If incorrect, which of the following would probably be considered a misrepresentation
of a material fact?
a. “This is the one that I think is the best buy.”
b. “This is the best computer on the market.”
c. “This car has new brakes.”
d. “These tires will wear like iron.”
An estate in fee simple would have which of the following characteristics?
a. It may be inherited.
b. It may be sold.
c. Judgment creditors may levy upon it.
d. All of the above.
The board of directors cannot declare dividends when the corporation:
a. is insolvent.
b. is merging with another corporation.
c. is the subject of a takeover bid.
d. issues new stock.
Dr. Wells purchased a refrigerator for use in storing medications at his office. The
refrigerator will be classified as:
a. consumer goods.
b. equipment.
c. a fixture.
d. inventory.
__________ is overdue for purposes of preventing a purchaser from becoming a holder
in due course if the purchaser has notice that she is taking the instrument on a day after
demand has been made or after it has been outstanding for an unreasonably long time.
a. Demand paper
b. Time paper
c. A defense
d. A claim
Which of the following forms of business association may elect that only the
partners/members are taxed?
a. General partnership.
b. Limited partnership.
c. Limited liability company.
d. All of the above.
The 1933 Act imposes liability for material misstatements and omission in a registration
statement on:
a. only the directors and certain officers.
b. only the issuers.
c. experts and underwriters as well as directors, officers, and issuers.
d. the CEO only.
An example of a “certification mark” would be:
a. Holiday Inns.
b. Xerox.
c. Real Cheese.
d. Nabisco.
Michael issues a check to Paula. She negotiates the check to Harold as payment for a
used television set. Harold has no notice of any claims or defenses and takes the check
in good faith. Harold indorses the check and gives it to his son as a birthday present.
a. Is Harold’s son a holder in due course? Explain.
b. What rights does Harold’s son have with respect to the check? Why? Explain.
c. Assume that Michael has a defense of fraud in the inducement against Paula. Can he
use that defense against Harold? Can he use that defense against Harold’s son? Explain.
A plan of reorganization under Chapter 13 will be confirmed when the:
a. debtor has not been discharged before.
b. unsecured creditors are not discharged.
c. unsecured creditors receive the same amount as the secured creditors.
d. unsecured creditors receive at least as much as they would have if the debtor had
liquidated.
Which of the following would most likely be enforceable?
a. An agreement supported by past consideration.
b. A substitute agreement to settle an undisputed debt.
c. A debt agreed to seven years ago in a state where the statute of limitations is six
years.
d. A promise following the rendering of emergency services that is not supported by
new consideration.
The case of Construction Associates, Inc. v. Fargo Water Equipment Co. illustrates the
doctrine of:
a. course of dealing.
b. unconscionability.
c. usage of trade.
d. a transaction outside the Code.
Bill, a builder, wants to submit a bid on a city sewer project. He computes the cost, but
mistakenly omits the cost of one item. Accordingly, he submits a bid of $430,000 to the
city. The next highest bid is $675,000, and the rest of the bids are even higher. The city
is happy to have such a low bid, so it accepts Bill’s bid and awards him the contract for
the job, even though the city engineer is of the opinion the job cannot be done for less
than $650,000. In this case:
a. Bill must perform for the agreed upon price, because he has made a unilateral
mistake.
b. the city was aware of Bill’s mistake. When it accepted the bid, with knowledge of
Bill’s mistake, the city sought to take an unconscionable advantage of Bill’s error.
c. there is a palpable unilateral mistake.
d. Both (b) and (c).
McDonald’s Corporation grants to Bob a franchise in which he will be the only one who
has the right to sell McDonald’s products in his small hometown. Under the Sherman
Act:
a. this is per se illegal.
b. there is no violation.
c. this will be tested under the rule of reason.
d. there is a tying arrangement.
Which of the following promises does NOT have to be evidenced by a writing in order
to be enforceable?
a. Jones’s agreement with Smith to sell his condominium for $100,000.
b. Stewart’s promise to work for Austin for a two-year period.
c. Dad’s promise to the credit union that he will make payments on his son’s truck.
d. Mindy’s agreement with Susan to buy her bike for $400.
Threats of resorting to a civil lawsuit to recover a debt does not constitute duress.
A buyer’s incidental damages include reasonable expenses or commissions in effecting
cover.
Bob sends Fred a letter offering to sell Fred his car for $2,500. Fred writes back that
he’ll take it. They now must get together and write a memorandum because it is a sale
of goods for over $500.
The 2005 Act added a requirement for individual debtors to receive credit counseling
within 180 days before filing a bankruptcy petition.
An implied in fact contract is not as enforceable as an express contract.
Specific lender usury statutes rather than the general usury statute generally apply to
real estate mortgages and small consumer loans.
Elko, Inc. and Fuldan, Inc. closely monitor each other’s actions regarding the sale of
consumer electronic products. Each corporation tries to match the other’s product
designs and specifications, prices, and advertising strategies. As a result, the two
corporations have similar products, prices, and profits. Is this a violation of the antitrust
laws?
A quorum for the United States Supreme Court consists of any three justices.