An automatic stay ends:
a. upon dismissal of the bankruptcy case.
b. when the debtor receives a discharge.
c. only by court order.
d. Both (a) and (b).
Lostowne was economically depressed until Sally’s Firecracker Corp. moved their
factory there. Test explosions and the acrid smell of sulfur were interfering with Bob’s
enjoyment of the old family home. Bob sues Sally for nuisance and motions the court to
issue an injunction to close down the factory. In determining whether the injunction is
appropriate the court will:
a. “balance the equities.”
b. consider the gravity of harm to Bob and his family.
c. consider the social value of Sally’s business.
d. consider the public interest in the jobs created by Sally and the economic upturn in
Lostowne.
e. All of the above.
In most states, a trustee’s investment decisions are usually governed by:
a. the prudent person rule.
b. judiciary determination.
c. the beneficiary’s intent.
d. The Uniform Principal and Income Act.
Automatic perfection would occur in which situation (assuming a written security
agreement)?
a. Mary buys a refrigerator for her apartment on credit.
b. Carl buys a computer for his office on credit.
c. Carl buys a computer for his office by borrowing the money for the purchase.
d. Both (a) and (b).
e. All of the above.
The Equal Employment Opportunity Commission (EEOC) is empowered to:
a. only file legal actions in its own name.
b. try to resolve alleged violations through informal means, but not bring suit in federal
or state courts.
c. investigate all charges of discrimination.
d. issue binding orders on employers who unfairly discriminate.
An association of banks created for the purpose of settling accounts with each other on
a daily basis is a:
a. payor banking group.
b. clearinghouse.
c. provisional reserve.
d. None of the above.
John agreed to build a new house for Ted. Unknown to John, Ted was an agent for
Russell Realty. John built the house as agreed. When Ted refused to pay, John became
aware that Ted was an agent for Russell. John wants to sue on the contract. Under the
Second Restatement, John:
a. must sue Ted, because Ted is the person with whom he dealt.
b. can collect judgments against Ted and Russell.
c. must sue Russell, because Russell is the principal.
d. can sue either Ted or Russell.
A landlord has an obligation to repair premises:
a. under the common law if the lease has no related provision.
b. and, if the landlord assumes that duty in the lease, the breach of the duty entitles the
tenant to abandon the premises and refuse to pay rent.
c. including lobbies, stairways, elevators, and other common areas.
d. All of the above.
Audit working papers would include all but:
a. accountant fees accrued for the year from all accounts.
b. information disclosed during the audit.
c. conclusions reached.
d. records of accounting and auditing procedures and tests performed.
The first bank to receive a check for collection is the:
a. depositary bank.
b. drawee bank.
c. payor bank.
d. intermediary bank.
Which is an irrevocable offer?
a. A bid to construct a bridge for the city
b. An offer to buy stock in the ABC Corporation once it is formed
c. A unilateral offer to pay John $30 to mow your lawn at the point that he has
completed half the job and indicates he wishes to finish
d. All of the above.
Steve purchases a four-wheel drive truck from Belk Auto Sales. Steve is only 17 years
of age. He wrecks the vehicle and attempts to disaffirm the contract and have Belk
repay him all that he has paid. In the majority of jurisdictions, Steve:
a. would be out of luck.
b. must have the truck repaired.
c. will receive his money less the depreciation in value of the vehicle.
d. may simply return the vehicle and get his money.
The European Community was the predecessor to the:
a. ICJ.
b. GATT.
c. CISG.
d. EU.
Fred agreed to loan George $10,000 for his retail store for which George signed a
promissory note. Two months later, Fred heard that George’s business was in trouble
and that he might not be able to repay the loan. As a result of hearing this information,
Fred asked Herman to guarantee the loan. Herman gave a glowing oral endorsement of
George and of George’s business and then orally promised to pay the $10,000 if George
did not. Herman has done business with George for 10 years and George buys his entire
inventory from Herman’s wholesale outlet. Herman adds that George is his major
customer. Is Herman’s agreement to pay the $10,000 if George does not pay it
enforceable?
a. No, because the statute of frauds requires that the suretyship agreement be in writing
b. Yes, because even though the statute of frauds applies, the main purpose rule
exception will probably make the agreement enforceable
c. No, because there is a personal defense available
d. Yes, because Herman’s is a conditional guaranty of collection
In which of the following situations is restitution available as a remedy?
a. As an alternative remedy for a party injured by breach
b. For a party in default
c. For a party who may not enforce the contract because of the statute of frauds
d. All of the above are situations where restitution is available.
The Oak Grove Partnership decided it would buy personal computers for use by each
partner. Cromwell, a partner, had an ownership interest in a computer store. He thought
he could get the computers for the partnership at the best price because of his inside
position, and he told his partners at Oak Grove about his position. He did obtain eight
computers for $150 over manufacturer’s price, which was $250 less per computer than
the next lowest bid. What consequence?
a. There was a sale, but no profit to the computer store.
b. There was a sale, but the computer store would only receive a percentage of the profit
equal to Cromwell’s ownership interest in the store and the partnership would receive
the balance.
c. There was a sale, and the computer store would receive the profit of $150 per
computer.
d. There would be no sale, because Cromwell had an interest in both businesses.
Which of the following is NOT an element of fraud?
a. Material misrepresentation
b. Competent parties
c. Knowledge of falsity
d. Justifiable reliance
Actionable fraud would be likely to be based on falsity of:
a. a car owner’s statement that, “This car is the best buy you will find.”
b. a realtor’s statement that, “The contractor used 25-year warranted shingles on the
roof.”
c. an art dealer’s statement that, “This painting will increase in value.”
d. a stockbroker’s statement that, “This stock should double in price within six months.”
With regard to UCC Article 6, which of the following is true?
a. The 1988 joint recommendation of the National Conference of Commissioners on
Uniform State Laws and the American Law Institute was for states to adopt the revised
version of Article 6, which the majority of states have done.
b. At least 45 states have repealed Article 6.
c. Article 60 is a revision of Article 6.
d. All of the above.
e. None of the above.
Paul is driving a truck delivering goods for his partnership when he negligently backs
into a customer’s new car. The customer sues the partnership and recovers $6,000 in
damages. What liability do the other partners have for Paul’s actions?
a. No liability
b. Liability based on their capital contributions
c. Individual liability but not joint liability
d. Joint and several liability
Richard writes a letter to Sarah authorizing her to sell his car and sends a copy of the
letter to Timothy, a prospective purchaser. If the next day Richard sends a letter to Sarah
revoking her authority, but he fails to notify Timothy, Sarah:
a. has actual authority to sell the car to Timothy.
b. has implied authority to sell the car to Timothy.
c. has apparent authority with respect to Timothy to sell the car.
d. is empowered under the doctrine of respondeat superior to negotiate the contract.
A warrant is required for a search by the police except where:
a. the police are in hot pursuit of a criminal.
b. voluntary consent is given to the search.
c. evidence of a crime is in plain view of the police officer.
d. All of the above.
For a ratification to be effective, the principal must:
a. have knowledge of all material facts concerning the transaction.
b. communicate her intent to ratify to the third party.
c. have been in existence when the act was done.
d. Both (a) and (c) are correct.
A negotiable electronic document of title:
a. is not possible, since a document of title must be in tangible form.
b. running to the order of a named person must be indorsed in order to negotiate it.
c. may be delivered by voluntarily transferring control rather than by voluntarily
transferring possession.
d. is tracked by a system of control created and set forth in Revised Article 7 of the
UCC.
A ninety-year-old patient walked away from a nursing home and wandered onto some
nearby railroad tracks. Once on the tracks, the patient stumbled and sprained his ankle.
A few minutes later a train approached. The engineer saw the man on the track and
could have stopped, but the train’s brakes were defective. As a result, the train hit and
killed the man. His family is suing the railroad for negligence. In this case:
a. the patient has assumed the risk of wandering onto the railroad tracks.
b. because the patient was contributorily negligent, most states would hold that the
railroad has no liability.
c. in states that follow the contributory negligence rule, the train had the last clear
chance to avoid the accident, so the patient’s negligence does not bar his estate’s
recovery.
d. the train’s striking of the man was an intervening cause, so the railroad company was
strictly liable.
Apparent authority may arise in all but which of the following ways?
a. The acts are customary of an agent in similar positions in an organization.
b. The principal has acquiesced to prior similar transactions between the agent and the
third party.
c. The agent shows the third party a power of attorney from the principal authorizing
the agent to enter such a transaction.
d. An agent tells the third person she has the authority to transact such business on
behalf of the principal.
A defense available to the employer in an action for workers’ compensation is that:
a. the employee assumed the risk.
b. the employee’s injury happened before he came to work.
c. the employee was contributorily negligent.
d. a co-worker caused the injury.
If all milk producers in the area agree to set a minimum price for raw milk, this would
be an example of:
a. horizontal allocation.
b. vertical market restraint.
c. horizontal price fixing.
d. a tying arrangement.
An involuntary petition in bankruptcy:
a. eliminates the operation of an automatic stay.
b. may only be filed under Chapter 7 or 11.
c. must be filed by the trustee.
d. eliminates the need for the court to order a discharge.
Stella goes to Ranger’s Department Store to look for clothes. The store is in the process
of remodeling, and there is a lot of clutter in the aisle. Stella trips over the clutter and
breaks her leg. What standard of care does the store have toward Stella under the
circumstances?
a. None, because she came to the store voluntarily.
b. The store owes her a duty of only ordinary care, because she is a trespasser.
c. Because she is a licensee, the store must warn her of hazards of which the store
knows but which Stella is not likely to discover.
d. Because Stella is a business visitor, the store must exercise reasonable care to protect
her against dangerous conditions she is unlikely to discover.
A zoning ordinance may be challenged in the court by proving:
a. it bears no reasonable relation to public health, safety, morals, or welfare.
b. it involves the exercise of powers not granted to the municipality by the enabling act.
c. the restriction deprives a person of all use of the property.
d. Any of the above.
Conglomerate mergers have been challenged only where:
a. one of the merging firms would be highly likely to enter the market of the other firm.
b. the merged company would be disproportionately large compared with the largest
competitors in its industry.
c. Both (a) and (b).
d. None of the above.
If the FTC rules that a seller has made a false or deceptive advertising statement, the
Commission:
a. has no power to address the practice.
b. can require the seller to make additional advertisements to correct it.
c. can require the company to go out of business.
d. can report the company to the President of the United States for deregulation.
Acid rain:
a. is precipitation containing high levels of phosphoric acid.
b. is caused primarily by emissions from automobile parts manufacturers and petroleum
refineries.
c. is regulated by 1980 amendments to the Clean Air Act.
d. federal regulation permits companies to bank or sell their emission allowances.
Mark is out sailing in his boat one evening when he hears a young girl crying for help
in the lake. Which of the following is true?
a. Mark MUST help the girl or he will be liable for negligence.
b. Mark must help the girl ONLY if he knows her.
c. Mark MUST help the girl if he is the girl’s uncle.
d. Mark MUST help the girl if he begins to rescue her and moves her to a position
farther from the shore.
The “rule of reason” requires the courts to balance the anticompetitive effects of
behavior in restraint of trade with its positive effects on competition.
An employee may quit the Tel Ko Company and then use information he learned at Tel
Ko in competition with Tel Ko, unless there was some unfair competition or a trade
secret involved.
There is an established rule in the law of torts that even one who has not created a peril
has a duty to take affirmative action to assist an imperiled person, no matter what the
relationship with that person, when the imperiled person can be saved from harm at
little or no personal risk to the rescuer.
A modification of a preexisting contract occurs when the parties agree to change one or
more of its terms and, under the common law, must be supported by mutual
consideration to be enforceable.
An automobile may be considered a necessary item for a minor.
Death or insanity of either the offeror or the offeree ordinarily terminates the offer.
A creditor will have to exhaust all the possible legal procedures to try to collect from
the principal debtor before he can collect from a conditional guarantor of collection.
When will a court enforce a liquidated damage clause? When will a court refuse to
enforce one?
In a novation, the delegator is discharged and the third party becomes directly bound
upon his promise to the obligee.
A person can be guilty of trespass whether he or she intended or did not intend to
violate the other’s rights.
Property insurance policies are freely assignable before, but not after, a loss occurs.
An implied-in-fact condition and constructive condition are the same.
The fact that a drawer has filed a stop payment order automatically relieves the drawer
of liability on the underlying obligation.
A limited partner may vote on the sale of all of the assets of the limited partnership or a
change in the nature of the business without being deemed to have taken part in control
of the business.
The Klodhoffer Corporation has assets amounting to $2 million and needs additional
capital to finance expansion of its marketing operation. The board of directors decides
to promote an issue of $500,000 of common stock in order to raise capital. At the time
the stock is issued, Klodhoffer has 250 shareholders owning common stock. If
Klodhoffer is to trade the stock over the counter, does it need to register with the SEC?
An assignor is bound by any express warranties he makes to the assignee with respect
to the right assigned.
If Harold buys a tomato plant, he owns the tomatoes produced by the plant based on
“confusion.”
Under a shipment contract, the seller passes title to the buyer when the goods arrive.