Joe Smith has just died. Three months ago, when he knew that his death was
impending, Joe established a spendthrift trust for the protection of his 16-year old son
Bobby. The trust property consists mainly of $500,000 in investment securities. The
trustee is Jack Purdy, a CPA. The trust agreement does not discuss the trust’s
termination. Answer the following questions regarding the trust. Can Jack invest trust
assets differently than Joe invested them? For example, can he sell trust securities and
buy others? Why or why not? Must Jack hire an investment professional to make trust
investments?
Which of the following indorsements is a special indorsement?
A. “For collection only”
B. “Mel Gibbs”
C. “Pay to Jack Black in Trust for Mel Gibbs”
D. “Pay to the Order of Jack Black, Mel Gibbs”
Sisk is a tenant of Met Co. and has two years remaining on a six-year lease executed by
Sisk and Met. The lease prohibits subletting but is silent as to Sisk’s right to assign the
lease. Sisk assigns the lease to Kern Corp. which assumes all of Sisk’s obligations under
the lease. Met objects to the assignment. Which of the following statements is correct?
A. The assignment to Kern is voidable at Met’s option.
B. Sisk would have been relieved from liability on the lease with Met if Sisk obtained
Met’s consent to the assignment.
C. Sisk will remain liable to Met for the rent provided for in the lease.
D. With respect to the rent provided for in the lease, Kern is liable to Sisk but not to
Met.
The transfer of an instrument:
A. vests in the transferee any right of the transferor, to enforce the instrument.
B. bars the transferee from attaining the rights of the transferor.
C. vests in the payor any right of the transferor, to enforce the instrument.
D. bars the transferor to pass on his rights to the transferee.
Which of the following is a true statement about easements?
A. It gives the right to make certain uses of another’s property.
B. They are more informal than licenses.
C. It pertains to personal rather than real property.
D. They cannot pass with the land.
LMNOP Corp. has been convicted under the Sherman Act for two distinct and separate
violations. LMNOP may be fined as much as _____ for these two violations.
A. $50 million
B. $100 million
C. $200 million
D. $150 million
Andrea hired Jack to be the sales agent for her paintings. However, in a month’s time,
she terminated the agency with Jack. Harold, a customer who had dealt with Jack
earlier, was not aware of the termination. Harold approached Jack to buy a painting and
wrote him a check of $5,000, the advance payment for the painting which Jack
promised would be delivered in two weeks. When Jack did not contact Harold later,
Harold demanded that Andrea honor the contract, since Jack sold the picture as her
agent. Which of the following is true of this situation?
A. Since Jack had apparent authority, Andrea is liable to honor his contract with Harold.
B. Harold’s duty was to contact Andrea. His failure to do this removes her liability to
honor the contract.
C. Jack had express authority as Andrea’s agent, which is not terminated with the
termination of their agency.
D. As Andrea terminated the agency with Jack in violation of his rights, Jack has the
direct authority to sell her paintings.
UCC section 2-301 outlines what basic duty of the buyer?
A. To pay a price on the goods that gives seller a profit
B. To designate an agent in each state the buyer operates
C. To accept and pay for goods shipped by the seller
D. To be honest to creditors regarding the sales contract
Agnes, a waitress at a restaurant, suffers severe anxiety attacks when things get really
busy at her job. As a result, she is a very ineffective waitress when the restaurant is
crowded. For this reason, she is fired. Maybe her employer could have assigned Agnes
to shifts when the restaurant is not busy, but this would have irritated the other
waitresses, caused significant scheduling difficulties, and appreciably increased
expenses. If Agnes sues the restaurant under the Americans with Disabilities Act
(ADA), the restaurant’s best argument would be:
A. that Agnes’s anxiety attacks are not a disability under the ADA.
B. that the ADA doesn’t require employers to accommodate such disabilities.
C. that accommodating Agnes would cause the restaurant undue hardship.
D. that the ability to handle stress is a BFOQ for the job of being a waitress.
If it is not indicated in the memorandum, where should the parties sign to make it
enforceable?
A. Right corner
B. Left corner
C. Bottom
D. Any place on memorandum
If the seller discovers that the buyer is insolvent, he has:
A. no right to stop the delivery of any goods that he has shipped to the buyer.
B. the right to stop the delivery of any goods that he has shipped to the buyer.
C. the right to ask the buyer to pay double compensation.
D. no right to do anything against the buyer.
A professional has duty to perform their contractual duties to what standard for his/her
client?
A. To ensure all parties make a profit
B. To perform as an ordinary prudent person in the profession would perform
C. To ensure that all shareholders are happy with the work the professional has
performed
D. To the standards of the International Labor Agreement (ILA)
Stan hired Mason to work as a janitor in Stan’s apartment building. Mason was
negligent. He left the floor in the building lobby wet and slippery, without putting up a
warning sign. Martha slipped and fell on the wet floor. If Stan is liable for this accident,
what is the source of his liability?
A. Direct liability
B. Vicarious liability
C. Strict liability
D. Negligent liability
Average State University students Ann, Bo, and Sherry are co-tenants under a
ten-month lease of a River Heights apartment from complex owner Stella Slumlord.
The monthly rent set forth in the lease is $480. All three co-tenants signed the lease,
which has five more months to go. Ann, Bo, and Sherry have each been chipping in
$160 per month to cover the rent. Slumlord was aware of the co-tenants’ rent-sharing
agreement. Bo recently flunked out of school and has returned to his parents’ home in
Reno, Nevada. Bo has informed Ann, Sherry, and Slumlord that he will no longer be
sharing in the rent. Slumlord has made demands upon Ann and Sherry for payment of
the full monthly rental of $480? Is Slumlord legally justified in making this demand?
Explain.
If the Uniform Commercial Code recognizes the fact that the parties to sales contract
frequently omit terms from their agreements or state ambiguous terms, then the Code:
A. can fill in the blanks with reference to common trade practices.
B. has no power to fill in the blanks.
C. declares such a transaction as a void one.
D. penalizes both parties for such lacunae.
The LexCon Corporation takes over the Zebra Corporation. By applying which
principle will LexCon become the owner of all the shares of Zebra Corporation?
A. Merger
B. Acquisition
C. Share trading
D. Share exchange
Adam published his personal opinion about the current condition of politics stating,
“Though the government is unable to fulfill the demands of the public, they demand
votes; they really are beggars on streets.” Can politicians sue him for defamation under
tort?
A. No, because as a general rule the material in a newspaper is totally exempted.
B. Yes, because defamation in a newspaper is always a tort.
C. Yes, because Adam wrote even though he did not have authority.
D. No, because statements of pure opinion do not amount to defamation.
Which of the following is an element of a promissory estoppel?
A. The promisee should reasonably expect to induce reliance
B. Reliance on the promise by the promisor
C. A promise to pay liquidated debts
D. Injustice to the promisee as a result of alliance
Which of the following is an accurate statement about liability insurance policies?
A. They cover bodily injury or property damage that result from the insured’s business
or professional pursuits.
B. They typically provide the insured with coverage for punitive damages liability he
may face.
C. They typically do not provide the insured with coverage for the consequences
stemming from his negligent acts.
D. They may be used by the insured as a way of transferring risks associated with
certain tort liability he may face.
A bankruptcy by this party would cause a termination in the agency relationship:
A. Principal
B. Agent
C. Both principal and agent
D. Subagent
Article 2 of the UCC does NOT apply to a sale of:
A. baseball bats.
B. harvested wheat.
C. corporate stock.
D. a new car.
The only difference between C & F and CIF shipping contracts is:
A. C & F shipping contracts do not require the seller to insure the goods
B. CIF shipping contracts do not require the seller to insure the goods
C. CIF shipping contracts do not include the cost of shipping
D. C & F shipping contracts do not include the cost of shipping
Which of the following is applied in determining the liability of a partnership and of the
other partners for the torts of a partner and other partnership employees?
A. Respondeat superior
B. De facto
C. Habeas corpus
D. Juris privati
The apparent authority of a general agent for a disclosed principal will terminate
without notice to third parties when:
A. the principal dismisses the agent.
B. the third party has notice of the principal’s death.
C. the purpose of the agency relationship has been fulfilled.
D. the time period set forth in the agency agreement has expired.
What section of the United States Constitution empowers Congress to promote progress
of science by enacting copyright and patent laws?
A. Article I 8
B. Article I 15
C. Article 2 5
D. Article 3 1
Which of the following regulates the manufacture and use of pesticides?
A. FIFRA
B. TSCA
C. RCRA
D. CERCLA
Filene’s Basement filed for bankruptcy in May 2009. In November 2009, Filene’s
Basement started its “going-out-of-business” sales. Are such price discriminations
legal?
A. No, such discounts are per se illegal under Section 7 of the Clayton Act.
B. Yes, such discounts are legal because Filene’s Basement can legally set resale prices.
C. Yes, such discounts are legal under the statutory defense of changing conditions.
D. No, such discounts are illegal considering they are provided only for a limited time.
Which of the following statements is true of copyright?
A. Copyrights and patents last forever.
B. There are different copyright rules for pre and post 1978 works.
C. Congress enacts copyright rules under the WIPO.
D. Copyrights for a work-for-hire last for 50 years.
Under the MBCA, which of the following is correct concerning shares repurchased by
the corporation?
A. They are no longer issued or outstanding, which means that they may be resold only
for par value or more.
B. They may either be restored to unissued status or held as treasury shares, which
means they may be sold at any price.
C. They may be canceled, in which case they are no longer authorized and cannot be
reissued.
D. They are issued but not outstanding, which means they may be resold at any price.
Kyle promised to mow Heidi’s lawn for $20 and clean Heidi’s gutters for $50, but only
mowed the lawn. Which of the following is true of Kyle?
A. He is the nonbreaching party and can, therefore, sue Heidi.
B. He cannot be sued by Heidi because he has performed one of the promises.
C. He can recover the contract price for the activity he performed.
D. He will be directed by the court to complete the entire contract for free.
Corine engaged Datz as her agent. It was mutually agreed that Datz would not disclose
that he was acting as Corine’s agent. Instead he was to deal with prospective customers
as if he were a principal acting on his own behalf. In this way he made several contracts
for Corine. If a third party were to file a lawsuit on one of the contracts, which of the
following statements would be true?
A. Corine is disallowed from ratifying Datz’s contracts in order to transfer liability.
B. Datz has no liability once he discloses that Corine is the real principal.
C. The third party can hold only Datz liable since the third party believed that Datz was
the principal.
D. The third party may choose to hold either Datz or Corine liable.
A gift causa mortis is a gift made in:
A. case of a birth.
B. anticipation of birth.
C. fear of death.
D. contemplation of death.
Lazur Corp. entered into a contract with Baker Suppliers, Inc. to purchase a used word
processor from Baker. Lazur was engaged in the business of selling new and used word
processors to the general public. The contract required Baker to ship the goods to Lazur
by common carrier pursuant to the following provision in the contract: “FOB – Baker
Suppliers, Inc. loading dock.” Baker also represented in the contract that the word
processor had been used for only 10 hours by its previous owner. The contract included
the provision that the word processor was being sold “as is” and this provision was in
larger and different type style than the remainder of the contract. With regard to the
contract between Lazur and Baker:
A. an implied warranty of merchantability does not arise unless both Lazur and Baker
are merchants.
B. the “as is” provision effectively disclaims the implied warranty of title.
C. no express warranties are created by the contract.
D. the “as is” provision would not prevent Baker from being liable for a breach of any
express warranties created by the contract.
Karen is attending the annual general meeting of shareholders of Express Corporation.
Six directors are going to be elected from seventeen nominees during the meeting
through straight voting. Karen owns 372 shares of Express. What is the maximum
number of nominees Karen can vote for?
A. 1
B. 6
C. 10
D. 17