A change of law discharges a contract if the new law:
a. requires a license and none was required before.
b. requires the use of fireproof materials.
c. requires the use of antipollution devices.
d. prohibits the act called for by the contract.
With used or secondhand goods, what is fit for normal use will be:
a. a higher standard than with new goods.
b. a lower standard than with new goods.
c. the same standard as with new goods.
d. not applicable since the goods are not new.
Small children who trespass on land may be owed a special duty of care based on the
doctrine of:
a. caveat emptor.
b. res ipsa loquitur.
c. comparative negligence.
d. attractive nuisance.
A(n) ______________ principal is liable for a simple contract made by an authorized
agent.
a. partially disclosed
b. undisclosed
c. both a. and b.
d. neither a. nor b.
In an employment contract, agreements not to compete are:
a. illegal
b. uniformly held to be in the public interest and therefore legal
c. valid only if the restriction protects the employee
d. valid, if the restriction is reasonable and necessary for the protection of the former
employer
An obligation to pay for the reasonable value of services rendered when there is no
contract would be called:
a. quasi-contractual.
b. quasi-enforceable.
c. semi-lawful.
d. valid.
How do the warranty provisions under the CISG compare to the provisions of the
UCC?
a. In most instances, the standards are the same.
b. In all instances, the standards are the same.
c. The CISG standards are stricter when compared to the UCC standards.
d. The standards are completely different.
Compensatory damages:
a. compensate consumers for their actual loss.
b. are imposed to punish the defendant for wrongdoing.
c. both a. and b.
d. none of the above.
In a cash sale that does not require the physical moving of the goods, the:
a. parties are required to perform concurrently.
b. seller is required to tender the goods before the buyer must pay for them.
c. buyer must pay for the goods in advance.
d. buyer must actually receive the goods before he or she is required to pay for them.
When there are two perfected secured creditors in the same collateral:
a. priority goes to the creditor who perfected first.
b. priority goes to the creditor who is owed the greatest amount of money.
c. each perfected secured creditor has a 50% interest in the collateral.
d. Both perfected secured creditors are treated like unsecured creditors in regards to the
collateral.
California passed a law prohibiting any transporting of nuclear waste in the state unless
the company doing so is a resident or is owned by residents of California. What
constitutional issues does this law raise?
Which of the following allows a domestic firm to maintain the greatest control over its
foreign operations?
a. wholly-owned subsidiaries
b. licensing
c. foreign distributorships
d. agency arrangements
A taker of a negotiable instrument may be denied the status and protection of a holder
in due course where:
a. one party is a consumer.
b. the close-connection doctrine applies.
c. the instrument is bearer paper.
d. none of the above.
When the effect of an antitrust violation is to raise prices:
a. damages are automatically considered doubled.
b. each plaintiff must sue individually.
c. imprisonment for the guilty is mandatory.
d. the state attorney general may bring a class action suit for damages.
Many states provide that a lease for a term exceeding __________ must be in writing.
a. three (3) months
b. six (6) months
c. one (1) year
d. three (3) years
A court is a tribunal established by:
a. the parties to a lawsuit.
b. the government.
c. the parties to a contract.
d. none of the above.
A corporation is liable to a third person for the act of its agent:
a. to the same extent as a natural person would be liable.
b. only if the agent was expressly authorized to perform the act.
c. only if the agent’s act was a crime.
d. only if the agent’s act was based on an intent to benefit the corporation.
The statute of limitations for breach of a sales contract:
a. may be reduced between merchants to one year.
b. may be expanded by the buyer and the seller to six years.
c. begins to run from the signing of the contract.
d. always requires a notice to the seller to activate the statute.
An oral contract to sell a house is binding if:
a. the agreement is witnessed by a member of the clergy.
b. there is a tape recording of the agreement.
c. the buyer paid the price and received the deed of conveyance.
d. the seller is a merchant.
A president of a corporation does not have the authority to:
a. make a long-term employment contract.
b. mortgage a corporate property.
c. release a claim of the corporation.
d. perform any of the above acts.
A bank that fails to carry out a payment order is usually liable for:
a. interest loss and expenses.
b. loss sustained by the originator.
c. consequential damages because the payment was not made.
d. all of the above.
Which of the following is not protected under the privileges and immunities clause?
a. right to go to another state and make a contract
b. right to go to another state and vote in local elections
c. right to go to another state and purchase property
d. right to go to another state and open a business
Perfection of a security interest takes place:
a. upon the creditor’s possession of the collateral.
b. upon attachment in the case of a purchase money security interest in consumer
goods.
c. upon the filing of a financing statement.
d. all of the above.
Modern decisions hold the principal liable for which actions of the agent?
a. Fraudulent acts
b. Misrepresentations
c. Both a. and b.
d. Neither a. nor b.
If shipped goods are damaged or destroyed after risk of loss passes:
a. the contract is avoided
b. the seller has breached the contract
c. the buyer has the option to accept or not accept the goods
d. it is the buyer’s loss
Tom established a bank account for his daughter Mary under the Uniform Gifts to
Minors Act. Tom named himself the custodian. Later, Tom had a serious disagreement
with Mary and ordered the bank to transfer the money in that account to a similar
account maintained in the same bank for Tom’s son Ed. The bank must:
a. comply with Tom’s order, because the custodian controls the account.
b. refuse Tom’s order, because this would clearly not be for the benefit of Mary.
c. comply with Tom’s order, because Uniform Gifts to Minors accounts are not final.
d. comply with Tom’s order if Mary is under 18 years of age and refuse the order if she
is over 18 years of age.
Vertical mergers:
a. occur between firms that have a competitor relationship.
b. occur between firms that have buyer and seller relationships.
c. are not covered by the Clayton Act.
d. are always protected by the federal government.
A disclaimer or exclusion of the warranty of merchantability will be invalid if:
a. the goods cost $500 or more.
b. the defects in the goods are obvious to all buyers.
c. it is made at the time of the sale.
d. it is not conspicuously set forth in a writing.
Jack sells Jim a used car that Jack falsely described as having been driven only 12,000
miles. Fraud has occurred if:
a. Jim bought the car solely because of its color.
b. Jim knew that the mileage was more than 12,000 miles.
c. Jim relied upon Jack’s statement.
d. Jack is a merchant.
To help eliminate conflicts of interest, Sarbanes-Oxley prohibits certain activities by
audit firms for their audit clients, including:
a. the design and implementation of financial information systems.
b. actuarial services.
c. management functions and human resources.
d. all of the above.
A bailee’s __________ gives the bailee the right to maintain possession of the bailed
property until reasonable storage and/or repair charges are paid.
a. reversionary interest
b. Lien
c. remainder interest
d. Mortgage
An illusory promise creates a bilateral contract.
Liens on land may be created voluntarily by the owner of land or involuntarily against
the wishes of the owner.
Billy has a dispute with Sleepdigit Bedspring Company over a number of beds Billy
recently purchased from Sleepdigit for use in his hotel. Billy needs to decide whether to
pursue litigation or employ an alternative means of dispute resolution. What advantages
are most often associated with alternative dispute resolution? Which choice would be
most appropriate in this case?
Under SEC Rule 504 of Regulation D, an issuer can offer and sell up to $2 million in
securities within a 12 month period without registration and without most of the
restrictions contained in Rules 505 and 506.
When the desired use of land is in harmony with the general nature of surrounding
areas, a zoning variance is usually granted.
When one party commits a non-material breach of contract, the other party may rescind
the contract.
A holder of a single share of stock who objects to a merger has the power to stop the
merger.
The parol evidence rule generally excludes words spoken before or at the time a written
contract was executed from contradicting the terms of the contract.
Kentucky Lumber and Millwork Company contracted to supply Rommell Company
millwork for use in the construction of a school building. While the work was in
progress, the Kentucky Lumber mill was destroyed by fire. For two months thereafter,
Kentucky Lumber and Millwork supplied Rommell with millwork purchased from a
third party. Kentucky Lumber and Millwork did not wish to continue this plan and
declared that the contract was ended. Rommell brought an action against Kentucky
Lumber and Millwork to enforce the contract. How will the court decide?
Agreements not to compete are always void.
A family law court is an example of a specialty court.
In most states, promises made to another based on moral obligation lack consideration
and are not enforceable.
Damages in excess of actual loss, imposed for the purpose of punishing or making an
example of the defendant, are known as compensatory damages.
Recording statutes provide that a person purchasing land from the last holder of record
will take title free of any unrecorded claim to the land of which the purchaser does not
have notice or knowledge.
An insurance broker generally is an independent contractor who is not employed by any
one insurance company.
In a merger or consolidation, the surviving corporation generally succeeds to all the
rights and property of the predecessor.
Consumer goods are classified into different categories based on the debtor’s intended
use, not the physical characteristics of the goods.
Sharing of gross returns, as compared to the sharing of profits, is strong evidence of a
partnership.
An agreement that does not specify the time for performance is not binding because it is
too indefinite.
A director is disqualified from taking part in corporate action with respect to a matter in
which the director has an undisclosed conflicting interest.