Which of the following is an option for the secured creditor when the debtor defaults?
A. Transfer the collateral on to another creditor.
B. Forget the collateral, and sue the debtor on his note or promise to pay.
C. Sell the collateral and keep the surplus if any.
D. Repossess the collateral and conduct a public sale without the knowledge of the
debtor.
Which of the following will be legally binding on all the parties despite the lack of
consideration?
A. A promise to donate money to a charity which was relied upon by the charity in
incurring large expenditures.
B. An oral employment agreement for a term of nine months from the date the
agreement was formed.
C. An irrevocable oral promise by a merchant to keep its offer open for 60 days.
D. A material modification signed by the parties to a contract to purchase and sell a
parcel of land.
A contract in which the parties have not yet fully performed their obligations is called
a(n):
A. executed contract.
B. executory contract.
C. quasi-contract.
D. bilateral contract.
A(n) _____ is secondarily liable for the debt of the principal debtor.
A. surety
B. guarantor
C. beneficiary
D. executor
A person who is injured in his/her business or property by reason of a professional’s
conduct or participation, directly or indirectly, in an enterprise’s affairs through a pattern
of racketeering activity may recover _____ from the professional.
A. only part of the damage for which the professional is responsible
B. five times his/her actual damages
C. three times his/her actual damages
D. only his/her actual damages
The underlying purpose of the statute of frauds is to:
A. prevent frauds in general.
B. corroborate the existence of the oral contract.
C. punish those who commit frauds.
D. make fraud illegal.
Ben, a Big Bank checking account customer, wrote a check for $1,000 to Mia. At the
time that Mia presents the check for payment at Big Bank, Ben has $1,500 in his
account. However, the clerk mistakenly refuses to pay the check and stamps it NSF.
Mia then goes to the local prosecutor, and Ben is later arrested for writing a bad check.
Ben could recover from Big Bank the damages involved in his arrest, such as attorney’s
fees.
When does an insurer’s contractual obligations to the insured commence?
A. When the insurance contract is drafted.
B. When the insurance application is dispatched.
C. When the insured receives the insurance application.
D. When the insurer accepts the insurance contract.
A defendant who is negligent is not liable for the unlikely or unforeseeable harm that
results. This rule is called:
A. the proximate cause.
B. the distal cause.
C. the just cause.
D. the “but for” rule.
Joe agreed on April 1 to sell and deliver 1,000 bushels of wheat to a grain elevator on
June 1 for $10 per bushel. He then refused to deliver on June 1 because the market price
was then $15 per bushel. How much can the grain elevator recover in damages from
Joe?
A. Nothing
B. $5,000
C. $1,000
D. $1,500
Which of the following will lead to a violation of the FTC Act Section 5’s prohibition of
unfair acts or practices?
A. An advertisement that causes emotional distress.
B. A seller’s use of high-pressure sales tactics on vulnerable consumers.
C. An advertisement that is perceived to be offensive in nature.
D. A seller’s failure to give a consumer complex technical data about a product.
Cases are said to be _____ when there no longer is a real dispute between the parties.
A. ripe
B. moot
C. feigned
D. intangible
Courts may also refuse to decide cases that are moot, i.e., there no longer is a real
dispute between the parties.
In order to satisfy the consideration requirement to form a contract, the consideration
exchanged by the parties must:
A. have a monetary value.
B. conform to the parties’ subjective intent.
C. be legally sufficient.
D. have approximately the same value.
A _____ check is a draft on which the drawer and drawee are the same bank (or
branches of the same bank).
A. cashier’s
B. teller’s
C. certified
D. traveler’s
A third party is categorized as a donee beneficiary when:
A. the promisee’s primary purpose in contracting is to make a gift of the agreed-on
performance to the third party.
B. the benefit derived by the third party was merely an unintended by-product of a
contract that was created for the benefit of those who were parties to it.
C. he/she is unable to establish that the contract was made with the intent to benefit
him/her.
D. the promisor’s performance is intended to satisfy a legal duty that the promisee owes
to the third party.
A professional is not liable for breach of contract if the:
A. professional lacks the required educational qualifications.
B. client has opposed delegation of duties.
C. client obstructs the performance of the contract.
D. professional has not included such liability in the contract.
An “argumentum ad populum” used in an argument is a wrong conclusion:
A. that does not follow from the facts or premises set out.
B. based on a false analogy.
C. that relies on the idea that a popular belief is true.
D. based on an attack against the speaker, not his/her reasoning.
Tony Sinister is a candidate for a middle management position at Mobco Inc. Mobco
retained Clandestine Investigation & Credit Reporting Agency (CICRA) to interview
Sinister’s friends, neighbors, and associates and then prepare an investigative consumer
report on Sinister. Which of the following would the Fair Credit Reporting Act require
in this situation?
A. That CICRA not disclose to Mobco any information pertaining to Sinister’s personal
traits or reputation.
B. That Mobco inform Sinister of its request for the report and of his right to obtain
further disclosures about the investigation.
C. That CICRA conduct interviews of Sinister’s neighbors and relatives to gather
relevant information.
D. That Mobco call off the investigation because a hiring decision does not involve
credit-related information.
Which of the following actions is considered to reflect a counteroffer?
A. A grumbling acceptance
B. An inquiry regarding terms
C. A demand for additional terms
D. A silent acceptance
A limited partnership:
A. dissolves when a limited partner dies.
B. may not have a corporation as a general partner.
C. may be taxed either as a partnership or as a corporation.
D. may be created by default.
A voting trust:
A. must be available for inspection by shareholders at the corporation’s offices.
B. need not be made public and may be kept secret from other shareholders.
C. is limited in duration to 20 years, but may be extended for another 10-year period.
D. will be specifically enforced by the courts if a shareholder refuses to vote as agreed.
When negotiations occur through email or mail, there is usually a time limit put on
what?
A. The time the offeree has to accept the offer
B. The time the offeror has to register the contract with the state
C. The time the offeror has to register the contract with the federal government
D. The time to have a judge approve the contract
Under the U.S.A. PATRIOT Act, the Foreign Intelligence Surveillance Act (FISA)
Court may issue warrants of the “sneak and peek” variety.
What is a court’s power to hear a case and to issue a decision binding on the parties
called?
A. Jurisdiction
B. Prerogative
C. Venue
D. Assignment
Harvey is planning to file a case against a petrochemical giant which has a plant in his
town. The petrochemical plant is dumping toxic wastes into its surrounding areas.
Harvey is mobilizing the residents of the town, all of whom have suffered from various
health problems due to the activities of the plant. Which of the following would be of
most help to Harvey and the other residents?
A. Demurrer
B. Class action
C. Directed verdict
D. Affirmative defense
The Benson Bearing Company sells Textron, Inc. a quantity of baseball bats that were
stored in an independent warehouse at the time of the sale. The contract says that
Textron is to pick up the bats at the warehouse. The risk of loss passes to Textron:
A. at the time of the contract.
B. at the time it receives a negotiable warehouse receipt for the bats.
C. at the time it pays for the bats.
D. at the time it picks up the bats.
Ashley says to Ford, “I’d like to buy your house,” and Ford responds, “You’ve got a
deal.” This exchange lacks _____.
A. partners
B. communication
C. object
D. specificity
A _____ has one or more general partners and one or more limited partners.
A. limited liability partnership
B. professional corporation
C. limited partnership
D. limited liability company
Jane wrote a check for $10. She wrote this check in a careless and negligent manner,
making alteration easy. Ben altered this check to read $1,000. His alteration was crude
and obvious to anyone paying attention. Ben cashed the check at Jane’s bank. The bank
was negligent in accepting this check, but it deducted $1,000 from Jane’s account. Jane
sued the bank, and the jury determined that Jane’s negligence contributes 50 percent to
the loss and the bank’s negligence contributes 50 percent. How much is Jane entitled to
recover from her bank?
A. Nothing, because she was negligent.
B. Half the loss.
C. The entire loss.
D. The entire loss plus her court costs.
Anderson incorporated his new company, Pearl Inc., in the business of manufacturing
rubber. After some years, he opened his own subsidiary rubber manufacturing company.
The new subsidiary company is a success. Meanwhile, the workers of Pearl Inc.,
claimed that payment of bonus is due and they are demanding the same from the
subsidiary company. In this case, are both Pearl Inc., and its subsidiary liable?
A. Yes, they are liable because it is provided under corporation law.
B. Yes, they are liable because both are the same entity in the eyes of the law.
C. No, they are not liable because it is not a subsidiary of Pearl Inc.
D. No, they are not liable because a subsidiary is not liable for parent’s debts as
provided under the law.
Joe buys a bottle of Coca-Cola. When Joe spots a needle inside the bottle, his buddies
dare him to drink the coke. After doing so, Joe suffers physical injury as the needle
sticks in his throat. Joe sues Coke under section 402A; Coke defends by arguing
assumption of risk on Joe’s part. Transylvania, however, has eliminated assumption of
risk as a separate defense in product liability cases. Instead, it has a comparative fault
statute just like the statute in the Jimenez case in the text. Under that statute, what is the
result of Joe’s lawsuit and why?
Troika Corp. owns an apartment complex at which break-ins and prior instances of
criminal activity had occurred. However, no security-related measures have been
adopted. As a result, a criminal intruder easily enters the complex and physically attacks
a tenant. Which of the following is true regarding the case?
A. Troika has no liability for breach of duty.
B. Troika is liable only for actual cause.
C. Troika is liable only for proximate cause.
D. Troika is liable for proximate and actual cause.
Wonder Widgets agrees to sell Bill Buyer 10,000 of its “Grade A” widgets at a price of
$3.00 per widget. After Wonder breaches the contract by failing to deliver, Bill buys
substitute widgets at a price of $3.20 per widget. Bill also incurs $200 in reasonable
expenses associated with the purchase. Bill then sues Wonder for $2,200. What, if
anything, can Bill actually recover?
A. Nothing
B. $200
C. $2,000
D. $2,200