Eliza was an antique expert. She went to a tea party at Grandma Jones’ house and saw a
magnificent Queen Anne table out on the back porch. She asked Grandma about it and
was told it was in the way so they were going to store it in the barn. Eliza offered to buy
it from her for $200. The next week, Grandma saw it in Eliza’s store on sale for
$3,000. Grandma:
a. can get the table back because of fraudulent concealment of the value.
b. can get the true value, because it would not be fair otherwise.
c. cannot rescind the contract because Eliza did not have a duty to tell her the value of
the table.
d. cannot rescind the contract because she did not rely on Eliza to give her a fair price.
“Discharge” has to do with the termination of contractual duties.
a. True
b. False
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.
A corporation formed in substantial compliance with the incorporation statute and the
required organizational procedures is a:
a. defactocorporation.
b. dejurecorporation.
c. corporation by estoppel.
d. private corporation.
A license is the limited right to use property for a period of time.
a. True
b. False
Currently, Julia is vice president of Speller Corporation. Under the Revised Act, Julia
will not be permitted to also hold the office of treasurer.
a. True
b. False
In suing to recover for environmental damage, under the common law, plaintiffs
generally have had causes of action in:
a. nuisance.
b. trespass.
c. strict liability.
d. All of these.
Stuart promises to act as a guide and fishing instructor on a trip for a group of visiting
dignitaries. The dignitaries agree to pay him $200 for his services. Stu completes his
duties, but when they discover that Stu does not have a fishing license, they refuse to
pay him. The agreement between Stu and the dignitaries is an illegal one, which is not
enforceable.
a. True
b. False
An absolute privilege exists to protect which of the following in defamation cases?
a. Members of Congress on the floor of Congress
b. Statements made by the U.S. President in the discharge of official duty
c. Statements about third persons between spouses when they are alone
d. All of these.
Confiscation of property by a foreign government for nonpublic purposes without
adequate payment violates generally observed principles of international law.
a. True
b. False
An example of a special court in the federal judicial system is the:
a. U.S. Court of Federal Claims.
b. Federal District Court.
c. U.S. Supreme Court.
d. U.S. Court of Appeals.
Donald, a minor, makes a contract with Albert, an adult, to buy a computer. One week
later, Donald has his eighteenth birthday. If shortly thereafter Donald tells Albert he will
pick up the computer the next week:
a. Donald has expressly ratified the contract.
b. the contract must be renegotiated, because Donald was a minor when it was made.
c. Donald can change his mind and avoid the contract, because it was made when he
was a minor.
d. the contract is void abinitio, because Donald was a minor at the time it was made.
George is a shareholder in the Muncy Kempf Corporation. He learns of insider trading
by one of the directors and wants to sue the corporation on behalf of the corporation
and its shareholders. A shareholder cannot sue the corporation to enforce a right
belonging to the corporation.
a. True
b. False
In Adam Smith’s TheWealthofNations, how many “institutions” are in the capitalistic
system?
a. 3
b. 4
c. 5
d. 6
A shareholder of N Corporation dissents to the corporation’s merger with J Corporation.
If the appraisal remedy is granted, the shareholders will be paid the:
a. par value of their shares.
b. stated value of their shares.
c. fair market value of their shares.
d. accounting book value of their shares.
A major purpose of the bulk sales provisions of the Code is to protect the seller’s
creditors.
a. True
b. False
Which of the following promises does nothave to be evidenced by writing in order to be
enforceable?
a. Jones’ 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 if his
son does not pay
d. Mindy’s agreement with Susan to buy her bike for $400
A retiring partner cannot be discharged from existing liabilities of the partnership
except by payment.
a. True
b. False
A promisor and a promisee may provide that the benefits under a contract will never
vest in a third person.
a. True
b. False
Non-bankruptcy compromises to give debtors relief while protecting the rights of
creditors include all of the following except:
a. mergers.
b. nonstatutory assignments for the benefit of creditors.
c. receiverships under the direction of a court with equity powers.
d. compositions.
Acceptance of any part of a commercial unit is acceptance of the entire unit.
a. True
b. False
In cases where one party to an illegal agreement is less at fault than the other, he will be
allowed to recover payments made or property transferred.
a. True
b. False
Which of the following is correct regarding the English courts of equity?
a. They were presided over by the king.
b. They could only award money damages.
c. They could issue a decree ordering a defendant to do or refrain from doing a specific
act.
d. They issued rulings only when a court of common law had refused to do so.
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.
In order to induce a car dealer to sell her son a car on credit, Mary promises that she
will pay for the son’s car if the son defaults on his monthly payments to the dealership.
Mary’s promise must be in writing or have a sufficient electronic record.
a. True
b. False
Copyright infringement may be unintentional.
a. True
b. False
Like domestic law, international law can be easily enforced, because international
courts have compulsory jurisdiction.
a. True
b. False
An investor has the right to transfer investment securities by sale, but not by gift or
pledge.
a. True
b. False
Under Article 2A, a lessor retains title to the goods and therefore has the right to
recover possession of them upon default by the lessee.
a. True
b. False
Which of the following is TRUE regarding the Foreign Corrupt Practices Act of 1977?
a. It applies only to corporations whose securities are registered under the Securities
Exchange Act of
b. It applies only to corporations engaged in foreign commerce.
c. The Act makes it illegal to bribe foreign officials to obtain business.
d. All of these are correct.
The failure to appoint a trustee will destroy a trust.
a. True
b. False
One of the objectives of NAFTA is to promote conditions of fair competition in the
United States, Canada, and
Mexico.
a. True
b. False
The Pregnancy Discrimination Act protects the job reinstatement rights of women
returning from maternity leave.
a. True
b. False
One risk of investing in foreign states is the risk that the host nation’s government may
take the investment property.
a. True
b. False
Which of the following may be used to redress the ultraviresacts committed by a
corporation?
a. A proceeding by shareholders to enjoin furthers such acts
b. A shareholder derivative suit against the directors or officers for exceeding their
authority
c. A proceeding by the Attorney General of the state to enjoin the corporation from the
transaction of unauthorized business
d. All of these may be used.