When a court says that an agreement is illegal, it most likely means that the agreement:
A. has not mentioned a time period for which the agreement is valid.
B. does not identify the parties involved in the agreement.
C. is related to buying and selling of trade secrets.
D. violates public policy.
The basic governing document of the corporation is the:
A. articles of incorporation.
B. bylaws.
C. shareholder agreement.
D. organizational operating agreement.
Which of the following helps a plaintiff to seize the property that belongs to the
defendant but is in the hands of a third party?
A. Class action
B. Garnishment
C. Non obstante veredicto
D. Settlement
Which of the following is generally true regarding the tort of conversion?
A. It involves both real property (land and interests in land) and personal property.
B. As its name implies, conversion always involves the transformation of the plaintiff’s
property into something else—e.g., its destruction, alteration, etc.
Which of the following is true of the period during which parties can file a lawsuit for
breach of a sales contract?
A. The parties can extend it for a period longer than six years after the breach occurs.
B. The parties to a contract may shorten this period to one year after the breach occurs.
C. The parties are free to determine the period during which the lawsuit can be filed.
D. The lawsuit must be filed within two years after the breach occurs.
Which of the following is true about financing statements?
A. A financing statement never includes descriptions of the real estate.
B. A financing statement serves as an implied notice to the world.
C. A financing statement is effective for a period of three years from the date of filing.
D. A financing statement must give the name of the secured party.
Which of the following statements will cause an instrument to be nonnegotiable?
A. “Payment is subject to the terms of a mortgage dated August 30, 2005.”
B. “Payment is secured by a mortgage dated August 30, 2005.”
C. “Payment is in consideration of two months’ rent.”
D. “Payment to be made 30 days after date, for a note dated August 30, 2005.”
An administrative agency is most likely to use a subpoena to compel information from:
A. public interest groups.
B. businesses subject to regulation.
C. customers or competitors.
D. other regulatory agencies.
Linda wanted to replace the old carpet in her home. She entered into a contract with
Carpet Co., for the purchase and installation of a new carpet. The price of the carpet
was $3,000 and the cost of the labor to install the carpet was $150. Later, Linda became
dissatisfied with this transaction and now wants to sue Carpet Co. Linda wants to apply
the contract rules of the UCC, but Carpet Co., wants to apply the contract rules of the
common law. Which source of law should govern this case?
A. The contract rules of the UCC apply, because the contract included the sale of goods.
B. The contract rules of the UCC apply, because the predominant purpose of the
contract was sale of goods.
C. The contract rules of the common law apply, because the contract included services,
which are governed by the common law.
D. The contract rules of the common law apply, because all contracts are governed by
the common law.
Which of the following is a characteristic of administrative agencies?
A. They derive their power from the Supreme Court.
B. They make ordinances and pass executive orders.
C. They are generally created by a statute.
D. They are elected bodies.
The law makes individuals suffering from mental illness lack capacity to enter into
contracts because:
A. The mental ill tend not to vote in large numbers
B. Those with mental illness would be at a disadvantage in their ability to protect their
own interest in bargaining
C. An individual cannot be on public assistance and be legally competent to enter into a
contract
D. There is fear that those with mental illness would manipulate and harm those that
they would enter into contracts with
What was the original reason for granting Congress the power to regulate interstate
commerce after the Revolution?
A. To generate federal revenue
B. To establish federal supremacy
C. To block protectionist restrictions on trade
D. To enable a transition to a unitary system
A bank’s right or duty to charge a depositor’s account for a check can be terminated
when a:
A. stop-payment order from the depositor after the bank has certified a check.
B. depositor files a bankruptcy petition.
C. notice of garnishment of the account by the depositor.
D. creditor of the depositor files a bankruptcy petition after the notified cut-off hour on
the banking day after the check is received.
Which of the following actions constitutes the acceptance of an offer?
A. Offeree made material alterations to the terms of the offer
B. Offeree intended to enter the contract only if requisite changes were made
C. Offeree reflected assent to the terms of the offer in the requisite manner
D. Offeree suggested addition of new terms that were earlier not addressed in the offer
In which of the following cases will the U.S. Supreme Court have original, but not
exclusive, jurisdiction?
A. When the validity of any treaty has been questioned.
B. When the validity of a federal statute has been questioned.
C. When there is a controversy between two or more states.
D. When a state proceeds against citizens of another state.
Under the Model Nonprofit Corporation Act (MNCA), members have an absolute right
to inspect and copy a list of the members.
Leonard, Ted, and Julius are partners at Jutle Associates. They signed a two year lease
agreement with Property Company for business purposes. Five months into the new
agreement, Leonard dissociates from the partnership. Under what circumstances will
Leonard no longer be liable on the lease agreement?
A. Leonard gives proper notice to Property Company of his intent to dissociate from
Jutle.
B. The three partners and Property Company enter into an appropriate novation
agreement.
C. Leonard filed a Statement of Dissociation more than 90 days prior to leaving the
partnership.
D. Property Company will not serve to relieve Leonard of liability under the lease
agreement.
What is the term for an agreement that makes the shareholder sell his shares back to the
corporation at a price determined in the agreement and binds the corporation to
purchase the shares?
A. Option agreement
B. Buy and sell agreement
C. Fiduciary agreement
D. International agent agreement
Daniel owes Casey a debt, the amount of which is subject to a good faith dispute. The
parties agree to settle the debt, with Daniel promising to pay Casey $15,000 and Casey
promising to release Daniel on a $25,000 debt. The settlement agreement:
A. is supported by consideration.
B. lacks consideration because Casey is not giving Daniel any legal value.
C. lacks consideration because Daniel is promising to perform a preexisting legal
obligation.
D. is binding under UCC section 2-209 even though there is no consideration.
At a _____, the judge meets informally with the attorneys for both litigants in an
attempt to get the attorneys to stipulate, or agree to, a resolution of certain issues in
order to simplify the trial.
A. demurrer
B. directed verdict
C. pretrial conference
D. minitrial
Shania Watson has a checking account at the Capital Bank of New York. She goes to
Lowe’s and agrees to buy an electric water heater priced at $700. She writes a check to
pay for it. Shania is the _____ of the check.
A. payer
B. drawer
C. payee
D. drawee
Under the Racketeer Influenced and Corrupt Organizations Act (RICO), a pattern of
fraud is proved by the commission of:
A. two predicate offenses within a 10-year period.
B. five predicate offenses within a 20-year period.
C. two predicate offenses within a 20-year period.
D. five predicate offenses within a 10-year period.
AceCom Corporation issues dividends to its 30 shareholders. Each shareholder is well
aware that the corporation will be insolvent and unable to pay its creditors following the
dividend distribution. Efone is one such creditor. Under the Model Business
Corporation Act (MBCA), primary liability to Efone:
A. does not lie with the shareholders because they can never be held liable to creditors
of the corporation.
B. lies with the shareholders because they received the distribution from the corporation
with knowledge of the impending insolvency.
C. lies with the directors because they authorized the unlawful distribution of dividends.
D. does not lie with the directors because they placed the interests of the shareholders
above everything else.
In the case of an intestate estate, the personal representative to it is called a(n) _____.
A. trustee
B. executor
C. administrator
D. beneficiary
The Parol Evidence rule is relevant only in cases:
A. that are oral in nature.
B. where parties have expressed an agreement.
C. of the sale of goods.
D. subsequent modification do not have a suitable consideration.
According to Sarbanes-Oxley Act, how long must audit and review working papers be
retained?
A. 2 years
B. 7 years
C. 10 years
D. 20 years
Enumerated powers are those powers that the _____ can exercise.
A. states
B. Congress
C. U.S. Supreme Court
D. trial courts
Miranda leased an apartment, which had broken floorboards, from Gail. She invited her
friend Claire for dinner one evening to the apartment; during the course of the evening,
Claire slipped on the floorboards and broke her ankle. Which of the following is true of
the case?
A. Claire cannot recover any monetary damages.
B. Claire cannot recover any damages for trauma.
C. Claire can recover damages only from Miranda.
D. Claire can recover damages from Gail.
Automobile insurance is what type of insurance?
A. Insurance for personal property
B. Corporate insurance protection
C. Professional insurance
D. Insurance rider
_____ is a process which begins with the buyer giving the seller a check, and the seller
using the information on that check to name itself as the payee and forwarding it for
collection through an automated clearing house.
A. Source documentation
B. Check conversion
C. Account aggregation
D. Check truncation
When personal property is used in conjunction with, real property in such a way as to
be treated as part of the real property, it is known as a _____.
A. consideration
B. gift
C. fixture
D. bailment