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Discuss the product safety standards issued by the Consumer Product Safety Act (CPSA). Also, list at least three products which, although consumer goods, do not come under the authority of CPSA. Answer: Which of the following is an electronic funds […]

Which of the following authorities requires that, at minimum, the terms of the offer must be sufficiently clear so that what was promised can be determined? A. The UCC only. B. The common law and the Restatement. C. The UCC […]

Jon, a high-school senior, bit into a turkey bone in a bite-sized cube of white turkey meat in his high-school cafeteria. He felt something in his throat and after some effort expelled a small ½ inch bone. He sustained injury […]

The final act of winding up a dissolved partnership is the distribution of assets. Answer: An agent’s exercise of apparent authority, in the absence of actual authority, is in violation of the agent’s duty to the principal. Answer: TRUE S […]

Generally, notice to the agent is notice to the principal if it relates to the business of the agency. Answer: When the express terms of a contract and the past course of dealings are in conflict, the express terms will […]

In determining whether a party has given consideration, courts look at whether the promises exchanged were of equal value. Answer: A bank does not owe a duty to its customer to pay any checks out of the account that are […]

Oral evidence may be introduced to “fill the gaps” in an incomplete written contract. Answer: In a bailment situation, the bailor retains the title to the item of property. Answer: TRUE Mike indorsed a check from his employer by signing […]

The president cannot also be the secretary of the corporation. Answer: The EEOC has strongly supported mandatory binding arbitration as a condition of employment. Answer: FALSE The rights and liabilities of both sureties and guarantors are substantially equivalent. Answer: TRUE […]

A cashier’s check is a draft drawn by a bank on another bank or payable through a bank. Answer: The bank is primarily liable on a cashier’s check. Answer: TRUE Federal inheritance taxes are imposed on a person who receives […]

The victim of a fraud may be able to recover punitive damages. Answer: An agreement is illegal if it calls for behavior that violates a statute, but not a general rule of public policy. Answer: FALSE When entering into a […]

A patent generally is effective for 10 years from the date of filing. Answer: The courts have no power over unconscionable contracts. Answer: FALSE In a COD contract, the buyer may fully inspect the goods before accepting them. Answer: FALSE […]

Leroy writes a letter that said, “I agree to sell to Jay 5 modern art paintings” and he signs the letter. What happens according to the code if Jay is a merchant and he receives this writing from Leroy and […]

Regulatory statutes are designed primarily to: A. raise money. B. protect the public. C. define a public employee’s personal interests and public duties. D. provide the legal system with a degree of healthy flexibility. Answer: Which of the following statements […]

The Consumer Product Safety Commission’s authority is applicable to ___. A. firearms B. drugs C. cosmetics D. lawn mowers Answer: A bankrupt debtor: A. can elect to use the set of exemptions provided by either the state or federal bankruptcy […]

Discuss the importance of having contracts in today’s market economy. Answer: Statutory law has been supplanted by the common law of partnerships. Answer: FALSE The Restatement approach employs a “reasonably foreseeable” standard. Answer: FALSE Even if a jury unanimously finds […]

A client owns the working papers prepared by an accountant in connection with services performed for the client. Answer: An agent who commits a criminal act under instruction from her principal is guilty of that crime. Answer: TRUE Once a […]

Harold makes an oral agreement to purchase Tina’s boat for $700. Under the UCC: A. the contract is voidable. B. the contract is barred by promissory estoppel. C. the agreement is barred by the statute of frauds. D. the contract […]

A promisor who renders performance to the assignor without notice of the assignment: A. is still liable under the contract. B. has no further liability under the contract. C. creates a novation. D. cannot be sued for nonperformance. Answer: Carl […]

Oral contracts that come under the provisions of the statute of frauds are: A. void. B. illegal. C. unenforceable. D. valid. Answer: An acceptance is effective as soon as it is dispatched: A. if the offeree uses only an authorized […]

According to the UCC, the offeror who remains silent impliedly authorizes the offeree to accept by any reasonable means of communication. Answer: Negligence is an important element of Rule 10b-5 violation. Answer: FALSE The USA PATRIOT Act restricts law enforcement’s […]

The treble damages provision is applicable to individuals injured by violations of the Sarbanes-Oxley Act of 2002. Answer: A guarantor’s promise must be made in writing to be enforceable under the statute of frauds. Answer: TRUE Rob’s construction firm did […]

If an event must occur before a party’s duty to perform arises, it is called a condition precedent. Answer: A bearer instrument can be validly negotiated and transferred without indorsement. Answer: TRUE An individual who joins an existing partnership has […]

If a husband and wife involved in bankruptcy cannot decide whether to use the state or the federal set of exemptions, the state set is elected by default. Answer: There is no guarantee that the values of “ethical” shareholders would […]

A tenant is responsible for the care and upkeep of leased property, and is required to make major repairs if the damage was caused by his/her own negligence. Answer: A new trial is required in case where a case is […]

Agreements that create a conflict between a public employee’s personal interest and public duties are illegal and contrary to public policy. Answer: Union membership and union power have dramatically increased over the past decade. Answer: FALSE Foreign corporations doing business […]

The Sherman Act: A. makes contracts in restraint of trade and monopolization illegal. B. does not provide criminal penalties for violations of its provisions. C. does not give the federal courts any injunctive powers. D. was specifically designed to attack […]

Eloise took her prized poodle, Tiny, to Pam’s Pet Store & Grooming to prepare Tiny for an upcoming dog show. Unknowingly, one of Pam’s new employees sold the dog to Jas. Under these circumstances, which of the following statements is […]

A person who inherits property under a will takes the property free of all outstanding claims against the property. Answer: States generally permit LLCs to have an indefinite duration. Answer: FALSE A landlord is not liable for criminal acts committed […]

Under Section 11 of the Securities Act of 1933, a purchaser must sue the accountant within ten years after the time the misstatement or omission in the registration statement was or should have been discovered. Answer: Under the UCC, when […]

A liquidation proceeding was traditionally known as straight bankruptcy. Answer: Once made, anticipatory repudiation can never be withdrawn. Answer: FALSE As under the Fair Credit Billing Act, operators under the Electronic Funds Transfer Act are given a maximum of 90 […]

Each state has a constitution that is similar to the U.S. Constitution in the design of the government it provides. Answer: The parties had to rely on the testimony of third persons who were often paid witnesses or friends, and […]

According to the CISG, an offer: A. must be directed to a specific person. B. must express the quality of the goods to be valid. C. is not valid, if it impliedly provides means of determining the quantity of the […]

The “fair use” defense against copyright infringement: A. does not apply if the use enhances the value or marketability of the original work. B. applies if there are substantial differences between the copyrighted work and the derivative work. C. applies […]

The partnership will not be liable for contracts created by a partner acting outside the scope of her authority, even when the other partners ratify the unauthorized action. Answer: According to Joseph L. Badaracco Jr., the question “Which alternative best […]

A surety could avoid liability for a principal’s default by using the principal’s bankruptcy as a defense. Answer: Ralph and Ann engaged Sue, a realtor, to sell their variety store. Sue represented to buyer Mike that “this was a typical […]

Administrative agencies: A. rarely have both the power to issue regulations and the power to investigate when such regulations have been violated. B. may make regulations that are advisory in nature, but cannot make regulations that have the force of […]

Legislative reform at both the state and federal levels have facilitated e-commerce by revising traditional contract rules to include new contract rules for electronic transactions made over the Internet. Answer: To make a third party a donee beneficiary, the creation […]

Under condominium ownership, a purchaser takes title to his/her individual unit and becomes a tenant in common with other unit owners in shared facilities. Answer: Trading on inside information is in violation of fiduciary duties. Answer: TRUE One can commit […]

If someone signs a person’s name to a negotiable instrument without that person’s authorization, the signature binds the person whose name appears. Answer: Generally, businesses start out as publicly traded corporations. Answer: FALSE The Securities Act of 1933 is concerned […]

Statements of opinion serve as a basis for rescission. Answer: A registration statement is the basic selling document of a 1933 Act registered offering. Answer: FALSE A creditor who loans money to enable a consumer to buy goods can obtain […]

If a person is adjudicated insane, his/her personal representative cannot ratify the contract. Answer: Under the UCC, the implied warranty of merchantability applies to the sale of food or drink. Answer: TRUE The UCC is unique in its approach to […]

Since the Clayton Act deals with probable harms to competition, there is criminal liability for Clayton Act violations. Answer: If either party entering a contract lacks the capacity to contract, the contract is void or voidable. Answer: TRUE Horizontal (among […]

If the seller refuses to deliver the goods called for by the contract, the buyer can recover as damages from the seller the difference between the contract price of the goods and the cost of the substitute goods. Answer: The […]

The concept of infancy is a set of common law presumptions about the relation between capacity and gender. Answer: Which of the following statements is TRUE about a minitrial? A. In a minitrial, a six-member mock jury empaneled by the […]

An option contract is created when the offeree gives the offeror something of value in exchange for a promise not to revoke the offer for a stated period of time. Answer: Rita cosigned a promissory note for $500 at the […]

As a general rule, performing a preexisting duty is not consideration. Answer: If the subject matter of a proposed contract is destroyed without the knowledge of either party after the making of an offer but before its acceptance, the offer […]

The cap on monetary damages statute holds that the maximum liability that may be imposed on directors: A. is the greater of $100,000 or the amount of cash compensation that the director received from the corporation during the previous 24 […]

The Securities Act of 1933 is a one-time disclosure statute, although some of its liability provisions purport to cover all fraudulent sales of securities. Answer: The tenants have no right to remove trade fixtures even at the end of the […]

Those creditors who do not take any collateral to secure the debt owed to them are unsecured creditors. Answer: The courts have generally held that ads for the sale of goods at a specified price are treated as invitations to […]

The U.S. Supreme Court generally disfavors arbitration as a way to settle disputes. Answer: A creditor of a partner can attach any property owned by the partnership. Answer: FALSE The plaintiff in a contract action has no duty to mitigate […]

In exclusive dealing contracts, the UCC says that sellers have a duty to use their best efforts to supply their buyers, who in turn have a duty to use their best efforts to sell the goods. Answer: In cases of […]

Under the UCC, when acceptance is made expressly conditional on agreement to new terms and the parties begin performance: A. a contract is created. B. no contract is created. C. only a written stipulation will make the contract enforceable. D. […]

Which of the following statements about an exclusive agency listing is TRUE? A. The broker has the exclusive right to sell the property and entitles him/her to a commission no matter who procured the buyer. B. The broker operating under […]

An agency relationship results from any indication of consent by the principal that the agent may act on the principal’s behalf and under her control. Answer: If a consumer brings suit against the manufacturer, the retailer is relieved of its […]

In order to exclude the implied warranty of merchantability, the seller must put the exclusion in writing. Answer: People who are involved in a nonprofit association are considered partners. Answer: FALSE Goods sold “with all faults” are sold without the […]

Parties who are negotiating a contract always prepare a written draft of the agreement for both parties to sign. Answer: As a general rule, the owner of the original personal property becomes the owner of the improvements. Answer: TRUE The […]

If a liquidated damages clause is not enforceable because it is unconscionable, the injured party is barred from recovering actual damages. Answer: The elements of fraud are the same as the elements for the tort of deceit. Answer: TRUE The […]

A restraint that is merely ancillary to a contract may be legal if it is: A. designed to protect interests created by the contract. B. broader than reasonably necessary to protect the interests created by the contract. C. solely designed […]

A party who has waived rights to a portion of the contract not yet performed may retract the waiver. Answer: The party asserting the work product privilege bears the burden of establishing that the documents he seeks to protect were […]

Life insurance contracts give the insured the right to change the beneficiary only with the beneficiary’s consent. Answer: A contract of adhesion is not in violation of public policy. Answer: FALSE A warranty is an implied condition of an insurance […]

A corporation as well as its subsidiaries can vote treasury shares. Answer: Under the Magnuson-Moss Warrant Act and the FTC regulations, the seller is not required to give a written warranty. Answer: TRUE “Imminently hazardous consumer products” are those that […]

Under the MBCA, the corporation can issue shares in return for the promoters’ preincorporation service. Answer: Tim takes a shortcut across John’s yard on his way to school. Even if John gives Tim permission to use John’s yard as a […]

When the EPA expends money to clean up a Superfund site, it has the legal authority to recover its costs from those who were responsible for the problem. Answer: The parties to an arbitration proceeding can select an arbitrator in […]

In the United States, the copyright period for works for hires: A. is 110 years from the first publication or 140 years from creation, whichever comes first. B. lasts for the life of the author plus 70 years. C. is […]

A promisor who renders performance to the assignor without notice of the assignment still bears liability under the contract. Answer: An oral license for the temporary use of another’s land is enforceable. Answer: TRUE Many courts allow a third party […]

Christy downloaded a music software program from the Internet. Under the UCC, the software is: A. a good. B. a service. C. a good faith warranty. D. a mixture of goods and services. Answer: Advocates for socially responsible corporations sometimes […]

The Age Discrimination in Employment Act (ADEA) is enforced by the EEOC. Answer: Under which of the following conditions would a shareholder be liable to the corporation or its creditors? A. If he/she buys stock that was fully paid for […]

Disclaimers in contracts are usually effective to shield a manufacturer or seller against liability for negligence to consumers. Answer: The agent does not have to inform the principal of knowledge the agent gains in the course of her responsibilities. Answer: […]

The Parker Doctrine exempts many anticompetitive acts from the antitrust laws. Answer: A sole proprietorship and a partnership are taxable entities, but a corporation is not. Answer: FALSE If an offeree accepts the offer but complains about the terms of […]