Which of the following activities is/are regulated by the federal government through its
exercise of the commerce power?
a. Commercial speech.
b. Civil rights in employment.
c. Shoplifting.
d. All of these.
e. None of these.
Section 402A provides that liability exists only if the product reaches “the user or
consumer without substantial change in the condition in which it is sold.”
a. True
b. False
The principle illustrated in the Christy v. Pilkinton case is:
a. a breach of contract is material if it is an intentional breach.
b. subjective impossibility does not discharge the contractual duty of the party.
c. objective impossibility generally discharges the contractual duty of the party.
d. commercial impracticability occurs when performance can only be accomplished
under unforeseen and unjust hardship.
Albert read ElectroCorp’s ad in the local newspaper advertising a music system for $89.
Albert rushed to the store to buy the system only to be told by the salesperson that the
ad was a misprint and the price should have been $289. Albert gave the salesperson $89
plus sales tax and demanded the music system.
a. The ad is a firm offer by the merchant, and the music system must be sold for $89.
b. The ad is a contract and the store must abide by terms stated in the contract.
c. The store must accept the price stated in the ad, but only if Albert has a copy of the ad
with him.
d. Albert is merely making an offer to ElectroCorp to buy the music system for $89 plus
sales tax.
Patent rights are considered to be personal property.
a. True
b. False
A contract was made for 125 bales of cotton to arrive on a ship named “Peerless” from
Bombay. Unbeknownst to either party to the contract, there were two ships named
“Peerless,” both of which were sailing from Bombay. One sailed in October and the
other in December. The buyer had in mind the ship sailing in October, but the seller had
in mind the ship sailing in December. Each party held his belief in good faith. When the
goods failed to arrive on time, the buyer sued for breach of contract. The court found:
a. the seller was in breach and must pay damages.
b. the seller was guilty of fraud in the inducement for failing to disclose to the buyer
which ship would contain the goods.
c. no contract existed due to mistake in meaning of terms.
d. none of these.
If the owner of goods entrusts them to a merchant, the merchant can transfer good title
to the goods to a buyer in the ordinary course of business even if the original owner
does not want to sell the goods.
a. True
b. False
The fair market value of a 10-foot fishing boat is $1,000. In a special promotion, J’s
Marina purchases a 10-foot fishing boat for $900. The boat is badly scratched when it
arrives. J’s Marina, however, accepts the shipment and notifies the seller of the defect.
The boat as delivered has a value of $800. If the damaged boat is a breach of warranty
by the seller, the buyer may recover from the seller:
a. $100.
b. $100 plus incidental and consequential damages.
c. $200.
d. $200 plus incidental and consequential damages.
Diversity of citizenship exists when:
a. the plaintiffs are all citizens of a state or states different from the state or states of
which the defendants are citizens.
b. a foreign country brings an action against citizens of the United States.
c. the controversy is between citizens of the United States and citizens of a foreign
country.
d. All of these.
Under the Second Restatement, a possessor of land has a legal duty to warn business
invitees of obvious dangers that invitees should be able to discover themselves.
a. True
b. False
A bank is permitted by statute to remove an original paper check from the check
collection process and send a substitute check instead.
a. True
b. False
Shannon orally agrees to buy 500 telephone answering machines from Thomas for
$25,000. Thomas delivers 300 answering machines to Shannon, who receives and
accepts them. Which of the following is correct with regard to this transaction?
a. Shannon can enforce the contract for the additional 200 machines.
b. The contract is enforceable to the extent of the 300 machines that have been received
and accepted.
c. The entire contract is in violation of the statute of frauds and cannot be enforced.
d. This is a bad deal, and is therefore commercially unconscionable from the beginning
and is unenforceable.
A Chapter 13 plan of reorganization may include all but which one of the following?
a. Priority debts must be paid in full unless the debtor waives that right.
b. Future wages must be controlled by the trustee.
c. Assets must be liquidated.
d. The rights of unsecured creditors may be modified.
A shareholder who dissents to a merger and is entitled to the appraisal remedy generally
does not have the right to attack the validity of the corporate action.
a. True
b. False
The legislature may exercise control of administrative agencies in various ways. These
are:
a. through adjudicating cases brought against the agancies.
b. through the power to appoint and remove chief administrators.
c. by amending an enabling statute to increase, modify, or decrease an agency’s
authority.
d. All of these.
In which of the following situations would a minor be unable to disaffirm a contract
which he had made?
a. Upon restoring the consideration received in a situation involving a fully executed
contract.
b. Where real property is involved, upon reaching the age of majority.
c. During the time of his minority or for a reasonable time thereafter.
d. Where the minor wishes to perform part of a contract and disaffirm another part of
the same contract.
Confirmation of a plan for reorganization under Chapter 13 may be given only if:
a. the plan complies with applicable law and is given in good faith.
b. the plan provides for payments longer than three years.
c. the debtor remains in possession of the estate.
d. all of the creditors agree to accept it.
The Securities Act of 1933 identifies a number of securities exemptions that are, in
effect, transaction exemptions.
a. True
b. False
The federal courts have exclusive jurisdiction over:
a. federal criminal prosecutions.
b. trademark and copyright cases.
c. issues involving state constitutions.
d. Federal criminal prosecutionsand trademark and copyright cases.
e. Federal criminal prosecutionsandissues involving state constitutions.
An indorsement must be written on the instrument itself.
a. True
b. False
The parol evidence rule applies to partially written agreements.
a. True
b. False
In the Ernst & Ernst v. Hochfelder case, the Supreme Court stated that Section 10(b) of
the 1934 Act and SEC Rule 10b-5 apply only to intentional conduct and not to
negligence.
a. True
b. False
Albert offers his nephew, Tom, his 2001 car which would only need about $1,000 in
repairs to put it in running order. Tom has no right to reject the car.
a. True
b. False
Where there has been informal rulemaking or informal adjudication by an
administrative agency and the decision by that agency is then appealed to the courts, the
court will generally apply what standard in reviewing factual determinations?
a. The unwarranted by the facts standard.
b. The substantial evidence standard.
c. The arbitrary and capricious standard.
d. The beyond a reasonable doubt standard.
Morris interviewed for a job as plant manager at Northland Bearings and was offered a
two-year contract if she could relocate and start the new job within three weeks. Morris
agreed. Northland promised to follow up the oral agreement with a written contract
setting forth all the agreed terms, but the contract had not arrived within several days.
Morris wanted to give two-weeks notice to her present employer, so she called
Northland to check on the written contract and was told it was ready to be sent to her
and assured her the job was hers. She gave notice of her intention to quit her present job
and moved two states away to the Northland location. When Morris arrived for her first
day of work, she was told someone else with better qualifications had been found and
hired for the position. Morris:
a. has no recourse since she never received a written contract, as required by the statute
of frauds for a contract that cannot be performed within one year of its making.
b. has no recourse because promises are not enforceable if they do not meet all the
requirements of a contract, and here Morris lacked capacity.
c. may be entitled to good-faith reliance damages under the doctrine of promissory
estoppel to avoid injustice.
d. cannot enforce the contract since she had not actually started working at Northland.
A signed promissory note stating “I promise to pay to Bonnie Ramcell $600 on
December 15, 2014 is not covered by Article 3 of the UCC.
a. True
b. False
Selling liquor to a minor can result in criminal liability only if the seller intended to sell
to an underage person.
a. True
b. False
By indorsing a check, “Without recourse, Pat effectively disclaims both contractual and
warranty liability.
a. True
b. False
With a __________ the jury makes specific written findings on each factual issue, and
the judge then applies the law to these findings.
a. general verdict
b. special verdict
c. voir dire
d. quasi in rem
Dr. David Doright is a professor at Towers State University. One day he has an
argument with the president of the University over which team should win the next
Super Bowl. The next day, Dr. Doright is fired for incompetence. He sues, claiming the
firing is arbitrary and that he was denied an opportunity to respond to the charges. In
this case:
a. Dr. Doright has no right to a hearing because this is not a criminal case.
b. Dr. Doright appears to have been denied the equal protection of the law.
c. the firing by a state university is state action involving a property right that would
entitle Dr. Doright to a hearing and an opportunity to respond to the allegations against
him.
d. the U.S. Constitution does not apply.
A court needs to have both subject matter jurisdiction and jurisdiction over the parties
involved before it can hear a particular case.
a. True
b. False
A sole proprietorship dissolves upon the death of the owner.
a. True
b. False
Assume the U.S. has granted “most-favored nation” status to Holland. This means that
the tariff on Dutch imported tobacco must be at least as low as that charged on tobacco
from any other nation.
a. True
b. False
The fiduciary duty of an agent has no bearing upon his ability to act on behalf of a
competitor of his principal.
a. True
b. False