A defense that can only be asserted by the principal debtor is called a:
a. real defense.
b. subrogated defense.
c. personal defense.
d. joint defense.
Harvard philosopher, Robert Nozick, stressed liberty, not justice, as the most important
obligation that society owes its members.
a. True
b. False
The Magnuson-Moss Warranty Act contains disclosure and labeling requirements for
sellers of consumer products containing a written warranty.
a. True
b. False
The failure by an accountant to use the care of a reasonably competent accountant
under the circumstances is:
a. negligence.
b. material breach.
c. substantial performance.
d. fraud.
Under the 1934 Act, willful violations may result in:
a. a fine of up to $10 million for an individual.
b. imprisonment of up to no more than ten years.
c. a fine of up to $25 million for a corporation.
d. All of these.
The Federal Trade Commission may issue a cease and desist order having the effect of
an injunction.
a. True
b. False
Horst, a holder in due course, buys a note made out by Arthur to Superior Motors. Even
though Arthurs debt was discharged through bankruptcy, Horst can collect on the note.
a. True
b. False
Strict product liability exists if:
a. the consumer misuses the product.
b. the consumer alters the product before he or she uses it.
c. a defective, unreasonably dangerous product reaches the consumer or user without
substantial change in the condition in which it is sold.
d. the consumer gives the manufacturer or seller notice of the defect.
Since the purpose of remedies under the Code is compensation, punitive damages are
generally available.
a. True
b. False
After passage of a week, the buyer of six crates of strawberries will be deemed to have
accepted the goods.
a. True
b. False
Matt says to Lynn, “If you will mow my lawn, I will give you $20.” Lynn replies,
“O.K.” Under these facts, each party is a promisor and each party is a promisee.
a. True
b. False
Which of the following is not a remedy available to an unpaid seller against the buyer?
a. Recovery of the price.
b. Cover and sue for damages.
c. Recovery of incidental damages.
d. Cancellation of the contract.
A leasehold is like a bailment in that it permits the tenant to have a possessory but not
an ownership interest in the landlord’s estate.
a. True
b. False
Under the Second Restatement, the owner of land is liable to adult trespassers for
failure to maintain the land in a reasonably safe condition.
a. True
b. False
The Foreign Corrupt Practices Act makes it illegal for an American company to offer or
pay money to a foreign official to influence a decision of that official even if the offer is
not accepted.
a. True
b. False
Which of the following is an objective of the North American Free Trade Agreement
(NAFTA)?
a. Create trade barriers to the movement of goods and services across the borders.
b. Promote conditions of fair competition in the free trade area.
c. Decrease investment opportunities in the area.
d. Provide adequate and effective enforcement of all types of property rights.
A design patent:
a. has a duration of 14 years.
b. refers to ornamental designs for manufactured products.
c. requires a showing of novelty, ornamentality, and nonobviousness.
d. All of these.
In many states, the services of the incorporators are perfunctory and short-lived.
a. True
b. False
How long does a copyright last?
a. Exactly 25 years.
b. 17 years.
c. Exactly 50 years.
d. The author’s life plus 70 years.
An instrument payable at a definite time is time paper.
a. True
b. False
Under comparative negligence, the court apportions damages between parties in
proportion to the degree of fault or negligence it finds against them.
a. True
b. False
Terrell asks a salesperson what size of water heater he should buy for a twenty-unit
motel. If Terrell purchases a tank based on the salespersons suggestion, the salespersons
recommendation is:
a. an express warranty of merchantability regarding the water heater.
b. an implied warranty of merchantability regarding the water heater.
c. an implied warranty of fitness for a particular purpose.
d. no warranty, but only a statement of opinion.
In the absence of agreement, payment is due at the time and place the buyer is to
receive the goods, even though the place of shipment is the place of delivery.
a. True
b. False
The civil penalty for a person who trades on inside information:
a. is payable into the U.S. Treasury.
b. must be imposed as a result of an action brought within three years after the date of
the purchase or sale.
c. is, for a controlling person, up to the greater of $1 million or two times the profit
gained or loss avoided as a result of the controlled persons violation.
d. All of these.
In only a minority of states a jury may award punitive damages if a defendant’s tortious
conduct is intentional and outrageous.
a. True
b. False
The Americans with Disabilities Act requires businesses to make special
accommodations for handicapped workers and customers unless the cost is unduly
burdensome.
a. True
b. False
A mental condition that impairs a person’s ability to act in a reasonable manner is one
type of mental incompetence.
a. True
b. False
What is another name for the main purpose doctrine?
a. The collateral promise rule.
b. The possibility test.
c. The leading object rule.
d. The suretyship provision.
Misuse of procedure can occur even when the plaintiff succeeds in the litigation.
a. True
b. False
Under the UCC parol evidence rule, usage of trade will take priority over specific
provisions in a written contract.
a. True
b. False
Roscoe Braun, who lives in Cleveland, receives a mailing from Florida from the
SwampLand and Reclamation Project. It states that the Brauns can purchase one-acre
sites as part of a newly planned development located in Leon County, Florida. The
Brauns contact the company and are given a purchase agreement but no additional
information. They sign the purchase agreement and send it back. Then, a week later
they decide they would prefer to winter in either New Zealand or Australia. Can the
Brauns get out of the contract?
Debt securities represent an ownership interest in the corporation.
a. True
b. False
Sue deposits in her account at First Bank a $50 check drawn on Valley Bank. First Bank
transfers the check to Second Bank, which in turn forwards it to Valley Bank, which
pays the item. Valley Bank is the:
a. payor bank.
b. drawee bank.
c. collecting bank.
d. The payor bank and also the drawee bank.
Parol evidence refers only to any oral evidence that is outside an integrated written
contract and not incorporated into it, either directly or by reference.
a. True
b. False
A patent last for life, while a copyright ends after 50 years.
a. True
b. False