A draft is payable “to the order of Joe Jones or to bearer.” Sally finds it and demands
payment. Should the drawer pay Sally?
a. No, unless Joe Jones’ name is crossed off
b. No, unless “bearer” is handwritten
c. Yes, an instrument made payable both to order and to bearer is payable to bearer
d. Yes, since the instrument is ambiguous, Joe Jones has no right to payment and only
the bearer has the right to demand payment
Which of the following would NOT constitute scienter contributing to liability under
Rule 10b-5?
a. Negligent conduct
b. Intentional conduct
c. Reckless disregard for truth
d. Knowing conduct
Annette entered into a contract with a local truck dealer to have a new truck delivered
to her daughter, Sue, as a graduation present. In this contract, Sue is:
a. an incidental beneficiary.
b. a donee beneficiary.
c. a creditor beneficiary.
d. an assignor.
The ____ mandates clear disclosure of relevant credit information in consumer credit
transactions. It requires conspicuous disclosure of finance charges and interest rates
calculated in a uniform manner.
a. Equal Credit Opportunity Act
b. Fair Credit Billing Act
c. Truth-in-Lending Act
d. FTC Act
In tying arrangements, the courts may establish a seller’s economic power by showing
that:
a. the seller occupied a dominant position in the tying market.
b. the seller’s product enjoys an advantage not shared by its competitors in the tying
market.
c. a substantial number of customers have accepted the tying arrangement and the sole
explanation for their willingness to comply is the seller’s economic power in the tying
market.
d. All of the above.
e. (a) and (c), but not (b)
For soldiers on active duty and sailors at sea:
a. most statutes have specialized, more formal requirements for wills.
b. in most jurisdictions, personal and real property can be passed by soldiers’ and
sailors’ wills.
c. most statutes relax the formal requirements for a will and permit a testamentary
disposition to be valid regardless of the informality of the document.
d. specialized wills allow for general gifts only.
Which of the following would generally be considered to be a revenue-raising licensing
law?
a. A statute requiring that doctors be licensed
b. A statute requiring that salespeople be licensed, but not establishing any educational
or training requirements
c. A statute requiring public school teachers to be licensed
d. A statute that requires insurance agents to pass a test before selling insurance in a
state
A promise or order is payable at a definite time if it is payable:
a. on or before a stated date.
b. at a definite period of time after sight or acceptance.
c. at a time readily ascertainable at the time the promise or order is issued.
d. All of the above.
Refusal of a tender of performance by one party to a bilateral contract will:
a. be treated as a repudiation, excusing the tendering party from further duty of
performance under the contract.
b. not discharge either party from further duty of performance under the contract.
c. be considered a condition subsequent.
d. None of the above.
Marilyn, George, and Christine pool their money to buy land for a vegetable garden.
They plan to sell the produce at a roadside stand that summer. Are they partners?
a. Yes, since they co-own the land
b. No, because they each control the use of the land
c. Yes, because if there’s a loss in the land’s value, they will all share that loss
d. No, they are merely joint venturers
What does it mean that an agreement is void because it violates public policy?
The UCC Battle of the Forms rule:
a. changes the mirror image rule.
b. may yield different results depending on whether the parties are merchants.
c. may result in formation of a contract different from the terms of the offer.
d. All of the above.
Barb sets her prices to undercut her competitors by 20%. This is:
a. vertical price fixing.
b. market allocation in restraint of competition.
c. no violation of the Sherman Act.
d. per se illegal.
Title VII of the Civil Rights of 1964:
a. is enforced by the FTC.
b. applies to employers engaged in an industry affecting commerce and having fifteen
or more employees.
c. has been displaced by the Civil Rights Act of 1991.
d. forbids discrimination in the workplace involving hiring, promotion, and retention,
but does not cover transfer and retirement discrimination.
The case in which the court held that a newspaper advertisement was an offer because it
contained a promise of performance in definite terms in return for a requested act was:
a. Catamount Slate Products, Inc. v. Sheldon.
b. Newman v. Schiff.
c. Lefkowitz v. Great Minneapolis Surplus Store, Inc.
d. Osprey L.L.C. v. Kelly-Moore Paint Co., Inc.
The board of directors is delegated the power to manage the business of the corporation,
which includes:
a. determining the capital structure and financial policy of the corporation.
b. declaring the amount and type of dividends.
c. formulating major management policy.
d. All of the above.
e. None of the above.
The 1933 Securities Act defines the term ‘security.” The courts have generally
interpreted the statutory definition to include non-traditional forms of investments. The
Supreme Court of the United States has adopted a two-tier analysis of what constitutes
a security. Within this analysis the Court has used a three-part test to determine whether
a non-traditional financial transaction constitutes an investment contract and thus a
security. Explain: (a) the 1933 Act’s statutory definition of security, (b) the courts’
general interpretation of the 1933 Act’s definition and (c) the Supreme Court’s two-tier
test.
Which of the following need NOT be included in the certificate filed by a limited
partnership under the RULPA?
a. The name of the limited partnership
b. The name and address of the agent for service of process
c. The names of each of the limited partners
d. The name and business address of each general partner
Which of the following statements about corporate dissolution is incorrect?
a. A creditor cannot force a corporation into dissolution.
b. A corporation will be dissolved if all shareholders vote to do so.
c. A Secretary of State may start an administrative proceeding to dissolve a corporation
for failure to pay taxes.
d. A shareholder may petition a court to dissolve a “deadlocked” corporation.
Miller has a contract to sell 1,000 bushels of wheat to a bakery. The wheat is stored in a
grain elevator and has become infested with insects. Miller is:
a. discharged from performance because of impossibility.
b. discharged because of frustration.
c. not discharged, but must substitute wheat or pay damages to the bakery for breach of
contract.
d. discharged if he can prove that he did not cause the damages to his wheat.
Tate enters into a contract with Smith under the terms of which Smith is to pay Tate
$7,000 and Tate is to build a garage, repair a boat, and build a doghouse. If the
doghouse has not yet been built, which term describes the type of contract in existence?
a. Quasi contract
b. Executed contract
c. Illusory contract
d. Executory contract
Zeron Corporation stock may be summarized as follows:
100,000 authorized
90,000 issued
75,000 outstanding
15,000 treasury stock
How many shares or proxies will have to be present for a quorum (assuming no special
provision and that the Revised Act is not in effect)?
a. 45,001
b. 37,501
c. 30,001
d. 50,001
A Chapter 13 plan of reorganization may include all but which one of the following?
a. Priority debts must be paid in full unless the debtor waives that right.
b. The trustee must control future wages.
c. Assets must be liquidated.
d. The rights of secured and unsecured creditors may be modified.
Gary owns and operates a farm and a farm machinery dealership. Under the Code, a
new tractor that Gary has for sale at his dealership is classified as:
a. farm products.
b. equipment.
c. consumer goods.
d. inventory.
An insured holds a $32,000 fire insurance policy on a building which is valued at
$40,000, and on which there is an 80% co-insurance clause. If the building is totally
destroyed by fire, the policyholder will receive:
a. $40,000.
b. $32,000.
c. $30,000.
d. $25,600.
ABC Bank sent Joanne, a depositor, her January statement on January 31. Within what
length of time after this date will Joanne have to examine the statement and enclosed
items and notify ABC bank of any errors?
a. 10 days
b. 30 days
c. 60 days
d. 1 year
Which of the following is not true?
a. To have the full benefit of negotiability, negotiable instruments not only must meet
the requirements of negotiability but also must be acquired by a holder in due course.
b. A transferee of a negotiable instrument can acquire rights no greater than those of the
transferor.
c. A holder in due course takes a negotiable instrument free of most of the defenses to
which an assignee would be subject.
d. The number of checks written each year has decreased in recent years.
An artist would like to protect one of his original oil paintings from being sold as
original prints. He may protect his painting by applying for a:
a. copyright.
b. patent.
c. trademark registration.
d. service mark registration.
An easement may be created in which of the following cases?
a. The landowner agrees to it orally.
b. It is necessary for access to the land.
c. It is taken by using the land adversely to the rightful owner’s use openly for a period
of years.
d. All of the above.
e. Both (b) and (c) above are correct.
Chris was driving a car with defective brakes very slowly down Fifth Avenue looking
for a parking place. Mindy jumped out into the street five feet in front of his car. Chris
could not avoid hitting her. What is Chris’s best defense to the charge of negligence?
a. Mindy had a mental deficiency.
b. Chris was not negligent since he did not have a statutory duty to keep his brakes in
top condition.
c. Mindy illegally crossed in the middle of the street, which was a superseding cause of
the accident.
d. Chris was lawfully seeking a parking place and did not see her jump out.
An intentional breach of contract is generally held to be material.
Under the RULPA, a limited partnership may not use a name that is deceptively similar
to that of any corporation or other limited partnership.
A federal agency is required to consider only all reasonable alternatives in an EIS.
To be considered giving value to meet the requirements of being a holder in due course,
a person need not pay the face amount of the instrument.
Caryn deposits a check in her bank at 2:30 on Monday. The bank may, under the Code,
treat the check as having been deposited on Tuesday for purposes of meeting the
midnight deadline rule.
During the past twenty years or so, inside directors’ number and influence in most large
corporations have increased dramatically.
Banks may not pay checks issued by a customer who has died.
The estate of a debtor includes wages earned after commencement of a Chapter 7
liquidation proceeding.
Andrew has a contract to buy 100 tables from Bartholomew at a price of $50 a table.
Five days before Bartholomew is to deliver the tables, he tells Andrew that he is sorry,
but $50 won’t cover his costs; he will need at least $75 a table. Andrew agrees, because
he needs the tables for his special sale. The modified contract is enforceable without
new consideration, so long as Bartholomew is acting in good faith.
An agreement in connection with the sale of a business that prohibits the seller from
engaging in the same or a similar business for a period of twenty-five years would be
unreasonable.
All employees are agents, but not all agents are employees.
The lawful possessor of land is liable to adult trespassers for failure to maintain the land
in a reasonably safe condition.
Manuel applied for a variance from the local zoning ordinance in order to build a
building. His neighbor Sandra appeared before the zoning board to speak in opposition
to the application. At the hearing, Sandra testified under oath and made several
untruthful statements regarding Manuel’s character which she believed, but which were
not correct. The variance was denied. Manuel is now considering a lawsuit against
Sandra for slander. Does Manuel have a valid cause of action for slander against
Sandra? Explain. What are the elements that he must prove to win a case of slander?
What defenses can Sandra raise to the action?
An approved SIP is treated as both state and federal law.
Fritz is seriously considering bankruptcy because he has a large number of outstanding
debts, the principal ones of which are as follows: (1) he owes his ex-wife $25,000 in
back alimony and child support; (2) he owes $20,000 in guaranteed student loans; (3)
he has a lawsuit pending against him in which his ex-girlfriend is asking for $50,000 in
damages (the suit is based upon the intentional tort of battery and arises from an
incident in which Fritz got mad at his girlfriend and hit her); and (4) he owes the First
Bank $20,000 for the loan securing his new sports car. Should Fritz file for bankruptcy?
In 2006, the SEC abolished the requirement that a registration statement disclose
compensation paid to senior executives and directors.
Edwina wrote an original novel entitled “Good Thunder on the Prairie” and registered a
copyright on her work. A vice-president/producer at a film studio read the book and
thought it would make an excellent made-for-television movie, so without consulting
Edwina, he developed a script based upon the novel and produced it as “Thunder Storm
on the Prairie.” What, if any, recourse does Edwina have under the circumstances?