The plaintiff can sue the defendant in whatever court, and in whatever locale that the
plaintiff wishes.
Under the UCC if a liquidated damage clause in a contract turns out to be
non-enforceable then the injured party can sue for actual damages.
Vertical mergers directly result in an increase in concentration.
Under the Restatement’s fault requirement for injurious falsehood cases, the plaintiff
must prove that the defendant possessed ill will or spite motives toward the plaintiff.
An implied warranty of habitability in the leased property makes the landlord the
insurer of the tenant’s safety.
If an instrument is negotiable, the general rules of contract law control.
A member’s most important right within an LLC is to receive distributions.
According to the U.S. Constitution treaties made by the president with foreign
governments and approved by two-thirds of the U.S. Senate validate inconsistent state
and federal laws.
Under the “American rule” governing successive assignments, the first assignee in time
has the superior right.
All of the fifty states in the United States have a Workers Compensation system.
According to the provisions of UCC, an exclusive dealing contract imposes a duty only
on the distributor to use his/her best efforts to sell the goods.
UCC covers accord and satisfaction by the use of an instrument called “full payment”
check.
Offers that fail to provide a specific time for acceptance are invalid because they are
deemed to be indefinite.
Contributory negligence is an individual’s failure to take care for their own safety.
A drawer whose bank paid checks over a stop-payment order may not be entitled to
have his account recredited, if he is unable to show he suffered any loss.
Tenants must do routine tasks to ensure the basic upkeep of rental property.
The Sarbanes-Oxley Act of 2002 requires public companies to have board audit
committees comprising only independent directors.
No formalities are required in order to establish a partnership.
Mr. Green contracts to repair his roof with Mr. Brown. Prior to the work starting a
tornado destroys Mr. Green’s home. Mr. Brown fails to perform the duty on the
contract, but the court will not consider Mr. Brown in breach due to impossibility.
If the buyer and seller have agreed to the manner in which the resale is to be made, the
courts will enforce the agreement unless it is found to be unconscionable.
If a leasee is on a month to month lease and can terminate the lease at any time with
notice then lease is called a periodic tenancy.
Presentment warranties are made by any prior transferor of the instrument at the time
the person transfers the instrument.
A principal who instructs an agent to perform an unethical act will have no recourse
against an agent who refuses to perform.
According to the general rules of interpretation of contracts, ordinary words are given
their general meanings and the technical ones are given their technical meaning.
Securities and Exchange Commission (SEC) has the power to impose civil fines up to
$500,000 and issue cease and desist orders.
The Model Business Corporation Act has made the inclusion of purpose clause in the
articles compulsory.
The principal debtor’s lack of capacity is a defense for both the principal debtor and the
surety if they are sued by the creditor.
Securities Act Rule 506 requires an issuer to sell to no more than 35 accredited
investors.
Under the Clean Water Act, the states have the main responsibility for regulating water
pollution.
A stop order must be made so a bank is given a reasonable opportunity to act on the
order.
Except for the liability of limited partners, limited partnerships and LLLPs are identical.
The state statutory law prescribes the place where the financing statement has to be
filed.
United States has adopted a “first-to-file” approach to patent law.
Partners have a right to be indemnified for expenditures they make for the partnership
from their personal funds.
The Clean Air Act provides the framework for the current approach to air pollution.
Under the UCC, a remedy limitation blocking recovery of personal injury caused by
consumer goods is prima facie unconscionable.
Bettina knows that she is going bankrupt. One month before the filing of her voluntary
petition, Bettina sells a painting worth $50,000 to her brother for $100. This is legal
under Chapter 7. However, if Bettina had simply given her brother $49,900, the transfer
would have been voidable.
Under the UCC title passes to the buyer when the seller has delivered the goods.
How does an insurance company fully perform on an insurance contract?
A. Pay out the amount specified in the contract with an event occurs
B. Accept the insured premium payment
C. Notify the State of the contract
D. File the insurance contract with the court
Nina hired Sue to work as a janitor in Nina’s apartment building. Sue was negligent in
that she left a crack in the marble staircase unrepaired, without putting up a warning
sign. Seth slipped on the staircase and suffered severe injuries. Who is liable for this
accident?
A. Nina is liable for the accident under the doctrine of respondeat superior.
B. Sue is liable for the accident since she did not perform her duty with reasonable care.
C. Sue will be held liable for committing an intentional tort out of her scope of
employment.
D. Nina will be directly liable for Sue’s negligence.
Bob DeSlob, CEO of Westlake Inc., had supported the development and distribution of
the Super Widget, a product that is expensive to make. The Super Widget failed to meet
its expected sales. Bob, now, decides to invest more resources to produce and
aggressively market the Super Widget, rationalizing that if he did not invest more in the
product, what he has invested would be lost. Bob is engaging in:
A. sunk cost fallacy.
B. argumentum ad baculum.
C. argumentum ad hominem.
D. reductio ad absurdum.
Which of the following situations is most likely to be deemed in violation of Section 1
of the Sherman Act?
A. Intent to monopolize
B. Attempted monopolization
C. Misdirected monopolization
D. Conspiracy to monopolize
A partnership’s liability for the torts of a partner committed within the ordinary course
of partnership business or within the authority of that partner is:
A. joint and several.
B. joint or several, at the option of the tort creditor.
C. joint only.
D. several only.
What is a provision in a contract that purports to relieve the defendant of a duty of care
he would otherwise owe to the plaintiff called?
A. Strict liability cause
B. Exculpatory clause
C. Intervening cause
D. Actual cause
A check or draft that one bank draws upon another bank is called a:
A. certified check.
B. cashier’s check.
C. teller’s check.
D. bearer check.
Clint wrote a check to pay for his phone bill. The amount of the bill was $50. He wrote
out the words “Fifty dollars only” but he also wrote “$60” in the area for numbers. As a
result, the check:
A. is disqualified as a negotiable instrument.
B. qualifies as a negotiable instrument, and the payee can collect $50.
C. qualifies as a negotiable instrument, and the payee can collect $60.
D. is disqualified as a negotiable instrument, unless Clint’s intent is ascertained.
A durable power of attorney for healthcare only becomes relevant when:
A. registered with the Secretary of State.
B. filed with the Department of Health.
C. the principal has become incompetent.
D. the hospital has received a $500 fee.
What section of the UCC will govern the supplying of a missing price in a commercial
transaction?
A. 2-306
B. 2-305
C. 2-307
D. 2-401
A(n) _____ is a right to enter another person’s land and remove some product or part of
the land.
A. profit
B. estate
C. easement
D. covenant
Harry has a history of poor credit scores (650 or below). He also filed for bankruptcy
five years ago. He needs a consumer reporting agency to provide a credit report on him
for a government license he has applied for. Under the TILA, the agency should avoid
including in the report obsolete information predating the report by more than:
A. ten years.
B. fifteen years.
C. seven years.
D. five years.
Which of the following instances of lending is most likely to be covered by the Truth in
Lending Act (TILA)?
A. A savings and loan association extends a $30,000 credit to a retail consumer.
B. An auto retailer extends a $25,000 credit to a buyer payable in five equal
installments.
C. An accountancy firm extends a $10,000 one-time credit to an employee.
D. A bank extends a $20,000 credit to a farmer for use in agricultural purposes.
What does the term “caveat emptor” mean?
A. Let the seller beware
B. Let the buyer beware
C. Taking of the body
D. Justice for all
The shipment of nonconforming goods intended as an accommodation to the buyer is
a(n) _____.
A. ambiguous offer
B. prompt shipment
C. counteroffer
D. inquiry regarding terms
Which of the following characterizes assignability?
A. An assignment is ineffective if it occurs in the present.
B. Assignment is ineffective in the case of land rights.
C. Assignment is ineffective when contrary to public policy.
D. Assignment is mostly effective in the case of wage earners.
What can an offeror do to minimize the risk posed by the mailbox rule?
A. Include separate additional terms
B. Include a receipt stipulation in the contract
C. Select only known parties as original offerees
D. Revoke the offer before acceptance
Which of the following is true of delegation?
A. It requires special, formal language.
B. It covers all duties stated in a contract.
C. It is often confused with assignment.
D. It automatically places all legal responsibilities on the delegatee.
Thomas wants to create an inter vivos trust for the benefit of his adult children. In order
to create a valid inter vivos trust, he must have a level of mental capacity that is the
same as that required to:
A. make a valid contract.
B. make a valid will.
C. stand trial in a criminal case.
D. testify under oath in a criminal case.
If the holder’s name on an instrument is misspelled or wrong, then the indorsement:
A. can be made only in his name.
B. can be made only in the name that is on the instrument.
C. can be made either in his name or in the name that is on the instrument.
D. can be made by putting his name as well as the name that is on the instrument.
Which of the following characterizes the Computer Fraud and Abuse Act (CFAA)?
A. It is a statute enacted by a state legislature.
B. It imposes only civil liabilities in fraud cases.
C. It imposes only criminal liabilities in fraud cases.
D. It imposes liabilities in cases concerning interstate commerce.
According to the RUPA, a partner:
A. is entitled to a salary or wages.
B. is entitled to compensation based upon his capital contribution.
C. is entitled to an equal share of the profits.
D. is entitled to compensation based on the amount of time he contributes to the
business.
Rachel’s father gave her a check drawn on his checking account marked “payable to the
order of Rachel Stern.” This instrument is order paper, because:
A. the instrument uses the word “order.”
B. the instrument names a specific payee.
C. the instrument was properly negotiated to Rachel.
D. the instrument was an order to pay cash.
Which of the following is most likely to constitute a misstatement that can give rise to
fraud or misrepresentation liability?
A. A broker says to his client, “I think that this car’s engine has been overhauled.”
B. A customer sales representative of the most popular brand of car says to the
customer, “This is the highest selling car in town.”
C. An owner of a house gets his ceiling painted to conceal a leaking roof and says, “I
got the ceiling painted recently.”
D. The owner of an unencumbered horse states, “I am selling the horse to raise funds
for my ranch.”
After a reverse share split, corporation law permits a corporation to repurchase any
_____ shares, even if the shareholders do not consent.
A. preferred
B. fractional
C. outstanding
D. issued
Under Rule 10b-5 of the Securities Act of 1934, a plaintiff has the burden of proof to
establish that the defendant acted:
A. with negligence.
B. with scienter.
C. with malice.
D. in concert with others.
Which of the following kinds of marks are denied placement on the Principal Register?
A. Those which are geographically descriptive
B. Those containing fanciful names
C. Those consisting of surnames
D. Those consisting of government insignia
The statute of frauds was created in 1677 in what country?
A. United States of America
B. Germany
C. England
D. Russia
The statute of frauds requires that:
A. some contracts be evidenced by a writing.
B. all contracts involving fraud must be void.
C. all three-party contracts be collateral ones.
D. there can be no secondary debts in a contract.
Which of the following statements characterizes an implied warranty of fitness?
A. It is covered under UCC section 402A.
B. The seller relies on the buyer’s skill or judgment in making a purchase.
C. Any seller, merchant or nonmerchant may make this implied warranty.
D. It has the same tests as those for implied warranty of merchantability.
Pete Payee specially indorses a note payable to his order and also uses the words
“without recourse.” What is the effect of the words “without recourse” here?
Samantha is the general partner and Jack and Jared are the limited partners of Profiler
Limited Partnership. Samantha has contributed capital of $30,000 to the partnership,
Jack has contributed $150,000, and Jared has contributed $120,000. They have not
agreed on how to share profits or losses. Profiler incurs a loss of $90,000 in its first
year. What is Jack’s share of the loss? If Jack has a total income of $225,000 from other
sources and an income of $15,000 from other passive investments, how much of the
loss may he deduct on his federal income tax return?
How are the cleanups of hazardous waste sites required by CERCLA funded?
What are the essential constituents of an environmental impact statement (EIS)? How
are business people affected by the EIS requirement?
A state passes a minimum wage law. Fred Whitby, President of Unisys Corporation, is
certain that it is unconstitutional. For example, Fred argues that the Constitution’s
Contract Clause plainly renders the law unconstitutional. Is Fred right? Why or why
not?
Explain the position adopted by legal positivists regarding law.
What is the purpose of vesting?
Jereboah Company is a nonpublic company that wants to sell $2.7 million of preferred
shares under Rule 506 of Regulation D of the Securities Act of 1933. Jereboah plans to
sell to 42 investors, including 10 mutual funds. The other 32 investors are individual
investors with various levels of experience in making securities investment decisions.
Jereboah also hopes to attract additional investors using an advertisement in The Wall
Street Journal. May Jereboah use Rule 506? Assuming it can, what disclosure must
Jereboah make to the investors?
On May 1, S sells B 100 widgets on credit at a price of $1 per widget. S did so based on
an April 10 letter from B asserting B’s solvency. On May 7, B learns that S was
insolvent when it received the widgets on May 1. On May 13, S demands the return of
the goods from B. Is B obligated to return the goods to S?
Steve and Bob own real property as joint tenants with right of survivorship. Steve
decided that he wanted to own the entire property himself, so he killed Bob. Due to a
technicality, Steve was acquitted of any criminal charges. Nevertheless, Bob’s heirs
brought a civil suit against Steve. What would be the result, if the court accepts that
Steve obtained the property illegally? Explain.
Fantase Corporation has a union contract. To avoid the contract, the shareholders plan
to form a new corporation. They also elect to transfer their business interest to the new
corporation. Is the new corporation liable to the employees for union contract?
Gnossis Company has 15,000 outstanding common shares and a total equity of
$250,000. Gnossis has an additional 30,000 common shares that are authorized, but not
issued or outstanding. Gnossis has $225,000 in excess liquidity that it does not need to
pay its currently maturing obligations. Gnossis has paid all currently due dividends to
preferred shareholders. What is the maximum share dividend that Gnossis may make to
its common shareholders?
Jack and Jill moved to their dream home in Rural County. One month later, Otis
decided to develop the back 10 acres of his 200-acre farm (nearly all of which had
consisted of corn and soybean fields) into a hog-raising operation. Unfortunately for
Jack and Jill, the said back 10 acres adjoined their property. Jack and Jill claimed that
the smell of the hog operation was overwhelming and that they could no longer enjoy
living in their dream home. They also thought the hog operation has caused their
property value to decline substantially. Rural County had no zoning regulations in
effect. Under what legal theory, if any, may Jack and Jill seek legal relief? Explain.
What are the consequences of document alteration or destruction that interferes with
legitimate discovery requests?
Under the theory that alcohol and drug use should not be rewarded, today most courts
say that contracts made by intoxicated people are perfectly binding, no matter how
severe the intoxication is.