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Anderson Clock Company is in the business of selling and repairing clocks. Jay
purchased a grandfather clock from them. Laurie had left the clock at Anderson's for a
cleaning and calibration. When Laurie found out the clock had been sold, she contacted
Jay and demanded he return it. Must Jay comply with Laurie's demand? What other
options does she have?
An assignee's rights are the same as those that had been possessed by the assignor.
Forbearance may constitute consideration.
An assignee of a contract can bring suit on the contract only in the name of the assignor.
Ordinarily, a party to a contract has no duty to volunteer information to the other party.
The failure to act or perform in the manner called for by a contract is a:
a. waiver.
b. breach.
c. forbearance.
d. reservation of right.
A letter of credit:
a. is an advance arrangement for financing.
b. is used only in domestic sales.
c. involves only two parties.
d. all of the above.
Today, what is an important element in determining the validity of a contract?
a. the Uniform Contract Code
b. whether the agreement might harm the public welfare
c. whether the contract is wise or foolish
d. whether the contract operates unequally between the parties
What is not a correct statement concerning promoters?
a. Promoters are generally active before the corporation is formed.
b. Two (2) or more promoters are required to form a corporation.
c. Promoters are fiduciaries with respect to the corporation and its shareholders.
d. Promoters are liable for any torts that they commit while promoting the corporation.
A criminal nuisance may be terminated by:
a. abatement.
b. closure by government authority.
c. abatement or closure by government authority.
d. none of the above, since the law only recognizes civil (not criminal) remedies for
nuisance.
To revoke acceptance of goods:
a. any defect or nonconformity must be discovered.
b. the goods must be dangerously defective.
c. the nonconformity must substantially impair the value of the goods.
d. action must be taken by the buyer within 60 days of delivery.
When a debtor tender a check stating "paid in full" and the creditor cashes the check,
the debt:
a. is always discharged.
b. may be discharged if it is a liquidated debt.
c. may be discharged if it is a unliquidated debt.
d. is never discharged.
The Securities Exchange Act of 1934 deals with the __________ distribution of
securities.
a. primary
b. secondary
c. aftermarket
d. direct
A(n) __________ is an unauthorized change or completion of a negotiable instrument
designed to modify the obligation of a party to the instrument.
a. alteration
b. modification
c. transformation
d. transmutation
An employer may be liable on the theory of negligent hiring:
a. when it is shown the employer knew the employee would create an undue risk of
harm in carrying out job responsibilities.
b. by hiring an individual with a criminal record.
c. whether or not prospective employees fill out applications forms and are subject to
pre-employment background checks and character qualifications.
d. all of the above.
The concept of immunity from liability means that:
a. one who harms another can be held liable only for voluntary acts.
b. certain persons are not subject to tort liability.
c. one who harms another without intending to do so is not subject to tort liability.
d. one who harms a child can never be sued by the parents of the injured child.
When a defendant is convicted of a crime, the court may also declare that the
defendant's rights in any property used or gained from the crime be confiscated. This is
known as __________.
a. forfeiture
b. reversion
c. subversion
d. divestiture
Property may be taken from its private owner and the title acquired by the taking
government or public authority under the power of:
a. a restrictive covenant.
b. eminent domain.
c. an affirmative covenant.
d. restraint.
______ is a body of law that provides justice when the law does not offer an adequate
remedy.
a. Ethics
b. Regulations
c. Equity
d. None of the above.
Certification of a check at the request of a holder:
a. releases all prior secondary parties.
b. releases the drawer but not prior indorsers.
c. releases prior indorsers, but not the drawer.
d. does not release all prior secondary parties.
If an owner has acted in a way that misleads others, the owner may be __________from
asserting ownership.
a. estopped
b. voided
c. breached
d. identified
Advertising regulations are designed to:
a. give the consumer an accurate description of the product.
b. punish sellers who knowingly make false statements about the product offered for
sale.
c. punish sellers who state a false opinion about the product.
d. give the consumer information about other similar products that are available.
In determining the rights of partner Dewey in the firm of Dewey, Cheatham and Howe,
the most important reference point is:
a. the Uniform Partnership Act.
b. the partnership agreement.
c. the sworn testimony of Cheatham and Howe.
d. the customs and traditions of similar partnerships.
A third-party beneficiary contract may be amended:
a. with the consent of the beneficiary.
b. by operation of law.
c. if the contract allows modifications without the beneficiary's consent.
d. all of the above.
To ensure that audit partners do not become entrenched, Sarbanes-Oxley requires audit
firms to change audit partners at least once every __________ years.
a. three (3)
b. five (5)
c. seven (7)
d. ten (10)
Torts are classified as:
a. intentional only.
b. negligence only.
c. strict liability only.
d. intentional, negligence, and strict liability.
Knowingly making false statements in a loan application to a federally insured bank:
a. is a form of embezzlement
b. is a federal crime.
c. is a crime in the state the bank operates in.
d. all of the above.
An examination of goods excludes any implied warranty with respect to a defect that:
a. is apparent after a reasonable examination is made.
b. will not be apparent without chemical analysis.
c. will not be apparent until the goods are processed or used in manufacturing.
d. is unknown to all parties and is not detectable by reasonable examination.
A parents' group in a small town formed an association to run a little league baseball
team. Tom and Mary were members of the association, which was never incorporated.
Tom was elected president of the association and ordered some uniforms for the team.
When the uniforms were not paid for, the baseball supply company sued Tom and Mary
for the contract price. Regarding the liability of Mary:
a. Mary is liable because she is a member of an unincorporated association.
b. Mary is not liable because members of an unincorporated association have no
personal liability.
c. Mary is liable if she authorized or ratified the purchase.
d. Mary is liable but only for 50% of the outstanding debt.
When a bailor sues the bailee for damages to the bailed property, who has the burden of
proving fault and that such fault was the proximate cause of the bailor's loss?
a. the person in possession of the property
b. the bailor
c. the bailee
d. the jury
A __________ action restores the property to the landlord's possession unless the tenant
complies with payment requirements.
a. forcible entry and detainer
b. forcible exit and retainer
c. passive entry and detainer
d. passive exit and retainer
Which of the following represents a duty owed by a landowner to a trespasser?
a. the duty to refrain from causing intentional harm once the presence of the trespasser
is known
b. the duty to warn the trespasser of dangers existing on the premises
c. the duty to make the premises safe to protect the trespasser from harm
d. none of the above, since a landowner has no legal duty to a trespasser
Which of the following is not a duty of a trustee?
a. to use reasonable skill
b. to keep accurate records
c. to invest trust assets
d. to deliver possession of trust assets to the settlor for the trust period
Who serve as agents of the corporation and run the "day-to-day" operations of the
business?
a. officers
b. directors
c. shareholders
d. employees
Prohibited transactions by a partner without the consent of other partners include:
a. a contract that makes it impossible for the firm to conduct its usual business.
b. submitting controversies of the firm to arbitration.
c. making a general assignment of firm property for the benefit of creditors
d. all of the above.
A party working for and under the control of another and authorized to enter into
contracts for that other person or entity is called an:
a. employee.
b. agent.
c. independent contractor.
d. attorney.
An individual who receives information from an insider or temporary insider is called a:
a. tippee.
b. tipper.
c. de facto insider.
d. virtual insider.
A holder through a holder in due course is subject to limited defenses.
Freedom from liability to third persons dealing with the franchise holder is one of the
main reasons that franchisors grant franchises.
When the desired use of land is in harmony with the general nature of surrounding
areas, a zoning variance is usually granted.
Bart was a self-made millionaire who had earned his fortune by dedicated hard work.
Bart had worked so hard that he never had developed much of a social life. Bart met
Linda and fell in love with her. When Bart proposed to Linda, she told him that she
needed time before making such an important decision. Pressing her for a favorable
response, Bart telephoned Linda and promised her $100,000 if she would marry him.
Linda then accepted the proposal.
Bart contracted with Quick Builders for the construction of a home Bart intended to
move into with Linda after their marriage. Construction by Quick was not very quick
because Quick was not paying subcontractors the sums that they were owed. They, in
turn, were not completing their work. To expedite matters, Bart called the
subcontractors and assured them that Bart would pay any sums that Quick Builders did
not pay if they would complete the construction.
Bart and Linda married and the subcontractors completed the work. Quick Builders did
not pay the subcontractors in full. Bart failed to pay Linda the $100,000. Both Linda
and the subcontractors sued Bart. Discuss the probable outcome of the lawsuits.
Some courts allow sellers to recover the profits they would have made if the buyer had
completed the transaction.
Value is similar to consideration..
If an offer is indefinite or vague, no contract arises from an attempt to accept it.
The issuing or delivery of a forged instrument to another person constitutes the crime of
counterfeiting a forged instrument.
Within the area in which the administrative agency is authorized to make decisions, the
agency can be regarded as a specialized court or court of limited jurisdiction.
Supply chain management refers to the management issues of risk and title as goods
flow through commerce.
If the parties involved agree that personal property will be considered a fixture, it will
be deemed to be a fixture without the application of legal tests.
A lease provision requiring a tenant to obey regulations that may be subsequently
adopted by the landlord is void because it is unconscionable.
The rights of a holder of a duly negotiated warehouse receipt are extinguished by the
warehouser's surrender of goods to the depositor.
Securities covered by the securities acts includes only investment instruments such as
stocks and bonds not "investment contracts."
The death of a majority shareholder terminates a corporate enterprise.
Sylvia Jurgen operates a florist shop. During a particularly busy day, she allowed one of
her employees, Terry Lioni, to use her (Jurgen's) personal car to assist with deliveries.
Lioni had just obtained his driver's license. Lioni was involved in an accident that was
his fault. Would Jurgen's liability insurance pay in this situation?
The statute of frauds applies to promises to answer for another party's debt, but does not
apply to a promise to answer for another party's default.
Agent's may intentionally make themselves liable on contracts with third persons.
If a plaintiff's loss involves damaged property, it is described as liquidated damages.
In a self-service store a sale cannot occur until the goods are paid for.
