Answer the following:
Baker goes into bankruptcy owing $5,000 as wages to his employees. There is enough
in his estate to pay all costs of administration and enough to pay his employees, but if
the employees are paid, there will be nothing left for the general creditors. Which of the
following is NOT true under the above facts?
a. The Bankruptcy Code provides for priority of wages owed to employees.
b. Secured creditors will be paid to the extent of their security interest before the
employees will be paid.
c. The general creditors will not be paid.
d. The general creditors can be paid before the employees if they file a claim with the
court.
In a quitclaim deed, the grantor warrants that:
a. he has no knowledge of any encumbrances.
b. he himself has not impaired title to the land.
c. the land passes with no impairment of title.
d. he is conveying whatever interest he has in the land.
When the articles provide a ____, preferred stock has priority over common stock to the
extent the articles state after a corporation is dissolved and when assets are distributed.
a. stock right
b. liquidation preference
c. dividend preference
d. preemptive right
Handwritten, typewritten, printed, pictorial, or televised defamation is:
a. false light.
b. libel.
c. slander.
d. disparagement.
NEPA requires that the EIS contain:
a. an analysis of the relationship between local short-term uses of the environment and
the maintenance and enhancement of long-term productivity.
b. reversible and retrievable commitments of resources involved.
c. only a brief outline of the adverse environmental effects of a proposed action.
d. All of the above.
Mark tells Leslie that his stereo has quadraphonic speakers because he was told that
when he bought it. Leslie buys the stereo, but it does not have quadraphonic speakers.
Is Mark liable for breach of warranty?
a. No, because he did not know his statement was false.
b. No, because he did not promise her that the speakers were quadraphonic.
c. Yes, because the statement was false.
d. Yes, because Mark was not acting in good faith.
Drew, Elmer, and Frank are partners in the DEF partnership. The partnership is being
dissolved. It has $200,000 in cash assets and it owes $410,000 to creditors. Profits and
losses of the partners are shared equally, although Drew contributed $100,000 in
capital; Elmer contributed $50,000 in capital; and Frank contributed $25,000 in capital.
Which of the following is correct with regard to the responsibility of each partner?
a. Each partner is responsible for $70,000 of the money owed to creditors.
b. Elmer will have to contribute additional capital in order to settle the partnership
affairs.
c. Drew will have to contribute additional capital in order to settle the partnership
affairs.
d. All of the above are correct.
Brice owns a parcel of land that is encumbered by a mortgage held by the First National
Bank. Brice agrees to sell the land to Paul for $50,000. Brice and Paul together go to
the First National Bank to discuss the sale and purchase with the banker. Brice, Paul,
and the banker sign an agreement stating that Paul will assume the mortgage and that
Brice will be discharged from all further liability on the mortgage. In this case:
a. the bank is a third party donee beneficiary.
b. the bank can collect from Brice if Paul defaults.
c. Brice is a third party beneficiary of the agreement between Paul and the bank.
d. the agreement among the three is a novation.
A, a wholesale distributor, sells to B, a retail dealer, a set of defective tires
manufactured by X, a reputable manufacturer. Both A and B believed the tires to be in
perfect condition, although neither party has inspected the tires. C purchases the tires
from B and is injured because the defective tires blew out. Who, if anyone, is liable to C
in strict liability?
a. A, B, and X share liability to C under strict liability.
b. Only X, who manufactured the tires, has strict liability.
c. Only B, who sold the defective tires to C, has strict liability.
d. No one has strict liability in this case.
Taylor Corp. rents a warehouse where it conducts a small manufacturing operation. As a
condition of its lease, it pays a fire insurance premium. Taylor needs more room and
rents larger quarters. Taylor then subleases its old warehouse to Mack. Taylor also
assigns its already-paid insurance policy to Mack. This action is:
a. appropriate, so long as Taylor and Mack agree to it.
b. appropriate, so long as the landlord agrees to it.
c. not binding on the insurer.
d. totally within the rights of Taylor, who already paid the premium.
A(n) ____ is a delivery of possession of personal property to an agent for sale by the
agent.
a. sale on approval
b. consignment
c. sale or return
d. None of the above.
Betty owes Agatha $1,000. On March 1 Agatha, for value, assigned the debt to Clara.
Thereafter, on March 30, Agatha assigned the same right to Diane. Under the:
a. American rule, Clara will prevail over Diane.
b. English rule, the first assignee to notify Betty will prevail.
c. Restatement rule, the first assignee to notify Betty will prevail.
d. Both (a) and (b) are correct.
David, a partner in the Tri-State Express Mail delivery partnership, negligently drove
his delivery truck onto the curb during a rush-hour package delivery. Marlene was
injured. Against whom can Marlene collect?
a. Only David
b. Only the other partners
c. Tri-State Express Mail Partnership
d. Any partner
e. Both (c) and (d)
Avins Corporation wishes to acquire all of the shares of Solomon Corporation.
Approval would be required of:
a. Avins’ board of directors.
b. Solomon’s board of directors.
c. Avins’ shareholders.
d. Solomon’s shareholders.
e. Both (b) and (d).
Which of the following need NOT be proved in order to establish the defense of
economic duress?
a. That one side involuntarily accepted the terms of another.
b. That circumstances permitted no other alternative.
c. That one party explicitly made an economic threat.
d. That the circumstances leading up to the contract were the result of coercive threats
or acts of the opposite party.
Under the Equal Pay Act:
a. an employer cannot discriminate against a minority worker by paying him less than a
non-minority worker.
b. a man could be paid more than a woman for the same kind of work if he produced
more on a piece-rate basis.
c. an employer cannot discriminate in pay for substantially equal work on the basis of
religion, sex, or national origin.
d. All of these are correct.
Which of the following is untrue regarding closely held corporations?
a. Most corporations in the U.S. are closely held.
b. In most states, closely held corporations are subject to the general incorporation
statute governing all corporations.
c. Shareholders usually have little voice in the management and control of the business.
d. Some states have enacted special legislation to accommodate the needs of closely
held corporations.
Which of the following is not a breach of an agent’s duty of obedience?
a. Entering into an unauthorized contract for which his or her principal is liable.
b. Refusing to follow the principal/employer’s instruction to misrepresent the quality of
a competitor’s goods to a potential customer.
c. Improperly delegating her authority.
d. Committing a tort for which the principal is liable.
All of the following would constitute a “fundamental change” to the corporation
EXCEPT:
a. an amendment to the articles of incorporation.
b. a merger.
c. a stock dividend.
d. selling off 60% of the business assets not in the regular course of business.
Mary and Renaldi Co. have dealt with each other for many, many years. Mary’s
Boutique orders 100 assorted lipsticks at $3.00 each from Renaldi Co. Renaldi sends
back a confirmation letter stating that the shipment will be made by UPS rather than by
U.S. mail as usual. There is:
a. no contract, but a counteroffer.
b. a contract for shipment by UPS unless Mary objects.
c. a contract for shipment by UPS only if Mary agrees.
d. a contract for shipment by U.S. mail.
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. All of the above are considered.
The criminal intent necessary to commit a crime is known as:
a. actus reus.
b. mens rea.
c. vicarious liability.
d. malice aforethought.
Which of the following would always be considered to be contrary to public policy?
a. A contract which contains a covenant not to compete
b. A contract offered on a take-it-or-leave-it basis
c. An agreement to pay someone to make false, negative statements about a competitor’s
product
d. An agreement which contains an exculpatory clause
The bylaws of the corporation:
a. are adopted as one of the first items of business at the organizational meeting held
promptly after incorporation.
b. may contain any provision for managing the business not inconsistent with law or the
charter.
c. may be repealed by the board of directors.
d. All of the above.
A corporation whose principal place of business operation is Florida must be
incorporated in Florida.
A(n) ____ is a type of transaction generally involving three parties instead of two.
a. finance lease
b. consumer lease
c. sale
d. None of the above.
Which of the following is untrue regarding the revocation of a will?
a. There cannot be a partial revocation.
b. An inadvertent destruction of a will acts as a revocation.
c. The execution of a second will does not of itself constitute a revocation of an earlier
will.
d. Divorce does not ordinarily revoke a will.
Stark enters into a contract with a contractor to build a large shopping mall in River
City. Donner will benefit from this contract since his restaurant is adjacent to the
planned mall. Donner in this instance is a(n):
a. implied beneficiary.
b. partial beneficiary.
c. donee beneficiary.
d. incidental beneficiary.
The duties of a trustee are:
a. to carry out the purposes of the trust.
b. to act with prudence and care in the administration of the trust.
c. to exercise a high degree of loyalty toward the beneficiary.
d. All of the above.
Carol buys some items at Friendly Drugstore and writes a check to the store on her
account at First Bank. Who is the drawee?
a. Carol
b. Friendly Drugstore
c. First Bank
d. There is none.
One who is in possession of a negotiable instrument that is drawn, issued, or indorsed to
him or to his order or that is indorsed in blank is a(n):
a. bearer.
b. holder.
c. transferor.
d. assignee.
Congressional legislation implementing the Madrid Protocol:
a. allowed copyright holders to gain international recognition of their copyright.
b. allowed U.S. trademark owners to file for registration in the many member countries
of the Protocol by filing a single application.
c. gave international trade secret protection.
d. simplified the procedure for acquiring international patents.
In March, Margaret made a loan to Pete for $10,000. Three months later, she began to
hear rumors about Pete’s failing financial condition. When in July, Pete asked her to
loan him an additional $2,000 to buy inventory, Margaret required a security interest in
the inventory and also demanded that Pete secure the first loan with his personal
automobile. In September, Pete filed for bankruptcy. Will these security interests stand
up?
a. Yes, if they are properly filed
b. Yes, since they are for antecedent debts
c. No, both will be voidable preferences
d. No, the security interest in the automobile would be a voidable preference
Under the CISG, if the buyer fails to perform any obligations, the seller may:
a. set an additional period of time of reasonable length for performance.
b. require the buyer to pay the price.
c. receive damages.
d. All of the above.
A general partner, but not a limited partner, may be either a secured or unsecured
creditor of the partnership with the same rights as a person who is not a partner.
Under federal law, employers may require any employee to undergo a lie detector test.
Compensatory damages are intended to protect the injured party’s expectation interest.
If the owner of goods entrusts them to a merchant, the merchant can transfer good title
to the goods to a buyer in the ordinary course of business even if the original owner
does not want to sell the goods.
For an environmental effect to be treated as a public nuisance there must be some
interference with the health, safety, or comfort of the public.
A surety agreement must always be in writing to be effective.
Nonfraudulent representation is made without scienter.
A composition would bind to the settlement all of debtor’s creditors.
An indorsement “Pay to Jones Construction Company upon completion of the job at
No. 10 Park Place” does not affect the right of the indorsee to enforce the instrument.
Sean had two beers and felt tipsy. He made a deal with Yoko to buy her stereo. He can
avoid the contract because of lack of capacity.
What is the basic purpose of the World Trade Organization (WTO)?
If Bill tells Sara that he will give her two days to decide if she wants to buy his car, he
cannot sell it to anyone else during that time.
A security interest in fixtures, such as furnaces, central air-conditioning units, and
plumbing fixtures, may not arise under UCC Article 9 since fixtures have become so
related to real property that an interest in them arises under real estate law.
In a foreign distributorship arrangement, the foreign distributorship in the importing
country purchases the goods from the manufacturer in the exporting country.
Courts of equity will grant specific performance of contracts for personal service.
A valid contract is one that meets all of the requirements of a binding contract.
Marco received his payroll check on Friday afternoon and immediately indorsed it by
signing his name on the back. On his way home from work, he dropped the envelope
containing the check. If Bonnie finds the check, Bonnie becomes the holder of the
instrument.