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Details of performance of a contract not expressly stated in a contract will often be implied by the court. The Constitution took certain powers away from the national government and gave them to the state governments. Answer: F A will […]

Under the tort of false imprisonment, shopkeepers are prevented from detaining anyone whom they believe has shoplifted. If an offer is indefinite or vague, no contract arises from an attempt to accept it. Answer: T The parol evidence rule prohibits […]

A written will must be signed by the testator at the bottom or end of the will. The greatest change to the Constitution has been made by the United States Supreme Court through interpretation. Answer: T The property that is […]

The phrase “time is of the essence” means that: a. the court is in a hurry to dispose of the case. b. performance under the contract at the times specified in the contract is vital or essential. c. the contract […]

The warranty of merchantability guarantees that the: a. party in question is a merchant. b. product is fit for the ordinary purposes for which it is sold. c. product will remain fit for its normal use for the applicable statute […]

A letter of credit cannot extend for a period of more than five (5) years. Ames, an agent for Baker Antiques, had the authority to purchase early 20th-century American furniture costing a maximum of $1,500 per piece. Ames bought a […]

An agreement that does not specify the time for performance is not binding because it is too indefinite. A consumer may waive all defenses otherwise provided for by law. Answer: F A holder through a holder in due course is […]

Eligibility for membership on a board of directors is determined by all of the following except: a. statute. b. certificates of filing. c. articles of incorporation. d. bylaws. Bankruptcy results in a discharge of contractual obligations by __________. a. default […]

Each limited partner in a limited partnership is entitled to which of the following? a. the right to have the limited partner’s name as part of the limited partnership name b. the right to sue the general partner to protect […]

The defendant in a civil case is the party who is suing. The FTC requires advertisers to maintain records of the data used as support for statements made in the ads that deal with the safety, performance, efficacy, quality, or […]

Administrative agencies may make the rules, police the community to see the rules are obeyed, and sit in judgment to determine violations of their rules. Copying trademarks by using the Internet is an intellectual property issue. Answer: T The Willett […]

If while trespassing a hunter kills game, the game belongs to that hunter. No private or limited offerings of securities are exempt from the SEC registration requirements. Answer: F Embezzlement involves fraud. Answer: T Under UCC Article 2, specific performance […]

In states that follow the community property tradition, property acquired after the marriage belongs solely to the party who acquired it. By operation of law, a party can be discharged in bankruptcy from debts. Answer: T If a contract contains […]

How do the warranty provisions under the CISG compare to the provisions of the UCC? a. In most instances, the standards are the same. b. In all instances, the standards are the same. c. The CISG standards are stricter when […]

Ordinarily, a promise to perform an existing legal obligation is: a. not consideration. b. binding if the promisor promises to perform with extra care. c. binding if the promisor promises to perform to suit the personal satisfaction of the promisee. […]

Every limited partnership must have at least one general partner. When Gordon told Hanson that he was considering selling his house, Hanson offered to buy it. Gordon and Hanson entered into a contract in which Hanson paid Gordon $1,000 in […]

The rule of law imposing vicarious liability on an innocent employer for the wrong of an employee is known as the doctrine of respondeat superior. When a sales contract is broken by the buyer, the seller has only the remedies […]

Employment testing and educational requirements must be “job-related”; that is, employers must prove that employment testing and educational requirements bear a relationship to job performance. Suretyship is governed by the UCC. Answer: F New York follows the “contact” rule in […]

By virtue of an agency, one person can make contracts at numerous places with many different parties at the same time. The Equal Pay Act prohibits variation in wage rates paid to men and women based solely on gender. Answer: […]

The process of incorporation involves the expenditure of funds for organizational expenses. A reward offered to the public for the return of lost property is not considered an offer. Answer: F A limited liability company may hold property in its […]

Individuals who post defamatory messages in a “chat room” are protected from liability for defamation. The intention to ratify an unauthorized act may be expressed by words or conduct. Answer: T Sound business practice dictates the use of written contracts […]

Armenia purchased life insurance on her life. Regarding the beneficiary: a. Armenia must name a person with a pecuniary interest in her life. b. Armenia must name a close relative. c. Armenia must name a close relative or business associate. […]

An agreement that consists of two or more parts and calls for corresponding performances of each part by the parties is called a: a. partial contract. b. divisible contract. c. performance contract. d. divided contract. An administrative regulation: a. is […]

Making improvements is a duty that falls on the tenant. An administrative agency is a governmental body charged with administering and implementing legislation. Answer: T Ordinarily, a party to a contract has no duty to volunteer information to the other […]

The right to sue for damages sustained from a defective product is reserved exclusively to the buyer of such goods. Most states permit action to be taken by the board of directors without holding an actual meeting. Answer: T A […]

Regarding distribution of assets upon winding up a partnership, what is paid first? a. debts to outside creditors b. return of capital c. debts of partners who are creditors d. profits A taker of an instrument who is a holder […]

An individual who desires to make provisions that will be effective only on his or her death is said to have: a. probationary intent. b. a prejudicial interest. c. testamentary intent. d. attestation intent. Federal regulation of the sale of […]

For the purposes of determining holder in due course status, the requirement of value is similar to consideration. The creditor first must proceed against the debtor before suing the surety. Answer: F When the privity rule is applied, a bank […]

The often competing rights of both debtors and creditors are balanced and protected from excesses under United States law. A party that rescinds a contract without proper grounds for rescission is liable for damages for breach of the contract. Answer: […]

Plaintiffs suing for damages caused by a defective product are limited to taking action only against the manufacturer(s) of such goods. Mediation is a generally accepted method of resolving disputes. Answer: T If a common carrier delivers goods to the […]

Any shareholder owning more than five (5) percent of any class of the corporation’s equity securities is statutorily defined as an insider and must file with the SEC a disclosure statement regarding such ownership and all related transactions. There is […]

An employment contract of indefinite duration is: a. terminable at will. b. invalid. c. automatically terminated after five years. d. terminable only for good cause. The usual method of creating an agency is by: a. express authorization. b. conduct. c. […]

Unconscionability and fraud are synonymous terms. A holder of a negotiable instrument cannot be a holder in due course when the holder learns of a defense to payment after the acquisition of the instrument. Answer: F Bob Brown entered the […]

The legal definition of a guest of a hotel requires that the person: a. live at least five miles from the hotel. b. is a guest of a registered occupant of the hotel. c. is a transient. d. stay at […]

Trademarks and service marks are recorded with the Register of Copyrights. An agreement cannot be enforced if it does not set forth every contractual detail. Answer: F A person who buys a note from a holder in due course knowing […]

A check may be certified by a bank on request of the drawer or the holder. Changes to the Constitution have been brought about by interpretation, amendment, and practice. Answer: T A payment by a debtor in the ordinary course […]

A cured transaction is a pledge of property by the buyer-debtor that enables the seller to take possession of the goods if the buyer fails to pay the amount owed. The living Constitution has as a characteristic a strong president. […]

Pamela was the agent in charge of distribution and collections for the Coble Dairy Products Cooperative. Thrower operated a grocery store and purchased dairy products from Coble. Pamela made false invoice sheets, showing delivery to Thrower of greater quantities than […]

The Equal Pay Act: a. does not allow variances in wages pursuant to a seniority system. b. generally requires that members of both sexes be paid equally for equal work. c. generally requires a system that measures earnings by quantity […]

If an offer requires that acceptance be communicated by a specific date and the acceptance is properly dispatched by the offeree on the final date, a. no contract is formed, since the offeror will undoubtedly receive the dispatched acceptance after […]

When parties contract expressly for a particular subject matter, the contract is discharged if the subject matter is destroyed through no fault of either party. State laws that attempt to indemnify corporate directors against personal monetary liability for gross negligence […]

A deed, like a contract, must be supported by consideration to be effective. If the parties involved agree that personal property will be considered a fixture, it will be deemed to be a fixture without the application of legal tests. […]

A bank may file a voluntary petition with the bankruptcy court. If a debtor specifies the debt to which a payment is to be applied and the creditor accepts the money, the creditor is bound to apply the money as […]

A party to a sales contract may demand at any time that the other party provide adequate assurance of performance. Consideration always must be an act or the promise to perform an act. Answer: F Agent’s may intentionally make themselves […]

True consideration occurs only when the value of one promise is equal to the value of the promise given by the other party. Jane asserts she has a legal right. Jane is really saying she has an obligation to perform […]

The Jarvis family owned its land for more than 150 years. The Jarvis family traditionally farmed the land and for that purpose maintained farm animals. As years passed, most of the surrounding farms were sold by the owners and the […]

The liability of a buyer for the purchase price of goods is terminated by the fact that the buyer gave the buyer’s agent the purchase price to remit to the seller. A new state law mandates that all employers must […]

A merchant has greater potential warranty liability than does a casual seller. Courts will likely protect important customer lists under trade secret laws even if customer identities are determinable from other sources. Answer: F An entity not in privity with […]

Failure to mitigate damages limits recovery to: a. damages that would have been sustained had the plaintiff mitigated the damages where it was possible to do so. b. nominal damages and punitive damages. c. damages for consequential loss. d. exemplary […]

A limited partnership can be formed by one (1) or more __________ partners and one (1) or more __________ partners. a. unreserved; reserved b. active; silent c. licensed; unlicensed d. general; limited Which of the following is not a factor […]

An insurable interest in property must exist at the time that the loss is suffered, while an insurable interest in life must exist at the time that the policy is issued. “Without reserve” auctions give the auctioneer the right to […]

An owner of a copyright may license some of his or her rights to another in exchange for statutorily-prescribed royalty payments. The principal is bound by knowledge but not by notice of any fact that is acquired by an agent […]

Pursuant to the __________ theory, when a corporation is so dominated and controlled by shareholders, officers, and/or directors that the separate personalities of the individuals and the corporation no longer exist and there is a wrongful use of that control, […]

Describe the rights of employers to monitor the e-mail of employees who are using their employers’ email system. a. Employers may monitor employees’ e-mails, but only if the employees have consented. b. Employers may monitor employees’ e-mails, regardless of whether […]

Motive is an essential element of tort liability. A principal is not bound by statements made by an agent during the transaction of business that is within the scope of the agent’s authority. Answer: F A person has apparent authority […]

Which of the following is an incorrect statement about directors? a. Their eligibility requirements may be found in the bylaws. b. Bylaws may require that directors be shareholders in the corporation. c. The board of directors has authority to manage […]

The Americans With Disabilities Act prohibits employers from discriminating against disabled individuals, but does not require that any accommodations be made for such individuals. If a bank improperly refuses to make payment of checks for which its customer has sufficient […]

Due process requires that a hearing generally be held before an agency may make a judicial decision: a. in all actions. b. when the action affects the community generally. c. when the action concerns a class of persons. d. when […]

The RMBCA provides that shareholders: a. have no preemptive rights unless the articles of incorporation so provide. b. have preemptive rights regardless of what the articles of incorporation provide. c. cannot have preemptive rights. d. have preemptive rights with respect […]

If a warehouse receipt provides for the delivery of the goods “to the bearer,” the receipt may be negotiated by transfer of the document. The tort of intentional infliction of emotional distress requires proof of outrageous conduct and resulting emotional […]

Humberto called his friend John and asked him to come over immediately because Humberto had suffered a stroke and might be dying. In their telephone conversation, Humberto advised John that he wanted to give John his gold watch. Immediately after […]

Which is not a correct statement about deeds? a. The grantor must sign the deed. b. A deed must be recorded to effectively pass title. c. The fact that a deed is recorded provides notice to the world about who […]

Which of the following factors is irrelevant in determining whether an instrument is negotiable? a. the fact that it is in writing b. the fact that it is notarized c. the fact that it is unconditional d. the fact that […]

Many states provide that a lease for a term exceeding __________ must be in writing. a. three (3) months b. six (6) months c. one (1) year d. three (3) years Under the __________doctrine, the holder has taken so many […]

Initially, ratification is a question of: a. intention. b. consideration. c. form. d. implication. A system in which a central government is given power to administer to national concerns and individual states administer to local concerns is called: a. bicameral. […]

The Age Discrimination in Employment Act forbids discrimination by employers against persons over 30 years of age. A person who makes public information stored in a computer can never be held liable for invasion of privacy. Answer: F An employee […]

Title VII protects members of which racial grouping(s)? a. black only b. black, Native American, and Asian-Pacific c. white only d. all racial groupings A bill of lading that consigns the goods “to bearer” is called a: a. nonnegotiable bill […]

It is probable that a zoning variance would be granted: a. even though many of the neighboring property owners object. b. on the ground of hardship, regardless of whether the landowner created the hardship. c. to an outside advertiser to […]

Heterogeneous goods are goods that, when mixed together, are indistinguishable. As a general rule, the nondisclosure of information that is not asked for does not impose fraud liability or impair the validity of a contract. Answer: T In most bilateral […]

Franchising is a form of licensing that now is very common in international business. Roxy is employed as a manager at “com.com,” an Internet-based company attempting to compete successfully in the highly competitive software development industry. Roxy is concerned that […]

An absolute privilege is available as a defense to slander liability when: a. the statement is made to only a few people. b. libel exists. c. a witness testifies in a court proceeding. d. no intent to harm is present. […]

A holder having the rights of a holder in due course is subject to the defense of fraud in the inducement. Impossibility of performance applies when the debtor does not have sufficient funds to pay a debt. Answer: F A […]

Strict liability is one type of tort. The contributory negligence of the client does not reduce the liability of an accountant who is liable for malpractice. Answer: F Incapacity of the maker or drawer is a limited defense not available […]

Acceptance of goods is not shown by: a. modifying the goods. b. payment for the goods if they are sent COD. c. resale of the goods by the buyer. d. use of the goods by the buyer in manufacturing other […]

A right to a nonconforming use of land cannot be lost through abandonment. The promise of a creditor to refrain from collecting a debt is consideration for a promise by the debtor to modify the terms of the transaction. Answer: […]

Dave Tompkins was up late one night watching a television campaign for a charitable organization. The organization was seeking donations in order to construct a new building that would serve as the organization’s headquarters. One of Tomkins’ favorite performers appeared […]

In a negotiable instrument, the promise or order to pay must be unconditional. A court can dismiss an individual debtor’s petition if the debtor does not satisfy the means test. Answer: T When a special endorsement is made, the instrument […]

Which of the following is not a defense to a surety? a. fraud practiced by the debtor of which the creditor was unaware b. lack of consideration c. lack of capacity on the part of the surety d. mistake Because […]

Proof of substantial impairment of the value of a contract to the buyer is required to justify revocation of acceptance. Under the majority view, a contract that does not satisfy the statute of frauds is voidable. Answer: T In a […]

The act of stopping payment on a check imposes no liability on the depositor. An agency may arise by appointment, conduct, ratification, or operation of law. Answer: T When the desired use of land is in harmony with the general […]

A __________ insider is someone retained by the corporation for professional services, such as an attorney, accountant, or investment banker. a. professional b. corporate c. temporary d. virtual What is not a correct statement concerning the Fair Debt Collection Practices […]

Under the United States Supreme Court’s definition, an investment contract exists if the following elements are present: (1) an investment of money, (2) a common enterprise, and (3) an expectation of future profits from the efforts of others. Peter applied […]

Ordinarily, a court will not consider whether a contract is fair or unfair. In the absence of a statute requiring a writing, a contract may be oral or written. Answer: T When we speak of government regulation of business we […]

A firm offer is effective only if the merchant receives consideration to keep the offer open. Even if part of a contract is illegal, the court may enforce a divisible, legal part of the contract. Answer: T Property includes the […]

Shares of stock may not be acquired through subscription but may be acquired through a transfer of existing shares from a shareholder or from the corporation. An oral agreement to supply a line of credit for two (2) years cannot […]

The standard statute of frauds: a. requires full disclosure in the case of consumer sales on credit. b. requires a seller of real estate to obtain a broker’s license. c. specifies the punishment of perjury. d. requires that a contract […]

“Permissive” subjects of bargaining include seniority provisions, promotions, layoff and recall provisions, no-strike no-lockout clauses, and grievance procedures. As a result of pressure from the United Nations Conference on Trade and Development (UNCTAD), the General Agreement on Tariffs and Trade […]

A provision in a residential lease stating that the landlord cutting off heat or water will not constitute an eviction is: a. valid. b. a stipulation. c. a covenant. d. unconscionable. State statutes designed to protect the public from the […]

A limited liability partnership must include which of the following terms in its name? a. LLP b. limited liability partnership c. either a. or b. d. neither a. nor b. In the absence of an express agreement permitting continuation of […]

Under the “close-connection” doctrine, a holder has taken so many instruments from its transferor or is so closely connected with the transferor that any knowledge the transferor has is deemed transferred to the holder, preventing holder in due course status. […]

A custodian who holds money for the benefit of a minor under the Uniform Gifts to Minors Act may choose to use the money to send the minor to summer camp. Depositions are usually taken in the courtroom. Answer: F […]

A tort is a wrong arising from a violation of a private duty. If the finance company to which a seller of goods on credit assigns the buyer’s promissory note is more than half-owned by the seller, the finance company […]

Commercial exploitation is a form of invasion of privacy. Any warranty that does not provide the complete protection of a full warranty is called a warranty in breach. Answer: F Upon acceptance of a subscription after incorporation, the subscriber immediately […]

Both drafts and promissory notes may have the quality of negotiability. An after-acquired property clause in a consumer security agreement can cover only goods acquired by the debtor within thirty (30) days after the creditor gave value to the debtor. […]