Dan, an agent for Ramona, sees what he thinks is a good deal for Ramona. Without
asking whether he has authority to negotiate the deal, Dan enters into a contract on
Ramona’s behalf. Ramona says later that she isn’t interested. Is Ramona liable on the
contract? Is Dan liable on the contract? Explain.
A furnace would often be classified as a “fixture.”
a. True
b. False
If Stan’s land is condemned in order to build a subway system for the city, he must be
given:
a. the fair market value of the property as of the time of the taking.
b. equivalent property.
c. the option of keeping the property.
d. his price for the property.
A creditor may petition the court to judicially dissolve a corporation if he has an
unsatisfied judgment against the corporation and:
a. the corporation is insolvent.
b. the creditor will become insolvent if not paid.
c. the debt is over $5,000.
d. All of these.
An enabling statute:
a. delegates the power to zone to local city and village authorities.
b. typically allows municipalities to regulate and limit building heights.
c. typically grants the power to limit the intensity of use in a particular area.
d. All of these.
Maxine indorsed her paycheck by signing her name on the back, but she lost it on the
way to the bank. The check is now comparable to cash because it is a bearer instrument.
a. True
b. False
Under Article 2A:
a. a court faced with an unconscionable contract or clause must refuse to enforce the
entire contract.
b. consumers in an unconscionable consumer lease contract receive an additional
remedy over consumers in unconscionable sales contracts. Reasonable attorneys fees
may be awarded.
c. there is no provision for relief for unconscionable conduct in the collection of a claim
arising from a consumer lease contract.
d. lessees under all types of leases of personal property have the same protections
against unconscionable contracts.
The doctrine of stare decisis means that:
a. the common law has not been able to evolve in a stable and predictable manner.
b. decisions can be overruled.
c. courts adhere to and rely on rules of law that they or superior courts relied on in
similar decisions.
d. courts are not allowed to correct erroneous decisions or to choose among conflicting
precedents.
Juanita works for Chevco but owns no Chevco stock. She buys 10 shares of a new issue
of company stock as a savings plan and afterward receives the signed registration
statement, which contains an untrue statement of material fact. Because she works for
Chevco, she recognizes the error. Can she sue the auditor?
a. Yes, under Section 11, proof of reliance is usually not required.
b. Yes, if she can prove she would not have bought the stock otherwise.
c. No, because she did not rely on the statement.
d. No, because there is no privity between Juanita and the auditor.
Carl and Ron both work in road construction. They know that several jobs are going to
be up for public bids, and agree between themselves that Carl will bid on one job and
Ron will bid on the other, so that they both have work for the summer. When the bids
are opened, Carl realizes that Ron has bid on both jobs. Ron is awarded both contracts.
If Carl now wants to sue Ron for breach of contract:
a. Carl would probably win on the basis of promissory estoppel since he has
detrimentally relied upon Ron’s representation that he would not bid.
b. since Carl is less at fault than Ron, the court will likely award Carl damages.
c. the agreement will not be enforced by the courts because it violates public policy.
d. the agreement will not be enforced by the courts because it obstructs the
administration of justice.
State statutes sometimes cover areas that are not covered by federal employment law.
a. True
b. False
Barbara, an antique dealer, intentionally misrepresents the value of an antique chest of
drawers, as $6,000 when she has reason to know the value is considerably less.
Margaret agrees to buy it for $5,500. It is worth $2,500. In a state that uses the
“out-of-pocket” rule, Margaret’s damage award would be:
a. $3,500.
b. $3,000.
c. $500.
d. $2,500.
Landrum voluntarily assigns his transferable interest in a partnership to McClendon.
This act does not by itself result in the dissolution of the partnership, nor does it result
in McClendons being entitled to participate in the management of the partnership
business.
a. True
b. False
The court will not allow any claim that:
a. is unenforceable against the debtor or her property.
b. is for insider or attorney services in excess of the reasonable value of such services.
c. may be offset against a debt owing the debtor.
d. All of these.
Clara types a letter to David setting forth the terms of their contract that falls within the
statute of frauds. At the end of the letter, she types her name but does not sign her
signature to it. If David wants to use the letter to satisfy the writing requirement, he
may do so.
a. True
b. False
Which of the following is NOT a purpose of federal securities regulation?
a. To ensure that only worthwhile securities are sold in interstate commerce.
b. To ensure adequate disclosure by issuers of securities.
c. To ensure that inside information is not abused.
d. To prevent the use of fraud in the marketing of securities.
Which of the following is correct with regard to the powers of government in the
United States?
a. The federal government is a government of enumerated powers.
b. The federal government is all-powerful except in cases of state criminal law.
c. Legislation enacted by Congress does not need to be based on a specific power
granted to the federal government by the Constitution.
d. Congress may not enact legislation that affects the states.
Which of the following is correct regarding the decisions of state trial courts?
a. They are generally not reported.
b. They are reported in regional reports.
c. They are reported in state court reports.
d. They are binding upon lower courts based upon the principle of stare decisis.
According to the __________ Amendment, “the powers not delegated to the United
States by the Constitution, nor prohibited by it to the States, are reserved to the States
respectively, or to the people.”
a. First
b. Fourth
c. Fifth
d. Tenth
Vandehal Companys total liabilities are $520,000 and its total assets are $460,000, and
the company is unable to pay debts as they become due. Vandehals situation falls within
the bankruptcy meaning, but not the Codes definition, of insolvency.
a. True
b. False
If a person’s 150-pound sheep dog has a propensity to jump enthusiastically on visitors,
the animal’s keeper would be liable for any damages done by the dog’s playfulness.
a. True
b. False
In all substituted contracts there must be an agreement among three parties where a new
promise is substituted for an existing promise or a new promisor is substituted for an
existing promisor.
a. True
b. False
Carl, a contractor, and Lyle, a landowner, have a contract whereby Carl is to perform
routine construction services according to the blueprints that Lyle has provided. Carl
assigns the contract to David, a developer. As a result of this assignment:
a. Lyle can bring suit based upon detrimental reliance.
b. Carl has no more rights or responsibilities with regard to the contract.
c. Carl no longer has any rights under the contract, but he remains responsible for the
duties he agreed to perform.
d. Carl has all of his rights under the contract, but he has no responsibility for the
performance of the duties.
If Regency Services, Inc. wishes to protect itself against the possible dishonesty of
Chad, an employee who will be handling corporate funds, Regency may purchase a(n):
a. performance bond.
b. fidelity bond.
c. judicial bond.
d. official bond.
a. What warranties are given by an indorser?
b. What warranties are given by a transferor by delivery without indorsement?
c. If a person has no contractual liability on the instrument, does that mean he has no
liability as a result of the transaction involved? Explain.
The 1990 Clean Air Act Amendments provide that EPA must establish new NAAQS for
major pollutants every five years.
a. True
b. False
The Clean Air Act requires the EPA Administrator to do what, regarding new stationary
sources?
a. Establish federal standards of performance that reflect the best technological system
of emission reduction.
b. Establish performance standards that will match emissions from existing sources.
c. Allow no discharge of any pollutants.
d. All of these.
References to other agreements in negotiable instruments:
a. destroy negotiability unless the recital makes the instrument subject to, or governed
by, the terms of another agreement.
b. do not destroy negotiability in any circumstances.
c. do not destroy negotiability unless the recital makes the instrument subject to or
governed by the terms of another agreement.
d. None of these.
Under state law in many states and under the FTC rules and the Federal Consumer
Credit Protection Act, a contract solicited in a consumer’s home may be canceled
within:
a. 10 days by either party.
b. 10 days by the consumer.
c. three days by the consumer.
d. 20 days by either party.
When a partial assignment is made, the obligor may require all the parties entitled to the
promised performance to litigate in one action any issues concerning the contract
performance.
a. True
b. False
James offers to sell his fishing boat to Brenda for $3,000. Brenda says she will apply for
a loan and will buy the boat within a week. A contract is formed:
a. when Brenda tells James she will buy the boat.
b. when Brenda gets the money from the credit union.
c. when Brenda applies for the loan at the credit union.
d. only when James gets the $3,000.
A draft involves three parties: a drawer, a drawee, and a payee.
a. True
b. False
If a depositor in First Bank takes a check written on Valley Bank to First Bank to
deposit, it will not normally be credited to his account until collected from the payor
bank.
a. True
b. False
When a trial is conducted with a jury, the judge determines issues of __________ and
the jury determines questions of __________.
a. evidence, law
b. law, evidence
c. law, fact
d. fact, law