A novation occurs when there is a substitution, by agreement, of a new contract for an
old one, with the rights under the old one being terminated.
a. True
b. False
Mike is arrested at a warehouse in North Industrial Park and is charged with the crime
of theft. Mike will be prosecuted by
a. the owner of the warehouse.
b. the owner of the property that Mike is charged with stealing.
c. a public official.
d. any third party unrelated to Mike, the property, or the crime.
Dorothy files a petition for bankruptcy under Chapter 13. If she is granted a discharge,
debts that will most likely be discharged include
a. claims not provided for by the plan.
b. payments on retirement accounts.
c. claims for domestic support obligations.
d. credit-card debt incurred more than one year before filing.
In the case of Retail Sales Corp. v. Trucking Delivery Co., the court may rule contrary
to a precedent if the court decides that the precedent
a. is incorrect or inapplicable.
b. is not in line with the judges personal values.
c. would lead to unintended consequences.
d. would not bring about the result the judge prefers.
An assignment of rights in real estate often cannot be prohibited.
a. True
b. False
Fun Toyz Corporation makes skateboards, which it sells to con-sumers, including Holly
and Ira. Due to a defect, Holly is injured while using her new board. Iras board has the
same defect, but he is not injured. In a product liability suit based on strict product
liabil-ity, Fun Toyz may be liable to
a. Holly and Ira.
b. Holly only.
c. Ira only.
d. no one.
Child-support debts will be suspended by a voluntary bankruptcy filing.
a. True
b. False
Generally, acceptance of an offer to lease goods may be made in any reasonable manner
and by any reasonable means.
a. True
b. False
Jim is an appliance salesperson. To make a sale, he asserts that a certain model of a
Kitchen Helper refrigerator is the “best one ever made. This is
a. fraud if the statement is the truth.
b. fraud if Jim believes that this statement is not true.
c. fraud if Jim is stating his opinion, not the facts.
d. not fraud.
An Internet service provider is liable for any act of copyright infringement by its
customer.
a. True
b. False
A testator is a decedent who dies without a will.
a. True
b. False
Under the UETA, a contract is unenforceable if it is solely in electronic form.
a. True
b. False
The act of state doctrine provides that the executive branch of one country will not
examine the validity of public acts committed by a recognized foreign government
within its own territory.
a. True
b. False
Gaining unauthorized access to an electronic fund transfer system is a felony.
a. True
b. False
If a seller is an expert and gives an opinion as an expert, then he or she usually creates
an express warranty.
a. True
b. False
Property voluntarily discarded by its owner with no inten-tion of reclaiming it is
abandoned property.
a. True
b. False
For a minor to disaffirm a contract, he or she must present the contract to a court.
a. True
b. False
Violations of the Securities Exchange Act of 1934 may be subject to criminal
prosecution, but not civil liability.
a. True
b. False
A creditor must exhaust all legal remedies against the principal debtor before holding
the surety responsible for payment.
a. True
b. False
A-1 Furnishings, Inc., agrees to lease a desk to Business Resources, Inc. (BRI), which
requests that the desk be left outside City Warehouse for BRI to pick up. Before BRI
retrieves the desk, it is stolen. The loss is suf-fered by
a. A-1 Furnishings and BRI, but not City Warehouse.
b. A-1 Furnishings, BRI, and City Warehouse.
c. A-1 Furnishings only.
d. BRI only.
Entrepreneur Auto Rentals owes Sole Saver Auto Dealership $2,000. Entrepreneur
executes a note to Sole Saver as security for the debt. This security
a. does not constitute sufficient consideration for HDC status.
b. does not satisfy the value requirement for HDC status.
c. satisfies the consideration requirement for HDC status.
d. satisfies the value requirement for HDC status.
California enacts a statute to ban advertising in “bad taste. This stat-ute would likely be
held by a court to be
a. an unconstitutional restriction of speech.
b. constitutional under the First Amendment.
c. justified by the need to protect individual rights.
d. necessary to protect national interests.
Quin, an accountant, prepares for Reddy, Inc., a financial state-ment that omits a
material fact. The statement is included in Reddys registration statement with the
Securities and Exchange Commission. Timor, who reads the statement, and Ubi, who
does not, each buy Reddy stock. Velma reads the statement but does not buy the stock.
Under Section 11 of the Securities Act of 1933, Quin may be liable to
a. no one.
b. Timor and Ubi.
c. Timor, Ubi, and Velma.
d. Ubi only.
Ruthie, a minor, charges the cost of an expensive leather jacket at a Girls Trend store.
Two nights later, Ruthie loses the jacket at Minors Only Club. She disaf-firms the
jackets purchase. Ruthie owes Girls Trend the reasonable value of the jacket
a. if it is deemed a “necessary.
b. if it is deemed unnecessary.
c. under any circumstances.
d. under no circumstances.
In a limited liability partnership, a partner can be exempt from personal liability for the
malpractice of other partners.
a. True
b. False
The measurement of compensatory damages for breach of contract is the same for all
types of contracts.
a. True
b. False
Consequential damages are awarded to cover all of the remote conse-quences of
whatever injury a nonbreaching party suffers.
a. True
b. False
Elmo pays First National Bank $1,000 plus a service fee to draw a check on itself made
payable to Go Delivery Service. This is
a. a cashiers check.
b. an overdraft.
c. a stale check.
d. a stop-payment order.
A failure to exercise reasonable care is negligence.
a. True
b. False
A buyer who obtains substitute goods to replace goods that a seller did not deliv-er can
also recover damages from the seller.
a. True
b. False
Handy Hardware Store agrees to hire Ilsa for one year at a salary of $500 per week.
When Handy cancels the contract, Ilsa spends $100 to obtain a similar job that pays
$450 per week for a year. Ilsa is entitled to recover
a. the amount of the wages that Handy promised only.
b. the difference between the wages at the two jobs only.
c. the difference between the wages at the two jobs plus $100.
d. $100 only.
Phyllis intentionally injures herself while performing her job for Stone Cutters, Inc.
Phyllis will be entitled to
a. full workers compensations.
b. half of the normal workers compensation.
c. 10 percent of the normal workers compensation.
d. no workers compensation.