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Marilyn read an ad in the school newspaper offering a $1,000 swimming scholarship to
anyone who could swim 500 laps in the school pool. Marilyn called the advertiser and
began swimming. She has reached lap number 460; she feels great and is sure she can
make it all the way. The advertiser:
a. may revoke the offer since there has not yet been an acceptance.
b. may not revoke the offer since Marilyn has already accepted it.
c. must permit Marilyn the opportunity to finish her attempt to swim the 500 laps, or
pay damages if he interferes with the completion of the laps.
d. must pay Marilyn $920, because she has performed 92% of the offer.
The federal government has no restrictions under the Constitution on its power to
impair contracts since the Contract Clause restricts only actions of the states.
a. True
b. False
William agrees to drill a well up to 200-feet deep for John's rural cabin. The contract
price is $3,000. After drilling 100 feet, William strikes solid granite rock. He talks to
John and explains that this is highly unusual for the area and could not have been
anticipated at the time of entering into the contract. He offers to get a special drill, but
says it will cost him more money, so that he will be unable to complete the project for
the agreed price. Because John is anxious to have the well, he agrees to pay William an
additional $1,000 to complete the job. However, once the well is finished, he changes
his mind and now says he will pay only the originally agreed-upon amount. What is the
result?
a. The parties have agreed to a substitute contract which discharges the original
contract. John is obligated to pay the additional $1,000.
b. The agreement for $4,000 is binding because of provisions of the UCC.
c. William is in breach of contract. John need not pay any additional money.
d. William is under a pre-existing moral duty to perform at the originally agreed-upon
price.
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.
The 1969 amendments to the MBCA, which were carried over to the Revised Act,
tightened restrictions on closely held corporations.
a. True
b. False
The scope of an EIS:
a. does not apply to psychological effects.
b. does not apply to the urban environment.
c. is narrowly construed.
d. applies to a broad range of types of effects.
Which of the following would be the most convincing evidence of a partnership?
a. An agreement to share in the management of a business.
b. Agreements to share gross returns.
c. An agreement to share profits and losses.
d. An agreement to pay a firm manager a percentage of the profits for his salary.
Implied warranties under the Code:
a. depend on the type of contract or sale entered into.
b. are a result of specific language in the sales contract.
c. continue the common law rule of caveat emptor.
d. are intended to protect the seller rather than the buyer.
Robinson Wiring Co. submits a written offer for Turner Constructions use as part of its
bid as a general contractor for an office complex. Robinson knows Turner is relying on
Robinsons bid. Robinson:
a. can revoke its offer at any time until it is notified that Turners bid has been accepted.
b. cannot, under the doctrine of promissory estoppel, revoke its bid even prior to
acceptance.
c. cannot revoke its offer since it is a "firm offer.
d. can revoke its offer for a reasonable time under the doctrine of "commercial
reasonableness.
A corporation formed in substantial compliance with the incorporation statute and the
required organizational procedures is a:
a. de facto corporation.
b. de jure corporation.
c. corporation by estoppel.
d. private corporation.
Insurance companies have been successful in limiting the authority of local selling
agents to bind the company through waiver or estoppel.
a. True
b. False
A bailment may be made of either real or personal property.
a. True
b. False
The rule of reason test, under the Sherman Antitrust Act:
a. considers the makeup of a relevant industry.
b. does not consider the defendant's position in that industry.
c. considers the defendant's need for the financial gain from the restraint of trade.
d. does not consider competitor's ability to respond to the challenged practice of
restraint of trade.
An agent may not make a secret profit from any transaction subject to the agency.
a. True
b. False
A check is a draft payable on demand.
a. True
b. False
The liability of manufacturers and sellers of goods for a defective product or for its
failure to perform adequately may be based on one or more of the following:
negligence, misrepresentation, violation of a statutory duty, warranty, and strict liability
in tort.
a. True
b. False
The Council on Environmental Quality is a four-member advisory group to the EPA.
a. True
b. False
A corporation may purchase its own shares only out of earned surplus unless the articles
of incorporation or the shareholders permit purchase out of capital surplus.
a. True
b. False
The Truth-in-Lending Act establishes maximum amounts of interest that can be charged
for credit cards.
a. True
b. False
Embezzlement and forgery are considered white-collar crimes.
a. True
b. False
A valid contract may be unenforceable for which reason(s)?
a. Failure to satisfy the statute of frauds.
b. Running of the statute of limitations.
c. Both failure to satisfy the statute of frauds and running of the statute of limitations.
d. A valid contract is always enforceable.
Greg has been in the business of selling collectible figurines for twenty years. Margaret
agreed to buy a set if Greg would also bring her a display case for them. Greg bought
one and sold it to Margaret along with the figurines. While placing the figurines in the
display case, she ran her hand over the back edge of one of its shelves and cut herself
severely. The wood was not finished on that side and nails were protruding through the
shelf. Can Margaret sue Greg under strict liability?
a. Yes, because the display case was in an unreasonably dangerous condition.
b. Yes, because the display case was defective.
c. No, because she was not a true consumer under Sec. 402A.
d. No, because Greg is not a seller under Sec. 402A.
Under the Securities Exchange Act of 1934, an accountant's liability for false or
misleading statements is based on a good faith negligence standard.
a. True
b. False
While certain debts of an individual are not dischargeable under Chapters 7, 11, and 12,
all debts are dischargeable under Chapter 13's "hardship discharge" provisions.
a. True
b. False
Any kind of notice of dishonor that informs the recipient of potential liability is
sufficient.
a. True
b. False
Morgan is the maker of a promissory note payable to Hillary on August 29. If Hillary
fails to make proper presentment of the note to Morgan on August 29, Morgans liability
on the note is not affected.
a. True
b. False
Which of the following is true regarding noncompliance with the statute of frauds?
a. The basic legal effect under the statute of frauds and the UCC differs.
b. The statute of frauds applies to executed and executory contracts.
c. A party to a contract which was unenforceable because of the statute of frauds but
who relied upon the contract may recover in restitution the benefits he conferred on the
other party.
d. The doctrine of promissory estoppel cannot displace the requirement of a writing
under a statute of frauds.
Which of the following is not an express warranty?
a. Restating facts or market figures about a product.
b. The opinion of an expert in a certain field regarding a product in that field.
c. A statement of the product specifications.
d. The seller's opinion of the value of goods.
The executor-administrator provision applies to promises of an executor of a decedent's
estate to the decedent's creditors.
a. True
b. False
Res ipsa loquitur makes it easier for the defendant to prevail in a negligence action.
a. True
b. False
The board of directors cannot declare dividends when the corporation:
a. is insolvent.
b. is merging with another corporation.
c. is the subject of a takeover bid.
d. issues new stock.
Emma calls her bank to issue an oral stop payment order on a check on March 1st. She
then leaves town for two weeks to visit her mother. When she returns, she goes to the
bank to sign a written stop payment order, but finds the bank has already paid the
check. What recourse does she have? Explain.
What are the requirements of negotiability under the Code? List and briefly summarize
them.
Under what conditions do courts impose a constructive trust?
Through his observation of human behavior, psychologist Lawrence Kohlberg
developed a model of moral development. Describe the stages of moral development
that were studied and developed by Kohlberg and the relevance of this model for ethical
business behavior.
Discuss ARMs and their regulation.
Identify the three types of patents, their requirements, and duration.
Discuss invasion of privacy and identify possible defenses.
What defenses can be raised by a criminal defendant who is found to have committed a
criminal act?
Explain what may constitute a material breach and list the several basic principles that
must be applied to determine if a material breach exists in a given contract.
Define dissolution under the UPA and discuss its three causes.
Sharp Finance Company has furnished Keith with some pre-printed forms for
customers to sign to finance repairs on their homes. After the customers sign the notes
naming Keith as the payee, he sells them to Sharp Finance. Sometimes Keith is busy
and does a poor job on the homes so he can get on to the next job. When customers
complain, he says hell get around to fixing the problems. If the customers dont pay the
note, Sharp Finance sues them. Can the customers use the defenses they have against
Keith against Sharp? Explain.
What elements need to be proved to establish each type of fraud?
Bankruptcy legislation serves a dual purpose. What are these purposes?
Identify the three types of discriminatory conduct, including disparate treatment,
prohibited by Title VII of the Civil Rights Act of 1964.
Explain the difference between the lien theory and the title theory in relation to
mortgages.
Explain the effect that a reference to other agreements has on negotiable instruments
and the difference between a mere reference and a negotiable instrument's being subject
to the terms of another agreement.
Name the classifications of corporations.
