An unsecured credit transaction involves the greatest benefit to the creditor.
If an agent has authorized his subagent to make a certain contract and this authorization
is within the authority granted to the agent by his principal, the principal is bound to the
subagent’s contract.
In recent years, courts have often struck down as unconstitutional, broad Congressional
delegations of power to administrative agencies.
The two step process for obtaining an enforceable security interest consists of
attachment and perfection.
Partners who wind up the business of a dissociated partnership have implied authority
to sell all the assets of the partnership.
Administrative agencies typically possess a broad mix of governmental powers
resembling those associated with the three traditional branches of government.
Administrative agencies are created by orders from the courts.
If the buyer is not a merchant, then her obligation after rejection is limited to returning
the goods to the seller.
In a foreclosure by “action and sale,” deficiency judgments are generally not permitted
if the property sold is the residence of the debtor.
In return for services Charles performed for Richard in the past, Richard promises to
pay Charles $1000. There is no consideration for Richard’s promise.
In Exclusive Dealing Contracts under the UCC, sellers have an obligation to use their
best efforts to supply the goods to the buyers.
If no agreement is made between a buyer and seller on inspection then the UCC
indicates that a buyer may inspect the goods at any time the buyer choses as long as it is
reasonable.
In a partnership, each partner has limited personal liability to partnership creditors.
If the seller does not make a reasonable contract for delivery or notify the buyer and a
material delay or loss results, the buyer has the right to reject the shipment.
A creditor who fails to file suit to collect a debt within the time prescribed by the
appropriate statute of limitations loses the right to collect it.
A living will is a will under which bequests and devises to beneficiaries take place
while the testator is still alive.
United States-based firms that engage in international business activities must
remember that they could be subject to antitrust complaints in other nations.
“Check 21” is the popular name for a federal law that enables banks to process checks
electronically.
If the seller contracts to deliver goods to a certain destination and the contract says
“Ex-ship,” the seller bears the risk of loss until it delivers the goods to a shipper.
Under the Restatement (Second) of Contracts, intoxication will make a contract
voidable if the other party has reason to know that the intoxicated person is so
intoxicated that he/she cannot understand the transaction.
An indorsement is a signature of the holder typically on the back of a check.
The notice required of a dishonored check from the drawer to an indorser to hold the
indorsers’ to their contractual obligation can be either written or oral.
An agreement that violates legislative and court-made rules and creates threat to public
policy shall be denied enforcement on the ground of illegality.
The UCC imposes a duty of good faith on the performance and enforcement of every
contract it covers.
Lakeland Bank certifies a check that subsequently is cashed by Pine Federal Credit
Union. Pine Federal Credit Union is not liable for any damages associated with the
check.
Any authorized ownership and exercise over an instrument is referred to as conversion.
A partner’s transfer of his/her transferable interest has no effect on his/her status as a
partner, absent a contrary agreement.
The insurance relationship is contractual.
A limited partner in a limited partnership has the right to manage the limited partnership
business.
The Consumer Financial Protection Bureau (CFPB) has authority to take regulatory
action to prohibit hidden fees charged by a financial institution.
The primary corporate objective is to make money for the shareholders.
Mutual mistake is more likely to make a contract voidable than is unilateral mistake.
In most states, landlords must give a reasonable advance notice to the tenant before
exercising the right to terminate the tenancy.
The importance of the terms FOB and FAS in contracts for the sale of goods is that they
obligate the buyer to pay immediately upon delivery of the goods.
When contracting, one party is entering into an agreement with the federal government
to enforce behavior on another party.
Bill is 25 years old. His uncle had promised in writing to pay him $2,000 if Bill would
refrain from drinking alcohol for one year. Bill refrained from drinking alcohol for one
year. However, his uncle now refuses to pay Bill as agreed-upon. The uncle claims that
because Bill suffered no detriment by refraining from alcohol, his non-drinking does
not constitute legal consideration and therefore no contract was formed. If Bill sues his
uncle, Bill will:
A. win because Bill had a legal right to drink alcohol.
B. lose because consideration must have monetary value.
C. win because no consideration is needed in this contract.
D. lose because refraining from an action can never be considered legal consideration.
Most of the states have passed _____ to permit their courts to exercise jurisdiction
under the decision of the International Shoe case.
A. international statutes
B. amendments to the state constitution
C. amended commerce laws
D. long-arm statutes
Delta Corp. leased 60,000 square feet in an office building from Tanner under a written
25-year lease. Which of the following statements is correct?
A. Tanner’s death will terminate the lease and Delta will be able to recover any resulting
damages from Tanner’s estate.
B. Tanner’s sale of the office building will terminate the lease unless both Delta and the
buyer consent to the assumption of the lease by the buyer.
C. In the absence of a provision in the lease to the contrary, Delta does not need
Tanner’s consent to assign the lease to another party.
D. Delta Corp. can legally take possession of Tanner’s building at the end of the lease
period.
_____ is the method by which the rights of the property owner are cut off so that the
lienholder can realize her security interest.
A. Reimbursement
B. Garnishment
C. Foreclosure
D. Subrogation
Which of the following committees of a board of directors reviews and approves
salaries of high-level corporate executives?
A. Executive committee
B. Compensation committee
C. Nomination committee
D. Audit committee
Sam agrees to make partial deliveries of goods over three months to Winston. The first
delivery was late by two weeks. Why should Winston object to this late delivery?
A. Winston may be required to pay in advance for future deliveries.
B. Winston may waive his rights to cancel the contract if other deliveries are late.
C. Sam may cancel the contract.
D. Sam may be excused from performing all his contractual obligations.
Which of the following situations is most likely to trigger liability for a vertical boycott
under Section 1 of the Sherman Act?
A. Evidence indicates that a conspiracy existed between a manufacturer and its
nonterminated dealers to terminate a price-cutter.
B. Evidence indicates that a manufacturer unilaterally refused to deal with a price-cutter
who failed to follow the manufacturer’s suggested resale prices.
C. Evidence indicates that a manufacturer has terminated a discounting distributor after
receiving complaints from its other distributors.
D. Evidence indicates that a manufacturer and its nonterminated dealers were engaged
in an unlawful vertical price-fixing conspiracy.
Krieg’s will created a trust to take effect upon Krieg’s death. The will named Krieg’s
spouse as both the trustee and personal representative (executor) of the estate. The will
provided that all of Krieg’s securities were to be transferred to the trust and named
Krieg’s child as the beneficiary of the trust. Which of the following is true under the
circumstances?
A. Krieg has created a testamentary trust.
B. Krieg’s spouse may not serve as both the trustee and personal representative.
C. Krieg has created a spendthrift trust.
D. The trust is invalid because securities cannot be transferred to a trust.
Which of these is an essential element of a bailment?
A. The bailee has no responsibility for the bailed property.
B. There has to be a written agreement between the two parties.
C. The bailee is allowed to make changes to the bailed property.
D. The bailor owns personal property or holds the right to possess it.
An offer which is unclear about the form of acceptance that is necessary to create a
contract, is called a(n) _____ offer.
A. ambiguous
B. reasonable
C. implied
D. counter
The judicial standard of review often used in cases involving informal agency
adjudications or rulemaking is the:
A. substantial evidence test.
B. beyond reasonable doubt review.
C. de novo review.
D. arbitrary and capricious test.
In general, which of the following is least likely to unconstitutionally burden interstate
commerce?
A. A state law requiring that all state vehicles burn gasoline produced and refined
within the state.
B. A state law imposing tougher purity standards on food imported from out of state
than from food produced in-state.
C. A state law requiring in-state liquor distillers to post the prices at which they will sell
in-state, and not to exceed those prices when they sell in other states.
D. A state tax on gasoline that makes it more expensive for trucking companies to route
their trucks through the state.
A bilateral contract is accepted by when the offeree:
A. performs the requested act.
B. makes the promise requested by the offer.
C. accepts the offer in silence without prior indication.
D. makes additional inquiries regarding the terms.
In which of the following situations has the holder of a negotiable instrument not given
value for it?
A. Where the holder takes the instrument as security for an antecedent claim.
B. Where the holder gives a negotiable instrument in return for the one received.
C. Where the holder receives the instrument as a gift.
D. Where the holder acquires a security interest in the instrument.
Ace Computers (AC) is a manufacturer. It entered into a contract with a retailer,
Reliable Computer (RC) for the sale of 100 new XYZ model computers at $1,000 each,
for delivery in 6 months. AC would thus make a profit of $50,000. Six months later
however, the XYZ model has become almost relatively obsolete; its market price is
only $600 at that time. RC refuses to accept or pay for those computers. If AC sues,
how much should it be entitled to in damages? (Ignore any incidental expenses or cost
savings to AC.)
A. Nothing; when the XYZ model became almost obsolete, this excused RC from the
contract.
B. $50,000, the profit AC would have made had RC not breached the contract.
C. $40,000, the difference between market price and contract price.
D. $90,000, the lost profit plus the difference between market price and contract price.
The difference between executive agencies and independent agencies is that:
A. independent agency heads are appointed by Congress.
B. independent agency heads serve fixed terms in office.
C. executive agency heads are appointed by executives of corporations.
D. executive agency heads can be removed by Congress.
Which of the following is most likely to be considered a sale of goods to which the
UCC applies?
A. A dentist places a crown over a patient’s tooth.
B. A gas station sells a new battery for a car.
C. A hairstylist uses a crme rinse in styling a client’s hair.
D. A spinal readjustment from a chiropractor.
Which of the following is true regarding promissory estoppel?
A. It requires reasonable reliance on the promisor’s promise.
B. It requires a written promise.
C. It requires consideration.
D. It applies only when one party is a merchant.
What does tender of delivery mean?
A. The seller must make the goods available to the buyer.
B. The buyer must accept and pay for the goods if they conform to the contract.
C. Where delivery is to be made in lots, the seller can demand the price of each lot upon
delivery.
D. The goods are to be delivered at the buyer’s place of business.
Which of the following is true of a spendthrift trust?
A. The settlor can make himself the beneficiary.
B. It restricts the voluntary transfer of a beneficiary’s interest.
C. Assignees can claim rights to it.
D. Creditors can claim rights to it.
Roger and Erick make a bet concerning whether a certain rich citizen will die within the
next year. Neither party has any economic interest in this person’s fate, except for that
created by the bet. This agreement is:
A. unenforceable if the statutes prohibit wagering agreements.
B. unenforceable because it tends toward the commission of a crime.
C. unconscionable because it contemplates the destruction of life.
D. a valid and enforceable risk-allocation agreement.
A(n) _____ must state the remedy requested in the case.
A. summons
B. interrogatory
C. affirmative defense
D. complaint
The _____ case is an example of litigation initiated by commercial telemarketers
questioning the legal validity of the do-not-call registry.
A. Central Hudson
B. Kraft
C. Evory
D. Mainstream Marketing
Which of the following is true about dissociation?
A. It is a partner’s right to dissociate himself from the partnership.
B. A partner has the power to dissociate from the partnership at any time.
C. When a partner’s dissociation violates the partnership agreement, it is nonwrongful
dissociation.
D. Consequences of wrongful and nonwrongful dissociations are always the same.
How can a patentee transfer ownership of the patent to another party?
A. Specification
B. Assignment
C. Delegation
D. Infringement
The Fair Debt Collection Practices Act (FDCPA) does not bar debt collectors from
contacting third parties such as the debtor’s employer, relatives, or friends.
In a bailment, the bailee is liable for loss or damage to the bailed property while it is in
the hands of the bailee:
A. under all circumstances; the bailee is the “insurer” of the goods.
B. only if the bailee intentionally causes harm or loss to the goods.
C. unless the bailee has given some consideration.
D. only if he has a personal interest in the safety of the property.
Which of the following can recover damages for proven actual injury, but not presumed
or punitive damages, by proving only fault?
A. A public official plaintiff involved in a subject of public concern
B. A public figure plaintiff involved in a subject of private concern
C. A private figure plaintiff involved in a subject of public concern
D. A private figure plaintiff involved in a subject of private concern
Tom Smith is hired as an agent of Lakes Computer System. As part of the agency
responsibilities Tom is to wire offices for clients in the country of Israel. Prior to his
leaving war breaks out and the U.S. government post a ban on travel to Israel. What is
the status of the agency of Tom Smith?
A. It is probably terminated by operation of law.
B. It is terminated by the act of the parties.
C. It is terminated under international law.
D. It is terminated under religious law.
Termination of a partnership occurs automatically after:
A. wrongful dissociation has occurred.
B. dissolution has occurred.
C. the assets of the partnership have been distributed.
D. the winding up process has begun.
Samson Dsouza submits a financing statement in the year 2000 to perfect his security
interest against Kevin. Later in the year 2006, Samson tries to attach the security
interest in the property. Will Samson succeed in the attachment of the security interest?
A. Samson will succeed since he has filed his financing statement.
B. Samson will not succeed as the financing statement has lapsed.
C. Samson may enforce his security interest by filing continuation statement.
D. The security interest will automatically be enforced.
_____ are general rules of thumb employed in statutory interpretations.
A. Idioms
B. Phrases
C. Quotations
D. Maxims