Under the UCC, the seller’s right to correct a shipment of non-conforming goods is
called:
a. correction.
b. cure.
c. cover.
d. retender.
Tess, a tenant, moves from her apartment in breach of the lease agreement. The
landlord, Lenny, may not attempt to rent the apartment until the date of the lease
expiration, and so has no recourse to minimize damages.
a. True
b. False
HBR Accounting hired Denise, a CPA, to prepare tax returns. Which statement is
correct?
a. Denise is a gratuitous agent and has a duty not to commit gross negligence.
b. Denise is an agent and has a duty not to commit ordinary negligence.
c. Denise, as a CPA, is an agent with special skills. She is held to a higher duty than
ordinary negligence.
d. Denise, as a CPA, is an agent with special skills. She is held to a lower standard than
ordinary negligence.
Generally, a seller has no duty to disclose facts. However, there is a duty to disclose
information or facts if the disclosure is necessary to:
a. correct a previous assertion.
b. correct a basic mistaken assumption on which the other party is relying.
c. report a latent defect that the buyer would not be expected to discover.
d. All of the above are true.
Under the TILA, for subprime mortgage loans, a lender:
a. may charge a prepayment penalty any time the loan is paid off before its due date.
b. must collect property taxes and homeowners insurance for all first mortgages.
c. may not change the amount of the monthly payment during the period of the loan.
d. may consider the value of the home in determining the borrowers ability to repay the
loan.
Which of the following is TRUE about Affirmative Action?
a. Affirmative action is required by Title VII.
b. Affirmative action is prohibited by Title VII.
c. Affirmative action is allowed in goverment contracts if it can show the programs are
needed to overcome specific past discrimination.
d. Affirmative action programs are usually voluntary on the part of employers, since
courts have no power to order remedies for past discrimination.
According to the UCC, one or more open terms will not cause a sales contract to fail for
indefiniteness as long as the parties intended to make a contract and there is a
reasonably certain basis for the court to determine the open terms.
a. True
b. False
Mary goes into Honest Harry’s Electronics and purchases a TV. Mary agrees to pay for
the TV in 30 days on the store’s “30 days same as cash” plan. This is an executory
contract.
a. True
b. False
The advantage of a corporation over a partnership is:
a. shares are easily transferable to another person.
b. perpetual existence.
c. it is easier to raise funds.
d. All the above.
The maximum rate of interest for credit transactions is established by:
a. state law.
b. federal law.
c. the Federal Reserve Board.
d. the FTC.
Notren, Inc., a U.S. company, and SWT, a Singapore company, entered into a contract
under which SWT is to ship party supplies to Notren. One of the terms of the contract
states, “Any disputes that arise under this contract will be resolved in the courts of
Singapore.” This contract term is a:
a. letter of credit.
b. choice of language clause.
c. choice of forum clause.
d. draft clause.
Lemon laws, which assist consumers who have purchased automobiles that turn out to
be “lemons,”:
a. are enacted by state legislatures.
b. are enacted by Congress.
c. are included in the warranty provisions of the UCC.
d. come from common law equitable remedies.
In a recent case, In re Nuijten, the U.S. appeals court ruled that a method of encoding
additional information on electronic signals emitted from digital audio files was not
patentable because, although useful, the method was not a mechanical, electrical, or
chemical invention, a process, a machine, or the composition of matter.
a. True
b. False
Wendell, new to the area, selects a doctor from the telephone book and visits that doctor
to have a splinter extracted. Unbeknownst to Wendell, the doctor has never passed the
state licensing exams. Later, when Wendell discovers the truth, he refuses to pay his
bill. If the doctor sues for recovery of the fee, will the court support the doctor’s claim?
a. Yes, it was up to Wendell to verify the doctor’s qualifications prior to having the
splinter extracted.
b. No, the court is likely to take the position that it is not in the public’s best interests to
enforce contracts with unlicensed doctors.
c. It depends on whether Wendell’s injury healed properly.
d. No, but the doctor could probably recover under quasi-contract.
Eric was charged with attempted murder. His defense was that he was insane at the time
of the act. A jury accepted Eric’s defense. Eric will:
a. probably be committed to a mental hospital and when that hospital determines he is
no longer a danger to society, he will be released.
b. be declared guilty, but will have to serve his sentence in a mental hospital rather than
in prison.
c. have to be committed to a mental hospital until he regains his sanity, at which time he
will be retried.
d. be sent to prison once he is released from the mental ward.
The concept of stare decisis focuses most on:
a. Predictability.
b. flexibility.
c. legislative intent.
d. change.
Denton agreed to build a cedar deck for the Thrashers for $7,000. After he began the
work, the Thrashers asked him to add cedar flower boxes at one side. Denton replied he
would, but it would cost an additional $600. The Thrashers would not be obligated to
pay the additional sum because the original agreement already obligated Denton to
complete the deck for $7,000.
a. True
b. False
To perfect a security interest in a negotiable instrument, Second State Savings and Loan
should:
a. file a financing statement.
b. take possession of the instrument.
c. do nothing. Perfection is automatic.
d. secure a court order.
Harry agreed to pay $100 to rent a rooftop spot in downtown Seattle to watch the New
Year’s Eve festivities. The festivities were unexpectedly canceled because of concern
over a terrorist attack. Harry is:
a. obligated to pay the $100.
b. not obligated to pay under the commercial impracticability doctrine.
c. not obligated to pay under the force majeure doctrine.
d. not obligated to pay under the frustration of purpose doctrine.
If you grant a nonpossessory interest to Eagle Logging to enter your land and remove
timber from ten acres, you have granted Eagle a profit.
a. True
b. False
In a civil case, the plaintiff must prove the case beyond a reasonable doubt.
a. True
b. False
The concept that an injured party may recover consequential damages only if the
breaching party should have foreseen them was established in:
a. Bi-Economy Market, Inc. v. Harleysville Ins. Co. of New York.
b. Putnam Construction & Realty Co. v. Byrd.
c. Hadley v. Baxendale.
d. Toscano v. Greene Music.
The start of the bankruptcy process is:
a. the submission of a plan of repayment.
b. the bankruptcy courts issuance of an order for relief.
c. a meeting of creditors.
d. the appointment of a trustee.
Mrs. O’Leary hired Jenna to sell her house in Michigan. She executed a power of
attorney in favor of Jenna authorizing her to do “anything and everything associated
with the sale of real estate, acting as a prudent person.” On May 30, Jenna finalized a
deal with Brandon for the purchase of the house. Brandon and Jenna signed the real
estate contract that day. Jenna learned the next day that Mrs. O’Leary had died May 29.
a. The contract is void since the agency terminated May 29.
b. The contract is valid since the agencys purpose was achieved before Jenna was
notified of Mrs. O’Leary’s death.
c. The contract is voidable at the option of Mrs. O’Leary’s estate.
d. The contract is voidable at the option of Brandon.
Unethical behavior is a bar to financial success.
a. True
b. False
You have placed an antique sofa up for auction and the auctioneer has not made any
special announcements about the sale. You can withdraw the sofa at any time before the
auctioneer closes the sale by announcement or by the fall of the hammer.
a. True
b. False
An agreement in which parties intend to form a valid bargain, but a court declares that
some rule of law prevents enforcing it.is:
a. void
b. voidable
c. Unenforceable
d. none of the above.
If the subject of the contract includes issues that may be controversial, it is best to:
a. keep lawyers out of the negotiation, so relationships are not strained.
b. deal with them up front before the relationship is strained.
c. deal with them one at a time, as the problems arise.
d. state your position up front and stand firm when the other party objects.
Florence borrows $1,500 from Fremont, leaving her gold necklace with Fremont as
collateral. Two weeks earlier, Florence had borrowed $1,000 from Corner Bank.
Florence signed a security agreement and a financing statement giving Corner Bank a
security interest in the same gold necklace. The financing statement is filed in the
appropriate location. If Florence defaults on both loans, which creditor has the superior
rights to the necklace?
a. Fremont, because his loan was the first to attach.
b. Fremont, because possession takes priority over filing.
c. Corner Bank, because Fremont did not perfect his interest.
d. Corner Bank, because Fremont did not have a written security agreement.
Disputants Martin and Daulton have hired Thurman to mediate their disagreement.
Although Martin and Daulton must accept whatever decision Thurman makes, the
mediation has the advantage of keeping Martin and Daulton out of court.
a. True
b. False
Buyer Bob breaches his contract for the sale of goods with Seller Suzie. Suzie still has
possession of the goods at the time of the breach. Suzie can refuse to deliver the goods
and:
a. resell the goods and sue Bob for the total contract price.
b. either resell the goods or sue, but not both.
c. resell the goods and sue for any loss on the sale plus incidental damages less
expenses saved.
d. resell the goods and sue only for incidental damages.
If Cub Cadet wins a trademark infringement suit by proving the defendants trademark,
Kub Kadet, is likely to deceive customers about who made the goods, Cub Cadet is
entitled to:
a. up to three times actual damages.
b. an injunction to prevent further infringement.
c. any profits Kub Kadet made on its infringing product.
d. All of the above.
Daniel, his parents, and three brothers own all the stock of their family farm
corporation. This corporation, which is taxed as a corporation, is probably:
a. an S corporation.
b. a C corporation.
c. a closely held corporation.
d. an LLC.