business law exam 2

When two parties agree in advance on the duration of their agreement, it is called:

Term agreement

Chloe buys a motorcycle on eBay from Junior. In payment, she gives him a promissory note for $7,000. He immediately negotiates the note to Terry. After the motorcycle arrives, Chloe discovers that it is not as advertised. One week later, she notifies Junior. She still has to pay Terry because:

Terry's rights are not affected by Junior's misdeeds

Donna gives a promissory note to C.J. Which of the following errors would make the note invalid?

The due date was specified as "three months after Donna graduates from college"

Duty of loyalty is:

A duty of an agent

When two parties make no agreement in advance about the duration of their agreement, it is called:

Agency at will

Which of the following statements is true under the public policy doctrine?

An employee can be fired for threatening a coworker.

When behavior by a principal convinces a third party that the agent is authorized, even though e) Hermione worked for this company for a year and a half. Her title was chief knowledge officer. (This is true.) she is not, it is

Apparent authority

Someone who buys goods in good faith from a seller who deals in such goods

BIOC

Steps necessary to make a security interest valid against the debtor, but not against third parties

BIOC

Which case does not represent a purchase money security interest?

Bank lends money to Auto Dealer to purchase 150 new cars, which are the collateral

Brook moved from Denver to San Francisco to take a job with an advertising agency. His employment contract stated that he was "at will and could be terminated at any time." After 28 months with the company, he was fired without explanation. Which of the following statements is true?

Because he had a contract, he was not an employee at will.

Under the FMLA:

Both men and women are entitled to take a leave of absence from their jobs for childbirth, adoption, or a serious health condition of their own or in their immediate family

In a contract for the sale of goods, the offer may include any terms the offeror wishes; the offeree must accept on exactly those terms or reject the deal.

False

In some states, employers are not liable for false statements they make about former employees unless they know these statements are false or are primarily motivated by ill will.

False

Negotiation means that an instrument has been transferred to the holder by the issuer.

False

One of the primary goals of the Code is to teach the debtor a lesson.

False

Only workers, not their spouses or children, are entitled to benefits under the social security system.

False

Promises made by the employer during the hiring process are not enforceable.

False

Sellers can be bound by written warranties but not by oral statements.

False

The Code permits individual debtors (but no organizations) to keep some property for themselves.

False

The bankruptcy court issues an order for relief to give the debtor a chance to file a petition.

False

The same states must be named in the Choice of Law and Choice of Forum provision.

False

To be negotiable, bearer paper must be endorsed and delivered to the transferee.

False

When a debtor defaults, a secured party must seize the collateral and hold it, using reasonable care, but may not sell or lease it.

False

Without an agreement of the parties, there can be no security interest.

False

Payment made within the year before a petition is filed with the goal of hindering creditors.

Fraudulent transfer

Someone painting the outside of a building you own crashed through a window, injuring a visiting executive. Which of the following questions would your lawyer not need to ask to determine if the painter was your employee?

Had you checked the painter's references?

Debtor's promise to pay a debt after discharge.

Reaffirmation

Any employer has the right to insist that employees submit to a lie detector test.

False

Children under 16 may not hold paid jobs.

False

Each of the Code's Chapters has one of two objections - rehabilitation or liquidation.

False

Federal law limits the number of hours every employee can work.

False

For a modification to a contract to be valid, both parties must sign it.

False

A creditor is not permitted to force a debtor into bankruptcy.

False

A force majeure clause indicates who has the authority to write the first draft of the contract.

False

A party may take a security interest in tangible things, such as goods, but not in intangible things, such as bank accounts.

False

A promissory note may be valid even if it does not have a specific due date.

False

An employee may be fired if she disobeys a direct order from her boss not to join a labor union.

False

Debtors are not liable for money owed before the filing.

Discharge

The person who pays a draft:

Drawee

The person who issues a draft:

Drawer

Which of the following duties does an agent not owe to her principal?

Duty to reimburse

Property that individual debtors can keep for themselves.

Exempt property

A buyer in ordinary course of business takes goods free of an unperfected security interest but does not take them free of a perfected security interest.

False

A contract for the sale of $300 worth of decorative stone must be in writing to be enforceable

False

Bank has loaned unsecured money to Retailer, which still owes $700,000. Nervous that Retailer is on the verge of bankruptcy, Bank sends a "notice of security interest" to Retailer, claiming a security interest in all the inventory and real estate of Retailer. Retailer does not respond. Bank files its notice in the state's central filing office. When Retailer goes bankrupt, Bank

Has no security interest in either the real estate or the inventory

George was furious when Hermione left the company in the middle of a very busy sales period. He vowed that he would get even with her. Another employer called to check Hermione's references. Which of the following statements should George make, if his goal is to limit his company's potential liability?

Hermione worked for this company for a year and a half. Her title was chief knowledge officer. (This is true.)

Anyone in possession of an instrument if it is endorsed to her:

Holder

When an agent has authority to perform acts that are necessary to accomplish an assignment, it is called

Implied authority

The maker of a promissory note or the drawer of a draft:

Issuer

An instrument is negotiable unless:

It is signed only by the drawee

Someone who issues a promissory note:

Maker

Millie lends Arthur, her next-door neighbor, $25,000. He gives her his diamond ring as collateral for the loan. Which statement is true?

Millie has an attached, perfected security interest in the ring

A security interest taken by the person who sells the collateral or advances money so the debtor can buy it

PMSI

Steps necessary to make a security interest valid against the whole world

Perfection

The order in which creditors will be permitted to seize the property of a bankrupt debtor

Priority

The possessor of a piece of order paper does not have an unconditional right to be paid if:

The possessor is the payee

A party with a perfected security interest takes priority over a party with an unperfected interest.

True

A severability provision asks the court simply to delete the offending clause and enforce the rest of the contract.

True

An employee may be fired for a good reason, a bad reason, or no reason at all.

True

The federal government has the right to inspect workplaces to ensure that they are safe

True

The possessor of a piece of commercial paper always has an unconditional right to be paid

True

Three parties are involved in a draft

True

Under strict liability, an injured consumer could potentially recover damages from the product's manufacturer and the retailer who sold the goods.

True

Unless the contract provides otherwise, both sides in a contract dispute pay their own legal fees.

True

Payment to a creditor immediately before filing.

Voidable preference

Finn learns that, despite his stellar records, he is being paid less than other salespeople at Barry Co. So he decides to start his own company. During his last month on the Barry payroll, he tells all of his clients about his new business. He also tells them that Barry is a great company, but his fees will be lower. After he opens the doors of his new business, most of his former clients come with him. Is Finn liable to Barry?

Yes, Finn has violated his duty of loyalty to Barry

A whistleblower is

always protected when filing suit under the False Claims Act