It is presumed that a co-tenancy is community property unless there is a clear intention
to establish a joint tenancy.
A holding company is a company whose business activity consists of holding shares in
another company.
In a judicial foreclosure, the lender is allowed to foreclose on and sell the property
without judicial supervision.
The crime of theft requires the taking of property, without regard to whether the
perpetrator knew it belonged to another.
Firms overseas have almost total legal protection against government acts in the
countries in which they operate, under the act of state doctrine.
In sales law, a warranty is an assurance by one party of the existence of a fact on which
the other party can rely.
Tariffs are imposed only on exports.
A partnering agreement can indicate the parties’ intent with respect to subsequent
contracts.
A party must own property to have an insurable interest in it.
Misrepresentation of an opinion is an element of fraud.
Undue influence can occur when a named beneficiary is in a position to influence the
making of a will.
Dumping is the exporting of environmentally polluting goods to a foreign market.
One of the requirements of a valid contract is its acceptance.
To be negotiable, an instrument must be payable in money.
A tenant is not responsible for the ordinary wear and tear of leased premises.
The UETA does not create rules for e-transactions.
A foreign state is immune from the jurisdiction of U.S. courts as long as the state is
involved in commercial activity in the United States.
A future advance against a line of credit must be of the same type as the original
advance to be subject to the same collateral.
A majority shareholder does not owe a fiduciary duty to minority shareholders under
any circumstances.
Any product may be made entirely safe for all consumption.
A limited liability partnership allows its partners to avoid personal liability for the
malpractice of other partners.
Preferred shares normally have a fixed maturity date on which the firm must pay them
off.
An unauthorized signature binds the person whose name is forged.
It is not unlawful for an employer to retaliate against an employee who has opposed a
discriminatory employment practice.
Some states provide that in the absence of an agreement to the contrary each member of
a limited liability company has one vote.
If an actor’s conduct creates no risk, there is no negligence.
Anything less than substantial performance is a material breach of contract.
An insured’s lack of an insurable interest is an absolute defense against payment.
A bill of lading serves as a contract for the transportation of goods.
A contract for the sale of commercial realty should indicate what items are included in
the sale.
Fungible goods are goods that cannot be delivered by physical transport.
The UCC has replaced the common law concept of title in part with the concept of
identification.
Mineral Mining Corporation is a U.S. employer. Mineral, and other U.S. employers,
must perform I-9 verifications for new hires who work under the employer’s direct
supervision
A.excluding contractors and day workers.
B.excluding contractors but including day workers.
C.excluding day workers but including contractors.
D.including contractors and day workers.
Hu believes that he is a victim of a form of employment discrimination that falls under
Title VII of the Civil Rights Act. Compliance with this statute is monitored by
A.employees and job applicants, not an administrative agency.
B.employers and businesses, not an administrative agency.
C.the courts and Congress, not an administrative agency.
D.the Equal Employment Opportunities Commission.
Luke is a director of Motor Parts Corporation. Luke makes decisions with respect to
Motor Parts in good faith, in what he believes is the firm’s best interest, and without
violating any duties owed to it. If, despite these circumstances, Luke exercises poor
business judgment, under the business judgment rule Luke is
A.immune from liability.
B.liable only to the extent that he gains as a result.
C.liable only to the extent that Motor Parts suffers as a result.
D.wholly liable.
Text Publishers, Inc., contracts for a sale of textbooks to University Bookstores, Inc.
Vital Shipping Corporation, the carrier, transports the books to Warehouse Storage
Company. Text’s right to stop delivery is lost when University’s rights to the goods are
acknowledged by
A.the appropriate government agency only.
B.Vital Shipping only.
C.Vital Shipping or Warehouse Storage.
D.Warehouse Storage only.
Rhett works at Scarlett’s Sandwich Caf. After work, in the parking lot, Rhett finds a
diamond ring lost by Thalia. Title to the ring is possessed by
A.Rhett.
B.Scarlett’s.
C.Thalia.
D.the state.
Ethical standards would most likely be considered violated if Retail Mart Corporation
deals with a company in a developing nation that
A.agrees to produce goods at Retail Mart’s desired price.
B.goes unnoticed by “corporate watch” groups.
C.exploits its workers.
D.pays its workers less than the U.S. minimum wage.
Fealty Credit Corporation asks its employees to evaluate their actions and get on the
ethical business decision-making “bandwagon.” Guidelines for judging individual
actions include all of the following except
A.an individual’s conscience.
B.business rules and procedures.
C.loopholes in the law or company policies.
D.promises to others.
Hal’s Hardware store defaults on a debt to Intrastate Bank, which takes possession of
the collateral securing the debt. Intrastate sells the collateral. The proceeds from the sale
are applied first to
A.Hal’s debt to Intrastate.
B.Hal’s debts to other creditors.
C.Intrastate’s fees for the sale.
D.payments Hal’s made on the debt to Intrastate.
Winston applies to the U.S. Patent and Trademark Office for a patent on a process that
uses transactions to hedge the risk in securities (stocks and bonds) trading. The
patentability of business processes is controversial because business process patent
applications involve
A.computer programs.
B.ideas.
C.machines.
D.transformations of particular articles into different states or objects.
Open Country, Inc., makes grills, camp ovens, and other outdoor cooking appliances.
Under the Restatement (Third) of Torts: Products Liability, Open Country could be
liable for a warning defect if there is a foreseeable risk of harm posed by one of its
products and
A.the omission of a warning renders the product not reasonably safe.
B.there is a reasonable alternative design.
C.there is a lack of care in making of the product.
D.none of the choices.
Avatar, Inc., and Bling Corporation sign a contract in which Avatar agrees to deliver
t-shirts emblazoned with video game characters in exchange for Bling’s promise to pay.
Avatar delivers. The contract is
A.voidable.
B.executed.
C.executive.
D.executory.
Toby is an accountant whose clients include U-All Company. If Toby is negligent in his
work for U-All, most courts would hold him liable to U-All and
A.any third party.
B.no third party.
C.third parties who are foreseen users of the work.
D.third parties who are reasonably foreseeable users of the work.
A contract between Donald and Chloe to lease commercial property contains an
exculpatory clause. This clause is
A.enforceable as a matter of public policy.
B.enforceable if either party is in a business important to the public.
C.enforceable if an event occurs to which the clause applies.
D.generally unenforceable.
Qang and other foreign citizens allege human rights violations committed overseas by
the government of Burma on behalf of Railway Construction Company, a U.S. firm. To
seek redress for their injuries in a U.S. court, these citizens can
A.issue a letter of credit.
B.bring civil suits under the Alien Tort Claims Act.
C.file criminal complaints under Title VII of the Civil Rights Act.
D.do nothing.
The United States is a member of the World Trade Organization, which, among its
members,
A.does not affect trade barriers.
B.maximizes trade barriers.
C.minimizes trade barriers.
D.outlaws trade barriers.
Fact Pattern 20-1
Northeast Bank makes mortgage loans to consumers, including Mai, to buy homes.
Refer to Fact Pattern 20-1. Under federal law, disclosures with respect to one of
Northeast’s loans must be provided
A.a certain number of days after the loan is finalized.
B.a certain number of days before the loan is finalized.
C.at the same time at which the loan is finalized.
D.at whatever time is most rational and appropriate.
Speedy Delivery Company buys a white van from Tom’s Terrific Vehicles, on credit
under a guaranty signed by Ulysses, Speedy’s president, making him personally liable if
Speedy does not pay. Ulysses is
A.a surety.
B.a lienor.
C.a guarantor.
D.a creditor.
According to the terms of Diego’s will, specific gifts are made, and taxes and other
estate expenses and debts are paid. The assets of Diego’s estate that remain are most
likely to be distributed
A.by codicil.
B.holographically.
C.per capita.
D.through a residuary clause.
Tiny is an accountant. Tiny’s violation of generally accepted accounting principles and
generally accepted auditing standards
A.does not indicate that Tiny was negligent.
B.is prima facie evidence that Tiny was negligent.
C.precludes Tiny from raising any defense against a negligence claim.
D.will never subject Tiny to liability.
Agnes borrows $110,000 from Bay Harbor Bank to buy a home under a mortgage with
an acceleration clause. After eighteen payments, Agnes stops making payments on the
mortgage. Bay Harbor
A.can foreclose once on the entire amount of the loan.
B.may seek only the amount of the missed payments, not the entire loan.
C.must foreclose on small amounts over time as each payment comes due.
D.must notify Agnes to accelerate the steps to cure the default.
Fact Pattern 11-1
Mutual Company enters into a contract to employ Neil as an investment manager for
two years. During the first year, Neil is often absent without explanation and when
present fails to adequately monitor and manage Mutual’s investments.
Refer to Fact Pattern 11-1. Neil’s performance is most likely
A.a material breach.
B.a minor breach.
C.Mutual’s breach.
D.no breach.
Liu enters Mountain Triathlon, an athletic competition in which Liu has never
competed. Regarding the risk of injury, Liu assumes the risks
A.attributable to the Triathlon in any way.
B.different from the risks normally associated with the Triathlon.
C.greater than the risks normally associated with the Triathlon.
D.normally associated with the Triathlon.
Fact Pattern 11-1
Mutual Company enters into a contract to employ Neil as an investment manager for
two years. During the first year, Neil is often absent without explanation and when
present fails to adequately monitor and manage Mutual’s investments.
Refer to Fact Pattern 11-1. With respect to Mutual’s duties, Neil’s performance most
likely
A.discharges Mutual from the contract.
B.has no effect on Mutual’s performance.
C.increases Mutual’s duties under the contract.
D.suspends Mutual’s duty to perform.
NOW Shopping Mall Corporation leases space to Only U Stores and Pik-Ur-Choice,
Inc. Later, Pik-Ur-Choice begins to sell items that are similar to Only U’s goods, and
Only U abandons its space before the end of the lease term. Only U is liable to
A.not NOW or its other tenants.
B.NOW and its other tenants, except Pik-Ur-Choice, for any effect on their business.
C.NOW and its other tenants, including Pik-Ur-Choice, for any effect on their business.
D.NOW only for the unpaid rent.
Eduardo is an employee of Free-Flo Plumbing Corporation. With respect to the
workplace, under federal health and safety statutes, Free-Flo has
A.a general duty to keep it safe and to meet specific standards.
B.no general duty to keep it safe but must meet specific standards.
C.no general duty to keep it safe or to meet specific standards.
D.only a general duty to keep it safe.
Green Landscape Company buys a backhoe on credit from Heavy Equipment
Corporation, but does not make a payment on the loan for several months. Heavy
repossesses the backhoe by towing it from a public street. Green sues Heavy for breach
of the peace. Green will probably
A.not prevail, because Heavy did not use judicial process.
B.not prevail, because the repossession was not a breach of the peace.
C.prevail, because Green did not default on the loan.
D.prevail, because the repossession was a breach of the peace.
Scott presents an instrument that states “pay to the order of Scott” to Town Bank for
payment. This instrument is the most common type of negotiable instrument, which is
A.a certificate of deposit.
B.a check.
C.a note.
D.a trade acceptance.
Fact Pattern 19-1
Rico signs a lease on behalf of Start-Up Games, Inc., with Tower Office Suites. As part
of the lease, Rico signs a document titled “GUARANTY,” which states that it is “an
absolute guaranty” of the lease’s performance.
Refer to Fact Pattern 19-1. The reason for the result in the previous question is that
A.Rico signed a “GUARANTY.”
B.Tower Office Suites owns the property and can re-rent the premises.
C.the other tenants can equitably absorb a slight increase in rent.
D.Start-Up will likely move out when it stops paying the rent.
Mae is granted immunity after she agrees to testify about a crime. Mae has an absolute
privilege against self-incrimination and
A.can be prosecuted only for a crime about which she agreed to testify.
B.cannot be prosecuted for any crime.
C.cannot refuse to testify on Fifth Amendment grounds.
D.can refuse to testify on Fifth Amendment grounds.
Middling Credit Corporation asks Little Supply Company to agree to a security
agreement that provides for coverage of the proceeds from the sale of after-acquired
property. This is
A.a first-in, first-out rule.
B.a floating lien.
C.a funds guaranty.
D.in violation of secured transactions law.
Felipe is a member of Great States Transport LLC. Felipe’s relationship to Great States
ends, but the firm continues to do business. This is
A.dissociation.
B.dissolution.
C.winding up.
D.wrongful.
Regional Lumber Company and Superior Builders Corporation enter into a contract for
a sale of wood products. Regional, a merchant who deals in goods of the kind sold,
makes implied and express warranties in connection with the sale. Under the UCC, if
these are inconsistent
A.all implied warranties displace all express warranties.
B.all express warranties displace all implied warranties.
C.the implied warranty of fitness for a particular purpose takes precedence.
D.the implied warranty of merchantability takes precedence.
Tab stores video equipment with U-Store-It, Inc., under a contract that excuses the
warehouser from liability for any damage. A fire due to U-Store-It’s negligence destroys
the equipment. The loss is most likely to be imposed on
A.neither Tab nor U-Store-It.
B.Tab and U-Store-It.
C.Tab only.
D.U-Store-It only.
Ridgeway Sand & Gravel Corporation and Quick-Set Paving Company combine so that
all that remains after the papers have been signed is Ridgeway. This is
A.a consolidation.
B.a merger.
C.a purchase of assets.
D.a share exchange.