Q&A Hero

Q: Shane's Auto Parts orders twenty tires from Tough Tires, Inc. The truck delivering the tires to Shane's is in an accident and ten of the tires are damaged. Shane's Auto Parts a. cannot reject the entire shipment. b. must still pay for all twenty tires at the original contract price. c. may inspect the tires and accept the shipment with a reduction in price. d. must reject the entire shipment.

Q: Before undergoing sur­gery that could cause death, Donnelly, a guitarist, gives his of guitars to Cathy. The surgery is successful, and Donnelly does not die. The gift of the guitars is a. not revoked because it was a gift causa mortis. b. not revoked because it was a gift inter vivos. c. revoked because it was a gift causa mortis. d. not revoked because it was a gift largesse.

Q: Silas Paving Co. contracts to buy some construction machinery from Massive Earthmovers, Inc. Before either party performs, Massive sells its assets to Phoenix Equipment Corp. On learning of the sale, Silas is concerned about its contract with Massive. Silas should a. demand assurances of performance from Massive. b. consider the contract repudiated and sue Massive for breach. c. buy the machinery from a different supplier and bill Massive for the price. d. buy the machinery from a different supplier and bill Phoenix for the price.

Q: Bowie, a certified public accountant, prepares and certifies Candy Products Corporation's financial statements. These statements are in­cluded in Candy's registration statement filed with the Securities and Exchange Commission before Candy's offering of securities. Dona buys a security covered by the registration statement. Based on this transaction, Dona files a suit against Bowie under Section 11 of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934. To succeed in the suit, what must Dona prove? Bowie responds that Dona was not in priv­ity with him and that even if she had been in privity, she cannot prove his lack of due diligence. Can Bowie prevail on these grounds? Why or why not?

Q: Garden Tool Company makes hedge trimmers. Troy is injured while using a Garden Tool trimmer and sues the company for product liability based on neg­ligence. To win, Troy must show that a. Garden Tool did not use due care with respect to the trimmer. b. Garden Tool misrepresented a material fact regarding the trimmer. c. Troy was experienced in the use of trimmers. d. Troy was in privity of contract with Garden Tool.

Q: Dominique, a certified public accountant, provides accounting serv­ices to Eagle Corporation. The services include preparing Eagle's financial re­ports and issuing opinion letters based on the reports. In 2008, Eagle falls into serious financial trouble, but neither Dominique's reports nor her opinion let­ters indicate this situation. Relying on Dominique's portrayal of Eagle's finan­cial situation, Eagle borrows a large sum of money to build a new ship­ping facility. In lending Eagle the money, First National Bank relies on Dominique's opinion letter. Dominique is aware of this reliance. If Dominique did not en­gage in intentional fraud but was negligent, what is her potential liability?

Q: Mitch and Nadine enter into a contract for a sale of seventy-six specially made motion detectors. When Nadine does not deliver within a reasonable time after the agreed delivery date, Mitch files a suit for breach. Nadine asserts the doctrine of commercial impracticability. This doctrine extends only to problems that are a. foreseen. b. preventable. c. unforeseen. d. ordinarily assumed by a seller or lessor.

Q: Universal Assembly Company makes espresso machines and sells one to Vim through a misrepresentation on the label on which Vim relies and that results in an injury to Vim. Universal is most likely liable for a. a commonly known danger. b. fraud. c. privity. d. puffery.

Q: Forest & Field Company makes and leases a backhoe to Zach. Due to a defect attributable to Forest & Field's negligence, Zach is injured in an accident in which his neighbor Aron is also hurt. In a product liability suit based on negligence, Forest & Field may be liable to a. Aron only. b. no one. c. Zach and Aron. d. Zach only.

Q: Beef Burgers, Inc. contracts to buy five hundred steers from Fattening Feedlots. Before Fattening Feedlots can deliver the steers, there is an outbreak of disease in the feedlot, and all the cattle are quarantined. In this case the perfect tender rule a. applies to both parties. b. does not apply. c. applies only to Beef Burgers. d. applies only to Fattening Feedlots.

Q: Pace is an attorney, whose clients include Quikfeet Running Shoes Company. Unless Quikfeet has violated securities law, the contents of Pace's file on Quikfeet may be disclosed to someone other than Quikfeet a. only to a third party who is a foreseeable user of the information. b. only under a court order (with or without Quikfeet's consent). c. only with Quikfeet's consent. d. under any circumstances.

Q: Mineral Resource Company contracts to provide several manufacturers with tin. When a cartel of tin-producing countries suddenly embargoes future shipments of tin to Mineral Resource so that it cannot fulfill its contracts, the distributor a. can substitute some other material for the tin. b. is excused from the performance of its contracts. c. is liable for breach of contract. d. must still supply the tin needs of its customers.

Q: Bryce's accountant is Caleb and his attorney is Delilah. All states protect, as privileged information, Bryce's communications with a. Caleb and Delilah. b. Caleb only. c. Delilah only. d. neither Caleb nor Delilah.

Q: Farm Equip, Inc., makes farm­ing machinery. Gail discovers that her Farm Equip tractor is defective and sues the maker for product liability based on negligence. To win, Gail must show that a. Farm Equip sold the tractor to Gail. b. Gail knew and appreciated the risk caused by the defect. c. Gail suffered an injury caused by the defect. d. the "defect" was a commonly known danger.

Q: Sally's Sweet Fruits contracts with Fruits to You, Inc. for a delivery of two hundred pounds of strawberries to be delivered by Keep Kool Trucking, a trucking company with refrigerated trucks. On the day of delivery, the refrigeration units on Keep Kool's trucks are not working. Fruits to You a. may ship the goods to Sally's using another trucking company with refrigerated trucks. b. must refund Sally's money and cancel the contract. c. must wait to ship the strawberries until Keep Kool has fixed its trucks. d. must ship the goods through a different carrier and pay Sally incidental damages.

Q: Flynn, an accountant, helps Grange Supply Company prepare and file a false federal corporate income tax return. Under the In­ternal Revenue Code, this is a. a felony punishable by a fine and imprisonment. b. a felony punishable only by a fine. c. a misdemeanor punishable only by a fine. d. a civil violation subject to a liability suit but not a crime.

Q: Ceramic Tile Company designs and makes floor tiles. In a product liability suit based on negligence, Ceramic could be liable for vio­lating its duty of care with respect to a. neither the design nor the making of the tiles. b. the design and the making of the tiles. c. the design of the tiles only. d. the making of the tiles only.

Q: Levi's Toy Store orders one hundred board games from Big Board Games Warehouse. When the games are delivered, they are all missing pieces. Levi's Toy Store rejects the shipment. Big Board Games wants to cure. Big Board Games must a. promptly notify Levi's Toy Store of the intent to cure. b. pay Levi's Toy store a cure fee. c. send a truck to pick up the nonconforming goods before the end of the business day. d. create a new contract with Levi's Toy Store.

Q: Feder prepares federal corporate income tax returns for Giant Stores, Inc., and other firms. Under the Internal Revenue Code, with respect to an understatement of a client's tax liability, Feder may be liable for a. negligent or willful misconduct. b. no misconduct. c. only negligent misconduct. d. only willful misconduct.

Q: GR8 Skates Company makes and sells a pair of skates to Hugh. GR8 fails to exercise "due care" to make the skates safe, and Hugh is injured as a result. GR8 is most likely liable for a. assumption of risk. b. knowledgeable use. c. negligence. d. product misuse.

Q: Jerzy is an accountant whose clients include Kopper Kettle Restaurants, Inc. For a violation of securities laws, Jerzy may be subject to a. comprehensive liability. b. corporate liability. c. criminal liability. d. no liability.

Q: ValuRich Tools, Inc., sells tools, tool parts, and related supplies under "full" warranties. Under the Magnuson-Moss Warranty Act, this means that ValuRich must provide a. a choice between a refund or replacement if a product cannot be fixed and repair or replacement of defective parts. b. neither a choice of a refund or replacement, or repair of defective parts. c. only a choice of a refund or replacement if a product cannot be fixed. d. only repair or replacement of defective parts.

Q: On January 10, Winchester Pet Supplies orders fifty small dog collars from Quality Collars, Inc. to be delivered by January 15. On January 13, Quality Collars tenders fifty large dog collars. Winchester Pet Supplies rejects the shipment. Quality Collars has a. no right to cure. b. until January 15 to cure. c. until the end of the business day on January 13 to cure. d. unlimited time to cure.

Q: Food Packaging, Inc., agrees to sell 50,000 6-ounce yogurt containers to Golden Dairy Company. Food can obtain only 20,000 of the 6-ounce contain­ers, but also ships 30,000 more expensive 8-ounce containers for the same price. Under these circumstances, Golden a. cannot reject delivery, and Food cannot later replace the containers. b. cannot reject delivery, but Food can later replace the containers. c. may reject delivery, and notice to Golden of Food's intent to cure will give Food a reasonable time to replace the containers. d. may reject delivery, but Food cannot later replace the containers.

Q: Lacy is an accountant who prepares her clients' tax returns. Muff is not an accountant, but he also prepares tax returns for clients. Under the In­ternal Revenue Code, liability for preparing a false return may be im­posed on a. Lacy and Muff. b. Lacy only. c. Muff only. d. neither Lacy nor Muff.

Q: Mountain Bikes, Inc. (MBI), and Nero enter into a contract for a sale of a mountain bike. MBI, a merchant who deals in goods of the kind sold, makes implied and express warranties in connection with the sale. The Magnuson-Moss Warranty Act attempts to prevent deception in warranties by a. displacing the UCC as the primary source of warranty rules. b. making warranties easier to understand. c. prohibiting disclaimers of warranties. d. requiring sellers to give written warranties for consumer goods.

Q: Kim's Pony Rides orders ten saddles from Little Horse Saddles, Inc. The sales contract states that if the saddles are defective, Kim's will allow Little Horse Saddles to repair or replace them instead of rejecting the shipment. When the saddles arrive, they are defective. In this case, the perfect tender rule a. does not apply. b. applies to both parties. c. applies only to Little Horse Saddles. d. applies only to Kim's Pony Rides.

Q: Fact Pattern 17-1Bret, a representative of Concrete Products, Inc. assures Dependable Construction Company (DCC) that Concrete's cement will not crack within a certain range of temperatures. DCC uses the product. When cracks develop within the stated temperature range, DCC files a suit against Concrete.Refer to Fact Pattern 17-1. Suppose that the court rules against Concrete. The manufacturer might have avoided that result bya. making its cement fit for its particular purpose.b. making its cement merchantable for its intended use.c. not allowing Bret to express an opinion.d. not permitting Bret to make an express warranty.

Q: Longway Trucking, Inc., files a suit against Midge, an accountant, under the antifraud provisions of the Securities Exchange Act of 1934 and Rule 10b-5 of the Securities and Exchange Commission. To succeed in recovering damages, Longway must show that Midge a. acted with scienter. b. bought or sold a security. c. is incompetent. d. knows nothing about securities.

Q: Vehicle Leasing Agency (VLA) and Wander Trucking Company enter into a contract for a lease of eight cargo vans. VLA delivers eight vans, but they are not cargo-sized. Wander a. cannot reject the entire shipment. b. can reject the entire shipment. c. must accept the entire shipment. d. must reject the entire shipment.

Q: Bertha is an accountant with Chocolate Shoppes Corporation. Doral buys Chocolate stock and loses money on the investment. To recover from Bertha under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 of the Se­curities and Exchange Commission, Doral must prove a. nothing. b. scienter, fraud, and reliance only. c. scienter, fraud, reliance, and materiality only. d. scienter, fraud, reliance, materiality, and causation.

Q: Fact Pattern 17-1Bret, a representative of Concrete Products, Inc. assures Dependable Construction Company (DCC) that Concrete's cement will not crack within a certain range of temperatures. DCC uses the product. When cracks develop within the stated temperature range, DCC files a suit against Concrete.Refer to Fact Pattern 17-1. The court is most likely to rule in favor ofa. Concrete, because Bret's statement was an expression of opinion.b. Concrete, because DCC chose Concrete's product voluntarily.c. DCC, because Bret's statement was an express warranty.d. DCC, because Concrete's product is not fit for its purpose.

Q: Genuine Seed Company and Hillside Farmers Cooperative enter into a contract for a sale of hybrid seeds. Under the perfect tender rule, Genuine Seed must ship or tender seeds to Hillside that a. approximately conform to all of the details of the contract. b. entirely conform to the contract except in one or two details. c. exactly conform to the contract in every detail. d. substantially conform to the contract in most details.

Q: Screen Perfect, Inc., and TV Stores enter into a contract for a sale of high-definition television sets. Screen Perfect ships goods that do not exactly conform to the contract in some details. TV Stores a. cannot reject the entire shipment. b. can reject the entire shipment. c. must accept the entire shipment. d. must reject the entire shipment.

Q: Musical, Inc., sells fifty MP3 players to Noise Stores, Inc. To avoid liability for most implied warranties, in some states Musical could simply state in writing that the players are sold a. as is. b. by a merchant. c. in perfect condition. d. with no known defects.

Q: Meri, an accountant, includes a false statement in a report for Novelty Paper Products, Inc. (NPPI) that is filed with the Securities and Exchange Com­mission. When Otho buys stock in NPPI and loses money on the investment, he files a suit against Meri, alleging fraud under the 1934 Securities Exchange Act. To avoid liability, Meri can show that she a. intended to defraud NPPI, not Otho. b. intended to profit on stock trades generally, not only with Otho. c. is an otherwise competent accountant. d. was not aware her statement was false.

Q: Regal Autos, Inc., sells cars to consumers. To avoid liability for oral ex­press warranties, each sales agreement should note that a car is sold a. as is. b. in perfect condition. c. subject to warranties included in the written contract only. d. with no known defects.

Q: Business Rental Corporation (BRC) and Cartage Trucking Company enter into a contract for a lease of ten hydraulic lifts. Under the perfect tender rule, BRC must ship or tender goods to the lessee that a. approximately conform to all of the details of the contract. b. entirely conform to the contract except in one or two details. c. exactly conform to the contract in every detail. d. substantially conform to the contract in most details.

Q: Pat, an accountant, includes a false statement in a report for Quantity Overstock, Inc., that is filed with the Securities and Exchange Commis­sion. Quantity publishes a misleading ad about its future prospects. Rita sees the ad and calls Stan, who buys stock in Quantity. Under Section 18 of the Securities Ex­change Act of 1934, liability may attach to a. Pat's report. b. Quantity's ad. c. Rita's call. d. Stan's purchase.

Q: Sweet Candy, Inc., and Tasty Treats Stores enter into a contract for a sale of candy. Sweet, a merchant who deals in goods of the kind sold, makes express warranties in connection with the sale. Under the UCC, at the time a contract is formed, an express warranty can be disclaimed or modified a. by clear, conspicuous language called to the buyer's attention. b. by implied affirmations of fact relating to the goods. c. in any way that the seller sees fit for the ordinary purpose. d. in no way.

Q: Pine Mills Corporation and Ur-Choice Lumberyards enter into a contract for a sale of plywood. Under a destination contract, the seller must a. allow the buyer to reject the goods for any reason. b. deliver the goods to a particular destination. c. inspect the goods before tendering their delivery. d. place the goods into the hands of a carrier.

Q: Mona, an accountant, prepares for NuTech Corporation a financial statement that omits a material fact. The financial statement is included in NuTech's registration statement, which Pam reads. Pam buys NuTech stock. Under Section 11 of the Securities Act of 1933, for Mona to be liable for the omission, Pam must show that a. Pam relied on the omission. b. Pam suffered a loss on the stock. c. Pam knew about the omission before making her purchase. d. the omission had no causal connection to her loss.

Q: Quentin, an accountant, prepares for Ruff n" Reddy Concrete Corporation a financial state­ment that omits a material fact. The statement is included in Ruff n" Reddy's registration statement filed with the Securities and Exchange Commission. Timor, who reads the statement, and Ubi, who does not, each buy Ruff n" Reddy stock. Under Section 11 of the Securities Act of 1933, Quentin may be liable to a. neither Timor nor Ubi. b. Timor and Ubi. c. Timor only. d. Ubi only.

Q: Imported Carpets Store and Jill enter into a contract for a sale of an Oriental rug. Imported Carpets, a merchant who deals in goods of the kind sold, generally describes the goods, details technical specifications, and shows a sample. Under the UCC, if these are inconsistent a. the general description displaces the sample. b. the general description displaces the technical specifications. c. the sample takes precedence over the general description. d. the sample takes precedence over the technical specifications.

Q: Office Suppliers, Inc. and Little Office Shop enter into a contract for a sale of office supplies. Office Suppliers is the seller. Under a shipment contract, the Office Suppliers does not have to a. obtain and promptly deliver or tender to the buyer any documents necessary to enable the buyer to obtain the goods. b. deliver the goods to a particular destination. c. put the goods in the hands of the carrier. d. promptly notify the buyer when the shipment has been made.

Q: Lulu, an accountant, conducts an audit of Microstuff Toys, Inc. After the conclu­sion of the audit, the working papers created in preparing the audit must be a. disposed of immediately. b. kept until the Public Company Accounting Oversight Board's review. c. maintained for seven years. d. retained forever.

Q: Neil goes to Oil Shop to change the oil in his car. Perry, the service tech­ni­cian, learns that Neil plans to take a trip and advises the use of a certain type of oil. The oil breaks down during the trip, damaging the car. Neil may recover from Oil Shop for breach of a. an express warranty. b. an implied warranty of fitness for a particular purpose. c. an implied warranty of merchantability. d. a warranty of title.

Q: Elegant Carpets, Inc., and Fantastic Floors Stores enter into a contract for a sale of carpeting. Under a shipment contract, the seller must a. allow the buyer to reject the goods for any reason. b. deliver the goods to a particular destination. c. inspect the goods before shipping them. d. place the goods into the hands of a carrier.

Q: Hadley, an accountant, accumulates working papers while performing an audit for Ilene. After the audit, these documents belong to a. Hadley, with Ilene having a right of access to the papers. b. Ilene, with Hadley having a right of access to the papers. c. neither Hadley nor Ilenethe papers must be disposed of. d. the Public Company Accounting Oversight Board.

Q: Regional Lumber Company and Superior Builders Corporation enter into a contract for a sale of wood products. Regional, a merchant who deals in goods of the kind sold, makes implied and express warranties in connection with the sale. Under the UCC, if these are inconsistent a. all implied warranties displace all express warranties. b. all express warranties displace all implied warranties. c. the implied warranty of fitness for a particular purpose takes precedence. d. the implied warranty of merchantability takes precedence.

Q: Clear Day Company, which is based in Delaware, agrees to sell fifty windows, currently stored in Florida, to Far Vu, Inc., which is based in Hawaii. Absent an agreement to the contrary, the place of deliv­ery is in a. California. b. Delaware. c. Florida. d. Hawaii.

Q: Good Tire Company and Hiway Auto Service enter into a contract for a sale of tires. Good Tire is a merchant who deals in goods of the kind sold. Under the UCC, an implied warranty of merchantability arises a. automatically in sales contracts. b. only if the buyer asks for it. c. only if the seller does not expressly disclaim it. d. only in conjunction with lease contracts, not sales contracts.

Q: Sparkling Gem Corporation agrees to sell Jewel Outlets, Inc. (JOI), fifty new diamonds, but the contract does not specify a place of delivery. JOI is expected to pick up the goods. The place of delivery is a. Sparkling's place of business. b. JOI's place of business. c. the Annual Gems and Jewels Convention in New York City. d. the U.S. Postal Service office nearest to JOI's place of business.

Q: Craig is an accountant whose clients include Digby Excavation Corporation. Elbert is Craig's attorney. Under the common law and by statute in many states, working papers that Craig develops when preparing financial reports for Digby are owned by a. Craig. b. Digby. c. Elbert. d. no onethe papers must be destroyed immediately after use.

Q: Boris is an accountant. Under the Sarbanes-Oxley Act of 2002, the degree of government oversight over the public accounting practices of Boris and other accountants was a. decreased. b. increased. c. new. d. unchanged.

Q: Big Eggs, Inc. agrees to supply Omelet Express with five hundred eggs. Big Eggs cannot reasonably ask Omelet Express to pick up the eggs at a. 1:00 P.M. b. 2:00 P.M. c. 3:00 P.M. d. 4:30 A.M.

Q: Oceanic Vessels, Inc., and Pacific Harbor Company enter into a contract for a sale of a boat. Oceanic is a merchant who deals in goods of the kind sold. The goods are defective. Under the UCC, the implied warranty of merchantability is breached a. only if Oceanic did not know about and could not have discovered the defect. b. only if Oceanic did not know about the defect. c. only if Oceanic knew about or could have discovered the defect. d. regardless of what Oceanic knew or could have discovered.

Q: Under the UCC, parties to a contract cannot limit or exclude consequential damages.

Q: Dependable Appliances, Inc., and Elain enter into a contract for a sale of kitchen appliances. Dependable, a merchant who deals in goods of the kind sold, notes that its goods come with an implied warranty of merchantability. Under the UCC, this means that the goods are reasonably a. fit for the buyer's particular purpose. b. fit for the ordinary purpose for which such goods are used. c. suitable for resale at an acceptable price. d. the best quality that money can buy.

Q: Doug is an accountant whose clients include Everyday Products, Inc. (EPI). Under the Ultramares rule, if Doug is negligent in his work for EPI, he could be liable to a. EPI and any third party. b. EPI and third parties who are foreseen users of his work for EPI. c. EPI and third parties who are reasonably foresee­able users of his work for EPI. d. EPI only.

Q: If a seller asks a buyer to store nonconforming goods overnight, then the buyer is entitled to reimbursement for the costs involved.

Q: Trucks & Trailers, Inc. (T&T), and United Delivery Service enter into a contract for a lease of trucks. T&T is a merchant who deals in goods of the kind leased. Under the UCC, an implied warranty of merchantability arises a. automatically in lease contracts. b. only if the lessee asks for it. c. only if the lessor does not expressly disclaim it. d. only in conjunction with sales contracts, not lease contracts.

Q: Toby is an accountant whose clients include U-All Company. If Toby is negligent in his work for U-All, most courts would hold him liable to U-All and a. any third party. b. no third party. c. third parties who are foreseen users of the work. d. third parties who are reasonably foresee­able users of the work.

Q: If a seller fails to deliver the goods, the buyer's damages do not include all losses resulting from this course of events.

Q: Sari buys a new sport utility vehicle (SUV) from Terrific Cars & Trucks, Inc. The most important factor in determining whether an ex­press war­ranty is created is whether a. Sari expresses to Terrific what she wants warranted. b. Sari's desire for the SUV becomes part of her motivation to deal. c. Terrific expresses to Sari what it expects of its customers. d. Terrific promise becomes part of the basis of the bargain.

Q: Quibble Game Company's liabilities exceed its assets. Quibble hires Roo & Slay, an accounting firm, to prepare a balance sheet. Through Roo & Slay's negligent omissions, the sheet shows a positive net worth. Town Bank relies on the balance sheet to make a loan to Quibble. When Quibble defaults, Town files a suit against Roo & Slay. Under the Restatement rule, Roo & Slay is most likely a. liable because Roo & Slay owed a duty of care to Quibble. b. liable because Roo & Slay owed a duty to any foreseeable user. c. liable if Roo & Slay knew that Town would rely on the balance sheet. d. not liable because Roo & Slay and Town were not in privity.

Q: Marquis Company's liabilities exceed its assets, but the firm's employees falsify its books to reflect a positive net worth. Marquis hires Nan & Ollie, an accounting firm, to prepare a balance sheet, which is certified to show a positive net worth. Pure Credit Corporation relies on the balance sheet to make a loan to Marquis. When the firm defaults, Pure Credit files a suit against Nan & Ollie. Under the Ultramares rule, the accounting firm is most likely a. liable because Nan & Ollie owed a duty of care to all third parties. b. liable because Nan & Ollie owed a duty of care to Marquis. c. liable because Nan & Ollie owed a duty to any foreseeable user. d. not liable because Nan & Ollie and Pure Credit were not in privity.

Q: Parker, a salesperson for Quality Textiles, Inc., shows Rosa, a fabric buyer for Style Clothing Company, samples of cloth, stating that any ship­ment will match the samples. This statement is a. an express warranty. b. an implied warranty. c. a warranty of title. d. puffing.

Q: If a seller repudiates a contract, the buyer's damages do not have to be adjusted to reflect any expenses that were saved as a result of the breach.

Q: Big Screen Video Corporation sells high-definition television sets. Under most cir­cum­stances, Big Screen Video will be presumed to have warranted that its title to the TVs is a. the same as each brand's name. b. none of the choicesa warranty of title is not presumed. c. good and valid. d. the best that money can buy.

Q: Lars accuses Moe, an attorney, of committing malpractice. Malpractice is a. a breach of ethics. b. a defalcation. c. a mistake in judgment. d. professional negligence.

Q: A buyer who obtains substitute goods to replace goods that a seller did not deliv­er can also recover damages from the seller.

Q: Grover Nut Company files a suit against Hud, its former account­ant, alleging actual fraud. Grover must prove a. intent to deceive. b. misrepresentation of a non-material fact. c. the lack of an injury. d. unjustifiable reliance.

Q: Lebron, an attorney, allows a statute of limitations to lapse on a claim by Midwest Metal Fabrication Company, a client. Lebron a. can be held liable for malpractice. b. has violated an ethical standard but cannot be held liable. c. is subject to criminal penalties under the statute of limitations. d. will be automatically disbarred.

Q: A buyer may reject a seller's goods under any circumstances.

Q: If a buyer repudiates a contract, the seller cannot re­cover damages.

Q: Daisy Daycare, Inc., files a suit against Eldon, its former accountant, al­leging constructive fraud. Eldon may be held liable a. if Daisy cannot prove actual fraud. b. if Eldon was grossly negligent in the performance of his duties. c. only if Eldon acted with fraudulent intent. d. only if the court adopts the Ultramares rule.

Q: If a buyer wrongfully refuses to accept goods that conform to a contract, the seller can recover damages.

Q: Ezra, an accountant, intentionally misstates a material fact to mislead Fruit Packing Industries, Inc., a client. Fruit Packing justifiably relies on the misstatement to its detriment. Ezra is most likely liable for a. actual fraud. b. constructive fraud. c. destructive fraud. d. virtual fraud.

Q: Olga, a salesperson for Pre-owned Cars & Trucks, Inc., tells Quincy, "This is the best car I"ve ever seen." This statement is a. an express warranty. b. an implied warranty. c. a warranty of title. d. puffing.