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A letter of credit guarantees to the seller, that the bank will pay for the goods if the
buyer fails to do so.
The electric and cable companies have an easement in gross allowing them to enter
property to install and repair their equipment.
If a party, against whom enforcement is sought, admits to an oral contract in court
proceedings, then the Statute of Frauds requirement is waived and the oral contract can
be enforced.
Buyers are free to accept or reject accommodation shipments.
Under the 2005 Act, the highest priority of unsecured claims includes attorneys' fees,
court costs, and other costs associated with the administration of the bankruptcy estate.
Once an environmental impact statement is prepared, it is subject to public review, and
the public has ninety days to submit comments to the Environmental Protection Agency.
With respect to negotiable instruments, the "red light doctrine" prevents a holder from
being a holder in due course if the holder has knowledge of a defense to the payment of
the instrument.
In a finance lease, the lessor may acquire the title or the right to the possession of the
goods.
The Federal Trade Commission requires that a "FTC notice" be placed on the cover of a
franchisor's required disclosure statement to prospective franchisees, providing certain
information for the protection of franchisees.
Utility patents for inventions are valid for seventeen (17.) years.
Certified checks can be stopped by the drawer if they notify the drawee before the
check has been presented.
An instrument that is payable to a specific payee or indorsed to a specific indorsee is
order paper.
Title III of the Consumer Credit Protection Act allows debtors who are subject to a writ
of garnishment to retain a total of (1) 75 percent of their weekly disposable earnings
and (2) an amount equal to thirty hours of work paid at federal minimum wage.
Warranties are made when the negotiable instrument is originally issued.
Most states have enacted securities laws.
Today, resale price maintenance is a per se violation for both price floors and price
ceilings.
Credit may be extended on either an unsecured or a secured basis.
Only personal defenses, and not universal defenses, may be asserted against a holder in
due course.
An employee is not an agent unless he or she is specifically empowered to enter into
contracts on the principal employer's behalf.
Most federal cases originate in United States Courts of Appeal.
A force majeure clause is used to specify the remedies in the event of a breach of
contract.
A contractor is generally entitled to recover any lost profits on a contract breached by
the client.
If the maker or drawer of a nonnegotiable contract fails to pay it, the holder of the
contract can sue the non-performing party for breach of contract.
To qualify for federal protection under trademark law, a mark must be distinctive or
have acquired a 'secondary meaning."
The Federal Trade Commission "franchise rule" requires franchisors to make full
pre-sale disclosure nationwide to prospective franchisees.
The legal rule of imputed knowledge means that the principal is assumed to know what
the agent knows.
Indictments are issued, at the arraignment, by a judge who has determined that there is
sufficient evidence to hold a defendant for trial.
One of the common functions of negotiable instruments is as a substitute for money.
A "tenancy at will" may not be created by implication.
The Federal Torts Claims Act established the doctrine of sovereign immunity, freeing
governments from liability for the acts of their governmental employees.
Accountants cannot be held liable for their negligence in preparing unaudited financial
statements.
In the process of forming a contract, who generally has the power to create the
contract?
A) the offeror, in making the offer
B) the offeror, but only after the offeree has received the offer
C) the offeree, once the offer has been received
D) the court, once the offer has been received by the offeree
E) the offeror, by confirming the acceptance of the offeree
Who is protected under the Age Discrimination in Employment Act?
A) all workers who are forty years old or older
B) all workers of any age who are discriminated against for being too old
C) all workers who are employed in a position in which they were forty years old or
older when hired
D) any worker who is replaced with a younger worker
E) all workers who are fifty years old or older
While strolling through the city park one day, Frieda finds Larry's watch, which has a
broken strap, lying in the grass. Frieda discovers Larry's name and address engraved on
the back of the watch. Which of the following is correct?
A) Frieda must leave the watch where she found it.
B) Frieda may keep the watch, since it is lost property.
C) Frieda may keep the watch, unless Larry demands its return.
D) Frieda must return the watch to Larry, since she knows his identity.
E) The watch is misplaced, so she must turn it in to a representative of the city, as the
city is the proprietor of the park.
A(n) ________ contract occurs when one person agrees to answer for the debts or
duties of another person.
A) indemnity
B) assurance
C) guaranty
D) due diligence
E) insurance
Which of the following is true about crimes?
A) Criminal liability exists only if there is a victim who suffered damages.
B) A criminal defendant will be found guilty whenever the jury believes it is more
likely than not that the defendant committed the crime.
C) Torts always accompany crimes, although civil cases related to criminal
activities are rarely filed.
D) For some crimes, recklessness provides a sufficient criminal intent.
E) Recklessness never provides a sufficient criminal intent.
Another term for negotiable instrument is ________.
A) parol evidence
B) statutory evidence
C) commercial paper
D) industry paper
E) allonge
A limited partner who takes an active part in managing a limited partnership:
A) will be entitled to profit distributions as if he or she were a general partner.
B) will be treated as a general partner with respect to parties who reasonably believe
that he or she is a general partner.
C) will be treated as a general partner with respect to all parties with whom he or she
transacts business affairs.
D) will be entitled to reasonable compensation for the value of the managerial services
provided.
E) will lose the right to receive profit distributions as a limited partner.
The Sarbanes-Oxley Act was enacted in response to:
A) fraud by government contractors.
B) Medicare fraud by health care providers.
C) fraud by federal government employees.
D) fraud by state government employees.
E) fraudulent accounting practices.
Where a contract for the sale of goods does not mention the place of delivery for the
goods, which of the following is true?
A) The seller is obligated to deliver the goods to the buyer's place of business.
B) The contract is void for failure to state a material term.
C) Sellers without a place of business are obligated to deliver the goods at the seller's
home.
D) The buyer is obligated to pick-up the goods from a place designated by the seller.
E) The seller is obligated to leave the goods with an authorized shipper, who is then
responsible for delivery, wherever the buyer may designate.
The ________ provides legal rules that govern the formation, performance, and
enforcement of international sales contracts entered into between international
businesses.
A) UCC
B) CISG
C) UISG
D) CISC
E) UCSG
The effect of the fictitious payee rule is that:
A) fictitious payees are entitled to collect on instruments.
B) the maker or drawer will be liable for payment of an instrument naming a fictitious
payee.
C) makers and drawers are protected from liability resulting from paying an instrument
naming a fictitious payee.
D) parties forging the signature of a fictitious payee can be liable for losses incurred by
the forgery.
E) banks are required to positively identify any holder seeking payment at the bank on
an instrument.
Fred has 100 tons of stone in a warehouse. Barney agrees to purchase the stone from
Fred. The contract states that Barney will pick-up the stone directly from the
warehouse. Fred delivers a warehouse receipt to Barney for the stone. Before Barney is
able to pick-up the stone, a tornado sweeps through and destroys the stone. Who has the
risk of loss?
A) Fred has the risk of loss because Barney did not pick-up the stone yet.
B) The warehouse has the risk of loss because Barney did not pick-up the stone yet.
C) Barney has the risk loss because the risk of loss was transferred when he received
the warehouse receipt.
D) Fred, the warehouse and Barney are equally responsible for the risk of loss.
E) Fred and the warehouse are equally responsible for the risk of loss.
Principals cannot avoid liability for ________ activities that they assign to independent
contractors.
A) any
B) professional
C) non-professional
D) inherently dangerous
E) express
Section 11(a) of the Securities Act of 1933 imposes civil liability on accountants for
making misstatements or omissions of material facts in a registration statement, or for
failing to find such misstatements or omissions.
The degree to which an agent discloses the agency relationship affects the contract
liability of:
A) the agent.
B) the principal.
C) both the agent and the principal.
D) neither the agent nor the principal.
E) the agent, but only if the third party either knew or should have known of the agency.
Which branch of government has the power to enforce the law?
A) executive
B) legislative
C) judicial
D) state
E) federal
Jenny agreed to buy Darren's car for $12,000. Their written agreement mentioned the
car, the car's vehicle identification number and the price, but little more. Jenny claims
that before they signed the agreement Darren said that he would include a bike rack that
was in his garage when Jenny first looked at the car. Jenny also claims that after they
signed the agreement but before she picked up the car Darren agreed to give the car a
thorough cleaning and hand wax for an extra $50. If Jenny were to sue Darren, which of
these oral matters could she introduce into evidence under the parol evidence rule?
A) the agreement about the bike rack
B) the agreement about waxing the car
C) the agreement about the bike rack and the agreement about waxing the car
D) neither the agreement about the bike rack nor the agreement about waxing the car
E) the agreement about the bike rack, but only if she could establish that Darren was the
one who wrote the agreement
When a seller breaches a contract for the sale of goods by delivering nonconforming
goods and the buyer has the right to reject them, the risk of loss:
A) is unaffected by the seller's breach.
B) remains on the seller until the nonconformity is cured or the buyer accepts the
nonconforming goods.
C) remains on the seller indefinitely.
D) is transferred to the buyer upon delivery of the nonconforming goods, but is
transferred back to the seller if the buyer returns the goods.
E) is transferred to the buyer as a matter of law within 24 hours.
Historically, the bailee must exercise what level of care in a bailment for the bailee's
exclusive benefit?
A) utmost
B) minimal
C) ordinary
D) strict liability
E) reasonable
Which of the following best describes a franchise?
A) two parties work together on a limited-duration project or enterprise
B) a business establishes numerous retail locations, owned by the business, that all offer
similar products or services
C) a retailer pays a fee to operate a business using a particular name under a
standardized general business plan, with the fee often being paid in the form of royalties
D) a seller of products is in business long enough for its trade name to become
widely-recognized
E) a business obtains the right from another business to operate with limited liability
Someone who is authorized to act on behalf of another is generally known as a(n):
A) agent.
B) independent contractor.
C) employee.
D) surety.
E) principal.
The Revised Model Business Corporation Act (RMBCA) permits corporations to grant
more than one vote per share to some classes of stock and less than one vote per share
to others.
A corporation may sell, lease, or otherwise dispose of all or substantially all of its
property in other than the usual and regular course of business. Such a sale or lease of
assets requires:
A) the express approval of the Securities and Exchange Commission (SEC).
B) the recommendation of the board of directors.
C) an affirmative vote of the majority of the shares of the majority of the shares of the
selling or leasing corporation that are entitled to vote (unless greater vote is required.)
D) the express approval of the Securities and Exchange Commission (SEC), and the
recommendation of the board of directors.
E) the recommendation of the board of directors, and an affirmative vote of the majority
of the shares of the majority of the shares of the selling or leasing corporation that are
entitled to vote (unless greater vote is required.)
Probable cause is defined as the ________ that a person either committed or is about to
commit a crime
A) possibility
B) likelihood
C) substantial likelihood
D) absolute certainty
E) proof beyond reasonable doubt
In an ordinary merger, what approvals are needed?
A) recommendation by both boards of directors and votes of the shareholders of both
corporations
B) votes by both boards of directors, but the corporations' shareholders need not
approve
C) vote by the board of directors of the surviving corporation, and for the corporation
that does not survive, recommendation by the board of directors and an approval vote
by the shareholders
D) for both corporations, a vote by the shareholders, but no action by the boards of
directors is necessary
E) no approvals are needed by the surviving corporation, and for the corporation that
does not survive, recommendation by the board of directors and an approval vote by the
shareholders
Which of the following is true about determining whether someone working for another
person is an independent contractor or an employee?
A) The classification of the person doing the work depends on that person's job title.
B) The classification of the person doing the work depends on whether the parties to the
arrangement consider the person doing the work to be an employee or an independent
contractor.
C) The classification of the person doing the work depends on whether the person is
also acting as an agent.
D) The classification of the person doing the work depends on a number of factors, with
no single factor being any more significant that the others.
E) The classification of the person doing the work depends on a number of factors, with
the most important factor being the degree of control over that person's work exercised
by the person who is paying for the work.
Corporations are required to hold shareholders' meetings at least:
A) annually.
B) every six months.
C) twice per year, but they are not required to be held every six months.
D) quarterly.
E) monthly.
The E-SIGN Act provides that a digital signature can be verified in which of the
following ways?
A) by something the signatory knows, such as a secret password
B) by one (1) attesting witness
C) by diametrics
D) by judicial decree
E) by digital signature analysis (the modern equivalent of handwriting analysis)
Which of the following best describes the doctrine of abatement?
A) When there are not enough assets to satisfy all the gifts in the will, the residual gifts
will be the last to be paid.
B) When assets are distributed to lineal descendants, equal shares are given to all
descendants, regardless of which generation they are in.
C) If a decedent dies without owning the property that was the subject of a specific gift
in the will, the beneficiary will receive nothing for it.
D) If a testator leaves a specific gift of property to a beneficiary, but the property is no
longer in the estate of the testator when he or she dies, the beneficiary receives nothing
under the doctrine of abatement.
E) If a will provides for general gifts and there are not enough assets to satisfy all gifts,
then bequests to individuals abate last.
Under Rawl's social justice theory, ________ is considered the essence of justice.
A) economic development
B) social stratification
C) fairness
D) law
E) social standing
Sustainable Earth Clothiers is a retailer who sells only natural fiber clothing made from
fibers that are organically raised. Because of the store's heavy advertising that it sells
only products made from organically raised fibers, it simply cannot sell any clothing
that is not made from such fibers. Sustainable Earth buys 1,000 cotton shirts that are
delivered and accepted after an inspection. Three weeks later it is learned that these
shirts were made from cotton that was not organically grown. The market value of these
shirts is unaffected by the fact that the cotton is nonorganic. Assuming that it is difficult
to determine by observing the shirts that they were made from nonorganic cotton, which
of the following is true?
A) Sustainable Earth must keep the shirts, because it accepted them after the inspection.
B) Sustainable Earth must keep the shirts, because the market value of the
nonconforming shirts is the same as that for conforming shirts.
C) Sustainable Earth will be able to revoke acceptance of the nonconforming shirts.
D) Sustainable Earth will be able to revoke acceptance of the shirts, but only if it can
show that the contract would be unconscionable if it were not allowed to revoke the
acceptance.
E) Sustainable Earth must keep the shirts, because it only had 48 hours under the UCC
in which to inspect for any problems.
Why should partners in a general partnership be held personally liable for the debts of
the partnership and any wrongdoing committed by another partner in the course and
scope of the partnership?
Derek, Alex and Jorge each own stock in Roundball, Inc. Derek is the chief executive
officer, Alex is a fifteen-percent shareholder, and Jorge owns one hundred shares, which
is less than one percent of the company's outstanding stock. During the first quarter of
2008, each of the three have bought and sold various numbers of shares in Roundball,
and each has realized a significant profit. None of the three have used insider
information when making any of their transactions. Has a violation of the 1934
Securities Exchange Act occurred, and if so, by whom?
What are the three major sources of contract law and how do they affect contract law?
Why should the doctrine of commercial impracticability be applied to release a party
from duties under a contract when it is still possible for the contract to be performed?
Tom is a policeman and lives in a suburban neighborhood. It is a middle-class
neighborhood where everyone has a nice lawn, well-kept but smallish homes and no
one really stands out. The people down the block move and a young couple, Dick and
Jane, moves in. They are quiet and keep to themselves, always pleasant when they see
neighbors on the street but not making any friends. After about a month, Tom notices
that the Dick and Jane have bought two expensive cars and a boat. Furthermore, he sees
trucks arriving delivering home theater equipment and big screen televisions. Tom also
notices that people are stopping at Dick and Jane's for short visits, some bringing
packages in and some carrying packages out. Tom is convinced that they are drug
dealers because he never sees Dick or Jane go to work. He finally decides to
investigate. One night after he sees Dick and Jane leave the house, he enters their yard
and picks the lock on the back door. In the basement he finds a cocaine lab. He calls in
for reinforcements who arrive and seize the drugs and equipment. Did Tom act
appropriately and will the evidence seized be admissible in court?
Alice, Ted, and Bob form a limited liability company, and hire Seline as a manager.
There is no designation in the articles of organization as to whether the company is
"member-managed" or" manager-managed." Alice and Ted contribute $5,000 in capital
each. Bob contributes $50,000 in capital. The company makes motorcycles, and there is
a dispute regarding whether to continue to sell a certain model, the "Model X." Alice
and Ted want to stop selling it. Bob and Seline want to continue selling it. What will be
the outcome?
Paul and Mary have just purchased a home. Peter, thinking he is smarter than Paul and
Mary, writes a check to them for $1,000 in icing on a cake he brings to their
housewarming. Peter believes that the cake would be a nonnegotiable item. Is he
correct? Is there any way that Paul and Mary can cash the "check"?
What are some of the problems that employers face with respect to sexual harassment?
What can an employer do to minimize its liability exposure in this area?
Mark went to an antique auto auction where a car was advertised as Elvis Presley's
Cadillac. Mark ended up being the high bidder on the car. It was later discovered that
unbeknownst to the auction house, this car had never belonged to Elvis Presley. What
can Mark do in this situation?
Mike purchases a bicycle from Bikes R Us on credit, and signs a financing statement.
Bikes R Us does not record the statement. After a job transfer, Mike decides not to take
the bike with him, and he sells the bike to Mario. Mike still has payments due, but
Mario has no idea that money is still owed. Mario purchased the bike to use in his
bicycle touring company, which he operates for profit on a part-time basis. If Bikes R
Us can locate Mario and the bike, can they repossess it?
Melissa purchased a compact satellite dish as part of a contract to obtain satellite
television service. Melissa owns a small bar and plans to use the dish and cable service
in her bar. The contract provided that she pay $99 for the dish and $40 per month to
receive transmission signals. The dish is specially manufactured such that it can receive
only the signals provided by the company that provided her with the dish. The company
installed the dish in Melissa's bar as provided in the contract. In the fourth month of the
contract, Melissa began having problems. First, the dish became slightly warped.
Second, the signals received by the dish began to fail frequently, at least once every
week when bar patrons wanted to watch television. The warping of the dish appears to
have affected the quality of the picture. Melissa had a friend hold the dish and push it
into its original shape while Melissa watched the television, and the picture improved as
long as the friend held the dish. Discuss whether the Uniform Commercial Code or
common law would apply in resolving each of Melissa's problems and if Melissa is a
merchant.
Discuss how the doctrine of strict liability differs from the doctrine of negligence. What
are some types of conduct for which the doctrine of strict liability has been applied? Is
it fair that defendants may be found liable without evidence of wrongful conduct?
Mary signed a one-year lease for an apartment near the university she attends. Mary is
upset because of several problems that have developed in her apartment. First, the
plumbing in the bathroom often does not work, resulting in the bathroom being
unusable several times a month for a one to two days. Because of warping and swelling,
only one of the interior doors closes properly. The carpet is badly stained in many
places, and the microwave oven is not functioning. Does Mary have a claim based on
breach of the implied warranty of habitability?
What are the good and bad aspects of relying on precedent to decide current cases?
Give an example of precedent that either was not followed in the past, or should not be
followed in the future. How much leeway do judges have in deciding whether to follow
precedent? How much leeway should they have?
Betty is retired and works on antique cars as a hobby, sometimes working on those
belonging to others, and sometimes on cars that she purchases and restores for resale.
Betty has a 1965 Ford Mustang on which she has completed the mechanical and
exterior restoration. She has not yet begun the restoration of the interior, which needs a
lot of work. Betty needs some money quickly so she advertises the Mustang for
$13,000. Bob looks at it and enters into a written contract at $12,500. Bob then offers to
pay Betty $2,300 to complete the interior restoration. They agree, with the work to
begin in two months and take about three months to complete. Betty changes her mind
about selling the car. Can Bob get specific performance for these two contracts?
The law of negotiable instruments was designed to create a substitute for cash and to
facilitate commerce. Has the importance of negotiable instruments in commerce
increased or decreased in recent years? How will increased online commerce affect the
importance of negotiable instruments?
What is the mailbox rule and is it a good rule? What problems are there with it for the
offeror and offeree? What happens if an acceptance is sent but gets lost in transit and is
never received? What can the offeror do to make her situation better? Are there any
effects on the offeree? What can the parties do to reduce these problems?
How do you view law and the legal system with regard to how your beliefs correspond
to a particular school of jurisprudence? Which school do you feel that your beliefs most
closely correspond to and why? Illustrate your answer with a specific example or
examples.
