1) It may be a crime to take anothers property, but it is not a crime to receive stolen goods.
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2) Standard-form contracts are available on the Internet, but they should be adapted to the specific circumstances of a transaction.
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3) Final administrative rules have binding legal effect unless the courts later overturn them.
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4) Parents are always liable for the contracts made by their minor children.
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5) Federal law establishes the specific procedures for mergers.
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6) States may restrict emissions from motor vehicles.
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7) Remedies of the agent for breach of duty by the principal follow normal contract and tort remedies.
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8) Plain language laws regulate some types of contracts to require legalese.
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9) The maximum time that a bank can hold funds from deposited checks before making them available to the depositor will not change.
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10) The procedure for filing a family-farmer bankruptcy plan is very similar to the procedure for filing a repayment plan.
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11) A mere reference in an instrument to another writing makes the promise or order conditional.
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12) To determine whether a duty of care has been breached, a judge asks how he or she would have acted in the same circumstances.
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13) A person must have contractual capacity to be an agent.
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14) Corporate bylaws are the companys governing rules.
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15) Those who find lost property cannot acquire ownership rights through mere possession of it.
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16) For an instrument to be negotiable, it must not contain an express promise or order to pay.
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17) Territorial and customer restrictions are currently considered per se violations of antitrust law.
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18) Darren wants to go into the business of direct merchandise sales. What are the legal problems that Darren might encounter in telemarketing? In selling door-to-door? In marketing over the Internet? In soliciting sales through the mail?
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19) A covenant not to sue is against public policy.
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20) RiteMade Machinery, Inc., designs, makes, and sells a drill press. Steel Equipment Company copies the design without RiteMades permission. Steels conduct is actionable provided
a. consumers are confused.
b. Steels conduct is intentional.
c. Steels conduct reduces the value of RiteMades design.
d. RiteMades design is patented.
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21) To obtain office supplies for Doctors Medical Clinic, Elmo executes a draft in favor of Flynn. A draft is
a. a conditional promise to pay money.
b. an unconditional written order to pay money.
c. a qualified promise to set aside a sum of money.
d. a restricted promise to deliver goods at a future date.
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22) Craig is a state court judge. In his court, as in most state courts, legal and equitable remedies have merged. But it is important to distinguish between equitable and legal remedies
a. because neither type of remedy can be granted today.
b. for no good reason.
c. to negotiate an enforceable business contract.
d. to request a proper remedy.
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23) Flip, an accountant, certifies an audit for Erstwhile Corporation, Flips client, knowing that Erstwhile will use the audit to obtain a loan from Deepwater Bank. Flip believes that the audit is true and does not intend to deceive the bank, but does not check the audit before certifying it.
Refer to Fact Pattern 14-3. Under these circumstances, Deepwaters best course of action is most likely to
a. exert economic duress on Flip to retire from accounting.
b. rescind the loan on the ground of unconscionability.
c. recover damages from Flip for any loss on the loan.
d. undercut Flips career with negative puffery.
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24) Frothy Beverage Corporation is a public company whose shares are traded in the public securities markets. Under the Securities Act of 1933, Frothy is required to
a. contribute to the operations of national stock exchanges.
b. disclose financial and other information about its securities.
c. engage in market surveillance to deter undesirable practices.
d. solicit proxies for voting.
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25) Mango Corporation believes that Melon Corporation engages in anticompetitive behavior in an attempt to drive Mango, its chief competitor, out of the market. Antitrust laws can be enforced against Melon by
a. only a disinterested third party.
b. Congress.
c. Mango.
d. none of the choices.
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26) Jesse defends against a breach-of-contract suit by College Credit Corporation by claiming that their deala student loan accruing interest at a certain rate and payable beginning on a certain datewas unfair because the consideration for their contract was inadequate.
Refer to Fact Pattern 12-1. If, as Jesse claims, the consideration in this problem is inadequate, it may indicate a lack of
a. accord in Jesses satisfaction with the value of the deal.
b. bargained-for exchange or mutual assent.
c. flexibility on the part of College Credit to accommodate Jesses needs.
d. heft, substance, or weight in the terms of the contract.
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27) Pure Oil Company enters into a contract with QuikBilt, Inc., to construct an offshore oil pipeline to withstand specific conditions. If QuikBilt fails to meet this standard, which is construed as a breach of contract and a breach of a duty of care, Pure might be awarded punitive damages to
a. establish, as a matter of principle, that QuikBilt acted wrongfully.
b. provide Pure with funds for a foreseeable loss beyond the contract.
c. provide Pure with funds for its loss of the bargain.
d. punish QuikBilt and deter others from similar acts.
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28) Quincy draws a check payable to Replay Stadium to buy two season tickets to the next years State College football games. This instrument is
a. a bearer instrument.
b. an order instrument.
c. valid but nonnegotiable.
d. void.
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29) Pikabo files an employment discrimination suit against Quantitative Analysis, Inc., under the Civil Rights Act of 1964, based on its discharge of Pikabo. Possible relief includes
a. imprisonment.
b. reinstatement.
c. fines.
d. an order to shutdown the employers business.
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30) Beth is injured in a car accident and sues Cash, alleging negligence. Cash claims that Beth was driving more carelessly than he was. Comparative negligence may reduce Beths recovery
a. even if Beth was only slightly at fault.
b. only if Beth was as equally at fault as Cash.
c. only if Beth was less at fault than Cash.
d. only if Beth was more at fault than Cash.
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31) Pressing Music, Inc., offers to buy from Digital Media Corporation (DMC) one million blank CDs of a certain quality. Without notifying Pressing, DMC timely ships CDs of a different quality. With respect to the offer and a possible contract, this shipment is
a. an acceptance and a breach.
b. an acceptance and an accommodation.
c. an acceptance and complete performance.
d. a rejection and a counteroffer.
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32) Star Resorts Corporation wants to terminate its franchise arrangement with Tony. Their contract does not provide for notice of termination or set a time for winding up the business. This means that to wind up, Tony
a. has a reasonable time, with notice.
b. has whatever time A determines, with or without notice.
c. is entitled to notice, but nothing more.
d. must close immediately.
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33) Green Grocers, Inc., enters into a contract with Hiway Transport Company for the delivery of a shipment of fresh produce. In a later dispute between these parties over the delivery, the doctrine of quasi contract cannot be used because
a. both of the parties involved are businesses.
b. at least one of the parties had greater bargaining power.
c. the subject of the contract was a service.
d. there is an actual contract covering the subject in dispute.
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34) Vision Optical Company and Wide Eyes Open, Inc. decide to combine. Xavier, a Wide Eyes shareholder, is dissatisfied with the price that he will receive for his stock. In the absence of fraud or other illegal conduct, Xaviers exclusive remedy is to
a. exercise an appraisal right.
b. file a suit to delay the process.
c. refuse to agree to the deal, which cannot then proceed.
d. urge other shareholders to insist on a higher price.
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35) Trudy and Uri enter into a contract for the sale of Trudys house for which Uri agrees to pay her $200,000. Uri wants to transfer his right to the ownership of the house to Val, his niece. This transfer
a. is prohibited.
b. may be oral or written.
c. must be implied.
d. must be in writing.
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36) Nate tells Opal, I might sell the skis that I bought last fall since I havent used them and the skiing season is almost over. This is
a. an acceptance of an offer.
b. an invitation to accept an offer.
c. an offer.
d. a statement of future intent.
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37) Consolidated Trucking Company transports radioactive materials. Darla suffers from cancer. To succeed in a suit against Consolidated on the ground of strict liability, Darla must show that her injury was caused by
a. Consolidateds failure to use reasonable care to avert herm to Darla.
b. Consolidateds intentional lack of regard for the general public.
c. Consolidateds operation.
d. radiation from any source.
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38) An Illinois state statute requires commercial vehicle drivers to fully attend to the operation of the vehicle. Jerry, a driver for Crosstown Taxi Company, is driving and talking on his cell phone when his cab collides with Kaylas car, injuring her. Kaylas best theory for recovery against Jerry and Crosstown is
a. a Good Samaritan statutes.
b. negligence per se.
c. res ipsa loquitur.
d. the danger invites rescue doctrine.
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39) Davis points a gun at Eton, threatening to shoot him if he does not steal from his employer, Freddys Convenience Store, and give the stolen funds to Davis. Charged with theft, Eton can successfully claim, as a defense
a. nothing.
b. duress.
c. entrapment.
d. self-defense.
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40) Rita borrows $30,000 from South State Credit Union. South State accepts Ritas equity in her home as collateral, which can be seized if the loan is not repaid on time. This is
a. a home equity loan.
b. a hybrid mortgage.
c. a reverse mortgage.
d. a violation of the law.
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41) Megan and Nicole do business as One World Realty. In acting on the firms behalf in a deal with Property Acquisition Company, Megan fails to account for the profit. To her firm, Megan is
a. liable for breach of the duty of care.
b. liable for breach of the duty of economic sense.
c. liable for breach of the duty of loyalty.
d. not liable.
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42) The Internal Revenue Service (IRS) wants to seize certain documents of Mortgage Bank, Inc. Deciding whether it is permissible for the IRS to request or seize the documents depends on whether the documents are
a. incriminating.
b. relevant.
c. technical.
d. valuable.
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43) Sam, an engineer, supervises the construction of a new bridge. When the bridge collapses due to faulty construction, Sam is sued by those injured in the collapse. As a professional, Sam is held to the same standard of care as
a. ordinary persons.
b. other engineers.
c. other professionals, including doctors, dentists, and lawyers.
d. those injured in the collapse of the bridge.
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44) Audio Science Companys agent Bailey is authorized to draw checks on Audio Sciences account in Citizen Bank. The checks are preprinted with the company name. Bailey writes a check pay to the order of Darlene [signed] Bailey. Darlene presents the check for payment. If Citizen Bank dishonors it, liability extends to
a. no one.
b. Audio Science and Bailey.
c. Audio Science only.
d. Bailey only.
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45) Fast Food Corporation and Giant Potatoes, Inc., enter into a contract for Giants sale to Fast of all of the potatoes that Fast needs. The amount of potatoes that Giant must supply is
a. all of Fasts requirements that may occur in good faith.
b. all of Giants output that is not commercially impracticable.
c. the greatest quantity that is not unconscionable.
d. the greatest quantity that makes the contract a square deal.
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46) Rural Power Utility, Inc., enters into a contract with Shovel Excavation Service to dig up, replace, and rebury Rurals cables in a certain location. Rural advances Shovel 10 percent of its cost. The parties rescind the contract. Shovels refund of the payment is
a. a penalty.
b. liquidated damages.
c. restitution.
d. a breach of contract.
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47) Marine Recreation, Inc., allows Nels to take a Marine Recreation boat for a test run. Nels tries the boat for a few hours, returns, and buys it. This is
a. a bailment.
b. a consignment.
c. a sale on approval.
d. a sale or return.
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48) Floyd and Gert enter into a contract by which Floyd promises to deliver fertilizer to Gert. Floyd subsequently transfers this duty to Hazel. Floyd is
a. a delegatee.
b. an obligee.
c. an obligor.
d. an assignee.
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49) Dhani, an accountant for Eureka, Inc., learns of undisclosed company plans to market a new laptop. Dhani buys 1,000 shares of Eureka stock. He reveals the company plans to Fay, who buys 500 shares. Fay tells Geoff, who tells Hu, each of whom buy 100 shares. They knows that Fay got her information from Dhani. When Eureka publicly announces its new laptop, Dhani, Fay, Geoff, and Hu sell their stock for a profit.
Refer to Fact Pattern 42-2A. Under the Securities Exchange Act of 1934, Fay is most likely
a. liable for insider trading.
b. not liable because Fay did not prevent others from profiting.
c. not liable because Fay did not solicit information from Dhani.
d. not liable because Fay does not work for Eureka.
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50) Loren and Kendra enter into a contract for the distribution of Lorens produce to local restaurants for which he agrees to pay Kendra. Kendra transfers her right to payment under the contract to County Bank. This transfer is
a. a delegation.
b. an assignment.
c. an alienation.
d. prohibited.
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51) Penelope is an attorney. Penelopes conduct is governed by rules of professional conduct established by the state in which she is licensed, and the Model Rules of Professional Conduct drafted by
a. federal courts.
b. the American Bar Association.
c. the American Institute of Certified Public Accountants.
d. the International Accounting Standards Board.
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52) Flo-Thru Plumbing Corporation is poised to issue securities that, under the Securities Act of 1933, are exempt. This means that the securities can be sold
a. on the basis of a material omission or misrepresentation.
b. on the basis of nonpublic information.
c. within any six-month period by certain insiders.
d. without being registered.
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53) Veronica offers to sell Rowena her luxury sedan and says that it has never been in an accident. Rowena hires Laszlo, a mechanic, to appraise the vehicle. Laszlo says that it most likely has been in an accident. In spite of this information, Rowena buys the car. Later, when it develops mechanical problems, she can
a. not rescind the contract.
b. rescind the contract on the basis of fraud.
c. rescind the contract on the basis of mistake.
d. rescind the contract on the basis of unconscionability.
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54) Roy owns an apartment building that contains units of different sizes. The sidewalks around the building are in poor repair. Many sections have buckled from the growth of tree roots over the years.
Refer to Fact Pattern 71. As the owner of the building, Roy has a duty to
a. arrange to escort anyone who walks onto the property.
b. do nothing.
c. repair the sidewalks.
d. repair the sidewalks only if he is notified that it is a problem.
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55) Parker owns and operates Rancho Mirage Corporation, a destination resort in Arizona that features horseback riding and bunkhouse accommodations. The Constitution provides that no person shall be deprived of life, liberty, or property without due process of law. Included as legal persons under this clause are
a. the bunkhouses and other manmade creations.
b. the corporation and Parker.
c. horses and other beings in nature.
d. none of the choices.
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56) Homebuyers Mortgage Corporations promise to pay its employees a year-end bonus if it seems like a good idea at the time is
a. an enforceable contract.
b. an illusory promise.
c. an unconscionable proviso.
d. a unilateral pact.
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