Roxanne was injured when she fell in a hole while walking across her landlord’s
parking lot. She and her lawyer hope they can settle the claim. Which of the following
statements about settlements is correct?
a. A case can be settled provided it has not been filed with the court.
b. A case can be settled provided that discovery has not commenced.
c. A case can be settled provided the jury has not heard any testimony.
d. A case can be settled at any time.
The term “issuer:
a. is not used in relation to commercial paper.
b. is an all-purpose term that means both maker and drawer.
c. is synonymous with drawee.
d. is used in relation to commercial paper only to indicate the bank which creates a
certificate of deposit.
A purchaser may acquire better title than the seller had.
a. True
b. False
Chapter 13 bankruptcy:
a. is used by businesses to reorganize their financial situations.
b. is an involuntary bankruptcy.
c. can be used only by individuals with a regular source of income.
d. is used by businesses to liquidate their debts.
In either a derivative lawsuit or a direct shareholder lawsuit, any proceeds awarded by
the court must be paid to the corporation, not the shareholders themselves.
a. True
b. False
Sophie issues a promissory note made “payable to the order of Molly.” Molly indorses
the note by signing her name and gives the note to Dana. Which of the following is
correct?
a. Sophie issued a bearer instrument and Molly kept it in bearer form.
b. Sophie issued an order instrument, but Molly changed it to bearer form.
c. Sophie issued an order instrument and Molly kept it in order form.
d. Sophie issued a bearer instrument and Molly changed it to bearer form.
A donee beneficiary:
a. is not entitled to enforce a contract against either party.
b. usually does not give consideration in return for the gift.
c. will generally become a creditor beneficiary after his or her rights vest.
d. is an incidental beneficiary.
Which of the following cannot file a bankruptcy petition under the Code?
a. Aztec, a foreign corporation doing business in the United States.
b. Milan, a citizen of Bosnia, who owns property in the United States.
c. Debra, a resident of Michigan, whose liabilities do not exceed assets.
d. Stan, an American citizen, who refuses to undergo credit counseling.
e. All of the above.
If Oregon passed a statute that prohibited liquor stores from engaging in any kind of
advertising, that statute would be:
a. valid as an exercise of police power.
b. valid, as alcohol is illegal for minors.
c. invalid as a violation of the Commerce Clause.
d. invalid as an unreasonable restriction of free speech.
Concurrent conditions arise when there is both a condition precedent and a condition
subsequent.
a. True
b. False
Molly and Craig are the original parties to a contract. Craig is obligated to design a
Website for Molly. They subsequently make an agreement with Eric that Eric should
take the place of Craig and assume all of Craig’s rights and duties under the contract.
The agreement releases Craig from his obligations under the contract. This agreement
is:
a. a novation.
b. an accord and satisfaction.
c. an assignment.
d. a nullification.
A design patent protects the appearance of an item and is valid for 14 years.
a. True
b. False
Debts that cannot be discharged in bankruptcy include all EXCEPT:
a. alimony.
b. income taxes.
c. negligence judgments.
d. fraud judgments.
Alfred has been working for Canyon, Inc. for 12 years, with regular positive
performance reviews and promotions. Roger has only been working for Canyon for 3
years. Alfred also has more management qualifications, yet when a management
position is open, Alfreds supervisor advises that Alfred should NOT be promoted to that
position. His reason is that he has recently learned that Alfred regularly attends a
Narcotics Anonymous support group. Although Alfred has been clean for 16 years,
there is fear that he could relapse. What is true?
a. Canyon is allowed to make past drug abuse a barrier to managment positions.
b. Although Canyons behavior is unethical, it is not prohibited.
c. Canyons behavior is prohibited by the Americans with Disabilities Act.
d. Canyons behavior is not prohibited by the Americans with Disabilities Act, but it is
prohibited by Title VII of the Civil Rights Act.
A national magazine published an article about a famous television star. The television
personality is upset because the information contained in the story is not correct. If the
actress sues the magazine:
a. she will need to show that the magazine has a history of being “reckless” with facts
on a regular basis.
b. she will need to show that the magazine either knew the story was false or acted with
reckless disregard of the facts.
c. she will need to show that the magazine failed to attempt to verify the story by trying
to contact her or her agent before the story was printed.
d. she will need to show that the magazine could have discovered that the story was
false but failed to do so.
In the case of Leegin Creative Leather Products Inc. v. Psks, Inc.the court had to
decide..
a. Is price fixing legal if the prices are reasonable?
b. Is resale price maintenance a per se or rule of reason violation of the Sherman Act?
c. both a & b are correct.
d. None of the above.
Don received in the mail merchandise he never ordered. The package was addressed to
him, and when he opened it he saw a brochure stating he could keep the products for
only $19.95. If he chose not to keep the products he was instructed to mail them back
within five days. Don:
a. can keep and use the merchandise without having to pay for it.
b. can keep the merchandise only if he pays the $19.95.
c. must send the merchandise back within five days if he does not want it.
d. None of the above is correct.
Jerry purchased a laptop computer for his personal use from Computer City on an
installment loan contract. The sales contract stated that in the event the contract is
assigned to a third party, the purchaser (Jerry) promises he will not assert any claim or
defense against the assignee which he might have against Computer City. Computer
City immediately assigns the contract rights to Finance USA. The computer stops
working within two weeks of the purchase.
a. This is a valid waiver of defense clause. Jerry signed the contract, so he can’t raise a
defense to Finance USA.
b. Finance USA is an intended third party beneficiary and may therefore enforce the
contract.
c. In general, this type of waiver is not permitted in consumer contracts, so Jerry can
raise his claim against Finance USA.
d. This is a delegation of Jerry’s duties and the delegator remains liable on the contract
unless a novation agreement is made.
Negligence concerns harm that:
a. is unforeseeable.
b. arises intentionally.
c. arises by accident.
d. is always substantial.
Criminal defendants have the right to a lawyer at all the important stages of the criminal
process.
a. True
b. False
When measured in dollars, street crime costs society more than twice as much as
white-collar crime.
a. True
b. False
Rachel Retailer sends a preprinted purchase order offering to buy goods from Snidley
Supplier. Snidley acknowledges Rachel’s offer with a preprinted acceptance form. The
terms of the two forms do not mirror each other. To analyze whether an enforceable
contract exists, one must first determine whether the new language in the acceptance is
an additional term or a different term.
a. True
b. False
In the historic case of Hamer v. Sidway, the nephew:
a. lost, as there was no consideration.
b. lost, as the uncle was dead.
c. won, as there was consideration.
d. won, as there was a completed gift.
Pharm-Ace holds a patent on a drug. Pharm-Ace used the patent (evidenced by the
patent certificate) to secure a $1 million loan from First Bank. The patent is chattel
paper.
a. True
b. False
Fashions, Inc. has 12 shareholders. The company is subject to the Model Act. What
officers is Fashions, Inc. required to have?
a. A president, secretary, and treasurer.
b. A president and a secretary, and they can be the same person.
c. A president, at least one vice-president, a secretary, and a chief financial officer.
d. Whatever officers are described in the corporate bylaws.
Which of the following is a possessory interest in land?
a. Fee simple absolute.
b. Easement.
c. Profit.
d. License.
If a principal accepts the benefits of a whole unauthorized contract, the principal is
deemed to have ratified the contract and is bound as if the act had been originally
authorized.
a. True
b. False
Which of the following would suffice for a signature on a writing under the statute of
frauds?
a. A stamped signature.
b. A handwritten signature.
c. A name keyed at the bottom of an e-mail.
d. Any of the above would suffice. Judges define ‘signature very broadly.
Jolene hired Lacy to find a buyer for her house. Adam was interested in buying the
house. If both Jolene and Adam agree, Lacy, a real estate agent, may represent both
parties.
a. True
b. False
Francesca cannot serve as a trustee in a bankruptcy case because she is not a lawyer.
a. True
b. False
Lucky, a contractor, enters into a contract with Penny, a homeowner, to remodel her
kitchen. The contract provides a specific completion date, but does not specify what
will happen if Lucky does not have the job finished by the date. So, Penny may deduct
$100 per day from the contract price until the job is finished, because this is the
industry norm.
a. True
b. False
Paul decided he did not want the new jeans he had purchased from a large discount
department store. He had worn them three times and decided he just did not want them
because his friends said they werent “cool. The jeans fit him fine and there is nothing
wrong with them. He takes the jeans back to the store and, as is its policy, the store gave
him a full refund of his money. Which statement best expresses rationalization for this
decision?
a. Paul’s conduct was ethical as long as he was within the time frame for returns.
b. Paul’s conduct was unethical unless the stores policy included ‘satisfaction
guaranteed and allowed returns for any reason.
c. This is not an issue of ethics since people do this all the time.
d. Paul’s conduct was ethical since the store has a legal duty to return his money when
he returned the jeans.
The Federal Trade Commission Act considers the terms “deceptive and “unfair to be
synonymous when determining what practices should be prohibited.
a. True
b. False