Which of the following is true about the seller’s right to reclaim goods from an
insolvent buyer?
A. This right is superior to the rights of a good faith purchaser for value of the goods.
B. The seller must make a demand for the goods within ten days of their receipt by the
buyer.
C. The seller must physically repossess the goods within ten days of their receipt by the
buyer.
D. The buyer must have misrepresented his solvency to the seller in writing within three
months before delivery of the goods.
In most situations, the UCC uses the test of _____ for determining when a person is
excused from performing contractual obligations.
A. commercial impracticability
B. superior knowledge
C. frustration of purpose
D. impossibility
When close corporation shareholders want to ensure that there is a market for their
shares upon their deaths, they should use a:
A. buy-and-sell agreement.
B. right of first refusal.
C. consent restraint.
D. provision disqualifying purchasers.
_____ voting may permit minority shareholders to obtain representation on the board of
directors.
A. Preference
B. Cumulative
C. Ranked
D. Straight
Harris is a purchasing agent for Elkin, a sole proprietor. Harris has the express authority
to place purchase orders with Elkin’s suppliers. Harris typically conducts business
through the mail and has very little contact with Elkin. Elkin was incapacitated by a
stroke and was declared incompetent in a judicial proceeding. Subsequently, Harris
placed an order with Ajax, Inc. on behalf of Elkin. Neither Ajax nor Harris was aware
of Elkin’s incapacity. With regard to the contract with Ajax, Elkin (or Elkin’s legal
representative) will:
A. not be liable because Harris was without authority to enter into the contract.
B. not be liable provided that Harris had placed orders with Ajax in the past.
C. be liable because Harris was acting within the scope of Harris’ authority.
D. be liable because Ajax was unaware of Elkin’s incapacity.
_____ is a wrongful coercion that induces a person to enter or modify a contract.
A. Deceit
B. Mistake
C. Fraud
D. Duress
Susan is hired to manage a business. This means that she has the authority to make
contracts that are reasonably necessary for conducting the business. This is called:
A. express authority.
B. apparent authority.
C. implied authority.
D. fixed authority.
Section 2(b) of the Robinson-Patman Act allows a seller to price discriminate in certain
geographic areas if the competition has a lower price. What can the seller lower the
price to according to section 2(b)?
A. To the same price as the competitor
B. To intentionally create a price that beats the competitor
C. 10% discount off the list price of the seller
D. 50% discount off the list price of the seller
Which of the following means that the buyer can require the seller to give the buyer the
exact goods covered by the contract?
A. Specific performance
B. Trade usage
C. Implicit guarantee
D. Trade warranty
_____ is a tender offer defense where the target corporation turns the tables on the
tender offeror or raider by making a tender offer for the raider’s shares.
A. Greenmail
B. Lock-Up Option
C. White Knight
D. Pac-Man
Jessica a tenant invited her friend Angelina for dinner at her house. Jessica’s carpet that
was on the kitchen floor was in a torn condition. As Angelina walked over it, her leg got
trapped and she fell down. Her knee got dislocated. Angelina can sue:
A. neither Jessica nor the landlord.
B. only the landlord.
C. both Jessica and her landlord.
D. only Jessica.
Ruth purchased a property insurance policy from ABC Insurance (ABC). This policy
covered Ruth’s airplane and the policy limits were $300,000. A fire broke out on
January 1, 2006, when the airplane was stored in its hangar, completely destroying the
airplane. There was suspicious evidence that the fire had been deliberately set, and ABC
honestly believed that Ruth had set the fire. ABC refused to pay on this policy.
However, Ruth was completely innocent, and she sued to enforce the policy. The
lawsuit, which ended on January 1, 2007, determined that Ruth had nothing to do with
the fire. Because Ruth needed to use a private airplane to visit clients in remote areas,
she rented an airplane during the calendar year 2006. This cost her $50,000. ABC was
aware that Ruth needed an airplane to reach her clients when it issued the policy. Ruth
would have used the policy limits of $300,000 to purchase another airplane in 2006, but
for ABC’s refusal to pay on its policy. Under these circumstances, Ruth is entitled to a
judgment in the amount of:
A. $300,000 (the policy limits).
B. $300,000 (the policy limits) and also $50,000 consequential damages.
C. $300,000 (the policy limits), $50,000 consequential damages and also punitive
damages.
D. $300,000 (the policy limits), $50,000 consequential damages, statutory damages and
also punitive damages.
Price signed a contract to sell Wyatt a parcel of land for $90,000. The entire sales price
was payable at the closing. Price has decided to keep the land. If Wyatt commences an
action against Price, what relief is Wyatt most likely to receive?
A. Specific performance
B. Compensatory damages and specific performance
C. Punitive damages
D. Compensatory damages and punitive damages
According to the RUPA:
A. partners have no liability for the obligations of the partnership.
B. a partnership cannot sue or be sued in its own name.
C. a partnership does not have a life apart from its owners.
D. partnerships have continuity of existence.
If a statute is considered to be _____, the purpose of the legislation is to protect the
public against dishonest or incompetent practitioners.
A. regulatory
B. enforceable
C. adhesive
D. ancillary
Traditional antitrust thinkers argue that:
A. concentrated economic power may lead to antidemocratic concentrations of political
power.
B. antitrust regulations should protect competition instead of competitors.
C. concentration within a particular industry does not preclude interindustry
competition.
D. domestic concentration might be necessary for effective international market
competition.
If the drawee bank mistakenly paid a check with a forged or unauthorized drawer’s
signature on it:
A. the bank can recover the amount from the person whose name had been mentioned
in the check albeit without authorization.
B. the bank can recover if it paid the check to a presenter who had taken the instrument
in good faith and for value.
C. the bank cannot recover if it paid the check to a forger or unauthorized signer.
D. the bank cannot recover it if the presenter had taken the instrument in good faith and
for value.
A Subchapter S corporation is typically treated like a _____ for federal income tax
purposes.
A. for-profit corporation
B. partnership
C. publicly held corporation
D. not-for-profit corporation
Historically free made promises were not enforced unless they had what supporting
them?
A. Witnesses of good character
B. A signed statement of the Secretary of State
C. Consideration
D. Affidavits of profit attached to the promise
In which of the following situations is the obligor not likely to be fully discharged from
his or her liability on a negotiable instrument?
A. Jerry wrote a check to Elaine. Elaine cashes the check later.
B. Edward lends Monica $1,000 toward her college expenses. She gives Edward a
promissory note for $1,000, which Edward accidentally tears up.
C. On June 1, 2002, Kim receives a draft from Kurt payable on July 1, 2002. Kurt then
pays her in cash and cancels the draft.
D. John fraudulently increases the amount due on the check from Bruce.
The Magnuson-Moss Warranty Act of 1975 mainly applies to:
A. presale agreements for products used for commercial purposes.
B. written warranties for products used for household purposes.
C. presale agreements for products used for household purposes.
D. written warranties for products used for commercial purposes.
Melissa hurls a rock with the intention to hit Dave, with whom she has just fought. The
rock hits Stacey, instead, who is sitting next to Dave. Melissa is liable for battery under
the clause of:
A. conversion.
B. private nuisance.
C. actual malice.
D. transferred intent.
No manufacturer may sell vehicles subject to emission standards without prior
certification from the EPA.
Featherbedding was declared an unfair labor practice by the _____.
A. Landrum-Griffin Act
B. Wagner Act
C. Norris-LaGuardia Act
D. Taft-Hartley Act
_____ refer(s) to the goods used or bought primarily for personal purposes.
A. Inventory
B. Fixtures
C. Consumer goods
D. Equipment
Which of the following doctrines empowers courts to declare the actions of other
government bodies unconstitutional?
A. Judicial review
B. Federal supremacy
C. Federalism
D. Separation of powers
Although the Sherman Act indicates that ‘‘every” restraint on trade is illegal, courts
have held that the Sherman Act is applied only when a competitor acts in what way?
A. Unreasonably
B. When the competitor is profiting
C. When the competitor has obtained a monopoly
D. When the corporation has 6000 or more employees
Wheelies is an auto parts retailer. It operates a retail megastore in a city where the city
ordinance prohibits retailers from being open on consecutive Sundays. The
management of Wheelies realizes that their maximum sales happen on Sundays. They
create a wholly-owned subsidiary, CarBasics, and start leasing the megastore building
and its inventory to CarBasics every alternate Sunday. Who is liable for violating the
city ordinance?
A. Neither Wheelies nor CarBasics
B. Wheelies only
C. CarBasics only
D. Both Wheelies and CarBasics
A contract may be enforced by a third-party beneficiary if that beneficiary:
A. is an incidental beneficiary.
B. is a witness to the contract.
C. is the intended beneficiary.
D. has given some consideration.
Which of the following is applied to the equal protection standard?
A. The due process test
B. The still-controlling test
C. The proximate cause test
D. The rational basis test
Which of the following is true of revocation and renunciation?
A. Revocation is conducted by the agent and renunciation by the principal.
B. Both result in the termination of agency.
C. A party cannot revoke or renounce if doing so violates the agency agreement.
D. No, because there is no contract in writing.