Which of the following is an example of an improper payment?
a. A payment made after a letter of credit has expired.
b. A payment made in excess of the amount authorized by the letter of credit.
c. Both a. and b. are improper payments.
d. Neither a. nor b. are improper payments.
A copyright prevents the copying of an idea.
Armenia purchased life insurance on her life. Regarding the beneficiary:
a. Armenia must name a person with a pecuniary interest in her life.
b. Armenia must name a close relative.
c. Armenia must name a close relative or business associate.
d. Armenia may name whomever she wishes.
When the indorser merely signs a negotiable instrument, the indorsement is called a
__________ indorsement.
a. special
b. qualified
c. blank
d. restrictive
If the parties to a contract agree to undo the agreement and return any consideration
involved, the contract is discharged by:
a. mutual cancellation
b. mutual rescission.
c. novation
d. accord and satisfaction
A promise that the grantor of an interest in land will execute any additional documents
required to perfect the title of the grantee is known as a covenant:
a. of seisin.
b. of further assurances.
c. against encumbrances.
d. of quiet enjoyment.
When particular goods have been selected by either the buyer or the seller, or both, as
being the goods called for by the sales contract, the goods are said to be
a. identified.
b. actualized.
c. realized.
d. materialized.
A negotiable promissory note was issued by Gold. It was properly issued in all ways.
Nevertheless, the payee managed to alter the note and raise the amount from $500 to
$5,000. A holder in due course presented the note for payment to Gold who discovered
the alteration. In this case:
a. Gold is liable for $500 only.
b. Gold is liable for the full $5,000.
c. Gold has no liability on the altered note.
d. Gold is liable for $2,500.
In which case will performance on the exact date specified in the contract most likely
be deemed essential?
a. a sale of goods that fluctuate rapidly in value.
b. a sale of goods that remain stable in value.
c. a sale of real estate.
d. a sale of goods where no harm results from a delay in performance.
The promisor in a contract may also be called the:
a. obligor.
b. grantor
c. obligee
d. grantee
The Securities Exchange Act of 1934 deals with the __________ distribution of
securities.
a. primary
b. secondary
c. aftermarket
d. direct
The party who writes or creates a promissory note is called the:
a. payee.
b. drawee.
c. drawer.
d. maker.
Which of the following is an example of limited or special jurisdiction court?
a. Probate court
b. Juvenile court
c. Domestic Relations court
d. All of the above.
A nuisance:
a. is created by every interference that has an effect on others.
b. is established when the plaintiff shows harm as the result of the defendant’s conduct.
c. arises only by an interference that is great enough to be condemned as unreasonable.
d. cannot arise from a lawful activity or business that is conducted in a lawful manner.
Statutory protections for privacy in cyberspace:
a. include state laws that are difficult to enforce against web sponsors with no presence
in the state.
b. often address specific issues such as financial information rather than general
protections .
c. may not protect an individual from federal agency “routine use”.
d. all of the above.
Under modern law, when the issue that an agency decides is a question of law based on
a technical statute:
a. the court on appeal will reverse the agency’s decision if the court disagrees with the
decision.
b. the court will not accept the agency’s decision unless the agency’s interpretation is the
only one that could have been made.
c. the court will tend to accept the agency’s interpretation of the law as long as it is
reasonable.
d. the court will not reverse the agency’s decision.
A tenant in possession has control of the property and is liable when his or her failure to
use due care under the circumstances causes harm to:
a. invitees.
b. licensees.
c. trespassers.
d. both a. and b.
An agreement that consists of two or more parts and calls for corresponding
performances of each part by the parties is called a:
a. partial contract.
b. divisible contract.
c. performance contract.
d. divided contract.
An instrument is conditional if:
a. it contains an order for the payment of money out of a particular fund.
b. it is to be paid from the assets of an existing trust.
c. it is to be paid from the assets of an existing estate.
d. none of the above.
In the case of an illegal contract, both parties usually are prohibited from seeking relief
in the courts:
a. if the illegal contract has not been performed.
b. if the contract has been partially performed.
c. if the contract has been fully performed.
d. all of the above.
A summary jury trial is:
a. binding on the parties.
b. a mock trial.
c. a full and complete hearing of all evidence pertaining to the case.
d. a shortcut to establishing judicial precedent.
Consequential damages may be recovered if:
a. the damages were not a foreseeable consequence of the breach.
b. the damages reasonably flow from the breach as a result of the injured party’s
particular circumstances.
c. the breach did not cause the damages.
d. the loss exceeds $500.
SEC Rule 10b-5:
a. is the principal antifraud rule relating to the secondary distribution of securities.
b. provides that a civil action for damages may be brought by any private investor who
purchased or sold a security and was injured because of false, misleading, or
undisclosed information.
c. applies to all securities, whether registered or not, as long as use is made of the mail,
interstate commerce, or a national stock exchange.
d. all of the above.
The rule that doing or promising to do what one is already legally bound to do is not
consideration applies to a part payment made in satisfaction of a(n) __________ debt.
a. unliquidated
b. superfluous
c. non-superfluous
d. liquidated
A limited liability company:
a. is the same type of business entity as a “Subchapter S” corporation.
b. has no restriction on the number of owners.
c. is taxed in a manner similar to that of a corporation.
d. has unlimited life regardless of what happens with any individual member.
A rule requiring that a franchisor provide a disclosure statement to all prospective
franchisees was adopted by the:
a. UCC.
b. Franchise Tax Board.
c. Securities and Exchange Commission.
d. Federal Trade Commission.
The Sarbanes-Oxley Act prohibits all corporate loans to directors and executive officers
unless:
a. the company is in the consumer credit business.
b. the loan is to relocate as part of an employment contract.
c. the loan is made to purchase securities.
d. none of the above as all loans are prohibited.
The Immigration Reform and Control Act of 1986 (IRCA) sets forth what types of
penalties against employers who knowingly hire aliens who have illegally entered the
United States?
a. criminal
b. civil
c. both criminal and civil
d. neither criminal nor civil
The Sherman Act does not prohibit:
a. a company from engaging in purposeful conduct to exclude competitors.
b. a seller from dominating a market because of superior product or business.
c. competitors from agreeing not to deal with certain buyers.
d. all of the above.
A third-party beneficiary contract may be amended:
a. with the consent of the beneficiary.
b. by operation of law.
c. if the contract allows modifications without the beneficiary’s consent.
d. all of the above.
One element involved in the determination of unconscionability is:
a. the comparative bargaining power of the parties.
b. the opportunity to make a contract for better terms with someone else.
c. the course of the economy after the contract is made.
d. whether a loss will be sustained by performance of the contract.
Which of the following contract defenses cannot be raised as a defense against
suretyship obligations?
a. Lack of capacity
b. Absence of consideration
c. Mistake
d. All of the above defenses may be raised.
An offer is effective only if it is communicated by the offeror in person.
The drawee on a check is a bank.
The theory of justice is based on the concept that if there were no laws or rules
reasonable people would develop fair rules and standards.
“Without reserve” auctions give the auctioneer the right to withdraw the goods from the
sale process if the bids are not high enough.
A common carrier is liable for all delays in the delivery of goods.
Quasi contracts are contracts.
In a negotiable instrument, the promise or order to pay must be unconditional.
Transfer or possession and use of bailed property without compensation is a gratuitous
bailment.
Consequential damages may not be recovered, even if they were within the
contemplation of the parties at the time of contracting.
Action taken by shareholders without holding a meeting is valid under the RMBCA if it
is evidenced by a written consent signed by all the shareholders entitled to vote on the
action.
Accountants are equally liable to interlopers and rightful third parties.
Destroying information stored on a computer may be a crime.
When one party breaks the contract, the contract is said to be breached.
The two principal legal theories under which a plaintiff may prove a case of unlawful
employment discrimination are disparate treatment and disparate impact.
Donna called her stockbroker Henry and told him to purchase 300 shares of Royex
Corporation shares at $15 per share, the current market price. Henry agreed to do so,
but became distracted and failed to do so. The price of the shares rose $3 in price that
day. In the evening, Donna in a telephone conversation agreed to sell 300 shares of
Royex to Sid. Assuming Henry and Donna dispute the validity of the contracts, which
of the contracts are enforceable in court?
An ordinary bailment can arise without an agreement between the parties.
The sale of corporate assets outside the regular course of a corporation’s business is an
example of an extraordinary matter.
Ordinarily, action by shareholders has legal effect as a corporate act only if such action
is taken at a regular or special meeting of the stockholders.