A possibility of reverter is the complementary estate to a:
a. fee simple.
b. qualified fee.
c. life estate.
d. reversion.
Code Section Matching
a. Statute of frauds. f. Good faith.
b. Warranty of title. g. The “battle of the forms.”
c. Warranty of merchantability. h. Parol evidence.
d. Definition of “merchant.” i. Definition of ‘sale.”
e. Firm offers. j. Cure.
1) 1-201(19)
2) 2-104(1); 2A-103(3)
3) 2-106
4) 2-201; 2A-201
5) 2-202; 2A-202
6) 2-205; 2A-205
7) 2-207
8) 2-312(1)
9) 2-314
10) 2-508(1),(2); 2A-513(1),(2)
A form of strict liability applies to all of the following situations except:
a. a lawnmower sold in a defective condition that injures its owner.
b. a fireworks factory that blows up and injures townspeople and their property.
c. a medical procedure.
d. a herd of goats that travel onto a neighbor’s property, eating and trampling the
neighbor’s roses.
Franz signs a $1,000 note payable to ABC Bank. If, to help Franz get the loan
approved, Amy also signs the note as an accommodation maker:
a. Amy’s liability is the same as that of an accommodation indorser on a check.
b. the liability of each party to the bank is: Franz $500 and Amy $500.
c. Amy has secondary liability on the note.
d. Amy and Franz both have primary liability on the note.
Which Code section contains the warranty of merchantability?
a. 2-205
b. 2-207
c. 2-312
d. 2-314
Which of the following is a defense that a defendant could raise in an action based on
strict liability?
a. The plaintiff negligently failed to observe a sign on a highway warning of blasting
operations and was injured from the operations.
b. The owner of a car signed a waiver of potential damages if he parked his vehicle in a
blasting zone as a result of which the car was damaged.
c. A child played with a neighbor’s pet raccoon which had escaped from its cage. The
child teased the pet and was bitten.
d. All of the above are valid defenses which would be successful if raised by the
defendant.
Andrew noticed Michael and his pregnant wife Georgette walking down the street and,
as a joke, drove his car within inches of Michael. Michael wasn’t injured, but his wife
suffered severe mental distress and needed to be hospitalized in order to save the
pregnancy. Andrew has:
a. no liability to Georgette, because he has not committed a tort against her.
b. committed the tort of battery against Georgette.
c. committed the tort of battery against Michael but has committed no tort against
Georgette.
d. committed the tort of intentional infliction of emotional distress against Georgette.
The seller may recover the full contract price when:
a. there is no ready market available for the resale of the goods identified to the
contract.
b. the buyer has accepted the goods.
c. conforming goods have been lost or damaged after the risk of loss passed to the
buyer.
d. Any of the above occurs.
The doctrine declaring that the mortgagee’s interest in the property is limited to the
amount of the outstanding obligation is known as:
a. adverse possession.
b. the title theory.
c. the lien theory.
d. equity of redemption.
Arnold and Doug make a contract for Arnold to manufacture five leather chairs of a
specified design. Prior to their manufacture, the factory is destroyed in an accidental
fire that is no one’s fault. The chairs are available from other sources. Arnold:
a. must supply the chairs, even if he must buy them elsewhere.
b. is discharged from his duty to deliver the chairs by the destruction of the factory.
c. has materially breached the contract if he fails to deliver the chairs.
d. Both (a) and (c).
Under the CISG:
a. the seller has no right to cure a defective delivery.
b. if the seller does not perform on time, the buyer may fix an additional, reasonable
period of time for performance.
c. the seller has a limited right to cure a defective performance, but only before the date
for delivery specified in the contract.
d. the seller may, even after the date for delivery, cure a defective performance if it can
be done without unreasonable delay. The buyer cannot claim damages for delay as long
as the cure was within a reasonable time.
Which of the following is NOT an example of co-ownership?
a. A joint tenancy
b. A tenancy by the entireties
c. A tenancy in common
d. A lease between a landlord and a tenant
The Oak Grove Partnership decided it would buy personal computers for use by each
partner. Unknown to the other partners, Cromwell, a partner, had an ownership interest
in a computer store and thought he could get the computers for the partnership at the
best price because of his inside position. He did, in fact, obtain eight computers at only
$150 above the manufacturer’s price, which was $250 less than the next lowest bid for
each computer. What consequence?
a. Because Cromwell did not tell his partners of his inside position with the computer
store, there will be no sale.
b. Since Cromwell obtained the lowest price available, the deal will go through.
c. Cromwell will have to give his part of the sales profits to the partnership.
d. Cromwell will have to rescind the contract and go with the next highest bidder.
The CERCLA trust fund is financed by a:
a. tax on chemical feedstocks.
b. surtax on businesses with annual incomes over $2 million.
c. tax on petroleum.
d. All of the above.
Mark complied with all formation requirements for incorporating his taxicab business.
He is the sole shareholder in the corporation. The corporation owns two automobiles
that Mark frequently uses for his own personal use. In addition, he sometimes deposits
the money he takes in during the day into his personal checking account. One day, an
employee of the company, while driving one of the company vehicles, accidentally hits
Peter, a pedestrian, in a crosswalk. Peter sues both Mark and the Taxi Company for
$100,000. The corporate assets are only $32,000.
The process whereby a court “rewrites” or “corrects” a written contract to make it
conform to the true intentions of the parties is:
a. injunction.
b. reformation.
c. specific performance.
d. rescission.
Which of the following is included in the rules of priority established by Article 9?
a. A creditor with a perfected security interest has superior rights in the collateral over a
creditor with an unperfected security interest
b. Conflicting perfected security interests rank according to priority in time of filing or
perfection
c. As long as conflicting security interests are unperfected, the first to attach has priority
d. All of the above
An accountant’s records, including the data-gathering process followed and the
information and conclusions drawn therefrom are known as:
a. tax returns.
b. working papers.
c. rough drafts.
d. privileged communication.
Brenda agrees to lease a new car from Hyland Motors. Which of the following
statements is true?
a. Brenda has no insurable interest in the car.
b. Brenda receives title at the time of her contract with Hyland Motors.
c. Hyland Motors retains an insurable interest in the car unless and until Brenda
exercises an option to buy the car.
d. None of the above.
The exemption from registration for transactions not involving any public offering is
the so-called private placement provision found in Section 4(2) of the Act and SEC
Rule:
a. 10b-5.
b. 16(b).
c. 504.
d. 505.
e. 506.
If Valley Bank pays a check over a stop payment order of one of its customers, Valley
Bank is subrogated to the rights of:
a. the drawer against the payee or any other holder.
b. any holder in due course on the item against the drawer.
c. the payee or any other holder against the drawer.
d. All of the above are correct.
Pre-judgment attachment permits a creditor to seize the debtor’s property when the
defendant:
a. cannot be served with a summons personally.
b. has not paid his debts on time.
c. has filed for bankruptcy.
d. was found guilty of usury.
An ordinary contract between the debtor and his creditors whereby the creditors receive
pro rata a part of their claims and the debtor is discharged from the balance of the
claims is:
a. a nonstatutory composition.
b. a statutory assignment.
c. an equity receivership.
d. an automatic stay.
Unless otherwise agreed, under RULPA, a limited partner is entitled to repayment of his
capital contribution under which of the following conditions?
a. Before general partners are repaid their capital contributions
b. At the same time and on a pro rata basis with the general partners
c. Only after general partners have been repaid their capital contributions
d. None of the above
The CISG specifically excludes sales of which of the following?
a. Goods bought for personal, family, or household use
b. Ships or aircraft
c. Electricity
d. All of the above
State laws regulating the issuance and sale of corporate shares of stock and other
securities, typically with provisions prohibiting fraud in the sale of securities are called:
a. blue-sky laws.
b. Securities and Exchange Commission Acts.
c. model investment securities acts.
d. stock warrant laws.
A freehold estate is a:
a. gratuitous leasehold interest in real property.
b. right of ownership of real property for an indefinite time.
c. right of ownership for the life of a person.
d. Both (b) and (c).
Answer the following:
Conditions may be classified:
a. by how they are imposed.
b. by when they affect a duty of performance.
c. Both (a) and (b); they are not mutually exclusive.
d. Neither (a) nor (b).
Zoron Company purchased a truck from Ace Motors. The sales personnel at Ace know
that Anton Green is an executive at Zoron. To pay for the truck, Anton delivered a
$35,000 note to Ace and signed it “Anton Green, Agent.” In this case:
a. the signature of the maker is incomplete. Neither Zoron nor Anton is liable on the
note.
b. “Zoron Company” does not appear on the note. Only Anton is liable to Ace for
payment of the note.
c. as long as Ace Motors remains holder of the note, Zoron Company is liable for
payment.
d. if ABC Bank is holder of the note and Zoron Company does not pay, the bank has no
recourse against Anton.
What are some of the remedies available for infringement under the Lanham Act?
a. Injunction
b. The impoundment and destruction of infringing articles
c. Up to three times actual damages
d. Reasonable attorneys’ fees in exceptional cases, and criminal penalties for willful
trafficking in goods or services bearing a counterfeit mark
e. All of the above
Blane indorsed his paycheck in blank and cashed it at a store where he was a
well-known customer. The check was then stolen from the store. The store immediately
notified Blane’s employer, who gave the drawee bank a stop payment order. The thief
indorsed the check in a false name and transferred the check to a gas
station/convenience store, which took the check in good faith and for value. The check
was dishonored when presented to the drawee bank. Which of the following statements
is true?
a. The thief was a holder within the Code definition and could negotiate the check.
b. The thief could not negotiate the check because he forged the indorsement.
c. The gas station/convenience store is entitled to nothing from the drawer of the check.
d. The gas station/convenience store could not be a holder in due course because it took
the check from a thief.
What Article of the UCC governs electronic funds transfers?
a. Article 3
b. Article 4
c. Article 4A
d. Article 5
Sarah has a checking account at First Bank. Orrin steals one of her blank checks, writes
a check for $250, and then forges Sarah’s signature. He then presents the check to First
Bank for payment. First Bank pays the forged instrument. Which of the following
statements is correct?
a. First Bank will have to recredit the $250 to Sarah’s account if she so requests.
b. First Bank can collect the $250 from Orrin if they can find him and he has the money.
c. Sarah is primarily liable on the check even if she did not sign it and was not negligent
in allowing Orrin to take the blank check.
d. Both (a) and (b) are correct.
In some instances, people may be held liable for injuries they have caused even though
they have not acted intentionally or negligently.
What are the requirements for a transferee of a negotiable instrument to be a holder in
due course?
Although a contract to purchase an undeveloped lot must be in writing to be
enforceable, a contract to run power lines over someone else’s lot need not be.
An exculpatory clause attempts to excuse one from liability for her own tortious
conduct.
A merchant buyer who has rightfully rejected goods must follow reasonable instructions
from the seller regarding disposition of the goods if the seller has no agent at the place
of rejection.
The Federal Trade Commission has only three commissioners.
Under the majority view and the Restatement test for determining liability, negligence
of an accountant in conducting an audit may result in damage awards to potential
investors.
A person who engages an independent contractor may control the method and manner
used by the contractor to perform the job.
Barb loaned Mark $500, which Mark agreed to repay on January 15, 2011. If Mark filed
a voluntary petition of bankruptcy on August 1, 2010, Barb had a claim as a creditor.
A bondholder generally takes less of a risk than a shareholder of a corporation.
A corporation owned by one person is treated under the law as that person.
The board of directors appoints the officers of the corporation, who are agents of the
corporation.
Except in a finance lease, the risk of loss passes to the lessee in a lease of personal
property.
The parol evidence rule applies to partially written agreements.
Historically, courts held that representations of law were statements of fact, but the
present trend is to recognize that they have only the effect of statements of opinion.
An agent, acting within the scope of authority granted by the principal, may bind the
principal to contracts, but may not negotiate terms of the contracts.
A partner may not receive a distribution from a limited partnership unless the remaining
assets are deemed sufficient to pay partnership liabilities other than liabilities to
partners on account of their partnership interests.