“Attachment” occurs when a secured party has given value, the debtor acquires rights in
the collateral, and the:
a. debtor has completed his obligation to pay.
b. collateral is delivered to the borrower.
c. debtor and secured party have an agreement.
d. Both (a) and (c) above are correct.
A defendant who is indicted will next be:
a. brought before a grand jury.
b. tried.
c. arraigned.
d. fined.
Which of the following is NOT a duty that a collecting bank has in the collection
process?
a. Duty of care
b. Duty to act timely
c. Duty to honor a valid stop payment order
d. Duty to honor a restrictive indorsement
The United States and the country of El Guapo signed a treaty whereby the United
States agreed to assist the Latin American country in controlling drug traffic. The
United States, following the treaty, seized 100 square meters of land and bulldozed it,
because it was a suspected haven of drug smuggling. The land in question was in El
Guapo, but belonged to an American citizen. Which of the following is most accurate?
a. The treaty will supersede any general Constitutional rights because the treaty gave
specific authorization for the act.
b. The act was not offensive to the Constitution, because it occurred in El Guapo.
c. Constitutional rights apply to people, not to property.
d. Constitutional rights supersede treaties.
Which of the following debts would be discharged in bankruptcy?
a. A consumer credit loan for a stove
b. Property taxes on a beach house
c. Student loans
d. Alimony payments past due
When a debt is secured by property as collateral and the debtor defaults, the creditor
may:
a. take possession of the property and retain it in full satisfaction of the debt.
b. take possession of the property and sell it.
c. not take possession of the property, but must sue the debtor for the balance due.
d. Both (a) and (b), subject to provisions of the UCC.
William agrees to drill a well up to 200 feet deep for John’s rural cabin. The contract
price is $3,000. After drilling 100 feet, William strikes solid granite rock. He talks to
John and explains that this is highly unusual for the area and could not have been
anticipated at the time of entering into the contract. He offers to get a special drill, but
says it will cost him more money, so that he will be unable to complete the project for
the agreed price. Because John is anxious to have the well, he agrees to pay William an
additional $1,000 to complete the job. However, once the well is finished, he changes
his mind and now says he will pay only the originally agreed-upon amount. In this case:
a. the parties have agreed to a substitute contract which discharges the original contract.
John is obligated to pay the additional $1,000.
b. the substitute contract is binding under the UCC because there is the payment of
additional money.
c. William is in breach of contract. John need not pay any additional money.
d. William is under a pre-existing moral duty to perform at the originally agreed-upon
price.
a.What are the three essentials of an offer?
b. How does one distinguish between an offer and an invitation seeking offers?
Jim contracted with Kevin to serve as a guide for Kevin on his three-week fishing trip
to Canada. The contract was made on April 1 with the trip to begin on June 1. On May
1, Kevin notified Jim that he had changed his mind and would be unable to make the
trip. He also refused to pay Jim any compensation. In this case:
a. because the contract is executory, Jim has suffered no damages, and Kevin has no
obligation to pay any compensation.
b. Kevin has anticipatorily repudiated the contract and is liable to Jim for damages.
c. Jim is discharged from his duty to serve as guide, and he may bring suit immediately
against Kevin.
d. Both (b) and (c) above are correct.
Which of the following remedies is available to the seller or manufacturer of goods
upon a breach by buyer by repudiation of the contract?
a. The manufacturer may resell any unfinished goods.
b. The manufacturer may identify goods to the contract.
c. The seller may sell the unfinished goods for scrap.
d. The seller may do all of the above.
Parties that are usually secondarily liable for an instrument are:
a. indorsers and drawers.
b. makers and indorsers.
c. makers and acceptors.
d. acceptors and drawers.
The World Trade Organization (WTO):
a. is an agency providing insurance to firms involved in international trade.
b. is a general international antitrust agreement.
c. seeks to facilitate the flow of trade by establishing agreements on potential trade
barriers.
d. has successfully rid international trade of tariffs.
Shannon has just become a partner in A & R Accounting Partnership. Her capital
contribution is $10,000, which she paid from her savings. Which of the following is
correct with respect to Shannon’s liability for partnership obligations?
a. Shannon has no liability for partnership debts that existed at the time of her
admission as a partner.
b. Shannon is liable only to the extent of her capital contribution for partnership debts
that occur after her admission as a partner.
c. Shannon has unlimited personal liability for all partnership debts regardless of
whether they were incurred before or after she became a partner.
d. Shannon has unlimited personal liability for all partnership obligations that occur
after she became a partner; she has liability to the extent of her capital contribution for
obligations that existed at the time she became a partner.
Gail transfers property to Tel Ko Corp. that she claims is valued at $5,000. The
directors determine that the property is adequate to be exchanged for $5,000 worth of
Tel Ko Corp. stock. Later it is discovered that the property’s true value is $2,000. Under
the RMBCA, which is true regarding Gail’s liability?
a. She has none, since the directors’ determination of adequacy of consideration was
conclusive.
b. She is liable to the creditors of the corporation for the $3,000.
c. She is liable to the corporation for $3,000.
d. She is liable to both the corporation and its creditors for $3,000.
The parol evidence rule does not apply to:
a. a typographical error that obviously does not represent the agreement of the parties.
b. evidence showing one of the parties to the contract lacks contractual capacity.
c. The parol evidence rule does not apply to the situation in either (a) or (b).
d. The parol evidence rule applies to the situations in both (a) and (b).
Which of the following would ordinarily be a basis for making a contract void for
mutual mistake?
a. Market conditions
b. Genuineness of the source of the subject matter of the contract
c. The financial situation of the parties
d. All of the above.
A transaction whereby the tenant transfers away her entire interest under a lease is
called a(n):
a. sublease.
b. assignment.
c. eviction.
d. abandonment.
An employer directs his vice-president of marketing to fix prices with their company’s
competitors. The employee does so. Under these facts:
a. only the employee is liable.
b. both the employee and the employer are liable.
c. only the employer is liable.
d. neither the employee nor the employer is liable.
Perry is injured on the job at the factory where he works. He files a workers’
compensation claim against his employer. The liability of the employer under the
workers’ compensation statute is:
a. comparative.
b. strict.
c. contributory.
d. negligence per se.
Numerous states impose no limit on the rate of interest that may be charged on:
a. loans to corporations.
b. credit card transactions.
c. loans made by certain designated types of lenders.
d. All of the above.
NAFTA established a free trade area for the United States, Mexico, and Central
America.
Which of the following contracts is covered by Article 2 of the Uniform Commercial
Code?
a. The sale of a house
b. The sale of a new car
c. An employment agreement
d. A sale of automobile insurance
As a general rule, for purposes of attachment of a security interest, a debtor is deemed
to have rights in collateral that she:
a. owns.
b. has in her possession.
c. is in the process of acquiring from a seller.
d. All of the above.
e. Only (a) and (b).
Section 16(b) differs from Rule 10b-5 in that the latter:
a. applies to transfers within 6 months of each other.
b. only applies to officers, directors and 10% shareholders.
c. allows injured investors to recover damages on their own behalf.
d. All of the above.
If the goods that are the subject of a sale are in the possession of a bailee and are to be
delivered without being moved, when does the risk of loss pass to the buyer?
a. At such time as the seller tenders a negotiable document of title
b. At such time as the buyer receives a negotiable document of title
c. When a nonnegotiable document of title is tendered to the buyer
d. Both (b) and (c)
e. Both (a) and (c)
What happens if the police illegally seize evidence in violation of the Fourth
Amendment?
a. The evidence will be excluded from use at trial.
b. The defendant’s arrest is nullified.
c. The defendant is entitled to another trial.
d. The defendant will be paid for the expenses of his defense.
The Restatement Third, Torts:
a. was approved in its final form by the American Law Institute in 1995.
b. addresses the elements of the tort action for liability for accidental personal injury,
including property damage and liability for economic loss.
c. covers emotional harm and landowner liability.
d. All of the above.
Hannah, as a joke, offers to sell her violin to Mike. Her statement would have legal
effect if:
a. the intended jest is so successful that Mike as a reasonable person under the
circumstances believes the joke is an offer and he accepts.
b. Hannah’s intent, determined subjectively, is to enter a contract.
c. Hannah’s intent, determined objectively, is not to enter a contract.
d. Mike did not, but should have realized that Hannah was not serious.
e. Both (c) and (d).
In which of the following situations will a smaller sum be unable to discharge a larger
debt?
a. If the smaller sum is paid before the due date of the larger debt.
b. If an additional article or service is given together with the payment of the smaller
sum.
c. If the smaller sum is paid when the larger sum would ordinarily be due, but the
debtor is on the verge of insolvency.
d. A smaller sum is never able to discharge a larger debt.
A(n) ____ is a method of discharging a contract in which a third party becomes bound
upon a promise to the obligee.
a. assignment
b. delegation
c. partial assignment
d. novation
Marjorie is a member of the board of directors of Techno Ko Corp. She would like to
have the corporation lend her some money so that she can begin another business
venture. Which of the following is correct regarding loans of a corporation to one of its
directors?
a. The Model Act does not permit a corporation to lend money to its directors without
authorization in each instance by its shareholders.
b. The Sarbanes-Oxley Act prohibits any publicly held corporation from making
personal loans to its directors or executive officers, with certain limited exceptions.
c. Both the Model Act and the Revised Act prohibit loans to directors in all cases.
d. Both (a) and (b) are correct.
The seller may resell the goods identified to a contract:
a. only at a public sale.
b. only at a private sale.
c. at a public or private sale.
d. at a public sale only if notice is given to the buyer.
It would be illegal under the NLRA for Tel Ko Computer Company to:
a. refuse to allow notice of union meetings to be posted at work.
b. refuse to pay .50 per hour more to union employees.
c. fire Billy because he filed charges with the NLRB.
d. All of the above
e. Both (a) and (c) above are correct.
Lynn offers to sell his house to Dennis for $95,000. Dennis responds, “I will pay you
$95,000 if you will paint the second floor.” This response could best be described as:
a. an acceptance.
b. a counteroffer.
c. a rejection.
d. an invitation.
After secured creditors in a Chapter 7 liquidation proceeding have been satisfied and
there is enough money left to pay some, but not all other creditors, the claims of the
same rank share the money on a pro rata basis.
The Ultramares case involved the liability of an accountant under the Securities Act of
1933.
Discuss the similarity between a management buyout and a cash-out combination.
A trustee in bankruptcy may sell the property of the debtor’s estate.
The majority of states allow the injured party who has been induced to enter into a
contract by fraud to recover only “out-of-pocket” damages equal to the difference
between the value of what she has received and the value of what she has given for it.
The Taft-Hartley Act protects the employer from unfair practices by the union.
If Taylor conveys property “to Baines for life” and makes no disposition of the
remainder of the estate, Taylor holds the reversion.
A license is the limited right to use property for a period of time.
Identify the parties to checks and notes.
Under the Consumer Credit Protection Act, a consumer has three days to withdraw
from any credit obligation secured by a mortgage on his home, even if the contract was
not the result of a door-to-door sale.
The early common law required privity of contract before a plaintiff could sue a
defendant for breach of warranty.
What do the two major substantive sections of the National Environmental Policy Act
address?
The UPA codified all of the common law causes of dissolution of a partnership.
Once a plaintiff has established a prima facie case of discrimination on a disparate
treatment theory, and the defendant has articulated a legitimate and non-discriminatory
reason for the discrimination, a plaintiff may still win.
In the majority of states, even non-voting shares may vote on fundamental changes that
affect that class of shares as a class.
There are no defenses available for strict liability.