Susan bought Green Acre subject to a $500,000 mortgage granted by Joe to First Bank.
If Joe leaves for Bolivia and does not pay the mortgage, which of the following is true?
a. Susan will not have to pay the $500,000.
b. Susan will lose the land to First Bank (up to $500,000 value).
c. Both of the above are correct.
d. None of the above are correct.
In bankruptcy law, an insider may be defined as:
a. a limited partner of the debtor.
b. a relative.
c. one with inside information on prospective movement of a company’s position in the
marketplace.
d. Both (a) and (b).
The use of the qualifying word(s) ____ is/are understood to place purchasers on notice
that they may not rely on the credit of the person using the language.
a. “accepted”
b. “certified”
c. “without recourse”
d. “insufficient funds”
A shareholder’s obligation to repay an illegally declared dividend depends on:
a. the shareholder’s good or bad faith in accepting the dividend and his knowledge of
the facts.
b. the solvency or insolvency of the corporation and, in some instances, special
statutory provisions.
c. Both (a) and (b).
d. only the statutory liability on the part of directors.
Contract law:
a. has seen little change during the nineteenth and twentieth centuries.
b. has experienced an expansion of the absolute freedom of contract during the
twentieth century.
c. today usually recognizes contractual obligations whenever the parties manifest an
intent to be bound.
d. requires privity between parties seeking to enforce contractual rights.
Joanne had a paycheck from Pizza Plaza for $54 made out to her. She indorsed it with
her name and gave it to Larry, who in return agreed to paint her living room next
Saturday. In this case:
a. the check is not negotiable.
b. Larry is not a “holder.”
c. Larry is not a “holder in due course.”
d. Larry has given value for the check by his agreement.
Mixing identical goods from different owners is:
a. confusion.
b. accession.
c. possession.
d. gift.
Which of the following would NOT require a writing under the statute of frauds?
a. Where the buyer of a five-acre lot pays the $40,000 purchase price, thus fully
performing his obligation
b. Where a renter agrees to rent a building for a 5-year period
c. Where a contractor enters into an agreement for an easement across adjoining land to
run cables
d. Where a landscaper agrees to landscape the lot surrounding an office building
Tom, a trustee, fraudulently purchases property with trust funds and puts title in his own
name. What type of trust is created?
a. Constructive trust
b. Implied trust
c. Express trust
d. Resulting trust
A Federal Trade Commission rule limits the rights of a holder in due course of an
instrument that evidences a debt arising out of a(n):
a. consumer credit contract.
b. insurance contract.
c. consumer purchase paid for with a check.
d. construction contract.
Duties of a trustee in a case under Chapter 11 include all but which of the following?
a. To examine all proofs of claims
b. To provide the court with financial reports of the debtor’s business operations
c. To investigate the financial condition of the debtor
d. To file a list of creditors
The characteristics of a totten trust include that:
a. it is a bank account opened by the settlor of the trust.
b. it is tentative.
c. transfer of ownership is complete only on the depositor’s death.
d. All of the above.
Because of the ____, the contractual promise of a surety to the creditor must be in
writing to be enforceable.
a. main purpose doctrine
b. Uniform Commercial Code
c. Bankruptcy Act
d. statute of frauds
Alex tells Mona that he thinks her ring is very valuable and that he would like to take it
to be appraised. She gives him the ring, and he quickly sells it to unsuspecting Hanna’s
Antique Jewelry Shop for $2,000. A week later, Mona discovers her ring on sale at
Hanna’s and uncovers the story. Can Mona get the ring back?
a. Yes, a true owner can always recover his or her own property
b. Yes, since Alex had no title to the ring
c. No, since Alex had voidable title to the ring and Hanna was a good faith purchaser
d. No, since Hanna has paid for the ring
An absolute privilege exists to protect which of the following in defamation cases?
a. Members of Congress on the floor of Congress
b. Statements made by the U.S. President in the discharge of official duty
c. Statements about third persons between spouses when they are alone
d. All of the above.
Brett contracts to purchase a particular automobile from Johnson’s car lot. At what point
does Brett obtain a special property interest that enables him to insure the car?
a. When the car is tendered to Brett
b. When the contract is made
c. When Brett pays for the car
d. When Brett accepts the car
In which of the following situations would a minor be unable to disaffirm a contract
which he had made?
a. Upon restoring the consideration received in a situation involving a fully executed
contract
b. Where the minor wishes to affirm part of a contract and disaffirm another part of the
same contract
c. During the time of his minority or for a reasonable time thereafter
d. None of the above.
The UCC provides rules, where the parties do not set forth terms in their contract, to
cover:
a. terms of payment.
b. place of delivery.
c. particulars of performance.
d. All of the above.
Under the RUPA, a partner must manage the partnership affairs without ____
negligence to avoid violation of the duty of care.
a. ordinary
b. culpable
c. gross
d. any
The RMBCA provides what period of time within which an otherwise barred claim may
be enforced for a claimant who did not receive notice of dissolution and liquidation?
a. Six months
b. One year
c. Three years
d. Five years
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.
Garrett ordered 100 pieces of 2 x 6 lumber from his supplier and paid upon delivery.
Later, when he unpacked the lumber, he discovered that the supplier had delivered 2 x 4
lumber. After being notified, the supplier picked up the lumber, apologized, and gave
Garrett his money back. The response the supplier made to rectify the breach is:
a. an injunction.
b. mitigation.
c. liquidation of damages.
d. None of the above
Al has a tax service and accounting business in Redwood City. He decides to move to
Center City, which is 150 miles away and sells his accounting practice to Able and
Baker, a CPA firm. In the sales contract, he agrees that he will refrain from practicing
accounting anywhere within a 20-mile radius of Redwood City for a period of two
years. However, on weekends he returns to his house in Redwood City, and when
clients call him, he meets with them in his home. The sales agreement:
a. is being violated by Al.
b. is invalid, because it is an illegal restraint of trade.
c. is illegal, because it is a violation of public policy.
d. will be divided into an enforceable, valid portion and an unenforceable, invalid
portion, which is the time provision, because the two-year period is too long.
One of the fiduciary duties of directors is the duty not to compete with the corporation.
They may pursue their own business interest, but they may not:
a. use corporate resources.
b. hire away personnel for their own business.
c. use corporate facilities.
d. All of the above.
The All-Power Gas and Electric Company cleared a right of way across Larry’s land
and put up a power line, which it has maintained for the past 20 years. Now the
company wants to replace the old line with a new one, and Larry has decided he doesn’t
want them on his land.
The Justice Department’s policy toward conduct by foreign companies is to:
a. focus on boycotts and cartels that harm U.S. exports.
b. examine conduct to determine whether it would violate the law if it occurred within
the borders of the U.S.
c. expand the enforcement of the Sherman Act to include conduct by foreign companies
that harms U.S. exports.
d. All of the above.
One of the changes in contract law between the nineteenth century and the twentieth
century is that in more recent times:
a. contractual liability, once assumed, can rarely be escaped.
b. contract damages are viewed more narrowly and equitable remedies are no longer
available.
c. privity of contract is required.
d. intended third-party beneficiaries may sue in their own right.
Confirmation of a plan for reorganization under Chapter 13 may be given only if:
a. the plan complies with applicable law and is given in good faith.
b. the plan provides for payments longer than three years.
c. the debtor remains in possession of the estate.
d. all of the creditors agree to accept it.
The Revised Act and the majority of states hold that the officers’ and directors’ test of
the duty of diligence requires a director or officer to discharge her duties:
a. in good faith.
b. with the care an ordinarily prudent person in a like position would exercise under
similar circumstances.
c. in a manner she reasonably believes to be in the best interests of the corporation.
d. All of the above.
A precatory expression:
a. cannot impose a trust because of indefiniteness.
b. may be so definite as to impose a trust.
c. does not depend upon the court’s interpretation of the intent of the settlor.
d. is ineffective because it does not use the required words to create a trust.
A small damage amount fixed without regard to the amount of loss is known as:
a. reliance damages.
b. out-of-pocket damages.
c. nominal damages.
d. incidental damages.
Intent as used in the law of intentional torts requires the defendant to:
a. have a hostile motive.
b. desire to cause the consequence of her action.
c. believe the consequences are substantially certain to result from her action.
d. Both (b) and (c)
A felony is a more serious type of crime than a misdemeanor.
A sale of substantially all of the assets of a corporation in the ordinary course of
business of the corporation will not require shareholder approval.
Under the CISG, if the contract is avoided and the seller has resold the goods in a
reasonable manner, he may recover the difference between the contract and resale
prices.
Elko Inc. and Fulda Inc. closely monitor each other’s actions regarding the sale of
consumer electronic products. Each corporation tries to match the other’s product
designs and specifications, prices, and advertising strategies. As a result, the two
corporations have similar products, prices, and profits. Is this a violation of the antitrust
laws?
There is a federal uniform lemon law that applies across the states to protect consumers
in their purchase of new cars.
A description of the finance charges that said “1.8% per month compounded daily”
would comply with the rules of the Truth-in-Lending Act.
Stan offered Cheyenne, the chairperson of the Midtown Zoning Commission, a ten
percent interest in his proposed subdivision development if she would use her influence
to have his proposal approved by the commission. She refused to be a part of Stan’s
plan, so Stan cannot be found guilty of bribery.
Farmer Brown brings his crop of wheat to the local grain elevator where it is stored
along with the grain of several other farmers. Who owns the grain? Can Farmer Brown
get his grain back? Explain.
If Kenneth signs an employment contract for one year but is fired without cause after
two months and spends $500 in reasonable fees trying to find a comparable job, he may
recover $500 in incidental damages.
The state, a shareholder, or a creditor may bring a proceeding seeking judicial
dissolution.
Although most statutory enactments relating to employment are federal laws, state
statutes sometimes cover areas of employment law.
Like general partnerships, limited partnerships are statutory creations that did not exist
at common law.
A mortgagee cannot assign a mortgage without the consent of the mortgagor.
A restraint of trade may be classified as either horizontal or vertical.
A liquidated damage is a provision by which the parties agree in advance to the
damages to be paid in the event of breach.
In a “no arrival, no sale” contract, the seller is responsible to the buyer for the goods’
failure to arrive.
In states where limited liability limited partnerships (LLLPs) are available, a limited
partnership may register as an LLLP without having to form a new organization.
Mr. Chickilini is a surety for Wayne on a debt owed to Melvin. If Wayne fails to pay,
what defenses might Mr. Chickilini have to avoid payment of the debt?
A bearer instrument is comparable to cash in that it is negotiated by mere possession.