A majority of the members of an LLC must agree for a plan to merger.
If a buyer treats goods shipped to him/her as though he owns them then the UCC
considers the buyer to have accepted the goods.
Attachment of a security interest is a necessary condition for its perfection.
A shortcoming of the CERCLA is that the federal and state governments must bear the
sole financial burden for cleaning up the sites.
Under the Pennsylvania system, the general contractor’s failure to perform his contract
or his abandonment of the work has a direct effect on the lien rights of subcontractors
and materialmen.
The Justice Department and the Federal Trade Commission (FTC) share responsibility
for enforcing the Clayton Act.
Only when the promoter is liable on the preincorporation contract is the other party
liable on the contract.
Dick steals a computer belonging to Tom from his house. Then Dick represents himself
as Tom and sells the computer to Lawrence. Here, Lawrence draws a check payable to
Tom and delivers the check to Tom. Here, Tom is called the impostor.
The period of time between the filing and the effective date of a share offering is called
the waiting period.
The probate process involves collecting the decedent’s property, paying off debts, and
distributing the remaining property to others.
Defamation liability requires publication of the defamatory statement to an appreciable
number of people.
A contract made by a person who has been adjudicated to be insane and
institutionalized or put under a guardian’s care is void rather than voidable.
The term for the person who receives insurance proceeds paid to them is the
beneficiary.
A restrictive covenant may no longer be valid if the circumstances surrounding the need
for the covenant drastically change.
A deed which provides notice to the public at large about the grantee’s property interest
is called a recorded deed.
Under the stakeholder theory of corporate social responsibility, employees’ interests are
considered.
The rule on adequacy of consideration reflects the laissez-faire assumption of freedom
of contract.
Indorsements that state a condition to the right of the indorsee to receive payment do
not affect the right of the indorsee to enforce the instrument.
An individual is barred under federal law from filing for bankruptcy twice within a
4-year period.
A corporation may have several classes of common shares with unequal voting rights.
An agent’s implied authority is always considered superior in law, and thus can
contradict principal’s express statements.
The Federal Reserve operates a domestic wire transfer system known as Fedwire.
One example of procedural unconscionability is the use of “fine print” in stating a
contractual provision.
The legal term for innocent misrepresentation is “scienter.”
The U.S. Constitution recognizes the states’ power to make law in certain areas.
A testator can revoke a will before his death.
Not-for-profit corporations have members instead of shareholders and none of their
surplus revenue may be distributed to their members.
The tort of malicious prosecution affords a remedy when the defendant mounted a
wrongful and unjustifiable civil suit against the plaintiff.
The Bankruptcy Code is a part of state law.
American legal realists distinguish between the “law-in-the-books” and the “law in
action” and they recognize law as the behavior of public officials (mainly judges) as
they deal with matters before the legal system.
Foreclosure is the process by which any rights of the mortgagor or the current property
owner are cut off.
Parties that are successful in an antitrust suit are entitled to recover treble damages.
Corporations must give notice of the annual meeting and special meetings to
shareholders.
Straight bankruptcy or liquidation is covered under Chapter 7 of the Bankruptcy Code.
Which of the following is an informal alternative method for promoting settlement of
disputes from a formal court trial?
A. Minitrial
B. Summary judgment
C. Directed verdict
D. Peremptory challenges
Enforcement authority for violations of the Controlling the Assault of Non-Solicited
Pornography and Marketing Act of 2003 (CAN-SPAM Act) was given to:
A. the FTC, state attorneys general and users of Internet access services.
B. the FTC, state attorneys general and providers of Internet access services.
C. district courts, state attorneys general and users of Internet access services.
D. the FTC, district courts, and providers of Internet access services.
A reservation of rights is issued by an insurance company when?
A. When it needs to defend the insured but wants to have an opportunity later to decide
if the accident is beyond coverage of insurance policy
B. When the amount of injury exceed the policy limit
C. When there is a third party involved from a different state
D. When an insured misses payment on a premium
Which of the following is most important for imposing strict liability?
A. Unavoidable circumstances
B. Unreasonably unsafe
C. Unreasonable expensive
D. Unavoidably protected
Mr. Green contracts with Mr. Brown for $500 to landscape the home of Roy who is Mr.
Green’s son. What is Roy’s status in the contract with Mr. Green and Mr. Brown?
A. Donee beneficiary
B. Incidental beneficiary
C. Corporate beneficiary
D. International beneficiary
In which of the following orders are the proceeds from the sale of collateral by the
secured party distributed?
A. Debtor, creditor’s debt, selling expenses, and junior interests
B. Selling expenses, creditor’s debt, junior interests, and debtor
C. Creditor’s debt, selling expenses, debtor, and junior interests
D. Junior interests, debtor, selling expenses, and creditor’s debt
James owns Great Expectations, a trendy restaurant in Manhattan. He enters into a
contract with Mary, who makes and sells pastries. The contract states that Mary will
“supply all of Great Expectation’s needs” for pastries for the next year. Is this contract
enforceable?
A. Yes, because this is a requirements contract.
B. Yes, but only if James buys all of the pastries produced by Mary in the next year.
C. No, because the promise fails to specify the quantity of goods to be purchased.
D. No, because James might not need any pastries in the next year.
The FCRA establishes _____ for persons who knowingly and willfully obtain consumer
information from a credit bureau under false pretenses.
A. cease-and-desist orders
B. out-of-court settlements
C. consent orders
D. criminal penalties
Every state or local municipality must file an environmental impact statement under
NEPA.
Which of the following draws on the personal property right connected with a person’s
identity and her exclusive right to control it?
A. Writing a political editorial on a public figure
B. Signing a person’s name on a petition that he/she is against
C. Commercially using someone’s name
D. Spreading malicious gossip about a well-known person
A special term used to define a freeze-out of shareholders of a publicly owned
corporation is:
A. oppression.
B. novation.
C. right of appraisal.
D. going private.
An agency’s legislative rules are considered as binding in nature and carry the full force
and effect of law, provided:
A. they are in consonance with the Administrative Procedure Act only.
B. they are in consonance with the Constitution but not necessarily in consonance with
the enabling legislation.
C. they are in consonance with the enabling legislation, but not necessarily with the
Constitution.
D. they are in consonance with the enabling legislation, the APA as well as the
Constitution.
The _____ is a very relaxed means-ends test of constitutionality which challenged laws
usually pass with ease.
A. rational basis test
B. intermediate scrutiny
C. due process test
D. full strict scrutiny
Ingmar wanted to buy Otto’s land. Otto did not want to sell. In order to pressure Otto
into selling the land, Ingmar brought a private nuisance lawsuit against Otto. In this
case, Ingmar has probably committed the tort of:
A. abuse of process.
B. malicious prosecution.
C. defamation.
D. deceit.
Which of the following is most likely to constitute ratification of a contract made by a
minor?
A. Not performing one’s duties under the contract after reaching the age of majority.
B. Nonperformance of the other party to the contract after the age of majority.
C. Failing to disaffirm a completely executory contract within one month after the age
of majority.
D. Making an oral statement that “I will ratify the contract.”
Under the Model Business Corporation Act (MBCA), a prospective shareholder may
not revoke a preincorporation subscription for a one-year period, in the absence of a
contrary provision in the subscription.
UCC section 2-302(a)(1) states that in order for an individual to become a holder in due
course the instrument must not on its face do what?
A. appear to be a forgery
B. written in a language other than English
C. have the signature of a foreigner
D. be on any other color paper than white
In general, which of the following statements is correct with respect to unemployment
compensation?
A. An employee who voluntarily quits work without a reasonable cause is entitled to
unemployment compensation.
B. An individual who has been discharged from employment because of
work-connected misconduct is ineligible for unemployment compensation.
C. The maximum period during which unemployment compensation may be collected
is uniform throughout the United States.
D. The maximum amount of unemployment compensation paid by a state is determined
by federal law.
An absolute $136,875 homestead cap applies if:
A. the debtor’s aggregate interest exceeds $1,450 in value in jewellery held primarily
for the personal, family, or household use of the debtor.
B. retirement funds that are in a fund or account are exempt from taxation under the
Internal Revenue Code.
C. the debtor’s interest exceeds $136,875 in value in real or personal property.
D. the bankruptcy court determines that the debtor has been convicted of a felony.
Baronet Company is a publicly owned company whose shares are traded on the NYSE.
Baronet acquired a small manufacturing plant in Nevada as part of its strategic growth
plan. Under the 1934 Act, which of the following reports must Baronet file with the
SEC within four business days of this event?
A. The 10-K
B. The 8-Q
C. The 10-Q
D. The 8-K
When can the offeror effectively revoke his/her offer?
A. Only after an effective acceptance.
B. Only before an effective acceptance.
C. Only before payment for goods or services has been made.
D. Only before the parties have completed their obligations under the contract.
Which of the following requires tenants to be married to each other?
A. Tenancy in partnership
B. Tenancy in common
C. Joint tenancy
D. Tenancy by the entirety
Which of the following typically characterizes community property?
A. Partners get a share depending on who earned the property.
B. One partner may convey property without the other’s approval.
C. It is property acquired during marriage.
D. Inheritance is covered under community property.
_____ ethical theories focus on the consequences of a decision.
A. Deontological
B. Teleological
C. Kantian
D. Rights
What type of damages is awarded to an injured party in a tort case to cover damages for
the harm that the injured party suffered?
A. Compensatory Damages
B. Punitive Damages
C. Criminal Fines
D. Liquidated Damages
Which of the following statements about ocean dumping is accurate?
A. The states have the responsibility for designating ocean disposal sites under the
Marine Protection, Research, and Sanctuaries Act.
B. The Clean Water Act has provisions for regulation of the disposal of dredge spoils
from dredging to keep harbors open.
C. The Marine Protection, Research, and Sanctuaries Act set up a permit system
regulating the dumping of all types of materials into ocean waters.
D. The Clean Water Act required that all ocean dumping of municipal sewage sludge
and industrial wastes be terminated by end of the 20th century.
Mr. Green enters into a contract with Ms. White to purchase legal ingredients used to
perfect an illegal marijuana manufacturing operation. Ms. White refuses to pay the
amount owed to Mr. Green and he sues in court. What is the court likely to do?
A. Recognize the contract but only allow 50% economic recovery for Mr. Green since
his products were used to produce illegal items.
B. The court will likely not enforce Mr. Green’s contract since it was part of an illegal
action.
C. The court will likely enforce the agreement if Mr. Green registered the contract with
the Secretary of State’s office.
D. The court will enforce the agreement if Mr. Green has lived in the forum state longer
than Ms. White.
One of the elements that must be demonstrated before a challenged tying agreement
will be held to violate Section 1 of the Sherman Act is that:
A. the seller commands 10 percent of market in the tied product category.
B. the tying product is available for purchase without the agreement.
C. the tying agreement involves two integrated components of a larger product.
D. the seller is the market leader in the tying product category.
What form of negligence involves the duty of a manufacturer to build a safe product?
A. Negligent design
B. Negligent hiring
C. Negligent battery
D. Incorporation
The extent of a person’s insurable interest in property is limited:
A. to the value of that interest.
B. to the market value of the property.
C. to the maximum value of the property.
D. the reasonable value of the property.
Which of the following corporate decisions requires an approval vote of the
shareholders?
A. Merger
B. Share trading
C. Purchasing land for office
D. Joint venture
Which of the following is least likely to fall within the scope of what is protected by the
copyright on the work in which it appears?
A. The physical arrangement and ordering of pieces of factual information on pages in a
reference book.
B. The melody of a song.
C. The dialogue spoken by actors in a TV commercial.
D. The theme of a short story.
Which of the following is NOT an element of the common law claim of negligence?
A. The defendant owed a duty of care to the plaintiff.
B. There were substantial monetary damages due to the actions of the defendant.
C. The defendant committed a breach of his duty to the plaintiff.
D. The breach committed by the defendant was the actual and proximate cause of injury
to the plaintiff.
In a Chapter 7 liquidation proceeding, the claims of creditors are paid in which of the
following order?
A. Priority claims take precedence over claims made by secured and unsecured
creditors.
B. The claims of secured creditors are satisfied first, followed by priority claims, and
lastly claims made by unsecured creditors.
C. Older claims are given priority over more recent claims.
D. Claims of secured creditor are satisfied first, followed by unsecured creditors, and
lastly priority claims.
Abe took his bicycle to a bicycle shop for repair. By mistake, a sales clerk sold Abe’s
bike to Leon. This was a sale in the ordinary course of business; neither the clerk nor
Leon was aware that the bike belonged to Abe. Can Abe recover his bike from Leon?
A. Yes, because title was never transferred to the bike shop.
B. Yes, because Abe never agreed to sell his bike.
C. No, because Abe entrusted his bike to the bike shop.
D. No, because all sales by a merchant transfer clear title to a good-faith buyer.
Joe Loser enters into an investment scheme with some reputed financiers. To get Joe’s
money, these people lie to Joe about several present facts that are critical to the
investment scheme. Later, Joe sues to rescind the investment contract on the basis of
fraud. While Joe is on the stand, the attorney for the other parties asks him: “Mr. Loser,
why did you enter this deal in the first place?” Joe says: “For the one and only reason: I
admired these men tremendously and figured that any deal good enough for them was a
deal I wanted in on too. The details didn’t matter; if they were in it, I wanted to be in it
too.” Joe has just blown his fraud case. Why?
Davis owes a $5 million debt to the C Bank. He also owes $2 million to Samuel.
However right now, Davis is having trouble paying either loan. C Bank is willing to
finance Davis’s debt, but only if Samuel co-signs. Samuel, who fears that he’ll get
nothing on his $2 million loan if Davis doesn’t get some help from the bank, is willing
to do so. Thus, C Bank, Samuel and Davis complete a three-party agreement in which
the bank agrees to finance the $5 million debt, Davis agrees to pay it back at a certain
rate over a certain term, and Samuel agrees to pay the debt “in the event that Davis first
defaults.” Is this agreement covered by the statute of frauds? Why or why not?
An individual can lead ethically while not attempting to behave in an ethically way.
Why does the Code provide for “accommodation” in cases of acceptance by shipment
of nonconforming goods?
A person distributes unsolicited e-mails to large numbers of employees of the company.
He does so illegally from the company’s e-mail system without consent of the company.
Has the distributor committed tort of trespass to personal property?
Corporations may be held criminally liable even in the absence of proof that high
corporate officers ordered or acquiesced in the offense charged.
Shoddy, the owner of Shoe Repair, was contemplating retirement. He therefore
contracted to sell his business to Pauline Parker. Shoe Repair was located in
Hoosierburg, Indiana, which has a population of 5,233. Apart from containing a
provision entitling Parker to use the Shoe Repair name for the business, the parties’
contract included a clause that prohibited Shoddy from opening any competing shoe
repair shop in Hoosierburg for a period of one year from the date of the parties’
contract. Two months after the date of the contract (and one and one-half months after
the sale of the business to Parker had been completed), Shoddy grew tired of retirement.
As shoe repair had been his life’s work, he opened up a shoe repair shop in
Hoosierburg. Parker has sued him in an effort to obtain an injunction against his
operation of the competing business, alleging a violation of the parties’ contract. How is
the court likely to rule? Explain your reasoning.
Before he died, Aaron created a charitable trust for the plantation of Analytica Beni
trees, nominating David as his trustee. Some years later, planting Analytica Beni trees is
declared illegal by the state. What remedies does David have available to him?
Under what circumstances can a shareholder have liability for corporate debts?
Mike buys a new $25,000 turbocharged Dodge Vampire for cash. The dealer requires a
certified check for that amount, so Mike gets his bank to certify his check for $25,000.
One day later, the bank goes bankrupt. Rather than trying to recover in bankruptcy, the
dealer pursues Mike. One of the dealer’s theories is that Mike is secondarily liable on
the check, and that the bank’s default makes Mike liable on the instrument. Is the bank
right?
Steve weighs 465 pounds and looks like it. Steve goes to a store and says that he would
like to buy a hammock suitable for someone like himself to sleep in. He makes it clear
that it is up to the salesman to select a suitable hammock. The salesman selects a
hammock that is perfectly suitable for a normally-sized person but that cannot support
someone of Steve’s weight. Relying on the salesman’s recommendation, Steve buys the
hammock. After he is injured when the hammock collapses because it cannot bear his
weight, Steve sues the store. Can Steve recover under the implied warranty of
merchantability? Assume that the store is a merchant with respect to hammocks.
As a condition of giving Doyle a thirty-year loan for $100,000, the Caldwell Bank
requires that Doyle procure a surety. Doyle pays Sal $5000 to serve in this role. Later,
Doyle and the bank make a binding contract to extend the term of the debt from thirty
years to thirty years and three months. Will this change discharge Sal from his
obligation? Make no assumptions except those stated here.
If an individual holds a note that is labeled consumer paper then that individual cannot
be a holder in due course.
On June 1, Dave Drawer writes a check to Pete Payee. The check is postdated to July 1.
Nonetheless, Pete presents the check for payment at Dave’s bank on June 15, and
receives payment on that date. After Dave learns of this, he screams bloody murder,
arguing that the check was not properly payable and that the bank should recredit his
account. Is Dave right?
What is the main difference between a void contract and a voidable contract?
Larry works for Shannon as a salesperson. Shannon gave Larry a credit card with
Larry’s name on it so that Larry could charge necessary business expenses to Shannon’s
business account. Larry charged $1,000 in personal expenses, wholly unrelated to
Larry’s employment. Does apparent authority exist? Discuss.