Q&A Hero

Q: Kentle Bank will not honor the United Manufacturing check issued to Joe, an employee, which he cashed at the bank. Kentle Bank must notify Joe by midnight of the next banking day.

Q: Big Bank pays a check made by Franklin payable to Ellen, to a forger who signed Ellen's name. Big Bank is not liable to Franklin. FALSE

Q: When merchants bought goods, instead of paying for them with gold or silver, they simply filled in a piece of paper called the ____, which ordered the goldsmith or silversmith to give a certain amount of the precious metal to the person who sold the goods. A. demand note B. promissory note C. bill of exchange D. certificate of deposit

Q: An instrument containing an acknowledgment that a bank has received a sum of money and a promise by the bank to repay the sum of money is called a(n) ____. A. installment note. B. certificate of deposit. C. promissory note. D. certificate of demand.

Q: Dillon received a 900 telephone number without knowing that she would have to pay for the call. The telemarketer did not warn her about the cost of the call. She realized for the first time when she received the telephone bill, that there was a charge for the call. Discuss.

Q: Jasmine discovered that she had been slammed by her old company, Voicetone, after she had paid her telephone bill to the company, Distant Enterprise. Discuss Jasmine's legal rights.

Q: Samantha applied for a personal loan at a local bank in Illinois. The bank asked her to fill in an application form in which she was asked for her employment and marital status, as well as her age and her Social Security number. After reviewing her application, the bank denied her the loan because, it said, she was a 43-year-old divorceealbeit a successful attorneywho received alimony payments and therefore constituted a high risk. Analyze the case and Samantha's rights.

Q: Justin, who is on a business trip 500 miles away from home, decides to try a "free" Internet service that requires a credit card number and ends up costing $275. Justin wants to contest this charge. Explain in detail what he should do.

Q: Greenday Bank hires an agency to collect debt from one of its credit customers, Leon. The agency contacts Leon on his phone regarding the payment of the debt. Leon cites a family emergency and promises to visit the bank the next week. However, the agency sends a debt collector to Leon's house at 8 P.M. The debt collector does not find Leon at home, and inquires about his whereabouts with the neighbors, telling them that Leon is indebted to Greenday Bank. The neighbors inform the debt collector that Leon is visiting his ill mother in Virginia. Analyze the case with regards to consumer credit laws.

Q: An indorser is not required to provide a warranty that he or she has no knowledge of the bankruptcy of the maker, acceptor, or drawer.

Q: Alex, a painting contractor, purchased a movable Little Giant basket platform from Builder's Equipment Co., from which he or his employees could paint up to sixty feet off the ground. The platform malfunctioned and Alex was injured when he fell from thirty feet. Discuss the type of product liability claim that Alex might bring against Builder's and Little Giant.

Q: Roberts bought a new ride-on lawn mower and allowed his son, Don, to be the first person to drive it. Due to a factory defect, the mower's gearshift stuck in reverse. Don was seriously injured when the mower backed into a ditch and tipped over. When Don sued the manufacturer for his injuries, the manufacturer argued that it was not liable because Don had not purchased the mower. Is Don likely to win his case? Why or why not?

Q: Xena's 1998 car's odometer stops working and she does not repair it for six months because she is out of the country on business. Her family members drive her car while she is away. Xena is preparing to sell her car and honestly does not know the precise mileage on the car. Discuss what actions the law requires her to take after repairing the odometer while selling her car?

Q: MacLean went to an appliance store to buy an advertised camcorder. The salesperson discouraged him from buying the advertised product, saying that it was of very poor quality. The salesperson tried to talk MacLean into buying a more expensive camcorder of better quality. Discuss the case.

Q: Joslin orders merchandise by phone from Marginal Enterprises with no stated delivery date. When she does not receive it after a month, she contacts Marginal who indicates that due to a strike at their production plant, delivery that normally takes one month will take two months. Discuss Joslin's legal options.

Q: Mary contracts to lease an automobile from Zippo Sales with payments of $300 per month for a year and a final balloon payment of $1,200. This final payment is: A. lawful since it satisfies the requirements of the Consumer Leasing Act. B. unlawful since it exceeds $1,000. C. unlawful as it exceeds three times the average monthly payment. D. lawful since both parties have contracted on mutual agreement.

Q: Renee applied for credit to open her own beauty salon. The bank denies her the credit on learning that she has recently been divorced, and receives public assistance income. Under which of the following acts will the bank be held guilty for violation of laws? A. The Fair Debt Collections Act. B. The Equal Credit Opportunity Act. C. The Truth-in-Lending Act. D. The Fair Credit Reporting Act.

Q: Twenty-three year old Jon has a part-time job at the public library, which pays him $20 per hour. He applies for a credit extension of $500 to complete his education program. The bank refuses Jon's application, stating its refusal to consider Jon's income from his employment at the library. Which of the following laws has the bank violated? A. The Equal Credit Opportunity Act. B. The Fair Credit Reporting Act. C. The Fair Debt Collections Act. D. The Truth-in-Lending Act.

Q: Cristina receives from the Seventh National Bank a new credit card that does not provide a signature line or any other means for a retailer to verify that the user of the card is the authorized user. The next day, Cristina's card is stolen. As soon as she discovers the theft, she calls Seventh National to report the loss. Already, $620 worth of unauthorized charges have been made on her card. Cristina: A. will have to pay for the entire $620 of unauthorized charges. B. will have to pay for $50 of the unauthorized charges. C. will not have to pay any amount of the unauthorized charges. D. will have to pay for 50% of the unauthorized charges.

Q: After receiving her credit card bill, Claire feels that the credit card company has made a mistake: several transactions are not hers. The law that has established procedures for the prompt handling of such billing disputes is known as the ____. A. Fair Credit Reporting Act. B. Fair Credit Billing Act. C. Fair Debt Collection Practices Act. D. Truth in Billing Act.

Q: Which of the following is true of the Cooling-Off Rule? A. It gives consumers an opportunity to change their minds after signing contracts with people who come to their homes for product sales. B. It allows sales of consumer goods or services under $25 made at the seller's place of business, to be cancelled within three business days after the sale. C. It requires the seller to give the buyer one copy of a cancellation form, which the buyer may send to the seller any time before the third business day after the sale. D. It does not apply to consumer product parties given in private homes and to sales made in rented hotel rooms or restaurants.

Q: To which type of transaction does the negative option rule apply? A. Subscription to CD or DVD clubs B. Buying used cars C. Subscription to telephone services D. Buying goods via telephone or Internet

Q: Under the ____, sellers must ship orders within the time promised in their advertisements. If no time period is promised, sellers must either ship the order within 30 days or send the consumer an option notice. A. telemarketing sales rule B. negative option rule C. Cooling-Off Rule D. Mail and Telephone Order Rule

Q: Which of the following statements holds true of the FTC's Telemarketing Sales Rules? A. Calling times are restricted to anytime during business days. B. A telemarketer is allowed to call a consumer without requiring the consumer's consent. C. Telemarketers must mention the total cost of the products or services offered and that a sale is final or nonrefundable. D. Telemarketers are excused from disclosing the name of the seller, and what they are selling before they make their pitch.

Q: The _____ is an attempt by the federal government to reduce the use of unsolicited commercial e-mails on the Internet. A. Can Spam Act B. Mail and Telephone Order Rule C. Truth-in-Mailing Act D. AntiSlamming Law

Q: The Congress passed which of the following acts which requires lenders to disclose the finance charge and the annual percentage rate? A. The Fair Credit Reporting Act B. The Equal Credit Opportunity Act C. The Truth-in-Lending Act D. The Fair Debt Collection Practices Act

Q: At least hundred consumers have each been overcharged fifty cents by a credit card company, thus breaking FTC rules. These consumers: A. must sue the credit card company individually. B. must bring a class action lawsuit against the company. C. must approach the Department of Commerce to represent them. D. must approach the company for a consent order.

Q: Jackson Motors tells Sue, a consumer, that Bliss Automobiles are made with metal bodies when they are in fact made of fiberglass. This would be considered a(n): A. fraudulent misrepresentation. B. harmless error. C. bait-and-switch scheme. D. act of dunning.

Q: Which of the following entities are allowed to send merchandise through the mail to people who did not order it? A. Hospitals B. Local businesses C. Governmental units D. Charitable organizations

Q: _____ is an alluring but insincere offer to sell a product or service that the advertiser does not really intend to sell. A. Sales puffery B. Foot-in-the door scheme C. Bait-and-switch scheme D. Up-selling technique

Q: David went to the store to purchase a $120 CD player, advertised in the paper. The salesperson said that although the CD player was on sale, it was an undesirable, bottom-of-the-line product and that David would be much happier with a better CD player for $250. The salesperson: A. acted in good faith when he tried to offer a better product. B. can be sued under the policy of negligence and strict liability. C. can be held guilty of a bait-and-switch scheme. D. can be held guilty of fraudulent misrepresentation.

Q: Spice gives her four-year-old car to Homeless Helpers Charity. Spice: A. need not provide an odometer statement. B. must provide an odometer statement. C. need not provide an odometer statement since the car is not over 15 years old. D. must set the odometer to zero before resale.

Q: Local business activity carried on within state boundaries is known as ____. A. public commerce. B. interstate commerce. C. intrastate commerce. D. local commerce.

Q: The Equal Credit Opportunity Act makes it illegal for businesses to discriminate against credit applicants because they receive public assistance income.

Q: A credit cardholder is liable for all unauthorized charges if he or she does not report the unauthorized charges within sixty days of receiving a statement on which the unauthorized charges appear.

Q: Jarvis rents an apartment for a period of two months. His lease is governed by the Consumer Leasing Act.

Q: Product liability suits are based on which of the following legal theories? A. Negligence B. Public interest C. Public policy D. Social duty

Q: Which of the following is true of public interest and public policy? A. Public interest promotes behaviour complying with the public consensus while public policy refers to the idea that certain activities affect the entire social structure. B. Public interest is the consensus and public policy is the coercive social engineering strategy by which that consensus is implemented. C. Public interest promotes the making of safe goods to coerce the public policy to maintain a social structure that promotes health and safety, and prevents illness and injury. D. To meet the goal of public policy, public interest insists that manufacturers, sellers, and distributors compensate a victim, who is injured by an unsafe product,

Q: Under the ____, the principal consideration is the safety of the product, not the conduct of the manufacturer or supplier of the goods. A. doctrine of public policy B. doctrine of negligence C. doctrine of public interest D. doctrine of strict liability

Q: A knife has a metal handle and the manufacturer has received reports that some consumers have received electrical shocks when attempting to use the knife as a screwdriver while installing an electrical outlet. Acina is one such consumer and decides to sue the manufacturer and the seller. Which of the following is true of this situation? A. Acina can sue the manufacturer since there is no specific warning label on the knife. B. Acina cannot file a suit as a warning label may not reduce the likelihood of an injury in case of a knife. C. Acina cannot file a suit against the manufacturer since the danger presented by the product is obvious. D. Acina can bring a lawsuit against the manufacturers stating that the warning on the product was inadequate.

Q: Robin orders merchandise from Internet Enterprises. If no delivery date is promised, Internet must ship the merchandise within ten days.

Q: A 900 telephone number bills the consumer for the telephone charge.

Q: Slamming is the illegal practice of changing a consumer's telephone service without permission.

Q: The annual percentage rate (APR) may be calculated with tables provided by the Federal Trade Commission. FALSE To help consumers know the truth about the cost of borrowing money, Congress passed the Truth-in-Lending Act. Under this act, lenders must disclose two important things to borrowers: the finance charge (the actual cost of the loan in dollars and cents) and the annual percentage rate (APR) (the true rate of interest of the loan).

Q: A written statement disclosing the odometer reading at the time of the transfer of title of a motor vehicle must be provided by the seller in all motor vehicle sales.

Q: Carlos sells four used motor vehicles in twelve months. He need not provide a Buyer's Guide to the purchasers.

Q: The Federal Trade Commission in most states, requires used car dealers to display statements that the cars are sold "as is" if the cars are sold with no warranties.

Q: The Cooling-off Rule applies to sales that are entered completely by phone or by mail.

Q: An order under which a company agrees to stop the disputed practice without necessarily admitting that it violated the law is called consent order.

Q: Persons who receive unordered merchandise in the mail may treat it as a gift.

Q: Public policy is the equivalent of Weber's social consensus in that it refers to the idea that certain activities affect the entire social structure and must be regulated by the government.

Q: A child is injured after swallowing a piece of glass hidden in a jar of jam. A court will award money for the injuries suffered only if the child or the child's parents purchased the jam.

Q: The principal consideration under the doctrine of strict liability is the safety of the product, not the conduct of the manufacturer or supplier of the goods.

Q: A successful plaintiff in a product liability suit typically always recovers punitive damages.

Q: Interstate commerce consists of local business activity carried on within state boundaries.

Q: Toy Distributors Inc. had a swing set constructed for customers to examine. It was anchored to the ground with 20 inch steel pins. Gina purchased one for installation in her backyard by Toy but Toy anchored it with 6 inch steel pins that pulled out of the ground causing the swing set to tip over and injure Gina's child who was playing on the swing. Discuss if any warranties have been violated by Toy.

Q: When Zachary purchased an Arctic Refrigerator from Best Bargain Sore, the refrigerator came with a 36 month full warranty. When the refrigerator malfunctioned, Zachary discovered that he was expected to ship the refrigerator at his expense to the Arctic factory in China where it was manufactured. There would be a four month delay until he received his repaired refrigerator back from the factory. Discuss if these requirements to exercise the full warranty are lawful.

Q: Tang went into a bicycle shop to purchase a bike rack. He asked the salesperson for help in picking out a rack that would fit his bike. While the salesperson was helping another customer, Tang went ahead and chose one he wanted. The salesperson then told Tang that the rack was a good one. After Tang put the rack on his bike, it did not fit properly and damaged his gear shift. Explain whether Tang can rightfully claim that the salesperson committed a breach of warranty of fitness for a particular purpose.

Q: Cassandra purchased a truck at a Middleburg police auction of abandoned property. The truck in fact had been stolen and the original owner, Ariel, subsequently asserted a claim to it. Discuss if Cassandra has any claims against Middleburg or Ariel.

Q: The doctrine of public policy is based on the assumption that no one should be permitted to do anything that harms the public interest.

Q: Westdress Inc. entered into a contract with Salvo Inc. to supply them with specified goods by June, 15th. Salvo Inc. shipped the goods which were delivered to Westdress Inc. on May 30th. Westdress inspected the goods, found 50% of the goods to be nonconforming to their order but kept them without notifying the seller of the discrepancy. In the meantime, Salvo Inc. realized its error and contacted Westdress to replace the goods. But Westdress refused the offer. Discuss the case.

Q: Jan, a nonmerchant buyer, receives nonconforming goods from Zoe, a merchant seller. Jan is so upset that she places the goods outside next to the trash collection bin and tells Zoe to come get her "trash." Rain damages some of the goods before Zoe picks them up the next day. Discuss Jan's duties and Zoe's rights.

Q: Bigger Grocery Stores orders 100 cases of tomatoes from Produce Wholesale Co., but receives 100 cases of bananas. Bigger asks Produce for instructions concerning the wrong delivery but receives no instructions. Bigger resells the bananas, considering they are perishable goods. However, when Produce Wholesale learns this, it sues Bigger Grocery Stores on grounds that it did not await instructions from Produce. Discuss the case.

Q: Nicholas entered into a written contract with Mondo Choco, Inc., agreeing to pay Mondo Choco $700 for several hundred assortments of holiday chocolates for the employees of his corporation. Mondo Choco failed to deliver the chocolates by the date set in the contract. Nicholas then told Mondo Choco that he would cover the sale. Discuss.

Q: Rebecca sells Qadir goods that are located in Matrix Warehouse and gives Qadir a warehouse receipt at 5PM. Matrix closes at 5PM. That night the goods are destroyed by a fire at the Matrix Warehouse. Have the goods been tendered to Qadir by Rebecca?

Q: Jarvis Enterprises ordered 50 boxes of blueberries from Agricultural Wholesalers Inc. Agriculture delivered 50 boxes of blackberries. Jarvis rejected the blueberries and attempted to contact Agriculture. After many unsuccessful attempts, Jarvis decided to sell the blackberries to Cold Ice Cream Co. for $500. Jarvis was ready to forward the money after deducting its expenses and a commission to Agriculture but when Agriculture learned the sale price, it objected that the blackberries had a fair market value of $1200 and that Jarvis sold the blackberries too cheaply. Discuss the legal rights and duties of Jarvis in this situation.

Q: Jess buys a microwave oven with a manufacturer's full one-year warranty. If Jess discovers that the microwave oven does not work properly during this time, the manufacturer is obligated to: A. charge Jess only for the cost of the parts replaced, not for the labor involved. B. repair the microwave at a nominal cost to Jess. C. provide a pro-rata credit for the defective part of the microwave. D. fix or replace the microwave for free.

Q: _____ is any written warranty that does not meet all of the requirements for a full warranty. A. An express warranty B. A limited warranty C. An implied warranty D. A warranty of merchantability

Q: Lori went into an electronics store that had a sign posted on the wall declaring "All sales final!" She told the salesperson that she was looking for a radio headset that she could wear while working out in her health club. The salesperson selected a headset and told Lori that it would get good reception even in her fitness center. When Lori tried to use the headset the next day, she found that she could not get any stations and only heard static. Which of the following is true of this situation? A. Lori will be unable to return the headset because the store's policy said "All sales final!" at the time of the purchase. B. Lori may not be able to claim a refund since the headset will be declared as merchantable. C. Lori can claim a refund on the basis of an implied warranty of fitness for a particular purpose created by the salesperson. D. Lori can claim a refund from the store based on limited warranty that is practiced in the electronics industry.

Q: Tyler has always had a 180 day full warranty from Business Sales when purchasing office equipment over the past five years. On this occasion Tyler purchased a fax machine that broke thirty days after Tyler purchased it. Business Sales asserts that it did not provide a 180 day full warranty on the fax machine and has no legal liability. Which of the following is true of this situation? A. Tyler cannot assert a warranty since Business Sales has not provided a fall warranty on the product. B. Tyler may assert a warranty based upon past dealings with Business Sales. C. Business Sales can escape liability by asserting that the defect was caused by the manufacturer. D. Tyler can bring a suit against Business Sales and claim punitive damages.

Q: Samantha purchased a used computer system from Office Rental Inc. who was updating its computers. Later Big Bank asserted the right to repossess the used computer system from Samantha since it had a lien on all of Office Rental's business equipments that secured an unpaid loan. Samantha was unaware of this lien. What are Samantha's legal rights? A. She can sue Office Rental for breach of warranty of title. B. She can claim that she was unaware of Office Rental's debt, and hence Big Bank cannot assert its lien. C. She can continue to possess the computer system, since she paid Office Rental for it. D. She can claim a refund from Office Rental but cannot bring a lawsuit against Office Rental or Big Bank.

Q: Which of the following is true of exclusion of implied warranty of merchantability? A. It can be an oral or written statement, promise or other representation about the quality of a product. B. It can occur by excusing buyers from examining the goods, the sample, or model. C. It must be in writing, conspicuous and use the word merchantability. D. It uses expressions such as is, with all faults and so on to exclude express warranties and warranties of titles.

Q: In a written contract, Hogan agrees to sell Jason kitchen cabinets and to deliver them before December 21. On October 17, Hogan tells Jason that he will not sell him the cabinets. Which of the following can Jason do in this situation? A. He can sue Hogan for breach of contract, but must wait until December 21 to do so. B. He can sue Hogan for breach of contract immediately. C. He can sue Hogan for breach of contract if he is unable to find another vendor by December 21. D. He cannot sue Hogan for breach of contract, since Hogan served an advanced notice to Jason.

Q: _____ are reasonable expenses that indirectly result from the breach, such as expenses incurred in stopping delivery of goods, transporting goods, and caring for goods after the buyer's breach. A. Compensatory damages B. Resale damages C. Punitive damages D. Incidental damages

Q: Gerald orders 1,000 cupcakes from Haddock Bakers for a Christmas Eve party. However, Haddock fails to deliver the cupcakes as per the schedule mentioned in the contract, and does not send any notification to Gerald. Gerald orders the cupcakes from Marlene's Cakes that evening. This is an example of which of the following? A. Writ of replevin B. Sue for specific performance C. Cover of a sales contract D. Seek adjustment

Q: _____ is a court action that allows a person entitled to goods to recover them from someone who has them wrongfully. A. Adjustment B. Writ of replevin C. Specific performance D. Cover the sale

Q: Auto Rebuilders Inc. orders original 1995 model parts from Car Wreckers Inc. Car Wreckers boxes the parts for shipment but finds another purchaser who is willing to pay more and refuses to ship the parts to Auto. Auto Rebuilders is unable to find the parts for sale elsewhere but is uncertain about what legal remedy to pursue. What remedy is best suited for this situation? A. Compensatory damages B. Specific performance C. Writ of replevin D. Compensatory and incidental damages

Q: Bridget contracts with Hunter to purchase $30,000 of goods for her store. Hunter wants a clause in the contract that neither party will sue the other after one year from the date of breach of contract. Which of the following is true of this situation? A. Parties are not allowed to provide time limits in their sales agreements since the UCC sets this time. B. Competent and informed parties can agree to set any time limit to sue for breach of contract. C. The courts must review the time limits the parties have determined in the sales agreement as reasonable. D. The UCC allows parties to shorten the time limit to bring a suit to a minimum of one year.

Q: _____ is an oral or written statement, promise, or other representation about the quality of a product. A. Express warranty B. Guarantee C. Quality assurance D. Implied warranty

Q: Brenner entered into a written contract with the Inkblot Corporation for $1,000 worth of office supplies. Inkblot subsequently sent Brenner some supplies that were not requested in the contract. Brenner noticed that the order did not match the contract, but he accepted the nonconforming goods. Which of the following is true of this situation? A. The Inkblot Corporation should cure the improper tender. B. Inkblot does not have the right to cure the improper delivery since it has been accepted. C. Brenner can reject the goods without informing Inkblot of the defect in the supply. D. Brenner can accept the goods and through the court, obligate the Inkblot Corporation to cure the improper delivery.