Divided Parcel (DP) includes the following on its mailing receipts: “We are not
responsible for any damages to packages whether or not through the fault or negligence
of our employees. Send packages at your own risk.” Mary reads this clause but sends
her watch back to its manufacturer to be repaired anyway. The watch is destroyed when
the DP driver negligently drops and runs over the package. Mary is:
Section 522 of the Bankruptcy Code exempts specified property of an individual debtor
from bankruptcy. What are some of these exemptions?
What are the ways that basic trade secrets are misappropriated?
What are the major functions of the Federal Trade Commission (FTC)?
Describe the crime of false pretenses and name and define three crimes similar to false
pretenses that were discussed in the textbook.
Which of the following can meet the scienter requirement to establish fraud in the
inducement?
a. Actual knowledge
b. Lack of belief in the statement’s truthfulness
c. Reckless indifference as to a statement’s truthfulness
d. All of the above meet the requirement.
Congress enacted the ____ to provide consumers who purchase a home with greater and
more timely information on the nature and costs of the settlement process.
a. RESPA
b. CPSC
c. OSHA
d. FCCPA
The consolidation of AB Corporation and ZX Corporation requires the affirmative
majority vote of:
a. the boards of directors and shareholders of both corporations.
b. the boards of directors of both corporations, but not the shareholders.
c. the shareholders of both corporations, but not the boards of directors.
d. the directors and shareholders of one of the corporations, but not both corporations.
Which of the following would NOT be considered to be an example of open-ended
credit?
a. A gasoline credit card account
b. A VISA account
c. A real estate mortgage account
d. A department store credit card account
The 1994 amendments to the Bankruptcy Code require that the U.S. Judicial
Conference adjust for inflation the dollar amounts of certain provisions of the Code
every:
a. three years.
b. five years.
c. six years.
d. eight years.
Answer the following:
a. What are the two types of fraud and what is the effect of each on the contract
involved?
b. Give an example of each type of fraud.
c. What elements need to be proved to establish each type of fraud?
A buyer of real estate subject to a mortgage who does not undertake any personal
liability for payment of the mortgage debt:
a. takes the property ‘subject to” the mortgage.
b. “assumes” the mortgage.
c. can only obtain a quitclaim deed.
d. can only obtain a leasehold.
Which of the following is not a real defense?
a. Forgery
b. Fraudulent alteration
c. Discharge in insolvency proceedings
d. All of the above are real defenses.
A definite time required for negotiability would NOT be satisfied in which instance?
a. Payable on or before January 1, 2015
b. Payable one week after demand is made
c. Payable one year from the completion of the building
d. A dated instrument payable “90 days after date”
A gratuitous agent:
a. is a paid agent.
b. is subject to the same duty of loyalty as other agents.
c. has no duty of diligence.
d. need not be reimbursed for her expenses.
A(n) ____ is a third party who obtains possible benefits but no rights under a contract.
a. incidental beneficiary
b. intended beneficiary
c. assignor
d. donee beneficiary
The definition of price-fixing includes agreements that:
a. may, among other things, depress prices.
b. stabilize prices.
c. raise prices.
d. All of the above.
In insurance contracts, warranties:
a. are of little importance.
b. must be expressly included in the insurance contract.
c. only apply to the insurer, not the insured.
d. operate as conditions that must exist before the contract is effective or before the
insurer’s promise to pay is enforceable.
The Revised Act permits the board of directors to adopt certain amendments without
shareholder action. These amendments would include:
a. extending the duration of the corporation if it was incorporated when limited duration
was required by law.
b. changing each issued and unissued authorized share of an outstanding class into a
greater number of whole shares if the corporation has only one class of shares.
c. making minor name changes.
d. All of the above.
The National Pollutant Discharge Elimination System may require that discharge
permits be obtained from:
a. the EPA.
b. the Army Corps of Engineers.
c. an individual state.
d. All of the above.
Answer the following:
a. What is an undisclosed principal?
b. What is a partially disclosed principal?
c. What liability does an agent have to a third party when the principal is either
undisclosed or partially disclosed?
d. Stan is asked to be an agent for Roscoe, but Roscoe does not wish third parties to
know that Stan represents him. In light of your answer to part (c), why would Stan want
to be an agent for Roscoe? Why would Roscoe wish that third parties not know his
identity? Explain.
The Revised Act grants dissenters’ rights to:
a. a shareholder when any amendment to the articles of incorporation materially and
adversely affects that dissenter’s rights regarding his shares.
b. dissenting shareholders of a corporation leasing substantially all of its assets not in
the usual course of business.
c. dissenting shareholders of each corporate party to a short-form merger.
d. All of the above.
e. Only (a) and (b).
Revised Article 9 removes the requirement of ____ from the financing statement.
a. notice filing
b. the debtor’s signature
c. the name of the secured party
d. an indication of the collateral covered by the financing statement
a. What is an assignment?
b. What is a delegation?
c. What does it mean to “assign a contract”?
With regard to the interpretation of a contract, what priority is given to each of the
following items?
(a) Course of dealing
(b) Usage of trade
(c) Express terms
(d) Course of performance
Able has an allowed claim of $5,000 against the estate of Wallace and has a security
interest in his art collection in the amount of $3,000 of the $5,000 claim. Able:
a. will recover nothing in the bankruptcy proceeding.
b. will recover $5,000 in the bankruptcy proceeding.
c. has a secured claim in the amount of $3,000 and an unsecured claim in the amount of
$2,000.
d. has a secured claim in the amount of $5,000.
Match the following:
a. The right in personal property that insures payment or performance of an obligation.
b. Making a security interest effective against third parties who assert competing
interests.
c. A document filed to provide notice of a security interest.
d. A catch-all category of collateral not otherwise covered; includes software, goodwill,
and interests in patents and copyrights.
e. Tangible or electronic record that evidences both a debt and a security interest in
specific goods.
f. The creation of a security interest that is enforceable against the debtor.
g. A dealing in which one party obtains a security interest in the personal property of
another to secure the payment of a debt.
h. A contract between the debtor and creditor creating a security interest in the debtor’s
collateral.
i. Goods bought or used primarily for personal, family, or household purposes.
j. The right of a surety who has paid the creditor to be repaid by the principal debtor.
k. A person liable to a creditor immediately upon the default of a principal debtor.
l. Interest retained either by the seller of goods or by a lender who advances the
purchase price.
m. The right of a surety to be relieved of his obligation to the creditor by having the
principal debtor perform the obligation.
n. The party primarily liable on the obligation.
o. A person who promises to answer for the payment of a debt or the performance of a
duty owed to the creditor by the principal debtor upon the failure of the principal debtor
to perform.
p. A way to begin a bankruptcy case that is available to any debtor, even if solvent.
q. May be filed only under Chapter 7 or 11 if the debtor is generally not paying his
undisputed debts as they become due.
r. The person responsible for collecting, liquidating, and distributing the debtor’s estate.
s. Property subject to a security interest.
t. Any entity that has a claim against the debtor.
u. A claim with a lien on property of a debtor; a claim that is tied to specific property of
the debtor.
v. The Bankruptcy Code invalidates certain preferential transfers made before the date
of bankruptcy from a debtor to favored creditors.
w. An agreement between the debtor and two or more of her creditors that each will
take a portion of its claim as full payment.
x. Prevents attempts by creditors to recover claims against the debtor.
y. A voluntary transfer by the debtor of his property to a trustee, who applies the
property to the payment of all of the debtor’s debts.
1) security agreement
2) exoneration
3) attachment
4) secured transaction
5) automatic stay
6) PMSI
7) involuntary petition
8) composition
9) perfection
10) financing statement
11) absolute surety
12) trustee
13) assignment for benefit of creditors
14) secured claim
15) voidable preference
16) collateral
17) general intangibles
18) security interest
19) consumer goods
20) principal debtor
21) creditor
22) voluntary petition
23) surety
24) reimbursement
25) chattel paper
If the court finds misappropriation of trade secrets, it may award the following
remedies:
a. damages in the amount of the pecuniary loss to the plaintiff caused by the
misappropriation.
b. damages in the amount of the pecuniary gain to the defendant.
c. treble damages.
d. Either (a) and (b), whichever is greater.
Under the Foreign Sovereign Immunities Act, a foreign state is:
a. immune from all suits in the United States.
b. immune from suits in the United States involving public acts, but not commercial
acts.
c. not immune from any type of suit in the United States.
d. None of the above.
Which of the following is correct with respect to an accountant’s working papers?
a. The client is held to be the owner of an accountant’s working papers.
b. An accountant must surrender his working papers to his client if the client so
requests.
c. An accountant may not disclose the contents of his working papers unless the client
consents or a court orders the disclosure.
d. All of the above are correct.
What should the simplest agreement for the sale of land contain?
a. Names and addresses of the parties
b. Description of the property to be conveyed
c. Time for conveyance
d. Type of deed to be given, along with the price and manner of payment
e. All of the above
The U.S. belongs to multinational treaties that try to coordinate the application of
member nations’ intellectual property laws. A principal treaty protecting intellectual
property is:
a. the Berne Convention for the Protection of Literary and Artistic Works.
b. the Vienna Patent Treaty.
c. the Paris Convention for the Protection of Copyrighted Works.
d. the Paris Trademark Registration Treaty.
IBM has two manufacturing facilities-one in New York City and one in Evergreen,
Oklahoma. Marjorie has worked in the Oklahoma plant for 15 years assembling
resistors. Her sister, Ellen, has worked at the same plant for 15 years also. Their brother,
Hank, has worked there for 10 years in the same job as his sisters. Ellen transfers to the
New York facility. Their salaries are now as follows:
Marjorie-$12.00 per hour
Ellen-$19.50 per hour
Hank-$14.00 per hour
Is there a violation of the Equal Pay Act?
a. Yes, because Ellen’s pay is higher than Marjorie’s.
b. Yes, because Ellen and Hank’s pay is higher than Marjorie’s.
c. Yes, because Hank’s pay is higher than Marjorie’s.
d. No, since they are different people with different personalities.
With respect to the voting rights of shareholders, a shareholder is entitled to vote:
a. only at annual shareholder meetings.
b. one vote for every two shares of stock owned.
c. only in person.
d. at annual and special shareholder meetings, ordinarily with one vote for each share
owned.
In order for an offer to end by lapse of time, the offeror must specify the time within
which the offer is to be accepted.
Warrick makes a $10,000 investment in a debenture issued by F & M Company.
Warrick is now a secured creditor of F & M Company.
Noncompete agreements for Internet-related jobs have the same limitations in
determining what is reasonable as to time and place restrictions as other types of jobs.
For purposes of the statute of limitations contained in Article 2, a cause of action
generally accrues when a breach occurs, without regard to whether the injured party
knows of the breach at that time.
The Federal Organizational Corporate Sentencing Guidelines require corporations to
formulate and implement compliance programs reasonably designed to prevent crimes
by the corporations and their employees; adopting and implementing an adequate
compliance program can lead to lesser penalties when crimes do occur.
Notice of dishonor is waived if presentment has been waived.
A defendant will be liable for all harm that can be traced back to the defendant’s
negligence.
A buyer may not recover consequential damages that could have been prevented by
cover.
In most states, a corporation may, with shareholder approval, limit the liability of
directors for some breaches of the duties which they owe to the corporation.
Clara receives a telephone call from her Aunt Mary in which Mary says she has decided
to give Clara her pet python as a gift. Clara may refuse to accept, making the intended
gift invalid.
For negligence cases, the Restatement has adopted the requirement of privity as set
forth in the landmark opinion of Judge Cardozo in Ultramares Corp. v. Touche.
If a person is unable to understand the nature and effect of entering into a contract, he or
she can avoid it.
Tania calls her bank to issue an oral stop payment order on a check on March 1. She
then leaves town for two weeks to visit her mother. When she returns, she goes to the
bank to sign a written stop payment order, but finds the bank has already paid the
check. What recourse does she have? Explain, citing provisions in Article 4.
Foreign limited partnerships do not have to operate in another country.
Discuss the corporate form of business organization with respect to how it is created,
the liability of persons having an ownership interest, how management is conducted,
and duration of existence.
A discharge of the principal debtor’s obligation in bankruptcy does not discharge the
surety’s liability to the creditor on that obligation.