Mark, a college student, agreed to sell his horse to Henry for $1,000. The contract
required Mark to take the horse on that same day to Idlewild Stables where Henry was
going to board the horse. Henry paid Mark the money, patted the horse and said, “I’m
glad you’re mine, you beauty,” and drove off. Mark then led the horse into the trailer
and set off for the two-hour drive to Idlewild. Has there been a sale?
a. No, not until delivery to Idlewild.
b. No, not until Henry sees the horse again.
c. Yes, since Henry already paid for it.
d. Yes, since the contract was made earlier in the day.
An estate in fee simple has which of the following characteristics?
a. It may be inherited.
b. It may be sold.
c. Judgment creditors may levy it upon.
d. All of the above.
e. Two of the above, (b) and (c).
The delivery of personal property to a creditor as security for the payment of a debt is:
a. perfection.
b. a pledge.
c. attachment.
d. a general intangible.
If Arthur conveys his farm to Melissa in fee simple as long as she does not develop the
property for non-farm use, in which case the property would revert to Arthur’s estate, he
has created:
a. a fee simple absolute.
b. a base fee.
c. a life estate with a remainder.
d. a future interest to Melissa.
Regarding priority claims:
a. each claimant in a priority class shares pro rata if the assets cannot satisfy all claims
in the class.
b. employees have a priority for contributions to employee benefit plans but only to the
extent that the $4,925 cap for unpaid wages has not been reached.
c. subordination agreements are enforceable.
d. Both (a) and (c) are correct.
e. Choices (a), (b), and (c) are correct.
If Andrews Manufacturing Company has repudiated its contract to sell 500 computers
to a retailer, the retailer:
a. must await the seller’s performance.
b. can recover punitive damages.
c. can seek specific performance.
d. can “cover” by procuring goods elsewhere and then sue Andrews for incidental and
consequential damages.
Which of the following can be raised as a defense to a claim of defamation?
a. That the statement was true.
b. That there was a constitutional privilege to comment about the plaintiff who is a
public figure and that the statement was made without malice.
c. That there was a conditional privilege to make defamatory comment on another’s
statements in order to protect legitimate self-interest.
d. All of the above.
Vladimir entered into a contract to buy Daniel’s collection of rare stamps. Vladimir
mailed payment of $10,000 for the stamps to Daniel, but now Daniel tells Vladimir, “I’ll
never part with these stamps.” Are the following remedies available to Vladimir?
a. Restitution: Yes; Specific Performance: Yes
b. Restitution: Yes; Specific Performance: No
c. Restitution: No; Specific Performance: Yes
d. Restitution: No; Specific Performance: No
Perry is building his house and orders a hot water heater from Jones Co. to be installed
by them. The hot water heater they sent has a 45-gallon capacity when Perry ordered a
60-gallon capacity. Jones cannot provide a 60-gallon heater for two months, so Perry
cancels the contract and gets a heater from Stosill’s. Jones Co. says it must be allowed
to install the heater purchased from Stosill’s. What result?
a. Jones wins; Perry can only cancel the contract as regards the goods.
b. Jones wins; Perry can only cancel if installation is also delayed two months.
c. Perry wins since the contract breach goes to the whole contract.
d. Perry can cancel the whole contract, but he is then limited in his recovery of
damages.
Clark and David are partners. Clark has contributed $25,000. David has contributed
only his time and skill. On dissolution, after all firm debts are paid, $20,000 in assets
remains. Which of the following is NOT correct?
a. The $20,000 remaining after payment is profit that will be equally divided.
b. The partnership has sustained a loss of $5,000.
c. David is not entitled to any part of the $20,000.
d. David has no obligation to reimburse Clark for any loss.
Under the Second Restatement, except in cases of death or incapacity or where
performance of an authorized transaction becomes impossible, actual notice of
termination of agency is required to the third party if she is one:
a. with whom the agent has dealt on credit.
b. to whom the agent has been specially accredited.
c. with whom the agent has begun to deal.
d. All of the above.
Which of the following is correct with respect to a bank customer’s duty to discover and
report unauthorized signatures?
a. The customer is required to exercise reasonable promptness in examining the bank
statement.
b. This duty of examination includes the signatures of payees or indorsers.
c. The bank is liable on all items with unauthorized signatures even if these canceled
checks were returned to the customer four years prior to the discovery of the alterations.
d. The bank customer must report an unauthorized indorsement within one year of its
occurrence.
In determining the meaning of a contract under the UCC, which of the following will
have first priority?
a. Course of performance
b. Course of dealing
c. Usage of trade
d. Express terms
Under notice-race statutes, a subsequent purchaser of real estate will prevail if he or
she:
a. records the deed first.
b. takes without actual knowledge of a prior unrecorded conveyance and records the
deed first.
c. takes with actual knowledge of the prior conveyance and records first.
d. secures a guarantee of indemnification against title defects from the seller and
records the written document first.
Ricardo is the holder of a check that contains the indorsement “Without Recourse,
(signed) Mary Roberts.” This indorsement:
a. makes further indorsement impossible.
b. requires a special indorsement by the transferee.
c. limits the liability of Mary Roberts.
d. limits the liability of all subsequent holders including Ricardo.
Alice purchases Bob’s house and in so doing assumes the mortgage. Which of the
following is/are true?
a. Alice is personally liable to pay the mortgage.
b. Bob is personally liable to pay the mortgage.
c. Bob is no longer liable to pay the mortgage.
d. (a) and (b).
e. (a) and (c).
Sixteen-year-old Laura’s disaffirmance of a contract:
a. for a sale of land by her is not effective until after she reaches the age of majority.
b. is only effective if expressed in words in the particular form required by statute.
c. can only be effective if she is an “emancipated” minor.
d. must take place after she reaches the age of majority, regardless of the type of
contract, since only then does she have capacity.
Answer the following:
a. Ron Rader wants to buy all of the stock of Radmore, Inc. He approaches the officers
and directors and offers to pay them $200 per share for each of the shares they hold.
The officers and directors agree and then convince the majority of shareholders to sell
their stock for $100 per share. Do the other stockholders have a cause of action against
the officers and directors? Explain.
b. Anne, Bob, and Clark are three of the five board members of Starzitz, Inc. One day
they meet by chance for breakfast and decide to transact some corporate business while
they are all together. If they decide to declare a dividend and to purchase another
building for the corporation at this meeting, will their actions be binding on the
corporation? Explain.
Which of the following is NOT covered by the Fair Labor Standards Act?
a. Minimum wages
b. Hours of employment
c. Child labor
d. Defined benefit plans
The Magnuson-Moss Warranty Act provides that:
a. a full warranty cannot disclaim any implied warranty.
b. a limited warranty can disclaim any implied warranty.
c. a full warranty cannot disclaim, but may modify or limit an implied warranty.
d. a limited warranty cannot limit the duration of any implied warranty
The Sarbanes-Oxley Act prohibits accounting firms from performing which of the
following services for audit clients?
a. Bookkeeping
b. Implementing financial information systems
c. Actuarial services
d. All of the above
e. None of the above
EPA’s initial inventory of existing chemicals, completed in 1980, listed approximately
how many chemicals?
a. 5,000
b. 55,000
c. 189
d. 1,890,000
Any property other than an interest in real property is:
a. goods.
b. personal property.
c. tangible property.
d. intangible property.
Rules for the distribution of property in a situation involving intestate succession:
a. vary widely from state to state.
b. are uniform federal rules.
c. will govern distribution of an intestate’s estate only if such distribution conforms to
the clear intention of the decedent.
d. at common law and today, prevent intestate property from ascending lineally.
Ratification can occur in which of the following ways?
a. Through express language
b. As implied from conduct
c. Through failure to make a timely disaffirmance
d. All of the above.
Which of the following is the effect of the business judgment rule regarding the liability
of officers and directors?
a. Courts will not substitute their judgment for that of the board or an officer acting in
good faith with due care.
b. Officers and directors will never have liability for their decisions relating to the
corporation.
c. Officers and directors may have liability for bad faith decisions, but cannot be liable
for failure to act.
d. Directors and officers will not be held liable for conduct that is only negligent.
Sarah is working hard on the mayoral campaign of Timothy. She thinks that just a few
more votes could win the election, so she promises to pay her friend Violet $50 to
register and vote. Violet does so, but Timothy loses the election, and Sarah now refuses
to pay. The agreement is:
a. enforceable.
b. unenforceable and opposed to public policy.
c. one to obstruct the administration of justice.
d. an unconscionable contract covered by the UCC.
The 1992 Horizontal Merger Guidelines, as revised in 1997 and 2010:
a. were issued by the Justice Department to be additional to the FTC’s separate
guidelines.
b. require a mechanical application; in order to reduce the previously used analytical
framework, which was far too subjective and uncertain.
c. rejects use of the Herfindahl-Hirschman Index.
d. deals with mergers of powerful buyers and mergers between competing buyers.
e. None of the above.
In which of the following situations would the seller’s right to stop delivery continue?
a. Where the buyer receives the goods
b. When a negotiable document of title for the goods is negotiated to the buyer
c. When a bailee of the goods has not yet acknowledged to the buyer that he holds the
goods for the buyer
d. When the carrier acknowledges to the buyer that he holds the goods for the buyer as a
warehouser
In many states, dissolution that is nonjudicial may be brought about when:
a. all the shareholders agree to dissolve, even without action by the board.
b. the board of directors agrees to dissolve.
c. the creditors petition the court.
d. the business of the corporation becomes obsolete.
All of the following except which one are warranted by the transferor of a negotiable
instrument?
a. The instrument is not subject to a defense.
b. The transferor has no knowledge of a material alteration.
c. All signatures are authentic and authorized.
d. Transferor has no knowledge of insolvency proceedings instituted with respect to the
maker or drawer.
Codicils will not be valid if executed and attested.
Where the seller fails to make delivery, the buyer can cancel the contract, but he must
give the seller notice of his cancellation.
Under Regulation A, as amended in 1992, issuers may use a simple
question-and-answer disclosure document.
A blind person will be held to the standard of care of a reasonable blind person rather
than that of the reasonable sighted person for purposes of determining negligence.
Agents and principals have mutual fiduciary duties to one another.
MICR enables check processing without further human involvement.
What are the two broad categories of defenses available to intentional torts? Under what
circumstances can the U.S. Constitution be used as a defense to an action for an
intentional tort?
The term “past consideration” is not really consideration at all because the law will not
find a contract where there is no bargained-for-exchange.
Discuss the business judgment rule.
Once a partner becomes entitled to a distribution, he has the status of a creditor with
respect to that distribution.
If Connie buys the real estate subject to an existing mortgage, she will have to pay the
mortgage if the mortgagor does not.
A partner’s liability for partnership debts is limited to his capital contribution.
Under the UPA, in what circumstances do the remaining partners after dissolution have
the right to continue the partnership?
Daniel and Lena have spent months looking for their dream home. One day they saw it
and fell in love with everything about the house. They asked the realtor to draw up a
purchase agreement, which they then signed. After signing the papers, they asked the
realtor whether the house was in good shape. The realtor said that it was. When the
Daniel and Lena moved into the house, they realized that the basement had serious
water problems and that the roof leaked. They now want to sue the realtor. What tort
should they consider? If they sue the realtor for this tort, will they win? Why or why
not? Explain.
Under the Code, what rights do the parties have to affect the possible remedies
available in the case of breach?
If Keisuki insures his building for $300,000 and at the time of its total loss the property
is valued at $250,000, under an open policy Keisuki would recover $300,000.
The profits realized for violation of Rule 16(b) are given directly to the shareholders as
a penalty to the corporation.