A number of states have enacted statutes exempting the following types of lenders from
their usury laws:
a. eligible lenders of installment loans.
b. lenders for large consumer loans.
c. Both (a) and (b).
d. None of the above. Only certain types of transactions rather than types of lenders are
exempted.
Under the Uniform Commercial Code and the Bankruptcy Code, the trustee in
bankruptcy:
a. assumes the rights and powers of a hypothetical lien creditor.
b. has priority over a creditor with a perfected security interest.
c. has priority over a creditor with a security interest that was not perfected when the
bankruptcy petition was filed.
d. Both (a) and (c) above.
An agreement of a seller to supply a buyer with all of the buyer’s requirements for
certain goods is known as:
a. an output contract.
b. a requirements contract.
c. a firm offer.
d. promissory estoppel.
A contract contains the provision, “Walter Hamilton promises to pay Faye Weeks
$1,200 for a 2005 V-6 motor provided that Phelps’ Garage approves the quality of the
motor.” This provision:
a. makes the contract unenforceable since Walter’s promise is illusory.
b. creates an express condition which must be met before Walter’s duty to pay arises.
c. cannot create an express condition because it lacks the necessary words “on condition
that.”
d. cannot be valid since it makes Walter’s duty to pay dependent upon the opinion of a
third party.
Which of the following is true of liquidation of a corporation?
a. Liquidated assets are used first to pay contract rights of shareholders.
b. Common stock has a priority over stock with a liquidation preference.
c. Voluntary liquidation is carried out by the corporate officers.
d. A court-appointed receiver may conduct involuntary liquidation.
Which of the following is enforceable without consideration?
a. A new promise to pay a debt barred by the statute of limitations.
b. An illusory promise.
c. Under the common law, a promise made to satisfy a preexisting moral obligation.
d. A promise by a father to pay someone for rendering emergency services to his injured
son before the father had arrived at the accident scene.
Which of the following is not a general corporate power typically granted by
incorporation statutes, including the RMBCA?
a. To have a corporate seal
b. To own and vote shares of other entities
c. To make donations for charitable or educational purposes
d. All of the above are typical corporate powers.
Match the following:
a. Person who files a lawsuit in a trial court.
b. Part of private law dealing with rights and duties of individuals among themselves.
c. A system of law based upon Roman law which depends upon comprehensive
legislative enactments and the inquisitorial system of determining disputes.
d. A system of law first developed in England that relies on the judiciary as a source of
law and on the adversary system for settling disputes.
e. Theory that actions must be judged by their motives and means as well as their
results.
f. The law establishing duties which, if violated, constitute a wrong against the entire
community.
g. Person against whom a lawsuit is brought.
h. A body of law based upon principles distinct from common law and providing
remedies not available at common law.
i. A court order requiring a party to do or refrain from doing a specified act.
j. A general legal principle formulated by equity courts.
k. Theory which seeks to analyze the type of society that people in a “natural state”
would establish if they could not determine in advance whether they would be talented,
rich, healthy, or ambitious relative to other members of society.
l. Rules for enforcing legal rights and duties.
m. Theory under which individuals look to a central authority to guide their decisions.
n. An equitable remedy rewriting a contract to conform to the original intent of the
parties.
o. An equitable remedy invalidating a contract by setting it aside.
p. Theory that moral actions are those that produce the greatest net pleasure compared
with net pain.
q. A court order directing a party to perform a contractual duty.
r. The principle found in common law systems that requires courts to apply rules
decided by that or a superior court in prior, substantially similar cases.
s. Basic law that creates, defines, and regulates legal rights and duties.
t. Means by which the law enforces court decisions.
1) stare decisis
2) substantive law
3) procedural law
4) injunction
5) sanctions
6) civil law
7) civil law system
8) ethical fundamentalism
9) equity
10) plaintiff
11) common law system
12) criminal law
13) maxim
14) distributive justice
15) rescission
16) utilitarianism
17) specific performance
18) defendant
19) reformation
20) deontology
Mark wants to give Susan his car. He can effectively “deliver” it by:
a. giving Susan the keys.
b. giving her an indorsed title certificate.
c. making her take it for a period of time.
d. giving her a written statement that he plans to give the car to her.
e. Both (a) and (b) are correct.
For a memorandum to be incorporated into a will, which of the following conditions
must be met?
a. It must be in writing.
b. It must be in existence when the will is executed.
c. It must be adequately described in the will.
d. All of the above.
Which of the following is NOT always necessary in order for a valid contract to be
formed?
a. Mutual assent
b. Legality of purpose
c. A writing
d. Competent parties
Mark gave the keys to his apartment to his friend Jack so Jack could sleep after a
late-night study session. When Jack walked in, Mark’s roommate, Sam, was standing
behind the door in the dark, holding a baseball bat over his head. Jack flicked on the
light and Sam saw it was Jack, so he lowered the bat before Jack noticed him. In this
case:
a. Jack is guilty of assault.
b. Sam is guilty of assault.
c. both Sam and Mark are guilty of assault.
d. neither Jack nor Sam is guilty of assault.
Anita is hired to manage an unincorporated dress boutique owned by Betty. The two
agree that Anita will receive one-third of the net profits, which amount is to be paid to
her on a monthly basis.
Which of the following is not a restrictive indorsement?
a. “Without recourse”
b. “For deposit”
c. “Pay any bank”
d. “For collection”
The elements of adverse possession include:
a. open, constructive, and with permission of the true owner.
b. open, visible, under color of title, and with permission of the true owner.
c. secretive, invisible, hostile, and under claim of right.
d. continuous for the statutory period, open, actual, and adverse.
Which of the following conduct would be likely to invalidate a will?
a. Maria urges her husband to leave all of his property to her.
b. Leah, who was not a blood relative, took care of Austin in his last illness. While he
was in a weakened condition, she urged him to name her sole beneficiary to the
exclusion of his children, which he did.
c. Paul falsely tells Edward that he is Edward’s long-lost son, and Edward leaves his
property to Paul in his will.
d. All of the above.
e. Both (b) and (c).
Marge wishes to raise some money to begin mass producing her prize-winning jellies
and jams. She offers her neighbors a piece of her profits if they will each invest $2,000.
Is the investment a ‘security”?
a. Yes, since Marge will do all the work.
b. Yes, because her neighbors will have a security interest in the jelly.
c. No, since the neighbors are putting no effort into it.
d. No, because Marge is not issuing stock certificates.
Promissory estoppel is a contractual doctrine that includes the following considerations:
a. The courts use the doctrine of promissory estoppel to enforce noncontractual
promises.
b. Under this doctrine the promisor reasonably expects that the promisee, in reliance on
the promise, will be induced by the nature of the promise to take action or refrain from
taking action and the promisee does so.
c. The courts will not, under any circumstance, enforce promises that do not include all
four of the elements of contract.
d. Both (a) and (b).
a. What is the difference between equal pay for equal work and equal pay for
comparable worth?
b. How is it possible to establish a claim for equal pay for comparable worth if the jobs
are different jobs?
c. Is equal pay for comparable worth covered by the federal employment discrimination
laws? Explain.
Which of the following are exempt transactions for issuers under the 1933 Act?
a. Private placements
b. Limited offers not exceeding $5 million under Role 505
c. Limited offers not exceeding $1 million under Rule 504
d. Limited offers solely to accredited investors
e. All of the above
Barbara owes Arturo $2,000. On July 1, Arturo assigns the debt to Charles. Thereafter
on July 15, Arturo assigns the same right to Dennis, who in good faith gives value for it
and knows nothing about the first assignee. Dennis immediately notifies Barbara of the
assignment. Under:
a. all of the rules, Charles has priority since he was the first assignee in time.
b. the majority rule, Dennis has priority.
c. the English Rule, Dennis has priority.
d. the English Rule, Charles has priority.
Absent an agreement otherwise, upon dissolution, a partner is entitled to which of the
following after payment of partnership creditors?
a. A share of profits in proportion to capital contribution
b. A share of profits based on the degree of participation in management
c. Under the UPA, repayment of his capital contribution during the winding up of the
firm
d. The UPA requires that the partners have an agreement or else they must seek a court
order distributing the remaining assets
If an agent at his principal’s direction fixes prices with the principal’s competitors:
a. only the agent is criminally liable.
b. only the principal is criminally liable.
c. both the principal and agent are criminally liable.
d. any liability would be civil only.
Voidable preferences include all of the following EXCEPT:
a. a transfer of property of the debtor to or for the benefit of a creditor.
b. payment of taxes owed to a governmental unit.
c. a transfer of the debtor’s property while the debtor was insolvent.
d. a transfer that enables a creditor to receive more than he would have received under
Chapter 7.
Ralph is the payee of a negotiable promissory note on which Brian is the maker. Ralph
indorses the note in blank and delivers it to Clark, who then transfers it to David
without indorsement. David presents it to Brian for payment when it becomes due, but
Brian claims he signed the note based upon fraud in the inducement and refuses to pay.
a. Who is primarily liable on the instrument? Who is secondarily liable on the
instrument?
b. Who has warranty liability? Why? Explain.
c. From whom can David try to collect?
To be protected by federal law, a mark must be distinctive enough to identify clearly the
origin of the goods or services. A trade symbol may satisfy the distinctiveness
requirement by, in certain circumstances:
a. being a descriptive or geographic designation.
b. being inherently distinctive.
c. acquiring distinctiveness through a secondary meaning.
d. All of the above.
Zoning ordinance variances:
a. are not available for hardships caused by the actions of the property owner seeking
the variance.
b. are available if it affirmatively appears that the property as zoned cannot yield a
reasonable return on the owner’s investment in the property.
c. are available for hardships caused by the variance that are common to the zoned area.
d. Both (a) and (b).
e. Both (a) and (c).
Under Chapter ____, certain debts of individuals are not dischargeable despite the
debtor’s good faith.
a. 7
b. 11
c. 13
d. All of the above.
A merger of Parker Corporation with Jones Corporation that results in only Parker
Corporation surviving normally would require approval of:
a. Parker’s and Jones’s boards.
b. Parker’s shareholders.
c. Jones’s shareholders.
d. All of the above.
e. (a) and (b).
Who among the following is most likely not considered a merchant according to Article
2 of the UCC?
a. Jim who owns a wholesale auto parts business.
b. Tom who, as a hobby, builds and sells birdhouses on the weekends.
c. Kay who sells her 3-year-old fishing boat to her neighbor.
d. Jan who is not knowledgeable about selling sailboats, but employs an experienced
person in the trade.
The federal Truth-in-Lending law:
a. requires the lender to show how much profit is made on a particular sale.
b. regulates the maximum cost of credit.
c. is a uniform law made available to all states, like the UCC.
d. is intended to allow comparison of various credit offers or advertisements.
The UCC provides that a merchant is bound to keep a written offer open for a stated
period but no longer than:
a. ten days.
b. two months.
c. three months.
d. a reasonable time.
Which of the following will support a contract?
a. An illusory promise
b. Past consideration
c. Forbearance to do an act
d. A pre-existing public obligation
Karen has agreed to buy May’s car, but the two have not agreed on the price. When
there is no agreement in a sales contract as to price, what effect does it have on the
contract?
a. There is a contract, with the price being whatever the seller decides.
b. There is a contract, with the price being a reasonable price at the time the agreement
was made.
c. There is no contract, because the agreement is not definite and certain enough.
d. There is a contract, with the price being a reasonable price at the time of delivery.
The greatest ownership interest a person may have in real property is:
a. fee simple absolute.
b. tenancy by the entirety.
c. life estate.
d. vested remainder.
For purposes of intentional torts, a person can have the intent to cause harm if the harm
is substantially certain to occur even if he or she doesn’t desire that such harm occur.
When the assignee gives consideration in exchange for an assignment, there is a
contract between the assignor and the assignee that prevents the assignor from revoking
the assignment without the assent of the assignee.
Apparent authority arises out of words or conduct of a disclosed or unidentified
principal manifested to third persons.
A form of time draft known as a trade acceptance is used as a credit device in
commercial transactions.
Resulting from a Supreme Court decision, vertical territorial and customer restrictions
are now illegal per se rather than being judged by the rule of reason.
Charles is the holder of a promissory note, the maker of which is Charles’ niece,
Margaret. As a birthday gift to Margaret, Charles marked “Canceled” across the face of
the note. Margaret remains liable on the note because she did not give Charles anything
of value for the cancellation.
In corporations, the managers are necessarily owners.
An example of a bailment for the bailor’s sole benefit is when Sherri, without
compensation, lends her Cappuccino maker to Ed for Ed’s party.
The Americans with Disabilities Act requires businesses to make special
accommodations for handicapped workers and customers unless the cost is unduly
burdensome.
An agent whose compensation depends on his accomplishing a specific result is entitled
to the agreed compensation only if the result is achieved within a reasonable time if no
time is stated.
Ratification makes a contract void from the beginning.
The usual method of showing the mutual assent necessary to create a contract is by
offer and acceptance.
A “private placement” involves no public offering and is exempt from registration.
“Perfection” is required in order for the secured party to enforce rights against the
debtor.
Mary Lou takes her paycheck to Al’s Place on Friday night and gives it to the bartender
as payment for her running bar bill. If the company she works for goes bankrupt the
following Monday, Mary Lou is liable for breach of warranty of no insolvency.
A creditor of a limited partner may obtain a charging order against the limited partner’s
interest in the partnership, thereby becoming an assignee of the partnership interest.
All other estates are derived from the fee simple estate.