan. As a limited liability company, Ensure Care enters into contracts
as a legal entity apart from its owners.
Chair Company contracts to deliver a dozen suites of dining room tables and chairs to Furniture Store on May 1, On April 15, Chair tells Fumiture that delivery will be delayed until June 1. Furniture may
await performance, sue Chair, or suspend its own performance.
Lsa brings a successful sult against her employer Mold & Die Corporation for employment discrimination. Lisa may be awarded
back pay, retroactive promotions, and damages.
Chase, the owner of Data Master, a sole proprietorship, wants to obtain additional business capita This opportunity is most likely limited to
borrowing funds
Meds-Free Inc. enters into a contract to sell its product line to Naluropath Clinic, which later sells some of the items to Oneida, a patient and consumer. Article 2 of the UCC applies to
both transactions.
Beal, a member of a protected class, applies for a job with Coffee Brew Corporation, but fails the company's employment test and is not hired. Beal believes that the test has an unintentionally discriminatory effect. If so, this is
disparate-impact discrimination.
Oscar is a partner in Party Caterers. Oscar's death will
dissociate the partner from the firm.
Ling owns and operates Metro Delivery Service as a sole proprietorship. When she dies, the business will automatically
dissolve.
Megan contracts to sell Nonny her horse for $4,000. This contract will be fully discharged when Megan and Nonny
exchange the horse for the money.
Title Vill of the Civil Rights Act applies to employers and labor unions with at least
fifteen employces or members.
Bon, an agent for City Motors Inc., e-mails Dale on May 1 that the dealer will sell to her a 2018 Ford pick-up truck for $25,000 between May 1 and July 1. Bon's offer to Dale is
irrevocable for the stated period.
Jet enters into a contract to buy a certain warehouse from Kim. At the closing, Kim refuses to transfentitle in a suit for breach. Jet should seck specific performance to
obtain the exact bargain promised in the contract.
Riverside Resort replaces Sharon, a forty-five-year-old employee, with Terry. Sharon files a suit against the employer under the Age Discrimination in Employment Act. To establish a prima facie case, she must show, among other things, that she is
qualified for the position.
To induce the sale of an auto parts business, Carmel fraudulently represents the worth of the Inventory to Drew, who offers an inflated price. They enter into a contract to close the deal. On doser inspection, the buyer learns the true value of the goods. Drew can
rescind the contract.
Restoration Inc. enters into a contract to refurbish an old bus depot for Quality Diners LLC. II Restoration completes most of the work promised in the contract, its performance will be
substantal.
In determining procedural unconscionability, a court is most likely to consider whether
the buyer had an opportunity to ask questions about the contract.
Cindy, a real estate agent, sells her friend Doug's house without charging a commission. In return, Doug promises to give Cindy $1,000. This promise is not an enforceable contract because
the house has already been sold-the consideration is past.
Dain is a limited partner in Eco Baits, a pest control service organized as a limited partnership, which cernot pay its debts. Dain is liable for the debts
to the extent of his capital contribution to the firm
Corporate sharcholders will most likely be held personally liable for the firm's debts if they
use the firm to perpetrate a fraud.
Grinders Mill agrees to sell to Harvest Company a certain quantity of refined grains. Some of the otherterms in the deal are left open. In the case of a dispute, a court will generally presume
whatever is reasonable.
Trucking LLC enters into a contract to deliver a certain quantity of potatoes to United Foods's refrigerated warehouse in exchange for a specified payment. Trucking delivers the spuds to the location. United's duty to pay is
?
Erin indicates that she is acting as an agent on behalf of an unidentified client-Flight Services Inc. -when she enters into a contract with Go Airlines. Liability to Go for nonperformance of the contract may be imposed on
Erin and Flight Services.
A businessperson who enters into a contract with an investor on behalf of a future corporation is not personally liable on the deal, even though the firm is not yet formed, because the nature of investment is risk.
False
A close corporation need not meet all of the specific requirements set forth in state statutes for corporations because it is essentially a sole proprietorship.
False
A key advantage of the corporate form is the unlimited liability of its owners.
False
A landlord can avoid liability for injuries that occur on rental property by including an excupatory clause in the lease.
False
A limited liability company is a citizen only of the state in which it was formed.
False
A partner can be held liable for a partnership obligation only if he or she participated in, or knew about, whatever it was that gave rise to the obligation.
False
A property owner who hires a realtor to sell the property thereby enters into an agency relationship with an employee for a limited time.
False
Affirmative action programs are often found to be unconstitutional because they deprive members of protected classes of equal protection.
False
An agent can represent two principals in the same transaction, so long as neither is aware of the dual capacity.
False
An undisclosed principal is one whose identity is totally unknown by an agent and a third party at the time a contract is made.
False
The Americans with Disabilities Act defines disability to include a physical or mental impairment that causes "undue hardship."
False
The doctrine of respondeat superior imposes liability for an agent's tort on a principal without regard to the personal fault of the agent.
False
The management of any form of business organization is completely at the owners' discretion and does not affect liability for the firm's obligations.
False
To apply the doctrine of promissory estoppel in a given situation, there must exist no clear or definite promise.
False
Under federal law, the definition of gender discrimination has not been expanded to include discrimination based on pregnancy.
False
Under the Age Discrimination in Employment Act, if an employer offers a legitimate reason for its action, an employee's case is held to be a pretext.
False
Under the Americans with Disabilities Act, employers must accommodate the needs of persons with disabilities, even if doing so causes undue hardship.
False
Under the Uniformed Services Employment and Reemployment Rights Act, any person who has served in the military is entitled to more favorable treatment in the workplace than a co-worker who has not served.
False
When an agent, acting within the scope of his or her authority, contracts with a third party, in no circumstance is the agent liable to the third party.
False
•An independent contractor is, by definition, an employee because the person's physical conduct is controlled, or subject to control, by the employer.
False
•The Equal Pay Act requires equal pay for male and female employees working at the same establishment, regardless of the work they do.
False
Batteries Corporation is a private employer involved in an employmerit discrimination suit under the Civil Rights Act. Punitive damages may be recovered against Batteries
If it acted with reckless indifference to an individual's rights.
jana and Kwan are partners in Lawyers LLP, a limited liability partnershin. Jana supervises the firm's associate Milo, who negligently fails to appear in court on behalf of Norm, a client. Liability to Norm rests only with
Jana and Kwan
Kyla replaces Lomax in his job at Motor Corporation. Lomax believes that he has been discriminated against on the basis of his age. For the Age Discrimination in Employment Act to apply
Lomax must be forty years of age or older.
Riki contracts to buy a franchise from Sushi Inc. In this contract, as in most franchise contracts, the determination of the territory to be served is made by
Sushi.
A corporation is intangible and invisible, and exists only in the contemplation of the law.
True
An agreement to agree to the material terms of a contract at some future date may be enforceable.
True
An employer can avoid liability under Title VIl by showing that the employer's standards for hiring and promoting have a substantial, demonstrable relationship to realistic qualifications for the job at issue.
True
An excessive price for goods and unequal bargaining power can indicate to a court that a sales contract is unconscionable.
True
Because of the potential for punitive damages, plaintiffs often include a claim for fraudulent misrepresentation in their contract disputes.
True
Consideration must provide the basis for the bargain struck between contracting parties.
True
If a director commits a breach of fiduciary duty, the shareholders have the inherent power to remove the director from office by a majority vote.
True
If a limited liability company is not meeting the economic purpose for which it was established, a court may order the dissolution of the firm.
True
The greater the employer's control over the work, the more likely it is that the worker is an employee.
True
To bring a Title VIl claim as a class action, employees must prove a company-wide policy of discrimination that has a common effect on all of the plaintiffs.
True
Apt Adapt Inc. is formed to coordinate the design and delivery of projects and products to help communities cope with the effects of climate change. The stated purpose is to have a material positive impact on society and the environment, and to make a profit. Apt Adapt is
a benefit corporation.
Apt Adapt inc. is formed to coordinate the design and delivery of projects and products to help communities cope with the effects of climate change. The stated purpose is to have a material positive impact on society and the environment, and to make a profit. Apt Adapt is
a benefit corporation.
Analytics LLC processes misinterpreted data furnished by Botch Services to propose a marketing plan for Clientele Inc. Analytics and Clientele are both ignorant of the mistaken data. Their contract can be rescinded on the basis of
a bilateral mistake
Pipeline Corporation requires its employees to have a high school diploma. In a suit against Pipeline under the Civil Rights Act, the employer shows a connection between a high school education and job performance. Most likely, this is
a business necessity defense.
Edna, Fiona, and Gwyn form a limited partnership to make and test-market Happy Donuts and other bakcar-home pastries. To avoid a dispute in the event of the firm's dissolution about how its assets should be valued and distributed, and whether the business should be sold, the partners should sock
a buy sell agreement.
Metro Fabrication Inc. may be liable for the sexual harassment of an employee if the company knew or should have known about the harassment, failed to take immediate action, and the harassment was committed by
a company supervisor.
Metro Moving Service holds itself out to customers as being a corporation but makes no attempt to incorporate. In this circumstance, the outfit is most likely
a corporation by estoppel.
Market Data Corporation's articles list an incorrect address for its incorporator. Under this circumstance, Market Data is most likely
a de jure corporation.
Raceway LLC licenses the trademarks to its products to Stadium Markets Inc. to reproduce on dothing and other goods for sale. This is
a franchise.
Seacoast Transport Company pays Trucks & Trailers Inc. a stated price for the use of seven tractor-trailer rigs for a year. Under the UCC, this is
a lease
To open and operate Bool City, a Halloween costume and paraphernalla shop, Dwayne and Erica forma business organization that combines the limited lability aspects of a corporation with the lax advantages of a partnership. Their form of business organization is
a limited liability company
To be certain to transact business in states other than its state of formation with no limitations, Real Estate Investment Trust should choose as its form of business organization
a limited partnership.
Luis hires Mieko to act as his agent to buy Ngoc's Southeast Asian Café. Luis tells Mieko to reveal only that she is buying the restaurant on behalf of a third party, without telling Ngoc's seller who that third party is. Luis is
a partially disclosed principal.
Erin, a shareholder of Finance Inc., demands the right to inspect corporate records to determine whether management has engaged in self-dealing that impacts the company. The firm refuses the request. On Erin's challenge, a court is most likely to hold that her request constitutes
a proper purpose.
Oin applies for a job at Rocket Sclence Inc. He passes a test to determine which applicants are eligible for hiring, but Rocket discards the results, and Qin is rejected. To support a claim for discrimination against the employer under Title VIl of the Civil Rights Act. Qin must be a member of
a protected class.
Qin applies for a job at Rocket Science Inc. He passes a test to determine which applicants are eligible for hiring, but Rocket discards the results, and Qin is rejected. To support a claim for discrimination against the employer under Title VII of the Civil Rights Act, Qin must be a member of
a protected class.
Beth participates in an investigation into possible violations of Title VIl of the Civil Rights Act at ChemCo Inc., where she is an employee. As a result, the employer demotes her. Beth can file
a retaliation claim.
Bayside Restaurant LLC is a limited liability company. Its sole member is Conrad, For federal income tax purposes, unless the firm indicates otherwise, it will automatically be taxed as
a sole proprietorship.
Doris wants to form a new firm-eBeats-to market a new app. Fees are required to form all of the following business organizations except
a sole proprietorship.
Red offers to pay Sari to deliver certain documents within thirty minutes. Sarl can accept the offer only by completing the task within the deadline. If she does, Red and Sari will have
a unilateral contract.
The Uniformed Services Employment and Reemployment Rights Act applies to
all of the choices.
•Without authorization, Lars contracts on behalf of Mina to have Nemo paint Mina's Boutique. If Mina decides to ratify the contract, she must affirm
all of the contract.
Limited liability business forms, such as LLCs, LPs, and LLPs, offer tax advantages that are similar to those offered by
an S corporation.
Rene contracts with Scot to pay him $5,000 for repairs to Rene's lake cabin. After Scot performs, Rene tells him that she cannot pay him in full immediately. They sign an agreement in which Rene promises to pay $2,500 now instead of $5,000 later. This is
an accord and satisfaction.
Watercraft Inc. employs Vern as a sales agent for a trial period. At the end of the period, Watercraft and Vern disagree on the amount of the commissions Vern is due for sales that he made. Vern may demand
an accounting.
Pastries inc, sends Rolio its catalog showcasing a variety of baked goods for certain prices. This is
an ad, not an offer
Motor Parts Sales Inc. hires Nolly to work on its shipping dock, accepting deliveries, and dispatching trucks, and dealing with customers and drivers. With respect to Motor Parts, Nolly is most likely
an agent.
Rosario is a chef and caterer who hires out on a per-project basis to companies with on-location work sites, as well as to the hosts of banquets and other events. In this capacity, Rosario is
an employee
Nora works at Oil & Gas Inc. She is a sales representative who works with Oil & Gas customers. The company closely supervises its sales reps, and dictates their schedules. With respect to third parties, Nora is
an employee and agent:
Marketing Inc. offers concrete a campaign to increase nike cream Inks online bus ness. Hke. (tees to nay for the seviooheme iTh
an express contract
Jess, a salesperson for Kitchens Inc, shows Lane, a buyer for Metro Diner, display items in Kitchens' showroom, stating that any purchased equipment will match the display. This is
an express warranty.
Diamonds & Gold Inc, hires Esmé to buy gems and precious metals from various sources on lEs behalf. in this relationship, Diamonds is
an independent contractor.
Maeve posts her motorcycle for sale on an online auction site. This is
an invitation to negotiate, not an offer.
Masonry Inc.'s stated purpose is to perform the stonework on buildings and other structures. Masonry contracts with New Contracting to pour the pilings for a bridge's foundation despite lacking the skill and license to do the work. This is most likely
an ultra vires act.
Lisa brings a successful suit against her employer Mold & Die Corporation for employment discrimination. Lisa may be awarded
back pay, retroactive promotions, and damages.
Beryl enters into a contract with Clay for a guided tour of Deep Canyon. Clay represents that he is an experienced, knowledgeable guide, when in reality he has never been in the canyon. Most likely, Bery!
can rescind the deal based on fraudulent misrepresentation.
Curly Fries Inc. grants its agent Dian an exclusive territory in which to sell its products. The company cannot compete with Dian in that territory under the duty of
cooperation.
Gary drives a truck as an employee for Hauling Inc. Gary would most likely be considered acting outside the scope of her employment if he
crashed into a car at the airport while off duty.
Start-Up LLC is a limited lability company without a written operating agreement. Among the members, a dispute arises concerning the division of profits. Under most LLC statutes, the profits will
divided equally among the members
With respect to taxes imposed on limited liability companies, most states
follow the federal rules.
Security Insurance Agency contracts with Town Motors to buy six cars. The contract lists the cars by their VINs (vehicle identification numbers). Under the UCC, identification
has taken place.
Oren believes that Plumbing Contractor discriminated against him on the basis of race. He files a suit against Plumbing under the Civil Rights Act. To establish a prima facie case of employment discrimination, Oren must show that
he is a member of a protected class.
Kathy is a director of Line Production Inc. As a director, with respect to the corporation, Kathy is expected to subordinate
her personal interests to the corporation's welfare.
Ira serves in a representative capacity for Jett. Key is injured through Ira's negligence. Jett may be liable to Key if Ira's conduct occurred
in the course and scope of Ira's employment.
Data Analyncs LlC is a limited lability company. Unless the frm's articles of organization specily othenwse. (Lwill most likely be assumed that the hrm is
member managed
To gain an advantage in a business deal, Masonry LLC engages in fraud. Nicole, a member of Masonry, significantly contributes to the firm's misconduct. For any resulting damages, a court is most likel to hold tuicols
personally liable.
Rex forms Shell Company to assume debts that he does not wish to pay. The firm is not intended to make a proft. and Rex does not provide it with sufficient capital. This most likely warrants
piercins Sheil's corporate veil.
Ruby is interested in buying a franchise from Snax Stores Inc. This transaction, like other franchise deals, is regulated to protect
prospective franchisees from dishonest franchisors.
Embers Corporation orders twelve fire extinguishers from Firefighting Inc., which delivers the equipment. This is most likely
sale of goods.
A business organizational form that limits its owners' liability allows the firm to lawfully
take risks.
Jon, a paraplegic, applies for a broadcaster's job with a radio station. The manager says, "You meet all our requirements. But we need someone who can move around the studio without accommodation." Most likely, Jon could recover from the station under
the Americans with Disabilities Act.
Compliance with Title VI of the Civil Rights Act is monitored by
the Equal Employment Opportunity Commission.
Retail LLC contracts with Paving inc. to grado and pave a parking lot. The contract provides that it cannot be assigned without Retail's consent. Later, Paying assiens the contract to Roadwork Company without obtaining Retail's consent. Retail could most successfully argue that the contract cannot be assigned because
the assignment will materially change at risk
Real Stones Inc, and Sparkling Jewelry stores enter into a contract for a sale of gemstones, The seller fails to deliver. Sparkling can recover as damages the difference between
the contract price and the market price.
Donuts Whole Inc. offers an entrepreneur the opportunity to operate a franchise bakery under the Donuts Whole trade name. Before a franchise contract is signed, Donuts Whole must explain
the contract's termination provisions.
•Bakery LLC hires Cora to sell the company's products in a certain area. The company agrees to pay Cora a salary, plus commission, for a trial period. They also agree that she can sell using any methods and during any hours that seem appropriate. The key factor in whether Cora is an employee is
the degree of the employer's control over the details of the work.
Larry is an agent for Mary. She gives him clear instructions to enter into contracts on her behalf only on Mondays, Wednesdays, or Fridays. He enters into a contract on her behalf on Tuesday. Larry has breached
the duty of obedience.
Renew inc. contracts to resurface the pools at Swim Park by June 1. Renew knows that if performance is not timely, Swim Park will have to delay its scasonal opening. Renew finishes the job June 15. In a suit for breach. Swim Park can recover
the loss of profit from the delayed opening.
Vim applies for a job at Welding Inc. She passes a test to determine which applicants are eligible for hiring, but Welding discards the results, and Vim is rejected. To successfully defend against a claim for discrimination under Title VIl of the Civil Rights Act, the employer must show that
the practice in question was justified.
Marv files a suit against the state of New Hampshire, alleging employment discrimination under the Age Discrimination in Employment Act. The state asks the court to dismiss the suit. The court is most likely to rule that
the state is immune from the suit.
Eugene, an accountant, convinces his client Faye to enter Into a contract to invest her savings in Gather, a non-existent social media site. There is clear and convincing evidence that Faye did not act out of her free will. This is
undue influence
Laura is the only female employee in the maintenance department of Motor Service Inc. Her supervisor teases and plays tricks on her so relentlessly that she feels compelled to quit. This is most likely
© a constructive discharge.
A corporate officer is liable to the corporation or its shareholders for a bad business decision.
• False
Every form of business organization is a legal entity separate and distinct from its owner or owners.
• False
The board of directors hires the corporation's officers, but normally can remove them only for cause.
• False
The duties that an agent owes a principal must be set forth in the agency agreement because they do not arise by operation of law.
• False
Shareholders' assumption of personal liability, as guarantors, for the obligations of a corporation can enable the firm to obtain credit.
• True
Macve sells New Energy, a sole proprietorship that makes and sells solar panels, to Olaf. This Is
• a transfer of the ownership of the business.
Bee is an employee of Credit Agency Inc. On the termination of Bee's position, Credit pays Bee $10,000 to agree not to disclose the employer's confidential information. Later, Bee sells the information to Debt Records LLC for $100,000. In a suit for breach, Credit is most likely to recover
$10,000 from Bee.
Fiesta LLC contracts to buy 1,000 balloons from Gas Bags Inc. for $1 per item. When the market price decreases to 50 cents per balloon, Fiesta refuses to go through with the deal. Gas Bags can recover
$500.
A contract provision that deprives one party of the benefits of the agreement may seem unfair but a court is not likely to consider it unconscionable.
False
A contract that calls for an action contrary to public policy is illegal but not unenforceable.
False
The party on whom duress is exerted can choose to avoid the entire transaction.
True
Outdoor Outfitters Store contracts to buy fifty tents from Pitched Camp, Inc. Unless the contract states otherwise, this document is assumed to be
a shipment contract.
Bayside Restaurant LLC is a limited liability company. Its sole member is Conrad. For federal income tax purposes, unless the firm indicates otherwise, it will automatically be taxed as
a sole proprietorship.
Steel Mill Inc. makes an offer to Teri to enter into a contract to work as an metallurgical engineer for a certain salary for one year subject to a five-year renewal based on his performance. Teri accepts the offer. This is a valid contract because it includes
an offer and an acceptance.
Hometown Bank posts on its website an offer of a reward for information leading to the apprehension of a certain criminal. This offer could normally be terminated by
any of the choices.
Mesa County contracts with New Construct Inc. to build a courthouse. New Construct hires Odell to excavate the site. Odell's work damages adjacent properties. Mesa files a suit against the excavator, who argues that the county is not named in his contract with New Construct. Most likely, the court will hold that Odell is
liable on the ground that Mesa is an intended third-party beneficiary.
Rena asks Sully, "Do you want to pay me to repair your forklift?" This is
not an offer, because the terms are not definite.
Renew Inc. contracts to resurface the pools at Swim Park by June 1. Renew knows that if performance is not timely, Swim Park will have to delay its seasonal opening. Renew finishes the job June 15. In a suit for breach, Swim Park can recover
the loss of profit from the delayed opening.
National Trucking Company begins transporting crude for Oil Inc. under a contract for a stated amount per load. After six months, National demands an increase in the stated amount because ordinary business expenses have increased. Oil's agreement to pay the increased amount is
unenforceable due to the preexisting duty rule.
Choosing a business organizational form that limits its owners' liability is associated with the potential for higher profits.
• True
Like a partner in a partnership, the member of a limited liability company has the power to dissociate from the firm at any time, but may not have the right.
• True
The operating agreement of a limited liability company and a state's LLC statute can be applied together to determine the outcome of a dispute between the firm's members.
• True
A limited liability company that operates in more than one state may not receive consistent treatment. This is because, according to the principle that in most states determines the law that applies to a foreign limited liability company, one state's courts must
• interpret and apply another state's laws.
Phone Apps LLC is forming as a limited liability company. To become a manager-managed firm, Phone Apps' members must
• refrain from participating in the firm's operations.
A contract that only one of the parties can enforce in a court is not valid.
False
A franchisor can mandate retail prices for the goods that a franchisee sells.
False
A franchisor does not have good cause to terminate a franchise for a franchisee's failure to meet specified sales quotas.
False
Key promises to pay Liv, his niece, $5,000 if she obtains her degree at Metro College, where she is in her third year. Liv graduates. Key must pay because
Liv obtained a degree at Metro.
Quaff Café buys twenty-five crates of apples from Reynaldo Produce, Inc. The parties agree to ship the apples "F.O.B. Quaff" via Swift Trucking Company. The apples rot in transit. The loss is suffered
Reynaldo.
Carl starts up, and assumes the financial risk of, Data Works, a new marketing enterprise. As a sole proprietorship, the enterprise must meet legal requirements relating to
all of the choices.
In most situations, with respect to a limited liability company's debts, the firm's members are shielded from
the loss of their capital investment in the firm.
A promise made in return for an act or event that has already taken place is fully enforceable.
False
A single person carrying on a business for profit, with control over its operation, can constitute a partnership.
False
An offer made in undue excitement is an effective offer.
False
Because title to the property of a limited liability company must be held in the name of one or more of its members, disputes over its ownership is avoided.
False
Corporate stocks and bonds meet the requirements to be among the items of property characterized as goods under the UCC.
False
If a member of a limited liability company dissociates from the firm, the other members can continue the firm's business, and the dissociated member can continue to act as an agent for the firm.
False
If a seller fails to deliver the goods, the buyer can purchase other goods to substitute for those due under the contract, but cannot then sue for consequential damages.
False
In a limited partnership, a general partner assumes no liability for partnership debts beyond the amount of capital contributed.
False
One of the requirements of a valid contract is an adequate market for the deal's goods or services.
False
Parties to sales and lease contracts are not free to agree to terms different from those stated in the UCC.
False
The Franchise Rule does not require a franchisor to make any disclosures to prospective franchisees but what is disclosed must be material and informative.
False
The breach of a contract for a sale of goods qualifies for specific performance only when substantially identical goods can be bought or sold in the market.
False
Under the law that governs the international sale of goods, when an acceptance to a contract includes terms additional to those in the offer, the terms automatically become part of the deal.
False
When a person who is not a partner holds himself or herself out as a partner, a court may impose liability— and partnership rights-on the alleged partner.
False
A franchisee's breach of the duty of honesty and fidelity can be enough to allow a franchisor to terminate a franchise even if their contract contains a notice-and-cure provision.
True
A novation requires the contracting parties to make restitution of whatever they received under the contract.
True
If contracting parties attach materially different meanings to a contract word or term subject to more than one reasonable interpretation, a court may allow the contract to be rescinded.
True
Misrepresentation of law does not ordinarily entitle a party to avoid a contract.
True
Sellers can effectively disclaim or modify title warranties by asserting that they are transferring only such rights, title, and interest as they have in the goods.
True
To open and operate Boo! City, a Halloween costume and paraphernalia shop, Dwayne and Erica form a business organization that combines the limited liability aspects of a corporation with the tax advantages of a partnership. Their form of business organization is
a limited liability company.
Lazlo owns and operates Market Place, a venue for growers, crafters, and others to sell their goods, without creating a separate business organization. He receives all the profits from the vendors' fees and concession sales. This is most likely
a sole proprietorship.
'Confection Corporation orders Double Chocolate Bars from Edible Distribution Company. Edible identifies the goods. Before they are shipped via Fast Shipping LLC, an insurable interest in the goods exists in
both Confection and Edible.
Start-Up LLC is a limited liability company without a written operating agreement. Among the members, a dispute arises concerning the division of profits. Under most LLC statutes, the profits will be
divided equally among the members.
Ochre holds one ton of perishable fruit in storage for Produce Corporation. If Produce does not pay for the storage, under the doctrine of mitigation of damages, Ochre is held to a duty to
do whatever is reasonable to minimize the damages.
Del and Efron want to form a limited partnership to do general business bookkeeping with an emphasis on tax accounting. In most states, a limited partnership will be created when Del and Efron
file a certificate of limited partnership.
Luc, a vehicle dealer, offers to sell Mel a truck and trailer, which Luc claims can haul a certain weight. He knows nothing about the capability of the truck, but it is not as he asserts. Mel buys the truck. On learning the truth, Mel confronts Luc, who says he was not trying to fool Mel-he was only trying to make a sale. This is
fraudulent misrepresentation.
Mara and Nim enter into a contract for a sale of orchids that requires payment within thirty days of delivery. Under the UCC, the payment term in the contract
is fully enforceable.
Marketing Solutions Inc. promises to employ Niki as a software engineer. In reliance on the promise, Niki quits her job with Online Ad Agency, but Marketing Solutions does not hire her. Most likely, Marketing Solutions is
liable to Niki under the doctrine of promissory estoppel.
Beth and Connie do business as Dig Excavators. In acting on the firm's behalf, Beth makes an honest error in underestimating the cost of a certain project. In this situation, to her firm, Beth is liable for a breach of the duty of
none of the choices.
Grass Farm LLC offers to sell fifty bales of hay at a certain price to Horse Stable Inc. The owner of the stable responds, "We agree if you agree to make it 100 bales for the price." Their contract is formed according to
none of the terms.
Steel Buildings Inc. agrees to sell four portable garages to Truck Service Center. Five days later, Truck refuses delivery and cancels the contract. Steel is entitled to
resell the garages and recover any damages from Truck.
Primo tries to start his car with no success. He yells that he will sell the car to anyone for $10. Quanto, a passerby, hears Primo's yell. This is not an effective offer because it lacks
serious intent.
Restoration Inc. enters into a contract to refurbish an old bus depot for Quality Diners LLC. If Restoration completes most of the work promised in the contract, its performance will be
substantial.
Espresso Brew Inc. uses a Web site to provide downloadable information to prospective franchisees. This electronic information is the equivalent of an offer that must comply with
the Federal Trade Commission's Franchise Rule.
Real Stones Inc. and Sparkling Jewelry stores enter into a contract for a sale of gemstones. The seller fails to deliver. Sparkling can recover as damages the difference between
the contract price and the market price.
Nora and Owen do business as Property & Profit, a real estate investment partnership. In acting on the firm's behalf, Nora takes advantage of an opportunity to make a secret profit. To her firm, Nora is liable for a breach of
the duty of loyalty.
Van starts Wind Systems to make and sell turbines. Later, Van contracts with Xi to invest additional capital in the firm in exchange for 25 percent of the profits. Vaughn and Xi are not partners in Wind Systems because
they do not have joint control over the business.
Eugene, an accountant, convinces his client Faye to enter into a contract to invest her savings in Gather, a non-existent social media site. There is clear and convincing evidence that Faye did not act out of her free will. This is
undue influence.
