Discuss the product safety standards issued by the Consumer Product Safety Act
(CPSA). Also, list at least three products which, although consumer goods, do not come
under the authority of CPSA.
Answer:
Which of the following is an electronic funds transfer system?
A. Check truncation.
B. Point-of-sale terminals.
C. Expedited recredit..
D. Check 21.
Answer:
If an agent indulges in commingling:
A. he probably will not be liable for loss to the principal.
B. he bears the risk of any loss to the principal.
C. he will not be liable for any loss to the principal if the property is not wrongfully
used.
D. he is breaching the duty to communicate information.
Answer:
The seller has the right to cure:
A. anytime after the buyer accepts delivery but before the buyer repudiates.
B. only once the original time for delivery has expired.
C. even if the buyer accepts nonconforming goods.
D. if he notifies the buyer about the willingness to cure the improper delivery or tender.
Answer:
Helen is a promoter who, prior to forming Tile Co., contracted to purchase
tile-manufacturing machinery from Owen Machinery Co. The contract was negotiated
and entered into in the name of Tile Co. Subsequently, a certificate of incorporation was
issued to Tile Co. In view of the facts stated which of the following statements is
TRUE?
A. When Tile received its certificate of incorporation, it became liable for the contract
with Owen.
B. Helen is liable for the contract with Owen Machinery Co.
C. If Tile’s board of directors issue a suitable resolution, Helen will be relieved from all
liability for the contract with Owen.
D. Since Tile was not in existence at the time the contract was negotiated, the contract
is void.
Answer:
A special warranty deed:
A. cures the defect in the chain of title to property.
B. means that the grantor offers a unique warranty against all defects in the title and all
encumbrances.
C. implies that the grantor warrants against all liens and easements.
D. means that the grantor warrants against only those defects in the title that arose after
he/she acquired the property.
Answer:
The duty to mitigate damages:
A. is a non-equitable doctrine frowned upon by modern courts.
B. requires the non-breaching party to take steps only in case of physical injuries.
C. holds the non-breaching party liable to a minimal amount.
D. requires the non-breaching party to take steps to minimize the damage.
Answer:
In a shipment contract, “FOB” stands for ____.
A. Free on Board
B. Fee on Board
C. Freight on Board
D. Forbidden on board
Answer:
In a deed of trust transaction, when a trustee sells the property and the proceeds
generate a deficiency:
A. the borrower is relieved of all obligations to the lender.
B. the lender may sue the borrower on the debt and recover a judgment.
C. the lender may sue the trustee.
D. the trustee may sue the borrower.
Answer:
Which of the following requirements must be satisfied by the sellers according to the
Magnuson-Moss Warranty Act and the FTC guidelines, when they give a written
warranty?
A. It should be included in more than one document.
B. It should include a clear description of what is covered, but never include what is
excluded by the warranty.
C. It should include the time the warranty begins and its duration.
D. It should allow the seller to choose between a refund and a replacement after the
product has been repaired a number of times.
Answer:
In a conflict between the express terms of the contract and trade usage:
A. trade usage prevails.
B. express terms prevail.
C. the contract is invalid.
D. implied terms prevail.
Answer:
Illegally gained evidence such as evidence resulting from “unreasonable searches and
seizures” cannot be used in criminal prosecutions. This is a safeguard enjoyed by
criminal defendants under the:
A. Miranda warning.
B. exclusionary rule.
C. right of confrontation.
D. double jeopardy.
Answer:
When John, a dealer in antique furniture, stores his goods in a commercial warehouse,
it is a:
A. bailment for the sole benefit of John.
B. bailment for the sole benefit of the storage company.
C. bailment for the mutual benefit of John and the storage company.
D. bailment for mutual benefit of the government and storage company.
Answer:
A holder in due course takes a negotiable instrument free of all:
A. negotiable defenses.
B. real defenses.
C. claims to the instrument.
D. claims to the bearer.
Answer:
MNO was a partnership which contracted for and performed all types of painting jobs.
Before the partnership was dissolved, MNO had entered into a contract under which
MNO was to paint every room in the state capitol building. At the time of the
partnership dissolution, MNO had not yet performed the work called for by such
contract. If the partners involved in the winding up elect to perform the contract, they:
A. have the authority to enter into new contracts with subcontractors, material suppliers,
and workers.
B. have no authority to enter into new contracts.
C. cannot assign long-term contracts to other contractors.
D. have the authority to enter into new contracts with subcontractors, material suppliers,
and workers, but cannot borrow money in order to complete these contracts.
Answer:
If Geoff makes a fraudulent statement about his medical history on his application for
insurance:
A. the insurance company has a right to cancel Geoff’s policy.
B. the insurance company cannot consider the contract voidable.
C. the insurance company can adjust the benefits payable at its discretion.
D. the insurance company cannot cancel the policy unless Geoff misrepresented his age.
Answer:
When an offeree uses a nonauthorized means of acceptance, the acceptance is:
A. effective upon dispatch.
B. illegal.
C. not effective until it is received by the offeror.
D. not effective upon receipt by the offeror.
Answer:
The doctrine of _____ holds that even though the plaintiff was negligent, he/she can
still recover if it can be shown that the defendant had the last opportunity to avoid the
harm.
A. last clear chance
B. negligence per se
C. comparative negligence
D. strict liability
Answer:
If the required notice of a shareholder meeting is not given, actions taken at the
meeting:
A. are of no effect.
B. are effective only if two-thirds of the stockholders approve the action.
C. are effective, but subject to amendment.
D. are effective only if half of the stockholders approve the action.
Answer:
Which of the following implied guarantee is made by assignors who are paid for
making an assignment?
A. The assignor can enhance the value of the assignment.
B. The assignor has good title to the rights assigned.
C. The contract has been discharged two months prior to assignment.
D. Any written or oral statement representing the claim is genuine.
Answer:
When a warranty covers the future performance of goods, the breach occurs:
A. the moment the buyer discovers the defect in the product.
B. anytime within four years after the buyer discovers the defect.
C. anytime within 10 years after the buyer discovers the defect.
D. when the goods are delivered to the buyer.
Answer:
Under the Revised Article 3 rules for beneficiaries, in the event of a breach of transfer
warranty:
A. the damages recoverable will be less than the amount of the instrument.
B. the damages recoverable may not be more than the amount of the instrument plus
expenses and loss of interest incurred as a result of the breach.
C. a beneficiary of the transfer warranties who took the instrument in good faith may
not recover form the warrantor an amount equal to the loss suffered as a result of the
breach.
D. no damages may be recovered.
Answer:
Miriam established a trust by placing substantial funds in a trust account for the benefit
of her son, Robert. Miriam appointed her brother, Fred, as trustee for the trust. In the
trust document, she did not expressly define Fred’s powers as trustee, or his duties.
Under these circumstances:
A. Fred must use a reasonable degree of skill, judgment, and care in the exercise of his
duties.
B. Fred does not owe any fiduciary duty to the beneficiary.
C. Fred has the right to commingle his property with the property he holds in trust.
D. Fred cannot delegate ministerial duties.
Answer:
_____ releases the partner from liability for having exceeded his/her authority and
binds the partnership to the contract as if it had been authorized all along.
A. Devolution
B. Emancipation
C. Rescission
D. Ratification
Answer: