The Code determines negotiability at _____, so that indorsements do not affect the
underlying negotiability of the instrument.
A. precompliance
B. abeyance
C. issuance
D. disaffirmance
With an insurance contract who typically is the party that makes the offer?
A. The insurance company
B. The party seeking coverage
C. Neither, there is no initial offer
D. The government
Violations of the FCRA are violations of:
A. FTC Act Section 5.
B. FTC Act Section 10.
C. Section 43(a) of the Lanham Act.
D. Section 41 of the Lanham Act.
A hotelkeeper is liable for loss or damage to property if it can be proved that it was
caused by:
A. the bailor’s negligence.
B. an act of a government authority.
C. the nature of the goods.
D. the bailee’s or hotel’s own conduct that caused the damage.
The central question in most federal preemption cases is:
A. the intent of the Congress.
B. whether the federal law is supreme.
C. whether due process was afforded.
D. the application of the doctrine of judicial review.
A person who takes an instrument containing a restrictive indorsement, “Pay to Jack
Black in Trust for Mel Gibbs,”:
A. may not pay the proceeds to the indorsee without the due approval of the indorser.
B. may pay the proceeds to the indorsee paying due regard to whether the indorsee
violates a fiduciary duty to the indorser.
C. may pay the proceeds to the indorsee without regard to whether the indorsee violates
a fiduciary duty to the indorser.
D. may pay the proceeds to the indorser only with the approval and concurrence of the
indorsee.
Ojay Corp., A-C, Inc., and Kato Co. are competitors in the production and sale of
knives. A year ago, the three firms agreed to share pricing information with each other
on a periodic basis. As a result of this agreed sharing of information, the three
companies regularly charge the same prices, including a minimum price that none of the
three goes below and a maximum price that none of the three goes above. A fourth
producer of knives, Bronco Co., the plaintiff in a Sherman Act Section 1 lawsuit against
Ojay, A-C, and Kato. Bronco claims in the lawsuit that the foregoing facts constituted
price-fixing and that Bronco suffered direct antitrust injury as a result. Assuming that
Bronco is a proper plaintiff, which of the following is an accurate analysis under current
antitrust law?
A. Even if the defendants were involved only in conscious parallelism concerning
pricing policies, they will be held liable under Section 1 because their behavior caused
harm to the plaintiff.
B. If the court believes that the evidence demonstrates an agreement to fix prices, it will
hold the defendants liable under Section 1 regardless of the business justifications for
their agreement.
C. The defendants cannot be held liable under Section 1, because the facts indicate that
they agreed to share pricing information without agreeing to fix prices or making any
agreement to that effect.
D. The defendants should succeed with an argument that they are not liable for any
fixing of maximum prices, because any such price-fixing would have finally benefited
consumers.
Which of the following theories of recovery is likely to be most effective against a
disclaimer of liability?
A. Express warranty
B. Implied warranty of merchantability
C. Implied warranty of fitness
D. Section 402A
Which of the following factors will be most important in determining whether an
express warranty has been created concerning goods sold?
A. The seller’s description of the goods formed the basis of the bargain.
B. The buyer or seller is a merchant with respect to the goods being sold.
C. The seller intended to create the express warranty.
D. The buyer relied on the seller’s statements.
Normally, how long is the ordinary proxy valid for voting under the Model Business
Corporation Act (MBCA)?
A. 9 months
B. 1 year
C. 6 months
D. 11 months
Which form of damages is intended to give the victim of the breach of contract the
“benefit of the bargain”?
A. Compensatory
B. Punitive
C. Nominal
D. Liquidated
Under the TILA, if a credit plan for a home equity loan involves a variable interest rate,
the “index rate” to which changes in the APR are pegged must be:
A. based on creditworthiness of the debtor.
B. under the creditor’s control.
C. based on some publicly available rate.
D. under the debtor’s control.
Rice is a promoter of a corporation to be known as Dex Corp. On January 1, 1985, Rice
signed a nine-month contract with Roe, a CPA, which provided that Roe would perform
certain accounting services for Dex. Rice did not disclose to Roe that Dex had not been
formed. Prior to the incorporation of Dex on February 1, 1985, Roe rendered
accounting services pursuant to the contract. After rendering accounting services for an
additional period of six months pursuant to the contract, Roe was discharged without
cause by the board of directors of Dex. In the absence of any agreements to the
contrary, who will be liable to Roe for breach of contract?
A. Both Rice and Dex
B. Rice only
C. Dex only
D. Neither Rice nor Dex
The general law governing general partnerships is primarily found in the Revised
Uniform Partnership Act (RUPA).
Which of the following is true of U.S. efforts to curb greenhouse gas emissions?
A. In 2009, EPA issued a rule requiring annual reports of greenhouse gas emissions by
certain large sources, beginning in 2011.
B. The House of Representatives established a cap and trade program—similar to the
acid rain control program—for greenhouse gas emissions.
C. The EPA is barred from taking any actions to deal with greenhouse gas emissions.
D. The EPA introduced the “tailoring rule” that requires all sources to address their
greenhouse gas emissions as they get permits.
Most of the common law of corporations deals with:
A. creditor and shareholder rights.
B. incorporation of not-for-profit organizations.
C. promoter and manager rights.
D. incorporation of sole proprietorships.
In agency law the term ‘independent contractor’ is referred to as what?
A. Nonemployee agent
B. Employee
C. Incorporator
D. Organizer
Principals may try to escape liability for an agent’s misrepresentations by including
_____.
A. defensive conditions
B. exculpatory clauses
C. torts
D. ratification clauses
Why is a conditional gift considered to be an incomplete gift?
A. It may be revoked by the donor.
B. It involves money transactions.
C. The donee may refuse the gift.
D. The donor is liable to the donee in the future.
In the case of a merchant, _____ means honesty in fact as well as the observance of
reasonable commercial standards of fair dealing in the trade.
A. course of dealing
B. usage of trade
C. good faith
D. caveat emptor
Under the Bankruptcy Code a judge is allowed to reduce the debt of an unsecured
consumer creditor by what percentage?
A. 20%
B. 30%
C. 50%
D. 75%
Which of the following is most likely to breach one of the trustee’s fiduciary duties?
A. Selling stock owned by the trust to realize capital gains.
B. Selling stock owned by the trust because it has declined in value over the last three
years.
C. Delegating the selection of trust investments to an investment advisor.
D. Delegating the preparation of statements of account to an accountant.
Traveler’s checks commonly require, as a condition to payment, a countersignature of a
person whose specimen signature appears on the draft. Traveler’s checks are:
A. voidable.
B. negotiable.
C. nonnegotiable.
D. unenforceable.
Short-term certificated options that are usually transferable are referred to as:
A. options.
B. warrants.
C. bonds.
D. rights.
Shares permitted to be issued by a corporation are called:
A. preference shares.
B. issued shares.
C. authorized shares.
D. outstanding shares.
Sigmund enters into a contract with Carl. The terms are that Sigmund will purchase all
the gasoline that he wants to purchase in 2011, at a price of $2.50 per gallon, and Carl
agrees to sell on those terms. This is an example of a(n):
A. valid contract.
B. illusory contract.
C. voidable contract.
D. implied contract.
Which of the following is true about a partnership?
A. It is not a tax-paying entity for federal income tax purposes.
B. Business losses are deductible based on the limit on a partner’s individual tax return.
C. It does not have a life apart from its owners.
D. Partners in partnership do not assume personal liability for obligations of the
business.
Jack flipped a coin five times and each time it came up heads. His friend Atmel saw this
and bet Jack that the next flip would come up tails. Atmel figured that it was overdue
for a tails and so tails was a more likely outcome in the next flip. Atmel has fallen prey
to:
A. sunk cost fallacy.
B. reductio ad absurdum.
C. argumentum ad hominem.
D. gambler’s fallacy.
In which of the following circumstances would the bailee be expected to exercise
ordinary care?
A. Harold promises to look after Kate’s puppy in exchange for her cleaning his car.
B. Dave looks after Stacey’s dog while she is on vacation with her friends.
C. Nigel borrows a rare book from his professor to write a class report.
D. Melissa helps old Mrs. Henderson clean her garage on Sunday afternoon.
EU countries depend more on litigation instituted by private parties as the chief legal
means of dealing with misleading advertising. In this sense, the approach taken by EU
nations resembles advertising regulation in the United States under:
A. Section 5 of the FTC Act.
B. Section 4 of the Clayton Act.
C. Section 16(c) of the Sherman Act.
D. Section 43(a) of the Lanham Act.
Bob’s threat to breach an existing contract unless Lauren makes another contract with
Bob is considered:
A. an element of duress, because breach of an existing contract violates a criminal
statute.
B. an element of duress, depending mainly on the coerciveness of the threat.
C. not an element of duress, because it does not involve physical force.
D. not an element of duress, because breaking a contract normally does not violate a
criminal statute.