Q&A Hero

Q: Fabiola, or any foreign citizen, can bring a civil suit in a U.S. court for a. a violation of a treaty of the United States only. b. a violation of a treaty of the United States or of the law of nations. c. a violation of the law of nations only. d. no purpose.

Q: Sam, or any U.S. citizen, can bring a civil suit in a U.S. court against a foreign entity for a. a tort allegedly committed in the United States only. b. a tort allegedly committed in the United States or overseas. c. a tort allegedly committed overseas only. d. no purpose.

Q: Common law is no longer a source of legal authority.

Q: A discharge will be denied to a debtor who received a discharge within eight years of filing the current petition.

Q: Suisse Internationale, a Swiss maker of athletic equipment, enters into a price fixing agreement with Total World Sports, a U.S. wholesaler of Suisse's products. U.S. courts will apply U.S. antitrust laws if a. the agreement was made in Switzerland. b. the agreement was made in the United States. c. the price fixing has a substantial effect on U.S. commerce. d. the Swiss government agrees to be sued in the United States.

Q: A court may depart from a precedent if the precedent is no longer valid in view of changed technology.

Q: Some student loans are dischargeable in a Chapter 7 bankruptcy.

Q: Stare decisis is a doctrine obligating judges to follow precedents established within their jurisdictions.

Q: Fact Pattern 22-1First State Bank issues a letter of credit in favor of Oboe Company, an American firm, to facilitate an international sales contract to buy resources from Lapland Mining, Ltd., a Finnish company.Refer to Fact Pattern 22-1. To obtain payment, Lapland must comply with all of the requirements of the letter of credita. strictly.b. substantially.c. reasonably.d. materially.

Q: In order of priority, the claims of all unsecured creditors in a class must be satisfied before any re­maining amounts can be distributed to the next class.

Q: In most states, state law determines the amount of a debtor's property that is exempt from dis­tribution on bankruptcy.

Q: Fact Pattern 22-1First State Bank issues a letter of credit in favor of Oboe Company, an American firm, to facilitate an international sales contract to buy resources from Lapland Mining, Ltd., a Finnish company.Refer to Fact Pattern 22-1. In a letter of credit, the ben­eficiary isa. Lapland.b. Oboe.c. First State Bank.d. none of the above.

Q: A decision on a given issue by a court is not binding on an inferior court.

Q: A trustee has the power to avoid a sale of the debtor's property.

Q: Fact Pattern 22-1 (Questions 28"31 apply) First State Bank issues a letter of credit in favor of Oboe Company, an American firm, to facilitate an international sales contract to buy resources from Lapland Mining, Ltd., a Finnish company. Refer to Fact Pattern 22-1. First State Bank a. is responsible for making sure that the parties perform the contract. b. will make payment once the transaction has been completed. c. will make payment when Lapland presents the proper documents. d. none of the above.

Q: A plaintiff is a person against whom a lawsuit is brought.

Q: Current City (CC) is a retail seller of television sets. CC sells Dhani a $3,000 large-screen, high-definition, LED set on a retail installment security agreement in which he pays $100 down and agrees to pay the balance in equal installments. CC retains a security interest in the set, and perfects that interest by filing a financing statement centrally. Two months later, Dhani is in default on the payments to CC and is involun­tarily petitioned into bankruptcy by other creditors. Discuss CC's right to repossess the TV set and whether CC has priority over the trustee in bankruptcy.

Q: Child-support debts will be suspended by a voluntary bankruptcy filing.

Q: Smartt Software Company borrows $10,000 from Term "˜N All Loans, Inc., but cannot repay the loan when it comes due. Term "˜N All refuses to ex­tend the time for repayment unless Smartt can provide an acceptable surety. Uno Venture Corporation agrees to act as a surety for the loan af­ter Smartt offers the firm a discount on software and shows Uno financial statements, compiled with Term "˜N All's assistance, that misrepresent Smartt's financial situation. Later, after Uno uses the discount to buy software, Smartt again defaults on repayment of the loan, and Term "˜N All files a suit against Uno to collect the amount of the debt. Is Uno liable? Why or why not?

Q: A court's direction to a party to do or to stop doing a particular act is a rescission.

Q: The filing of a petition for bankruptcy will automatically stay most legal actions against the debtor.

Q: Suki files for bankruptcy under Chapter 13. The value of her property to be distributed under the plan is more than the amount of the creditors' claims. The court can approve the plan a. only if neither an unsecured creditor nor the trustee objects. b. only if no unsecured creditor objects. c. only if the trustee does not object. d. over the objection of either an unsecured creditor or the trustee.

Q: Equity is a branch of unwritten law that seeks to award damages in most cases.

Q: Gustav files a petition for bankruptcy under Chapter 13. Gustav is granted a discharge. Debts that will not be discharged include claims for a. domestic support, fraudulently incurred debt, and student loans. b. domestic support only. c. fraudulently incurred debt only. d. student loans only.

Q: An order for relief in a bankruptcy proceeding amounts to a discharge of the debts of the party petitioning for bankruptcy protection.

Q: Common law is a term for the laws that are familiar to most of us.

Q: Federal agency regulations take precedence over conflicting state agency regulations.

Q: Jill believes that she should file a plan for a Chapter 13 discharge in bankruptcy. A Chapter 13 bankruptcy plan must provide for a. the completion of all payments to all creditors within six years. b. the payment of 100 percent of all obligations in full. c. the surrender of all collateral to the creditors. d. the turnover of the debtor's future income to the trustee.

Q: Efrem owns Fans & Players, a retail sporting goods shop. When Great Hill Lodge, a new ski resort, is built in the area, Efrem decides to expand and borrows a large sum from Hometown Bank. The bank takes a secu­rity interest in Efrem's present inventory and any after-acquired inven­tory as collateral for the loan. The bank properly perfects the security in­terest by filing a financing statement. Efrem's business is profitable, and he begins doubling his inventory. A year later, an avalanche destroys the ski slope and lodge. Efrem's business takes a turn for the worse, and he defaults on his debt to the bank. The bank seeks possession of his en­tire inventory, even though the inventory is twice as large as it was when the loan was made. Efrem claims that the bank has rights to only half of his inventory. Is Efrem correct? Explain.

Q: Administrative law includes only federal regulations.

Q: Sara needs $1,500 to buy textbooks and other school supplies. Tomas agrees to loan Sara $1,500, accepting as collateral Sara's car. They put their agreement in writing and sign it. Sara keeps possession of the car. Does Tomas have an enforceable security interest? How can Tomas let other creditors know of his interest in the car?

Q: The Federal Trade Commission developed the Uniform Commercial Code.

Q: Natural Resources, Inc. (NRI), files for bankruptcy under Chapter 11 and assumes the role of a debtor in possession. In this role, NRI is simi­lar to a. a creditor at a Chapter 7 creditors' meeting. b. a family farmer after a discharge under Chapter 12. c. a secured creditor in possession of collateral under Chapter 13. d. a trustee in a liquidation proceeding under Chapter 7.

Q: Hal's Hardware store defaults on a debt to Intrastate Bank, which takes possession of the collateral securing the debt. Intrastate sells the collat­eral. The proceeds from the sale are applied first to a. Hal's debt to Intrastate. b. Hal's debts to other creditors. c. Intrastate's fees for the sale. d. payments Hal's made on the debt to Intrastate.

Q: Sweetwater Café defaults on debts to Town & Country Bank and Uno Loan Company. Town & Country perfected its security interest before Uno. Town & Country takes possession of the collateral in which it has a security interest. On a sale of the collat­eral, the proceeds will be applied first to a. Sweetwater's previous payments on the debts. b. Sweetwater's unpaid payments on the debts. c. the balance of Sweetwater's debt to Town & Country. d. the balance of Sweetwater's debt to Uno.

Q: Each state has its own constitution.

Q: Kipper files a petition in bankruptcy. Kipper's dischargeable debts include a. domestic-support obligations. b. student loans unless the lender would suffer undue hardship. c. unpaid state and federal taxes. d. unsecured credit-card debt.

Q: Elias repays his debt, incurred to buy consumer goods, to Fidelity Bank and immediately files a written request for a termination state­ment. Fidelity a. must comply within one month of receipt of the letter. b. must comply within twenty days of receipt of the letter. c. must refund $500 to Elias. d. need not comply.

Q: The U.S. Constitution is the supreme law of the United States.

Q: Pola files a petition in bankruptcy. Pola's non-dischargeable debts include a. domestic-support obligations. b. student loans if payment would impose undue hardship. c. unpaid loans to finance home repairs. d. unsecured credit-card debt.

Q: A federal law that conflicts with the U.S. Constitution will be deemed unconstitutional.

Q: Quotient Financial Corporation is a secured party with a security inter­est in property owned by Retail Sales Company. Perfection of this secu­rity in­ter­est may not protect Quotient Financial against the claim of a. a bank. b. a buyer in the ordinary course of business. c. a subsequent lien creditor. d. a trustee in bankruptcy.

Q: Fact Pattern 21-1In January, Jazz Dance Studio owes Kay, its musical director, $1,800 for cur­rent wages, receives $700 as a down payment for dance lessons from Lora, and pays a Music, Inc., a sheet music supplier, $1,500 of $3,000 owed. In February, the studio files for bankruptcy under Chapter 7.Refer to Fact Pattern 21-1. The highest priority belongs toa. Kay and Music, Inc.b. Kay only.c. Lora only.d. Music, Inc., only.

Q: Fact Pattern 21-1In January, Jazz Dance Studio owes Kay, its musical director, $1,800 for cur­rent wages, receives $700 as a down payment for dance lessons from Lora, and pays a Music, Inc., a sheet music supplier, $1,500 of $3,000 owed. In February, the studio files for bankruptcy under Chapter 7.Refer to Fact Pattern 21-1. Based on the size of the studio's estate in bank­ruptcy, each of Jazz's creditors will get only 10 percent of their claims. Regarding the payment to Music, Inc., the trustee maya. not recover it because Music's claim has priority.b. not recover it unless Music is an in­sider.c. recover it as a fraudulent transfer.d. recover it as a voidable preference.

Q: A judge's view of the law is of little importance in a common law legal system.

Q: Idle Investments, Inc., and Harbor Bank are secured parties with secu­rity interests in property owned by GR8 Manufacturing Corporation. Priority between these security interests is generally determined by a. the amount of the claim. b. the custom in the trade. c. the time of perfection. d. the time the security agreement was signed.

Q: Elle is a trustee for a federal bankruptcy court. Elle's duties include a. collecting a debtor's property. b. establishing priority for the payment of unsecured creditors. c. operating a debtor's business to obtain maximum profit for creditors. d. submitting to an examination under oath by the creditors.

Q: Lena borrows from Mac and Nicol, using the same farm equipment as collateral for both loans. Only Nicol has a perfected security interest. Lena defaults on both loans. The party with first rights to the collateral is a. Lena. b. Mac and Nicol, in proportion to Lena's debt to each. c. Mac only. d. Nicol only.

Q: How judges apply the law to specific disputes may depend in part on their personal philosophical views.

Q: The law establishes rights, duties, and privileges that are consistent with the values of society.

Q: Zeke files a petition for bankruptcy. Zeke's creditors must file with the court their proof of claims against Zeke's assets within a. fifteen days of the creditors' meeting. b. thirty days of the creditors' meeting. c. sixty days of the creditors' meeting. d. ninety days of the creditors' meeting.

Q: Fact Pattern 20-1General Leasing Company (GLC) buys equipment for use as inventory, borrow­ing $1 million from Helpful Finance Corporation for a security in­terest in the equipment. The next day, GLC borrows $500,000 from Interstate Bank, also for a security interest in the equipment. GLC defaults on the loans.Refer to Fact Pattern 20-1. Suppose that two weeks after GLC takes pos­session of the equipment, Helpful and Interstate file financing state­ments, with Interstate fil­ing first. In that cir­cum­stance, the party with priority to the equipment isa. GLC.b. Helpful and Interstate proportionately.c. Helpful only.d. Interstate only.

Q: Fact Pattern 20-1General Leasing Company (GLC) buys equipment for use as inventory, borrow­ing $1 million from Helpful Finance Corporation for a security in­terest in the equipment. The next day, GLC borrows $500,000 from Interstate Bank, also for a security interest in the equipment. GLC defaults on the loans.Refer to Fact Pattern 20-1. Suppose that Helpful perfects its se­curity in­ter­est when GLC takes possession of the equipment. In that cir­cum­stance, the party with pri­ority to the collateral on GLC's default would bea. GLC.b. Helpful and Interstate proportionately.c. Helpful only.d. Interstate only.

Q: 321 Studios, a seller of software for copying digital versatile discs (DVDs), filed an action in the U.S. District Court of the Northern District of California. 321 Studios sought a declaratory judgment from the court as to whether 321 Studios' product infringes on copyrights held by Metro Goldwyn Mayer Studios, Inc., and other film studios. The court's opinion in the case is at 321 Studios v. Metro Goldwyn Mayer Studios, Inc. 307 F.Supp.2d 1085 (N.D.Ca. 2004). Specifically where can this opinion be found?

Q: Ollie files a petition in bankruptcy. At the moment of filing a. an automatic stay goes into effect. b. Ollie's debts are discharged. c. Ollie's petition is dismissed. d. Ollie's property is distributed to Ollie's creditors.

Q: Americans with a Better Cause (ABC), a nonprofit organization, files a suit against the U.S. Department of Justice (DOJ), claiming that a certain federal statute the DOJ is empowered to enforce conflicts with the U.S. Constitution and with a state constitution. In each situation, which source of law has priority?

Q: Pete borrows $5,000 from Willy in a secured transaction using Pete's BMW as collateral. Pete then borrows $7,000 from Janet using the same car as collateral. Neither Willy nor Janet perfects their security interests. Pete defaults on the loans. The party with priority is a. Willy, because his interest was the first to attach. b. Janet, because Pete owes her more money. c. Janet, because her interest was the second to attach. d. Willy, because Pete owes him less money.

Q: Mia's voluntary petition for bankruptcy is found to be proper. The order for relief is effective as soon as a. Mia files the petition. b. Mia posts a bond to cover the costs of the proceedings. c. Mia's creditors agree to the terms. d. the trustee collects and distributes the property of Mia's estate.

Q: The Pennsylvania Supreme Court decides the case of Quality Co. v. Royal Corp. Of nine justices, five believe the judgment should be in Quality's favor. Justice Smith, one of the five, writes a separate opinion. This opinion is a. a concurring opinion. b. a dissenting opinion. c. a minority opinion. d. a unanimous opinion.

Q: Elmo files a petition in bankruptcy. If the court concludes that there are grounds for a finding of "substantial abuse," the court will most likely a. dismiss Elmo's petition. b. discharge Elmo's debts. c. distribute Elmo's property to Elmo's creditors. d. issue an automatic stay against any actions by Elmo's creditors.

Q: Middling Credit Corporation asks Little Supply Company to agree to a security agreement that provides for coverage of the proceeds from the sale of after-acquired prop­erty. This is a. a first-in-time rule. b. a floating lien. c. a funds guaranty. d. in violation of secured transactions law.

Q: The citation of a case does not include a. the names of the parties. b. the name(s) of the judge(s) who decided it. c. the year in which it was decided. d. the volume and page number of the applicable reporter where the opinion may be found.

Q: Joan borrows money from Jake under a security agreement. After borrowing the money, Joan buys a new kayak. The kayak is considered a. a floating lien. b. after-acquired property. c. a future advance. d. proceeds.

Q: Kofi files a petition for bankruptcy. Kofi must include with the petition a. a list of creditors and the amount of the debt owed to each only. b. a list of creditors and the amount of the debt owed to each, a list of property, and a statement of financial affairs. c. a list of property only. d a statement of financial affairs only.

Q: Everyday Loans, Inc., issues a line of credit in Glade Electronics Corporation under a security agreement. Later, Glade buys new HD-TVs to add to its inventory. Everyday has a security interest in the new inventory a. if the security agreement included an after-acquired property clause. b. if Everyday has not yet filed a financing statement. c. if Glade bought the inventory with Everyday funds. d. under no circumstances.

Q: Beth is a victim of Carl's violation of a criminal law. Criminal law is concerned with a. the prosecution of private individuals by other private individuals. b. the prosecution of public officials by private individuals. c. the relief available when a person's rights are violated. d. wrongs committed against the public as a whole.

Q: Mabel files a petition in bankruptcy. The initial proceeding on this peti­tion will be in a. a federal bankruptcy court. b. a state bankruptcy court. c. the highest court in the state in which Mabel is located. d. the United States Supreme Court.

Q: Lulu joins with other creditors to force Mikhail, a debtor, into bankruptcy. One of the goals of bankruptcy law with respect to creditors is to a. ensure that creditors will continue to lend to insolvent debtors. b. protect creditor assets from diminution in value. c. provide equitable treatment in the competition for debtor assets. d. make all debtor property available for creditor claims.

Q: The term substantive law refers to laws that a. create legal rights and obligations. b. establish the methods of enforcing rights. c. focus on major, as opposed to minor, issues. d. prohibit substandard acts.

Q: City Bank's financing statement in collateral owned by Delta Waters Corporation will expire in less than a year. Filed timely, a continuation statement could extend the effectiveness of the financing statement for a. one year. b. two years. c. five years. d. ten years.

Q: Valley Furniture Store sells household consumer goods on credit for which Valley files a financing statement to perfect a security interest in the goods. With the filing of subsequent continuation statements, the ef­fectiveness of the statement can be continued a. indefinitely. b. for no longer than five years. c. for no more than six months. d. up to five years and six months.

Q: Carlton files a petition in bankruptcy. One of the goals of bankruptcy law with respect to a debtor is to a. encourage the continued use of credit to borrow funds. b. ensure that third parties will continue to guarantee loans. c. provide a fresh start, free from creditors' claims. d. shield assets from creditors' claims.

Q: A federal statute regulates an employment practice. To resolve a dispute concerning the practice, Paula, a judge, will most likely apply a. a common law doctrine that applied before the statute was enacted. b. a common law doctrine that applies to other, different practices. c. Paula's personal philosophy of law. d. the statute.

Q: Kurt is a judge hearing the case of Local Co. v. Macro Corp. Applying the relevant rule of law to the facts of the case requires Kurt to find previously decided cases that, in relation to the case under consideration, are a. as different as possible. b. as similar as possible. c. at odds. d. exactly identical.

Q: The payment of Paul's debt to Ryan is guaranteed by Paul's 2002 Honda Civic. Ryan filed the financing statement on July 1, 2012. If Ryan does nothing else, the financing statement will be effective until a. July 1, 2013. b. July 1, 2014. c. July 1, 2017. d. July 1, 2022.

Q: Brick's debt to Conry is past due. Conry brings a legal action against Brick to collect the debt. To ensure that a judgment in Conry's favor will be collectible, Conry asks the court to order the seizure of Brick's property. Exempt from such an order in most states is a. all of Brick's personal property. b. as much of Brick's personal property as Brick opts to exempt. c. equipment that Brick uses in a business up to a specified amount. d. none of Brick's personal property.

Q: In Export Co. v. Imports, Inc., there is no precedent on which the court can base a decision. The court can consider, among other things, a. neither public policy nor social values. b. public policy only. c. public policy or social values. d. social values only.

Q: Saf-T Lenders, Inc., takes possession of Tiara's stock in Urgent Care Corporation to perfect Saf-T's security interest in the stock. This is a. after-acquired property. b. a pledge. c. a purchase-money security interest. d. a violation of most state laws.

Q: Jay is a surety for Karen's loan from Little Bank. Jay's right to be repaid by Karen after having paid her debt is the right of a. contribution. b. redemption. c. reimbursement. d. subrogation.

Q: Corporate Bank wants to perfect its security interest in inventory owned by Outdoor Outfitters, Inc. Most likely, a financing statement should be filed with a. the bank manager. b. the county clerk. c. the U.S. Department of the Interior. d. the secretary of state.