A client owns the working papers prepared by an accountant in connection with
services performed for the client.
Answer:
An agent who commits a criminal act under instruction from her principal is guilty of
that crime.
Answer:
Once a binding accord and satisfaction has been entered into, parties give up their right
to have a court decide their liability.
Answer:
According to the MBCA, the board of directors should never act unless properly
convened at a meeting.
Answer:
Critics claim that allocational efficiency is not society’s only goal and that sometimes it
must be sacrificed for other social concerns.
Answer:
The Lilly Ledbetter Act said that each illegal pay differential payment renewed a cause
of action until the discrimination was reasonably discovered.
Answer:
By accepting goods, the buyer forfeits remedies against the seller for any
nonconformities in the goods.
Answer:
Under the ECPA, an electronic communication provider may disclose the contents of
an electronic communication if the disclosure was made as part of
government-authorized surveillance.
Answer:
Unlike the Uniform Securities Act of 1956, the new act of 1985 contained an additional
provision demanding broker-dealer registration.
Answer:
Substantive due process means that the government must accomplish its objectives
only by the use of fair procedures, such as reasonable notice and the right to a hearing
before an impartial tribunal.
Answer:
A person who discovers that he is a victim of fraud has an indefinite amount of time to
report his grievance.
Answer:
An oral contract for the sale of real estate is generally enforceable under the statute of
frauds.
Answer:
Intestacy statutes are designed to reflect the presumed intent of the deceased.
Answer:
The executive branch of the Securities and Exchange Commission:
A. administers only to the 1933 Act and two other securities statutes.
B. contains a mandatory disclosure which requires issuers of securities to make a
one-time disclosure.
C. promulgates rules and regulations.
D. brings enforcement actions against alleged violators of the statutes.
Answer:
The doctrine that permits a party to suspend its performance under a contract when the
other party repudiates the contract is known as:
A. anticipatory repudiation.
B. revocation.
C. voidance.
D. breach.
Answer:
Which of the following is TRUE for a contract made by a minor?
A. It is voidable.
B. It cannot be disaffirmed during minority.
C. It is barred from ratification.
D. A minor’s capacity to contract is never presumed.
Answer:
The work product privilege:
A. prevents an attorney from divulging confidential information communicated to the
lawyer by a client or potential client in the course of seeking to retain the attorney or
otherwise seeking legal advice.
B. covers information divulged to an attorney’s subordinates (secretaries or paralegals).
C. considers a lawyer to be an officer of the court who is bound to work for the
advancement of justice while faithfully protecting the rightful interests of his clients.
D. is derived from the notion that the effective functioning of the judicial system will be
undermined if a client does not feel free to speak fully and honestly with his attorney.
Answer:
Sales on approval are primarily _____ transactions.
A. seller
B. merchant
C. consumer
D. nonmerchant
Answer:
The provider of materials or labor is not entitled to a lien:
A. if the property is a public property.
B. if materials are not furnished for the improvement of a particular property.
C. if the materialman is not a general contractor.
D. if the property is under a land sales contract.
Answer:
An increasing number of courts hold that the obvious danger rule:
A. is no longer a complete defense.
B. is a complete defense.
C. is a complete defense only if a warning is issued after a sale.
D. is not a complete defense even if a warning is issued after a sale.
Answer:
Which of the following is TRUE about the exception to the parol evidence rule?
A. A party can always introduce proof of an oral agreement made after the writing was
created, these subsequent oral modifications of contracts will always be enforceable.
B. A party can introduce oral testimony about the facts and circumstances surrounding
the agreement without contradicting its terms.
C. A party can always introduce proof of an oral agreement made before the writing
was created, these oral agreements will always be enforceable.
D. If the terms of the writing are unclear, oral testimony can be introduced to aid the
court in interpreting the writing.
Answer:
X, a builder, contracts with the city of Y to build a new convention center. Z, a hotel
owner, stands to benefit once the convention center is built, so Z is angry when X backs
out of the contract. Z wants to sue X. Can Z sue X?
A. Z is a creditor beneficiary and can sue X.
B. Z is a donee beneficiary and can sue X.
C. Z can sue X because Z is a citizen of Y, with whom X contracted.
D. Z is an incidental beneficiary and cannot sue X.
Answer:
Milt borrowed $200 from Anne. He promised to pay the money back in two weeks. As
a showing of his good faith, he agreed verbally that Anne could take possession of his
baseball card collection and keep it until he had repaid the loan in full. The next day,
after Anne had the baseball card collection in her possession, Orin heard that Milt was
in need of money. Knowing that Milt’s baseball card collection could be worth a great
deal of money in a few years, Orin offered to purchase the collection from Milt for
$150. Milt accepted the offer, took Orin’s money, and promised to retrieve the
collection from Anne and deliver it to Orin the next day. Anne, however, refused to give
up possession of the collection until she was paid in full. Both Milt and Orin now take
the position that Anne has no rights in and to the collection because she does not have a
signed security agreement and she has not filed a financing statement. Which of the
following statements is TRUE?
A. Milt and Orin are correct in their arguments.
B. Anne’s security interest is not attached in the absence of a written security agreement
even though she maintained possession of the baseball card collection.
C. Anne’s possession of the collection satisfies the perfection requirement because it
puts a third party like Orin on notice of Anne’s interest in the property.
D. Anne’s failure to file a public notice rejects the perfection of the agreement even
though she is in possession of the collateral.
Answer:
Under the Reasonably Foreseeable Users approach:
A. the accountant could be liable to third parties who are unknown but reasonably
foreseeable users.
B. a negligent accountant is exposed to lesser liability than in the Restatement
approach.
C. the accountant could be liable to third parties who are specifically foreseeable users.
D. a negligent accountant is exposed to lesser liability than in the Ultramares approach.
Answer:
Which of the following statements is not TRUE about discharge by alteration?
A. If the parties’ agreement is represented by a written instrument, a material,
intentional alteration of the instrument by one of the parties discharges the other party.
B. If a party consents to an alteration or does not object to it after learning of it, even
then he or she will be discharged.
C. Alterations by third parties without the knowledge or consent of either contracting
party will affect the parties’ rights.
D. Since contracts are created by mutual agreement, they are not allowed to be altered
by either of the parties.
Answer:
A purchase money security interest may be automatically perfected if it covers:
A. future advances.
B. inventory.
C. consumer goods.
D. proceeds.
Answer:
Trade agreements are legal if:
A. their sole purpose is to restrict trade.
B. their ancillary purpose is to restrict trade indefinitely.
C. their purpose is to recover punitive damages.
D. their purpose is to protect interests created by the contract.
Answer:
Under the Securities Exchange Act of 1934, a 10-K annual report:
A. must include audited financial statement for the fiscal year and current information
about the conduct of business.
B. must include only a summarized and unaudited operating statement.
C. requires only summarized and unaudited figures on capitalization, and shareholders’
equity.
D. is required within 15 days of the end of any month in which any specified event
occurs.
Answer:
After retiring from Jones & Co., a partnership founded by Megan, Jim Jones, and other
partners, Megan grew tired of staying at home and started visiting the firm’s place of
business. The other partners would introduce her to prospective customers as “My
partner, Ms. Jones,” or “Our partner, Ms. Jones.” Megan did not bother to correct
anybody about this. She was introduced in this manner to Tiffany, a new customer.
Relying on the idea that Megan was a partner, Tiffany entered into a contract with Jones
& Co. If Jones & Co. does not fulfill its obligations, can Megan be held liable?
A. Under the RUPA, Megan is not liable as she did not make any claims to partnership.
B. Megan is liable, as she failed to correct the statement when she was being introduced
as a partner.
C. Megan is not liable, but the partner who introduced Megan is liable.
D. Megan is not liable as she has withdrawn from the partnership agreement by retiring.
She is no more an actual partner.
Answer:
Aspirin has lost its trademark protection because the name has become so widely used
that it has acquired a ____ meaning.
A. generic
B. descriptive
C. arbitrary
D. comprehensive
Answer:
Sam Jackson rented an apartment from Landlords Inc. Sam invited Susie Brenner over
for dinner. Susie slipped on a banana peel as she entered the apartment building on the
common stairway. Under these circumstances:
A. Sam is liable for Susie’s injury since he invited her to the apartment.
B. Landlords Inc. will be liable to Sam only.
C. Susie can recover from Landlords if she can show that they did not use reasonable
care in maintaining the stairway.
D. Susie cannot recover as she was not a tenant of Landlords Inc.
Answer:
Disenfranchisement refers to the loss of the right to vote:
A. when a person is convicted of a white-collar crime.
B. when a person is convicted of abuse.
C. which might result from the conviction of a felony.
D. as a result of misdemeanor.
Answer:
Which of the following is TRUE of the criminal liabilities under 1933 and 1934
Securities Act?
A. A willful misrepresentation, including an omission, in a registration statement is
made a criminal act under the 1933 Act.
B. The 1933 and 1934 Act makes it a crime to willfully make a false or misleading
statement in reports that are required to be filed under the act.
C. The criminal provisions of 1933 and 1934 Act specifically mention that they will be
used against accountants.
D. A willful violation of Rule 10b-5 is a crime under the 1933 Securities Act.
Answer:
Exculpatory clauses are generally unenforceable:
A. if they seek to avoid charges of misrepresentation.
B. if they seek to avoid charges of duress.
C. if they seek to avoid charges of fraud and willful misconduct.
D. if they seek to avoid charges of undue influence.
Answer:
Jeff, as agent, is paid $5,000 owed by a debtor of Lee, Jeff’s principal. Instead of giving
it immediately to Lee, Jeff invests it in the stock market. Luckily, the market price of
that particular stock rises to $10,000 before Lee learns of the wrongdoing. Under these
circumstances:
A. Jeff cannot be sued as the money was put to good use.
B. Lee is entitled only to $5000.
C. Lee is entitled to all of the stock.
D. Jeff can be sued for an indefinite amount on account of his misconduct.
Answer:
With respect to instruments, “responsibility” means the authority:
A. to access instruments in incoming or outgoing mails.
B. to process instruments for issue in the name of fictitious payees.
C. to prepare or process instruments for issue in the name of the employer.
D. to have access to instruments in storage.
Answer:
In determining whether a product is “inherently dangerous” or has been “defectively
designed,” courts look at:
A. whether anything else could have been done to make the product safer, given the
practical and technological limitations of the time.
B. what other companies in the industry are doing.
C. whether the product was grossly overpriced.
D. whether the seller can pass on the costs of injuries as higher prices in the market or if
they should be borne by the injured person.
Answer:
Life insurance proceeds are usually controlled by:
A. statutes.
B. the provisions of a will.
C. the insured’s designation of beneficiaries.
D. the right of survivorship.
Answer: