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dynamic business law
Business Law And The Legal Environment 9th Edition Jeffrey F Beatty, Susan S Samuelson - Solutions
. Able was a partner in the law firm of Able, Baker & Charley. He wrote nine checks on the firm’s checking account payable to “Bank of the United States.” The law firm was not a customer of the Bank, but Able was. He deposited these checks into his personal account at the Bank and, of course,
. Ian was CEO of a company. He stole money from| Pay to the order of Dama the company by writing a series of checks made out op ee pe e to “Cash,” which he deposited in his own personal account at Bank. (Please do not try this at home.)Of course, he then spent the money. The company sued Bank
. Shelby wrote this check to Dana. When is it payable 320 Crest Drive ie and for how much?
. Kay signed a promissory note for $220,000 that was payable to Investments, Inc.The company then indorsed the note over to its lawyers to pay past and future legal fees. Were the lawyers holders in due course?
. Donna gives a promissory note to C. J. Which of the following errors would make‘the note non-negotiable?(a) ‘The instrument was written on a dirty sock.(b) The instrument promised to pay €15,000.(c) The note stated that Donna owed C. J. “$1,500: One thousand and five dollars.”- (d)
. CPA QUESTION Bond fraudulently induced Teal to make a note payable to Wilk, to whom Bond was indebted. Bond delivered the note to Wilk. Wilk negotiated the instrument to Monk, who purchased it with knowledge of the fraud and after it was overdue. If Wilk qualifies as a holder in due course, which
. CPA QUESTION In order to negotiate bearer paper, one must(a) indorse the paper(b) indorse and deliver the paper with consideration(c) deliver the paper(d) deliver and indorse the paper
. Marla is not a holder in due course if she takes an instrument(a) believing that the underlying contract was honest, although it turned out to be dishonest(b) that isa consumer credit contract(c) that appeared commercially reasonable when made but it turned out to be dishonest(d) All of these
. Which of the following standards are required for negotiability?(a) The instrument must be signed by the payee.(b) The instrument must be payable on demand.(c) ‘The instrument must contain a promise or order to pay.(d) The instrument must be dated.
. Which of the following statements are true?(a) A draft is always a check.(b) A check is always a draft.(c) A note must involve at least three people.(d) All of these are true.
. After reading this chapter, will your future behavior as a businessperson change?What specific steps will you be most careful to take to protect your interests?
. After reading this chapter, will your behavior as a consumer change? Are there any types of transactions that you might be more inclined to avoid?
. After a federal judge refused to dismiss criminal charges against him, Michael Reed took revenge by electronically filing a UCC financing statement listing the judge as the debtor on a $3.4 million loan. Reed himself was listed as the secured party. The lien became part of the public record. Reed
. ETHICS The Dannemans bought a Kodak copier worth over $40,000. Kodak arranged financing by GECC and assigned its rights to that company. Although the Dannemans thought they had purchased the copier on credit, the papers described the deal as a lease. The Dannemans had constant problems with the
. Collateral may change categories depending on its holder and how it is being used at the time of default. Classify a refrigerator in the following circumstances:(a) When sold by an appliance store(b) When used by a restaurateur in his business(c) When installed ina homeowner’s kitchen
. Cooke borrowed money from Haddon and gave as collateral four cases of champagne and a promissory note. When Cooke failed to pay the debt, Haddon obtained a judgment for the outstanding balance. Cooke promptly paid and demanded return of the collateral. But Haddon had consumed part of the
. The state of Kentucky filed a tax lien against Panbowl Energy, claiming unpaid taxes. Six months later, Panbowl bought a powerful drill from Whayne Supply, making a down payment of $11,500 and signing a security agreement for the remaining debt of $220,000. Whayne perfected the next day. Panbow!
. Sears sold a lawn tractor to Cosmo Fiscante for $1,481. Fiscante paid with his personal credit card. Sears kept a valid security interest in the lawn mower but did not perfect. Fiscante had the machine delivered to his business, Trackers Raceway Park, the only place he ever used it. When Fiscante
. A boat manufacturer incorporated under the name “Glasco, Inc.,” but operated its business solely under the name “Elite Boats, Division of Glasco, Inc.” When Citizens Bank agreed to finance Glasco’s marine engines, it filed a UCC-1 financing statement listing the debtor as “Elite
. Eugene Ables ran an excavation company. He borrowed $500,000 from Highland Park State Bank. Ables signed a note promising to repay the money and an agreement giving Highland a security interest in all of his equipment, including after-acquired equipment. Several years later, Ables agreed with
. Alpha perfects its security interest by properly filing a financing statement on January 1, 2016. Alpha files a continuation statement on September 1, 2020. It files another continuation statement on September 1, 2024. When will Alpha’s financing statement expire?(a) January 1, 2021(b)
. CPA QUESTION Mars, Inc., manufactures and sells VCRs on credit directly to wholesalers, retailers, and consumers. Mars can perfect its security interest in the VCRs it sells without having to file a financing statement or take possession of the VCRs if the sale is made to which of the
. CPA QUESTION Under the UCC Article 9, perfection of a security interest by a creditor provides added protection against other parties in the event the debtor does not pay its debts. Which of the following parties is not affected by perfection of a security interest?(a) Other prospective creditors
. Jim’s birth certificate lists him as “James Brown Smith”; his driver’s license identifies him as “Jim Smith”; his business card reads “J.B. Smith”; and his friends call him Jimbo. How should the financing statement list this debtor’s name?(a) James Smith(b) J.B. Smith(c) Jim
. CPA QUESTION Under the UCC Article 9, which of the following actions will best perfect a security interest in a negotiable instrument against any other party?(a) Filing a security agreement(b) Taking possession of the instrument(c) Perfecting by attachment(d) Obtaining a duly executed financing
. European consumer laws are much more protective than the UCC. In the European Union, buyers have an unqualified 14-day right of return for all goods—no questions asked. If a seller fails to inform the buyer of this right, the return window is extended for one year. Some commentators have
. Are the UCC’s rules related to cure sensible? If a seller ships goods that are not what you ordered, should you (in many circumstances) be required to give them a chance to make it right?
. Consider the UCC’s exceptions to the Perfect Tender Rule: usage of trade, course of dealing, and course of performance. Do these all seem reasonable, or are they too lenient on sellers who deliver non-conforming goods?
. ETHICS Based on the facts in question 1, comment on BWNI’s ethics. BWNI wanted to protect itself against unlimited damage claims. Is this a legitimate way to do it? If you think BWNI dd behave ethically, what advice would you have for consumers who hire home improvement companies? If you
. Laura and Bruce Trethewey hired Basement Waterproofing Nationwide, Inc.(BWNI) to waterproof the walls in their basement for a fee of $2,500. BWNI’s contract stated: “BWNI will service any seepage in the areas waterproofed at no additional cost to the customer. All labor and materials will be
: Having heard that it was a profitable new business, Smith decided to breed emus.They are flightless birds that reproduce rapidly and provide high-quality meat. For$4,000, Penbridge Farms sold Smith a “proven breeder pair,” guaranteeing that the lovebirds had already bred together. When the
. Under the terms of a long-term supply contract, Linde supplied United Aluminum Corporation (UAC) with nitrogen at $0.23 per unit. Upon expiration, that contract gave UAC the sole option to renew the agreement for five additional years at the same price. When UAC exercised the option, Linde
. YOU BE THE JUDGE WRITING PROBLEM Clark Oil agreed to sell Amerada Hess several hundred thousand barrels of oil at $24 each by January 31, with the sulfur content not to exceed 1 percent. On January 26, Clark tendered oil from various ships. Most of the oil met specifications, but a small amount
. The AM/PM Franchise association was a group of 150 owners of ARCO Mini-Market franchises in Pennsylvania and New York. Each owner had an agreement to operate a gas station and mini-market, obtaining all gasoline, food, and other products from ARCO. The association sued, claiming that ARCO had
. Mastercraft Boat manufactured boats and often used instrument panels and electrical systems assembled or manufactured by Ace Industries. Typically, Ace would order electrical instruments and other parts and assemble them to specifications that Mastercraft provided. Mastercraft decided to work
. Assume that a year has passed, and Blackburn FC once again orders 10,000 soccer jerseys from Alpha, to be delivered on July 10. This time, non-conforming jerseys are delivered on July 10. Alpha thoroughly inspected the shirts before shipping and had no reason to spot the errér. When Blackburn
. Blackburn FC orders 10,000 soccer jerseys from Alpha Co. to sell in its stadium store. They are to be delivered on July 10. When they arrive early on July 2, Blackburn is disappointed because the collars, which are supposed to be white, are blue.Blackburn notifies Alpha of the error. Alpha says
. Under the UCC, to tender delivery, a seller must(a) make the goods available at a reasonable time(b) keep the goods available for a reasonable period(c) deliver to the buyer any documents that it needs to take possession(d) All of these(e) None of these
. CPA QUESTION On February 15, Mazur Corp. contracted to sell 1,000 bushels of wheat to Good Bread, Inc. at $6 per bushel with delivery to be made on June 23. On June 1, Good advised Mazur that it would not accept or pay for the wheat.On June 2, Mazur sold the wheat to another customer at the
. CPA QUESTION Cara Fabricating Co. and Taso Corp. agreed orally that Taso would custom-manufacture a compressor for Cara at a price of $120,000. After Taso completed the work at a cost of $90,000, Cara notified Taso that the compressor was no longer needed. ‘Taso is holding the compressor and
. After learning more about implied warranties and disclaimers, would you ever buy an item sold “as is”? Imagine a car salesman who offers you a car for $8,000, but who also says that he can knock the price down to $6,500 if you buy the car “as is.”If you live in a state that does not give
. A seller can disclaim all implied warranties by stating that goods are sold “as is” (or by using other, more specific language). Is this fair? The UCC’s implied warranties seem reasonable—that goods are fit for their normal purposes, for example. Should it be so easy for sellers to escape
. Arun manufactures and sells T-shirts. As a seller, would he be better off if his contracts indicated “FOB (place of shipment)” or “FOB (place of destination)” ?Explain your answer.
. Imagine that your laptop gets a virus, and you take it to a local computer repair shop.The shop sells your computer to Heidi. Under the entrustment rules in the UCC, Heidi is a buyer in the ordinary course of business. And so, even if you find Heidi and demand that she return your laptop, she
. ETHICS Myrna and James Brown ordered a $35,000 motor home from R.V. Kingdom, Inc. The manufacturer delivered the vehicle to R.V. Kingdom, with title in the dealer’s name. The Browns agreed to accept the motor home, but they soon regretted spending the money and asked R.V. Kingdom to resell it.
. When Sony released its PlayStation 3 (PS3), it represented that the gaming system(1) connected to the PlayStation Network, (2) had the ability to run other operating systems, and (3) was expected to last for over ten years. But the product’s terms of service provided that future updates might
. YOU BE THE JUDGE WRITING PROBLEM Construction Helicopters paid Heli-Dyne Systems $315,000 for three helicopters that were in Argentina. Two were ready to fly, and one was disassembled for routine maintenance. The contract said nothing about risk of loss (the parties could have saved a lot of
. Universal Consolidated Cos. contracted with China Metallurgical Import and Export Corp. (CMIEC) to provide CMIEC with new and used equipment for a cold rolling steel mill. Universal then contracted with Pittsburgh Industrial Furnace Co. (Pifcom)to engineer and build much of the equipment. The
. John C. Clark, using an alias, rented a Lexus from Alamo Rent-A-Car in San Diego, California. Clark never returned the car to Alamo and obtained a California “quick title” using forged signatures. He then advertised in the Las Vegas Review Journal newspaper and sold the car to Terry and
. Franklin Miller operated Miller Seed Co. in Pea Ridge, Arkansas. He bought, processed, and sold fescue seed, which 1s used for growing pasture and fodder grass.Farmers brought seed to Miller, who would normally clean, bag, and store it. In some cases, the farmers authorized Miller to sell the
. CPA QUESTION Under the UCC sales article, an action for breach of the implied warranty of merchantability by a party who sustains personal injuries may be successful against the seller of the product only when:(a) the seller is a merchant of the product involved.(b) an action based on negligence
. CPA QUESTION Which of the following conditions must be met for an implied warranty of fitness for a particular purpose to arise?2 I. ‘The warranty must be in writing.II. The seller must know that the buyer was relying on the seller in selecting the goods.(a) I only (c) Both I and II(b) IL only
. CPA QUESTION Vick bought a used boat from Ocean Marina that disclaimed“any and all warranties.” Ocean was unaware that the boat had been stolen from Kidd. Vick surrendered it to Kidd when confronted with proof of the theft. Vick sued Ocean. Who prevails?(a) Vick because the implied warranty
. Sam obtains a fancy Patek Philippe watch from Greg by fraud. It has a retail price of $10,000. He sells it to Melissa for $9,000. She believes he owns the watch.Melissa a bona fide purchaser. Sam disappears. If Greg discovers that she has the watch and demands that it be returned, Melissa have to
. Aiysha signs a contract with Farmer Charlie on February 1. Under the deal, she will pay $25,000 for Charlie’s entire pumpkin crop on October 1. Charlie plants pumpkin seeds on March 1, and they begin to sprout on April 1. When are the pumpkins identified?(a) February 1 (c) April 1(b) March 1
. CPA QUESTION On Monday, Wolfe paid Aston Co., a furniture retailer, $500 for a table. On Thursday, Aston notified Wolfe that the table was ready to be picked up. On Saturday, while Aston was still in possession of the table, it was destroyed in a fire. Who bears the loss of the table?(a) Wolfe
. A.C. Furniture (ACF) manufactured custom furniture for national restaurant chains.A representative of Arby’s Restaurant Group emailed ACF an order for 4,500 chairs at $44 per chair, with detailed specifications of seat pads, model numbers, and Arby’s signature colors. A year later, Arby’s
. Ohio Fresh Eggs (OFE) operated an egg farm. OFE and LandTech entered into a contract in which OFE promised to sell its chicken manure to Land Tech. As to quantity, the contract read: “all available tonnage per year of manure. Specific quantity to be determined by and mutually agreeable [sic]
. The Brugger Corp. owned a farm operated by Jason Weimer, who acted as the company’s business agent. Tri-Circle, Inc., was a farm equipment company. On behalf of Brugger, Weimer offered to buy from Tri-Circle certain equipment for use on the farm. Tri-Circle accepted the offer, using a
. Lara owns a used-car lot. She emails Seth, a used-car wholesaler who has a huge lot of cars in the same city. The email reads, “Confirming our agrmt—I pick any 15 cars from your lot—30% below Blue Book value.” Seth reads the email, laughs, and deletes it. Two weeks later, Lara arrives and
. The Massachusetts Bay Transit Authority (MBTA) awarded the Perini Corp.a large contract to rehabilitate a section of railroad tracks. The work involved undercutting the existing track, removing the ballast and foundation, rebuilding the track, and disposing of the old material. Perini solicited
. In which of the following cases must the contract modification have additional consideration to be binding?(a) Tony’s boss promises him a higher salary because he did a good job.(b) Tiana’s Toys agrees to upgrade Tal’s order of tricycles to expedited shipping.(c) Both require new
. Chef Carolina sells 40 cakes to Natasha at a price of $25 each for a total of $1,000.Under the UCC Statute of Frauds, which of the following must be in writing?(a) The name of the buyer: Natasha(b) The name of the seller: Chef Carolina(c) The quantity of goods: 40(d) The price to be paid: $25(e)
. Brendan assembles gaming computers in his garage and sells them. He makes an agreement with Alpha Company under which Alpha will deliver 100 graphics cards. The agreement does not specify when payment is due. Which of the following is true?(a) Brendan has no obligation to pay because there was no
. Which of the following transactions is vot governed by Article 2 of the UCC?(a) Purchasing an automobile for $35,000(b) Leasing an automobile worth $35,000(c) Purchasing a sound system worth $501(d) Purchasing a sound system worth $499
. For a contract governed by the UCC sales article, which one of the following statements is correct?(a) Merchants and non-merchants are treated alike.(b) The contract may involve the sale of any type of personal property.(c) The obligations of the parties to the contract must be performed in good
. ETHICS Sophia negotiated a contract with Pete under which she would buy his company for $10 million plus the amount of the company’s outstanding debt(approximately $1 million). But when Pete sent a draft of the contract, it stated that the purchase price would be $10 million /ess the
. Upon graduation from business school, Zoe has been offered a job as a product manager at a start-up, Appsley Co. She would be Employee #18. But first she has to negotiate a contract with the CEO, Phil. He would like to pay her $75,000, which is half of what a product manager at a more established
. What are the penalties if Artist breaches the movie contract? Are these reasonable?‘Too heavy? Too light?
. What are the advantages and disadvantages of hiring a lawyer to draft or review a contract?
. In the movie contract, which side was the more successful negotiator? Can you think of any terms that either party left out? Are any of the provisions unreasonable?
. When Maria and Marcel divorced, their settlement agreement provided that they would act in good faith. It further stated that Maria would receive half the proceeds from an oil and gas lease. At the end of five years, all the proceeds from the lease would go to Marcel. But, in an impressive effort
. Juan purchased an insurance policy on his house that did not protect against vandalism or burglary. An arsonist burned down the house. Did the insurance company have to pay?
. Blair Co.’s top officers asked an investment bank to find a buyer for the company.‘The bank sent an engagement letter to Blair with the following language: If, within 24 months after the termination of this agreement, Blair is bought by anyone with whom Bank has had substantial discussions
. List three provisions in a contract that would be material and three that would not be.
. Give an example of three types of contracts that should definitely be in writing and one that probably does not need to be.
. Simon has signed a contract with Miley agreeing to provide her company with 1,000 frozen pizzas each week. The contract states: “This agreement can only be modified by a written instrument signed by the party to be charged with such amendment.” But when Simon and Miley run into each other on
. Acontract states (1) that Buzz Co. legally exists and (2) will provide 2,000 pounds of wild salmon each week. Which of the following statements is true?(a) Clause 1 is a covenant and Clause 2 is a representation.(b) Clause 1 is a representation and Clause 2 is a covenant.(c) Both clauses are
. In the case of a scrivener’s error, what happens?(a) A court will not reform the contract. The parties must live with the document they signed.(b) A court will reform the contract if there is clear and convincing evidence that the clause in question does not reflect the true intent of the
. Acontract provided, “On January 5, Purchaser shall provide Seller with a certified check in the amount of $100,000. Seller shall transfer a deed for the Property to Purchaser.” What is wrong with this provision?(a) It is not clear who Purchaser and Seller are.(b) The number $100,000 should be
. Which of the following statements is true?(a) Vagueness occurs when the parties do not want the contract to be clear.(b) Ambiguity occurs when the parties do not want the contract to be clear.(c) Vagueness in a contract is often appropriate as a way to clinch a deal.(d) Ambiguity is an
. Is it reasonable to require the mitigation of damages? If a person is wronged because the other side breached a contract, should she have any obligations at all? For example, suppose that a tenant breaches a lease by leaving early. Should the landlord have an obligation to try to find another
. Walgreens operated a pharmacy in the Sara Creek mall. As part of this long-term lease, Sara Creek agreed not to lease mall space to another pharmacy. During an economic recession, Sara Creek’s largest tenant left and the landlord informed Walgreens that it intended to rent that space out to a
. PepsiCo entered into a contract to sell its corporate jet to Klein for $4.6 million.Before the deal closed, the plane was sent to pick up PepsiCo’s chairman of the board, who was stranded at Dulles airport. The chairman then decided that the company should not part with the plane. Klein sued
. Consequential damages can be many times higher than direct damages. Consider the “Farmer Ted” scenario raised in multiple-choice question 3, which is based on a real case.* Is it fair for consequential damages to be 60 times higher than direct damages? The Supreme Court is skeptical that
. ETHICS The National Football League owns the copyright to the broadcasts of its games. It licenses local television stations to telecast certain games and maintains a “blackout rule,” which prohibits stations from broadcasting home games that are not sold out 72 hours before the game starts.
. The Basketball Marketing Company (BMC) signed a long-term endorsement contract with a 16-year-old basketball player, Darko Milicic. Soon after his 18th birthday, Milicic successfully disaffirmed the contract. To prevent Milicic from entering into a contract with its competitors, BMC sent them
. YOU BE THE JUDGE WRITING PROBLEM John and Susan Verba sold a Vermont lakeshore lot to Shane and Deborah Rancourt for $115,000. The Rancourts intended to build a house on the property, but after preparing the land for construction, they learned that a wetland protection law prevented building near
. The Madariagas owned a restaurant where they served “Albert’s Famous Mexican Hot Sauce.” They entered into a contract to sell the restaurant and the formula for the secret sauce to Morris. Although Morris paid the agreed-upon price, the sellers refused to give him the recipe unless he also
. Parkinson was injured in an auto accident by a driver who had no insurance.Parkinson filed a claim with her insurer, Liberty Mutual, for $2,000 under her“uninsured motorist” coverage. Liberty Mutual told her that if she sought that money, her premiums would go “sky high,” so Parkinson
. Lewis signed a contract for the rights to all timber located on Nine-Mile Mine.He agreed to pay $70 per thousand board feet ($70/mbf). As he began work, Nine-Mile became convinced that Lewis lacked sufficient equipment to do the job well —and forbade him to enter the land. Lewis sued. Nine-Mile
. Under the Uniform Commercial Code, a seller generally entitled to recover consequential damages, and a buyer generally entitled to recover consequential damages.(a) .1S; 1S(b) is; is not(c) is not; is(d) is not; is not
. In which of the following scenarios is specific performance available as a remedy?(a) J.B. breached his employment contract and the employer seeks to enforce it.(b) J.C. has a contract to buy a house, but the seller backs out at the last minute.J.C. sues to enforce the contract.(c) J.D. books an
. Julie signs a contract to buy Nick’s 2015 Mustang GT for $20,000. Later, Nick changes his mind and refuses to sell his car. Julie soon buys a similar 2015 Mustang GT for $21,500. She then sues Nick and wins $1,500. The $1,500 represents her(a) expectation interest(b) reliance interest(c)
. A manufacturer delivers a new tractor to Farmer Ted on the first day of the harvest season. But the tractor will not start. It takes two weeks for the right parts to be delivered and installed. The repair bill comes to $1,000. During the two weeks, some acres of Farmer Ted’s crops die. He
. CPA QUESTION Kaye contracted to sell Hodges a building for $310,000.The contract required Hodges to pay the entire amount at closing. Kaye refused to close the sale of the building. Hodges sued Kaye. To what relief is Hodges entitled?(a) Punitive damages and direct damages(b) Specific performance
. CPA QUESTION Master Mfg., Inc., contracted with Accur Computer Repair Corp. to maintain Master’s computer system. Master’s manufacturing process depends on its computer system operating properly at all times. A liquidated damages clause in the contract provided that Accur would pay $1,000 to
. Franklin J. Moneypenny hires Angela to paint his portrait. She is to be paid$50,000 if the painting is acceptable “in Franklin’s sole judgment.” At the big unveiling, 99 of 100 attendees think that Angela has done a masterful job. Franklin disagrees. He thinks the painting makes him look
. Jacobs Builders entered into a contract with Kent to build him a home. The agreement stated that Jacobs would use only certain brand-name materials. Upon completion of the home, Kent discovered that Jacobs had installed high-quality, but not brand-name, pipes throughout the house. This was an
. In March 2019, Lars and Marika contracted with Wedding World Hotel to host and cater their March 13, 2020, wedding. The contract did not contain a force majeure clause. In late February 2020, COVID-19, a dangerous flu, began to spread around the world. Many neighboring cities compelled citizens
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