Law 2- Final Exam
The president of Deal Corporation wrote to Boyd, offering to sell the Deal factory for $300,000. The offer was sent by Deal on June 5 and was received by Boyd on June 9. The offer stated it would remain open until December 20. The offer:
May be revoked by Deal any time prior to Boyd's acceptance.
Mern Corp. sells computers and computer software to the public. Mern sold and delivered a personal computer to Whyte on credit. Whyte executed and delivered to Mern a promissory note for the purchase price and a security agreement covering the computer. If Whyte purchased the computer for personal use and Mern fails to file a financing statement, which of the following is correct?
Perfection of Mern's security interest occurred at the time of attachment.
Omega LLC is a limited liability company. The operating agreement for Omega is silent on the sharing of profits and losses. Omega has four members. Hess contributed $10,000, Ivan contributed $20,000, Johns contributed $30,000 and Kale contributed $40,000. For the year ending December 31, Year 3, Omega had losses of $200,000. What amount of the losses should be allocated to Ivan?
$40,000
Dell owed Stark $9,000. As the result of an unrelated transaction, Stark owed Ball that same amount. The three parties signed an agreement that Dell would pay Ball instead of Stark, and Stark would be discharged from all liability. The agreement among the parties is:
A novation.
Able, on behalf of Pix Corp., entered into a contract with Sky Corp., by which Sky agreed to sell computer equipment to Pix. Able disclosed to Sky that she was acting on behalf of Pix. However, Able had exceeded her actual authority by entering into the contract with Sky. If Pix does not want to honor the contract, it will nonetheless be held liable if Sky can prove that:
Able had apparent authority to bind Pix.
Becky borrows $100,000 from Bank to open a new restaurant. She gives Bank a security interest in all of her equipment, including equipment to be acquired in the future. Bank perfects the interest by filing a financing statement covering all of the collateral in a proper place. Becky uses all of the money Bank gave her to purchase equipment, but still needs pots and pans. Her brother Alex offers to lend her $1,000 for pots and pans if she will give him her guitar until she repays him. Alex promises to return the guitar on repayment. Becky agrees, Alex gives her $1,000, she gives Alex her guitar, and she buys the pots and pans. Four months later, Becky defaults in payments to both Bank and Alex. Bank repossesses all of Becky's equipment, including the pots and pans. Which of the following statements is correct?
Bank's security interest in the pots and pans is superior to Alex's interest in the pots and pans.
Fred, the general partner of Smackey, Ltd., a limited partnership, wants the partnership's main supplier, Ace Supply, to raise the partnership's line of credit substantially. Ace Supply is reluctant. Fred asks Allison, who is a limited partner in Smackey, Ltd., and is well-regarded in the financial community, to negotiate with Ace Supply. After Allison contacts Ace Supply, Ace Supply agrees to increase Smackey, Ltd's line of credit, erroneously thinking that Allison is a general partner in Smackey, Ltd., although Allison did not make such a representation. If Smackey, Ltd., borrows against its new line of credit with Ace Supply and fails to pay, who can be held personally liable for the payment?
Both Allison and Fred
Chris is a member in an LLC in Philadelphia. Chris wishes to participate in the management of the LLC. His fellow members have told him he cannot participate in its management. Chris seeks your advice. You correctly tell him:
By default, Chris may participate in management unless the LLC elected to be manager managed.
Which of the following is a reason to deny a debtor a discharge in bankruptcy?
Debtor received a discharge in bankruptcy five years ago.
Kent, a 16-year old minor, purchased a used car from Mint Motors Inc. Ten months later, the car was stolen and never recovered. Which of the following statements is correct?
Kent may disaffirm the purchase because Kent is a minor.
Stahl Corp. entered into a written contract to purchase a warehouse from Mehl for $385,000. Thereafter, Mehl received an offer from another purchaser to buy the warehouse for $395,000. As a result, Mehl has refused to transfer the warehouse to Stahl. Stahl has commenced an action for specific performance. Mehl has raised the statute of frauds as a defense. In order for Stahl to successfully prevail on the statute of frauds issue, it must be shown among other requirements that the contract was signed by:
Mehl.
The consideration needed to support a contract must:
Neither flow to the promise NOR have monetary value
Barb e-mailed Steve, an electronics supplier, an offer to buy 300 flash drives imprinted with an attached logo at $2.00 per flash drive. The e-mail bore Barb's electronic signature. Steve immediately e-mailed back his acceptance. A week later, Barb telephoned Steve and truthfully explained that she made an error in her order—it should have been for 200 flash drives. She asked if she could reduce her order to 200. Steve thought the imprinting process was not yet completed and so agreed to reduce the order to 200. After the phone call, Steve discovered that all 300 flash drives had already been imprinted. He delivered the 300, but Barb accepted only 200. Can Steve recover damages with respect to the 100 flash drives that were not accepted?
No, because Steve agreed to the modification and his mistake was unilateral.
Phil asks his employee Ed to take a company truck to deliver some lumber to a customer, Carl. After delivering the lumber, Ed drives 10 miles beyond the customer's house to visit his mother at her house. While pulling the truck in into his mother's driveway, Ed negligently strikes a pedestrian, Vic. If Vic sues Phil for his injuries, will Vic likely recover?
No, because the collision did not occur within the scope of Ed's employment.
Ted Fein, a partner in the ABC Partnership, wishes to withdraw from the partnership and sell his interest to Gold. All of the other partners in ABC have agreed to admit Gold as a partner and to hold Fein harmless for the past, present and future liabilities of ABC. A provision in the original partnership agreement states that the partnership will continue upon the death or withdrawal of one or more of the partners. The agreement to hold Fein harmless for all past, present and future liabilities of ABC will:
Not affect the rights of partnership creditors to hold Fein personally liable for those liabilities of ABC existing at the time of his withdrawal.
Union Bank loaned $200,000 to Wagner. Union required Wagner to obtain a life insurance policy naming Union as beneficiary. While the loan was outstanding, Wagner stopped paying the premiums on the policy. Union paid the premiums, adding the amounts to Wagner's loan. Wagner died and the insurance company refused to pay the policy proceeds to Union. Union may:
Recover the policy proceeds because it is a creditor beneficiary.
Fred entered into a written contract with Joe to purchase a car. The written contract was intended to be the final and complete agreement of the parties. Fred is unhappy with the performance of the car and has commenced an action for breach of contract based on an oral representation made at the time the written contract was executed. Fred may introduce evidence of the representation if it:
Serves to clarify an ambiguous term in the written contract
Able and Baker are two corporations, the shares of which are publicly traded. Able plans to merge Baker into itself. Which of the following is a requirement of the merger?
The boards of directors of both Able and Baker must approve the merger.
Terrence has been Pauline's agent in the liquor business for 10 years and has made numerous contracts on Pauline's behalf. Under which of the following situations could Terrence continue to have the power to bind Pauline?
The firing of Terrence by Pauline.
If a principal is undisclosed, which of the following statements is not true?
The principal may ratify an unauthorized act by the agent.
Diel entered into a written contract to sell a building to Stone. The contract was properly recorded. Stone breached the contract and Diel has brought an action for breach of contract. Stone pleads the statute of limitations as a defense. Which of the following statements is correct?
The remedy sought by Diel will be barred when the period of time provided by the statute of limitations has expired.
Pix is offering to issue $10 million of its securities pursuant to Regulation D of the Securities Act of 1933. Under the applicable provisions of Regulation D:
The securities may be debentures.
Trinket Corporation is being sued by its distributor, International, for nonpayment of debts. International will be able to hold Jasper Crumb, a shareholder of Trinket, personally liable for the company's debts if:
The shareholder's personal assets are materially commingled with Trinket's assets.
Race entered into a written contract to sell a parcel of land to Lark for $150,000. At the time the agreement was executed, Race had consumed a large amount of alcoholic beverages that significantly impaired Race's ability to understand the nature and terms of the contract. Lark knew Race was very intoxicated and that the land had been appraised at $280,000. Race wishes to avoid the contract. The contract is:
Voidable at Race's option.
Bob telephoned Samantha, an electronics supplier, and offered to buy 600 small LED flashlights at $1.00 per flashlight. Bob planned to give the flashlights away at the grand opening of his electronics store. A week before the grand opening, Samantha received an offer for the immediate purchase of most of her small LED flashlight inventory for $1.25 per flashlight. She telephoned Bob, explained the situation, and told him she would be able to send him only 200 flashlights. Bob responded that a deal is a deal and he expected delivery of all 600 flashlights. Upset, Samantha sent Bob a signed letter again explaining that she could not deliver the 600 flashlights for $1.00 each as promised but would be happy to deliver 200. Bob did not respond. The day before the grand opening, Samantha delivered 200 flashlights. To meet his grand opening obligations, Bob gave away 400 medium-size flashlights which cost him $1.75 each. Is Bob entitled to recover damages for Samantha's failure to deliver all 600 flashlights?
Yes, because Samantha delivered only 200 flashlights