The principal’s death automatically terminates an existing agency.
In the absence of a decision by the members of an LLC, any member can demand the
distribution of profits prior to the dissolution of the LLC.
In order for an assignment to be valid, the assignee must give some consideration to the
assignor.
An instrument that is payable “to cash” can be negotiated simply by giving it to the
person to whom you wish to transfer it.
The activities of a corporation and its wholly owned subsidiary will not constitute the
concerted action necessary for a violation of Section 1 of the Sherman Act.
The maker of a promissory note is the person who is secondarily liable on the note.
If an individual dies without a will, then they are said to have died intestate.
In order to prove actual malice in a defamation claim, the plaintiff must show that the
defendant had knowledge of the falsity of the statement.
Limited Liability Companies (LLC) are formed under federal law for international
commerce purposes.
Section 5 of the 1933 Act provides an exemption from registration for transactions of
securities by any person other than an issuer, underwriter, or dealer.
An indorsing transferor of a negotiable instrument makes six transfer warranties to all
subsequent transferees.
A disclaimer of the implied warranty of merchantability can be oral.
The offeror is said to be the “master of the offer.” This means that offerors have the
power to determine the terms and conditions under which they are bound to a contract.
Punitive damages are not meant to compensate victims for their injuries.
Normally, the implied authority of a winding up partner includes no power to borrow
money in the name of the partnership.
Title VII disparate impact suits involve situations in which an employer has treated an
individual differently because of the person’s race, sex, color, religion or national origin.
Minor criminal cases and civil disputes are decided in the appellate courts.
Recovery for occupational diseases is allowed under the workers’ compensation system.
Regardless of whether the parties’ written lease clearly so specifies, the landlord makes
an implied warranty of possession.
If the goods delivered by the seller do not conform to the contract, the buyer need not
pay for the units accepted at the price per unit provided in the contract.
Mr. Blue enters into negotiation with Mr. Green to build a house. Both parties expected
a written and signed purchase agreement. After agreeing on terms, Mr. Green is told by
his subcontractors that some of their prices have gone up. Mr. Blue objects and
indicates that there was a contract when the parties agreed to the original terms orally. A
court will find that indeed no contract existed since the parties expected acceptance to
be in written form.
Corporations engaging in political expression are entitled to the same First Amendment
protection as an individual engaged in such speech.
A corporation is a legal entity independent of its owners.
Law of sale of goods codified in the Article 2 of the UCC is modified to accommodate
current practices of the merchants.
Punitive damages are allowed when the insurer’s breach of contract consisted of a good
faith but erroneous denial of the insured’s claim.
Courts look at parties’ outward manifestations of intent as a requirement to enforce a
contract. This is called the subjective standard of intent.
In the EU, the Commission has considerable authority to quash a merger through its
own action.
Unlike many other federal consumer protection measures, the Electronic Funds Transfer
Act does not require disclosure of important terms to the consumer.
A secured creditor is classified as an unsecured creditor, to the extent of the debt
amount which exceeds the value of the collateral held by such secured creditor.
The Employee Polygraph Protection Act makes it illegal for an employer to require a
prospective employee to take a lie detector test.
Parol evidence can be used to resolve ambiguities in a completely integrated written
contract.
Lisa took her computer to ABC Computer Sales and Repair, Inc. ABC mistakenly sold
her computer to Rafi. Lisa may successfully sue Rafi for return of the computer.
A disclaimer is a clause attempting to block recovery of certain damages.
If the secretary of state’s office approves a company’s articles of incorporation then it is
return with a stamp indicated ‘filed’ and with a receipt for the fees paid.
In a limited partnership, general partners:
A. have the right to manage the business.
B. are not liable for the firm’s debts.
C. are nonparticipating investors.
D. cannot transfer their ownership interest.
Which of the following is an express or implied promise about the nature of the product
sold?
A. Warranty
B. Caveat
C. Advertisement
D. License
June included an exculpatory clause in the lease agreement for her house that May was
renting. During her lease period, May slipped and fell on the staircase which was made
of faulty and rotten floorboards. Can May recover damages from June if she files a
lawsuit?
A. Yes, because June is responsible for the care of the premises and many courts are
declaring exculpatory clauses as unenforceable.
B. Yes, because the lease period is not yet over.
C. No, because May should have been more careful.
D. No, because courts will probably enforce the exculpatory clause.
The most perplexing issue with regard to the authority of officers is whether an officer
has _____ authority merely by virtue of the title of his office.
A. express
B. implied
C. apparent
D. inherent
If a debtor defaults and the debtor’s surety satisfies the obligation, the surety acquires
the right of:
A. subrogation.
B. primary lien.
C. indemnification.
D. chattel mortgage.
Which of the following is sufficient to establish that a professional has acted with
scienter for purposes of common law fraud?
A. The professional’s careless consideration for the accuracy of his/her work.
B. The professional’s reckless ignorance of facts.
C. The professional’s failure to exercise due diligence.
D. The professional’s negligent misstatement of fact.
Which of the following is true of noncommercial speech?
A. It does not cover political speech.
B. Books, musical works, and journal articles are classified as noncommercial speech,
but are not fully protected due to the existence of an underlying profit motive.
C. It receives the full benefit of the First Amendment protection.
D. Any kind of corporate speech is classified as noncommercial speech.
A minor entered into a contract with GAM & Co. On attaining majority, he wishes to
enforce the contract. The adult party must:
A. perform the contract.
B. rescind the contract.
C. abandon the contract.
D. ratify the contract.
Most serious crimes require mens rea, or criminal:
A. behavior.
B. violation.
C. intent.
D. prosecution.
Courts may decline to enforce unconscionable terms or contracts. This provision has
been laid down in:
A. Section 12 of UCC.
B. Section 208 of UCC.
C. Section 4 of UCC.
D. Section 208 of Restatement (Second) of Contracts.
One of the elements that must be demonstrated before a challenged tying agreement
will be held to violate Section 3 of the Clayton Act is that:
A. the tying product was available for purchase without the agreement.
B. the seller had substantial market power in the market for the tied product.
C. the seller’s tying arrangements restrained a “not insubstantial” volume of commerce
in the tied product.
D. the challenged agreement involved two integrated components of a larger product.
A person who seeks to recover damages for deceit has to establish, apart from the
elements of rescission, an additional element of:
A. injury.
B. injustice.
C. fraud.
D. materiality.
Which of the following is not one of the seller’s remedies, once the buyer breaches a
contract for the sale of goods?
A. Canceling the contract
B. Recovering the profit the seller would have made on the sale
C. Recovering the goods’ purchase price
D. Recovering the profit on the sale and the purchase price of goods rejected
Outland Corporation is incorporated in Wyoming, where it has its executive office. It
has a manufacturing plant in Utah, and a warehouse in New Mexico, where most of its
sales are made. Outland is subject to taxation in:
A. Wyoming, Utah, and New Mexico.
B. Wyoming and Utah only.
C. Wyoming and New Mexico only.
D. New Mexico only.
In a partnership, when a partner makes a secret profit through a business transaction,
what is the remedy for such a breach?
A. Paying the other partners additional compensation
B. Hiring another individual to carry out the duties of the partner
C. Recovering the profits of the partner’s competing venture
D. Returning the profit made in the transaction
Under Section 11 of the Securities Act of 1933, an auditor who issues an opinion
regarding financial statements of a company making a public distribution of securities
can be held liable for errors in the expertised portions of the:
A. registration statement.
B. annual 10-K report.
C. 8-K current report.
D. proxy statements.
To distinguish an offer, courts first look at:
A. the communication to the offeree.
B. the definiteness of terms.
C. the present intent to contract.
D. a description of the parties involved.
What tort defined in the Restatement (Second) of Torts requires behavior that is “so
outrageous in character, and so extreme in degree, as to go beyond all possible bounds
of decency”?
A. Battery
B. Assault
C. Intentional Infliction of Emotional Distress
D. Conversion of Property
Maco Corp. is a real estate development firm and regularly engages real estate brokers
to act on its behalf in acquiring parcels of land. The brokers are authorized to enter into
such contracts, but are instructed to do so in their own names without disclosing Maco’s
identity or Maco’s relationship to the transaction. If a broker enters into a contract with
a seller on Maco’s behalf:
A. Maco will be bound by the contract because of the broker’s apparent authority.
B. the broker will not be personally bound by the contract because the broker has
express authority to act.
C. Maco will not be liable for the intentional torts of the broker committed while acting
on Maco’s behalf.
D. the broker will be held liable on contracts he/she signs without disclosing Maco as
the principal.
Under the Model Business Corporation Act (MBCA), notice of a(n) _____ meeting of
shareholders must list the purpose of the meeting.
A. special
B. quarterly
C. general
D. annual
“Your decision will be better for your firm and other stakeholders if you consider your
selfish interest.” Considering that this statement is true, which of the following
prescribed guidelines for ethical decision making should you focus on?
A. Will the shareholders offer support?
B. How can I increase the number of shareholders?
C. How do the alternatives impact me, the decision maker?
D. Who are the stakeholders?
What is the basic objective of the Code remedies for breach of contract?
A. To help the injured person recover consequential damages arising from the breach of
contract.
B. To put in place a mechanism that allows for repeat performance of the contract on
modified terms.
C. To help the injured person claim punitive damages arising from the breach of
contract.
D. To put the injured person in the same position that he would have been in if the
contract had been performed.
Which of the following is a criticism of the U.S.A. Patriot Act?
A. It covers a narrow range of activities associated with terrorism.
B. It does not permit warrants for “roving” wiretaps.
C. It delays the sanctioning of search warrants.
D. It gives undue freedom to law enforcement agencies.
What is the term for an instrument containing both an acknowledgement by a bank that
it has received money and a promise to repay money?
A. Commerce treaty
B. Articles of Organization
C. Certificate of Deposit
D. Escrow
When an agent suffers losses in conducting the principal’s business, the principal’s
obligation is to _____ the agent.
A. indemnify
B. renounce
C. reimburse
D. compensate
Rebecca, a minor, rented an apartment from Jones for a period of one year when she
had no place to stay. She disaffirmed the contract after four months, though she paid
rent only for the first two months. Which of the following is true of the case?
A. Jones can recover the unpaid rent for two months.
B. Jones can recover rent for the whole year because he has suffered a loss.
C. Rebecca need not pay any rent because she has disaffirmed the contract.
D. Rebecca is not liable to pay any rent if she can prove that she is a minor.
Commercial speech receives what form of protection under the First Amendment:
A. Intermediate protection
B. Full constitutional protection
C. Minimal protection
D. No protection
Which of the following is a common way in which seller breach contracts?
A. Indicating that he does not intend to fulfill the obligations under the contract
B. Delivering goods that do not conform to the contract
C. Agreeing to extended credit periods depending on the buyer’s credit record
D. Failing to take delivery of the goods
How can an offeree impliedly reject an offer?
A. By indicating that he will not accept it
B. By asking for more time to think
C. By making a counteroffer
D. By writing his nonacceptance
Which of the following is true of preexisting contractual duties and their modification
under the UCC?
A. There is no provision of modifications due to unforeseen circumstances.
B. No modifications can be made to an existing contract that is binding.
C. Modification requires “mere agreement” on the part of those involved.
D. Rules for contractual modifications are different for the UCC and the CISG.
A legal theory that imposes liability even if the defendant acts with all reasonable care
and caution is called:
A. assumption of risk.
B. strict liability.
C. superseding event.
D. contributory negligence.
The Foreign Sovereign Immunities Act (FSIA) provides that all commercial activities
of foreign sovereigns and their agents are exempt from antitrust liability.
A broker operating under a(n) _____ contract is entitled to a commission only if he was
the first to find a ready, willing, and able buyer.
A. open listing
B. exclusive right to sell
C. exclusive agency listing
D. exclusive right
What is a lien?
A. Compensation by a bailee for any damages to the bailed property.
B. The charges for delivery of any bailed property.
C. A charge against property to secure the payment of a debt.
D. A bailment for mutual benefit.
In order to recover for breach of an express warranty, a plaintiff must show that:
A. the warranty was part of the basis of the bargain.
B. the seller gave a sample or model of the goods.
C. the warranty was in writing.
D. the warranty used the words “warrant” or “guarantee.”
What are the four categories of claims listed in Revised Article 3?
What two conditions must be met if profit-maximization is to maximize utility?
Ginny is an agent of Vroom! Motors, and is designated to sell and deliver antique cars.
She spends her own money to call clients, visit them and finalize the deals. There is no
express agreement between Ginny and Vroom! Discuss the situation.
On May 1, 1999, S contracts to sell B a toaster that it warrants for five years. On May 5,
1999, S delivers the toaster to B. The toaster self-destructs on April 30, 2000, but B
does not discover this until May 3, 2000. However, B does not sue S until May of 2003.
Has B sued within the time period permitted by UCC statute of limitations? Why or
why not?
While eating dinner at a restaurant, Elvis placed his backpack on an empty chair located
next to his table. When Elvis left the restaurant, he forgot to pick up the backpack. A
few minutes later, Priscilla discovered the backpack and took possession of it. What
rights to the backpack do Elvis, Priscilla, and the restaurant have?
Why is it impossible for there to be apparent authority on behalf of an undisclosed
principal?
Bigcorp, Inc., a huge conglomerate with interests in various industries, is acquiring
Odorific Co., the nation’s leading manufacturer of men’s socks. None of Bigcorp’s
current “family” of companies purchases socks, nor do any of Bigcorp’s suppliers.
Bigcorp purchased Odorific after a study conducted by Bigcorp concluded that startup
costs in the sock industry made a de novo entry impractical, and that none of the
existing men’s sock manufacturers other than Odorific could be acquired for a
reasonable price. Odorific’s competitors were stunned by the acquisition. They wish to
challenge the acquisition. Which theory of attack best suits this case? Explain your
reasoning.
Mr. Smithers is the owner of Meany Co. In the past few months, office stationary
supply orders have risen significantly from the same period in previous years due to a
sudden shortage in items such as paper. Mr. Smithers is convinced that employees are to
blame for the paper shortage because they are taking paper without permission for their
personal use. Mr. Smithers orders that all the supply rooms, copy rooms, lounges, and
the employee locker rooms be monitored with hidden surveillance cameras. Discuss the
potential legal consequences if such an action is taken by Meany Co.
The drafters of Revised Article 3 created a new and significant exception to the
requirement that to be negotiable, an instrument must be payable to order or to bearer.
What is it?
Dave owes $100,000 to Cindy and $100,000 to Connie. Both before and after Dave
went into bankruptcy under Chapter 7, he engaged in faking records, withholding
information, and concealing assets in order to avoid Cindy’s debt. However, Dave did
not behave this way with regard to Connie’s debt. Because Dave had few assets and
Connie’s debt was unsecured, she got virtually nothing out of Dave’s bankruptcy. The
same is true regarding Cindy. Sometime later, therefore, Cindy and Connie sued Dave
on the debt, once Dave becomes rich. Dave defends by saying that both debts are
discharged. Is Dave right? Assume that each debt is a normal contract obligation.
Atria Corporation wishes to dissolve. How can it do so?
Harmer Company has filed a registration statement under the 1933 Act for purposes of
issuing $5,000,000 of debentures. The registration statement has not been declared
effective. Harmer wants to issue a press release concerning its plans to expand its
operations. It also wants to telephone several large investors and tell them why they
should buy the debentures. Will these activities cause Harmer to violate Section 5 of the
Securities Act?
Explain the term usage of trade. What happens if there is a conflict between the express
terms of the contract and trade usage?
Mr. Blue gave his favorite nephew Jim Jr, who is a mechanic, $1000 in January. Later
that year he needed his car repaired. In the sales contract Mr. Blue indicated that the
amount owed should be deducted from the money already paid. A court will find that
Mr. Blue failed to give proper consideration for the contract.
Why is the mirror image rule not strictly applied to modern commercial transactions?