Rorzex, Inc. entered into a contract with Denzil under the terms of which Denzil would
receive $20,000 if he stole trade secrets from the leading competitor of Rorzex. Denzil
performed his end of the agreement by delivering the trade secrets. Rorzex now refuses
to pay Denzil for his services. Denzil:
a. may recover based upon the express contract of the parties.
b. may recover based upon a quasi-contractual theory in order to prevent the unjust
enrichment of Rorzex.
c. will be unable to recover, because this is an illegal contract.
d. will be able to recover based upon promissory estoppel, because he has detrimentally
relied upon the promises made by Rorzex.
A patent may be renewed.
a. True
b. False
Tort law gives persons relief from civil wrongs or injuries to their person and property
but not their economic interests.
a. True
b. False
a. What is a bulk transfer?
b. What is the purpose of bulk sales law?
c. What is the effect of a failure to comply with the provisions in Article 6 in those
states that still follow this Article?
Jones went to C & C Bank to apply for a loan on a home he wanted to purchase. C & C
Bank loaned the money to Jones because he had excellent credit. C & C never inspected
the property Jones was purchasing. Two weeks later, five rusty and leaking 55-gallon
drums of a toxic substance were found buried in a creekbed in Jones’ backyard. Jones
and the Bank’s position with regard to liability for cleanup on the property would be:
a. that CERCLA could not impose strict liability for owners of or lenders of purchase
money for contaminated property even if they acquired the property with knowledge of
contamination.
b. that they would not be liable as innocent landowners as provided for in SARA and
they would have an automatic defense.
c. that if the Bank and Jones made all appropriate inquiry into the previous ownership
and uses of the property before purchase, they may not be liable.
d. that if it could be proven that neither Jones nor the bank unlawfully disposed of the
toxic waste, they could not be found liable under CERCLA.
Payment of the debt or performance of the obligation discharges both the principal
debtor and the surety.
a. True
b. False
Copyright infringement may be unintentional.
a. True
b. False
In the Brentwood Academy v. Tennessee Secondary School Athletic Association case, the
U.S. Supreme Court held that:
a. state action may be found only if there is such a close nexus between the state and the
challenged action that seemingly private behavior may be fairly treated as that of the
state itself.
b. as an express conclusion of law, public school officials do not necessarily act within
the scope of their duties when they represent their institutions.
c. as an express conclusion of law, public school officials act within the scope of their
duties when they represent their institutions.
d. the Association had a majority of private school memberships which prevented the
action of the Association from being considered state action.
An acceptance is generally effective upon dispatch.
a. True
b. False
Goods bearing a counterfeit mark may be destroyed without compensation to the owner
of the goods.
a. True
b. False
Consideration must be received for an assignment to be effective.
a. True
b. False
Which of the following is/are considered in determining the application of the
reasonable person standard?
a. Physical disability.
b. Superior skill or knowledge.
c. Emergency circumstances.
d. Each of these are considered.
In determining the meaning of a contract, which of the following will have first
priority?
a. Course of performance.
b. Course of dealing.
c. Usage of trade.
d. Express terms.
A gratuitous agency is not a true agency because it is not formed by contract.
a. True
b. False
Jerry received a check from McGregory Corporation as a dividend on his preferred
shares. Two days later, one of the corporate directors called him and said he would have
to return the check since it was erroneously declared and the company would not be
able to pay its day-to-day expenses. Jerry would:
a. have to return the check because the company would be insolvent.
b. have to return the check since it was erroneously declared.
c. not have to return the check because Jerry acted innocently.
d. not have to return the check because the board acted in good faith.
Assignment of a partner’s interest will cause dissolution.
a. True
b. False
A bankruptcy trustee may invalidate a granting of a security interest from the debtor if it
was made on the date of or within 90 days before the filing of the bankruptcy petition
and it was for the benefit of a creditor for an antecedent debt and was made before the
debtor became insolvent.
a. True
b. False
In a bilateral contract, if one party is not bound, neither party is bound.
a. True
b. False
A deed ordinarily contains all of the following except:
a. a description of the land.
b. a description of the consideration.
c. the signature of the grantor.
d. a description of the quantity of estate conveyed.
Hal promises not to foreclose on a mortgage that he holds on an office complex that
Christopher owns. In reliance on this promise, Christopher spends $200,000 to remodel
the complex. Which of the following is correct with regard to Hal’s promise?
a. Hal’s promise not to foreclose is unsupported by consideration.
b. Hal’s promise is noncontractual.
c. Hal’s promise may be enforced against him based upon the doctrine of promissory
estoppel.
d. All of these.
Under the Check 21 Act:
a. banks must accept checks in electronic form.
b. banks are permitted to truncate original checks and process check information
electronically.
c. banks must create substitute checks which are the legal equivalent of the original
checks.
d. All of these.
Which of the following is tangible real property?
a. Corn harvested and stored in a grain bin.
b. The mortgage on an office building.
c. A copyright.
d. The freight elevator in an office building.
A restraint of trade may be classified as either horizontal or vertical.
a. True
b. False
The duty of employers includes the duty to exercise reasonable care in hiring, training,
supervising, and retaining employees. This duty is independent of the vicarious liability
of an employer for an employees tortious conduct during the course of employment.
a. True
b. False
The ethical theory of intuitionism proposes that:
a. the power of an individual to assess the rightness or wrongness of decisions is as
basic to human beings as the instinct for survival.
b. market outcomes should be the basis for distributing goods.
c. the “veil of ignorance” should be developed to consider the needs and rights of all
society’s members.
d. society should stress equality of opportunity, not results.
The local supermarket has a large, glass front door which is well lighted and plainly
visible. Nelson, who is new in the neighborhood, mistook the glass for an open
doorway and walked into it, shattering the door and injuring himself. Under the Second
Restatement, the store:
a. is strictly liable to Nelson.
b. is not liable to Nelson since the door was well lighted and plainly visible.
c. would be liable under the doctrine of res ipsa loquitur.
d. has no duty to Nelson.
Allen owns 500 of the 5000 shares outstanding of General Myopics. GM plans to issue
600 new shares. If Allen has preemptive rights, he may:
a. buy all 600 shares before anyone else.
b. buy 600 shares at the same price he paid for the other stock.
c. buy 6 shares at a discount of 10%.
d. None of these.
Probate is the:
a. reading of a will by a lawyer.
b. actual property given away in a will.
c. process of declaring a person dead.
d. process of managing the distribution of a deceased person’s property.
In exercising judicial review, when reviewing factual determinations, the court uses one
of three different standards: arbitrary and capricious, substantial evidence, or
unwarranted by the facts.
a. True
b. False
The Restatement recognizes moral obligations as consideration.
a. True
b. False
Hugh recently purchased a motorcycle for $3,000 but has had extensive problems
starting the motor. In disgust at not being able to start the motor, Hugh shouts to his
friends, “Any of you want to buy this thing for $20?” A contract will be formed if a
friend gives Hugh a twenty-dollar bill.
a. True
b. False
Which of the following statements is not true of insurance policies?
a. The basic principles of contract law apply to insurance policies.
b. Insurance companies tend to standardize their policies.
c. Some states forbid standardization of insurance policies.
d. All of these.
SEC Rule 10b5-2 adopts what theory of liability?
a. Misappropriation.
b. Strict.
c. Negligence.
d. Criminal.
The usual remedy for breach of contract is:
a. injunction.
b. specific performance.
c. punitive damages.
d. money damages.