1) warranties do not apply without the indorsement of the transferor.
2) the only person with the legal power to accept an offer and create a contract is the
original offeree.
3) as a general rule, if a tenant abandons the leased property before the expiration of a
lease, the landlord has a duty to mitigate damages.
4) once a contract made by a minor has been effectively ratified, it cannot be affirmed.
5) under the principle of respondeat superior, an employer is not liable for torts
committed by employees.
6) an agent who purports to act for a legally nonexistent principal is personally liable
when the agent knows or has reason to know the principal does not exist.
7) the main difference between a certified check and a cashiers check is that the bank is
primarily liable on a certified check, but only secondarily liable on a cashiers check.
8) a cashiers check is a check for which the same bank is both drawer and drawee.
9) banks are not required to disclose their funds availability policy to all of their
customers.
10) if a customer does not discover a forged check and report it to the bank within one
year from the time of the statement containing the check, the bank is not obligated to
recredit his account for the amount of the forged check.
11) a shareholder must repay an illegal distribution if he/she had knowledge of the
illegality when he/she received the distribution.
12) common law is a state law and only state courts can apply it.
13) a teleological theory may find unacceptable that any competent employee loses his
job, even if the layoffs effect is to reduce prices to consumers and increase profits.
14) corporations engaging in political expression are entitled to the same first
amendment protection as an individual engaged in such speech.
15) barks and paws partnership is in the business of selling pit bull dogs. after operating
the partnership for one year, the state outlawed the breeding and sales of pit bulls.
assuming this is the only activity of the partnership, dissolution of the partnership will
be required.
16) the right of _____ is available for information that is not subject to a recognized
legal privilege and is relevant to the case or likely to lead to other information that may
be relevant.
a.demurrer
b.counterclaim
c.discovery
d.affirmative defense
17) a voting trust:
a.must be available for inspection by shareholders at the corporations offices.
b.need not be made public and may be kept secret from other shareholders.
c.is limited in duration to 20 years, but may be extended for another 10-year period.
d.will be specifically enforced by the courts if a shareholder refuses to vote as agreed.
18) which of the following is true of the coinsurance feature of property insurance?
a.it prevents the insured from insuring for a minimal amount and recovering in full for
such losses.
b.it precludes the insured from insuring for less than the coinsurance percentage.
c.it is an additional refinement of the insurable interest requirement.
d.it helps the insured to recover full damages for any loss.
19) which of the following must a person prove to rescind a contract if the
misrepresentation was innocent?
a.that the fact was asserted
b.that the fact was disclosed
c.that the fact was material
d.that the fact was ratified
20) a particular trust has income-producing real property as its sole asset. which of the
following trust proceeds or expenditures should be allocated to principal?
a.annual payments on a fire insurance policy to protect trust property.
b.the cost of a long-term permanent improvement to trust property.
c.rental income from the trust property.
d.real estate taxes paid on trust property.
21) davidson borrowed a motorcycle from his friend, harley. harley did not know that
the motorcycle had a defect that could cause the brakes to malfunction. while davidson
was riding the motorcycle, the brakes malfunctioned. this caused an accident and
davidson was injured. what duty of care, if any, did harley owe to davidson under the
traditional common law rule?
a.the duty of reasonable care–the same duty a bailor owes to a bailee in a bailment for
mutual benefit.
b.the highest duty of care because this was a bailment for the benefit of the bailor.
c.a duty to tell davidson of any known defects in the motorcycle because this was a
bailment for the benefit of the bailee.
d.no duty of care, because this was a gratuitous bailment.
22) the maximum penalty for a criminal violation of the 1933 act is a:
a.$20,000 fine and one year imprisonment.
b.$10,000 fine and five years imprisonment.
c.$20,000 fine and five years imprisonment.
d.$10,000 fine and one year imprisonment.
23) damages that are agreed upon at the time the contract is entered into are called
_____.
a.compensatory damages
b.consequential damages
c.liquidated damages
d.mitigated damages
24) nearly all corporations whose veils are pierced are:
a.close corporations.
b.government-owned corporations.
c.publicly held corporations.
d.nonprofit corporations.
25) according to the mbca, which of the following may, rather than must, be included in
the articles of incorporation?
a.the number of shares that the corporation has authority to issue.
b.the name and address of each incorporator.
c.the address of the initial registered office of the corporation.
d.the names and addresses of the individuals who are to serve as the initial directors.
26) menzes is the treasurer of abc corp. as such, he is authorized to sign checks for the
corporation. a supplier bills abc for a legitimate obligation. menzes makes out a check
to the supplier and signs it abc corp., by menzes, treasurer. who is liable on this check?
a.abc only.
b.menzes only.
c.abc and menzes.
d.neither abc nor menzes.
27) toby, an ohio real estate broker, misrepresented to allen that toby was licensed in
michigan under michigans statute regulating real estate brokers. allen signed a standard
form listing contract agreeing to pay toby a 6% commission for selling allens home in
michigan. toby sold allens home. under the circumstances, allen is:
a.not liable to toby for any amount because of the rule of mirror image which needs to
be fulfilled for creating a binding contract.
b.not liable to toby for any amount because toby violated the michigan licensing
requirements.
c.liable to toby only for the value of services rendered under the quasi-contract theory.
d.liable to toby for the full commission under the promissory estoppel theory.
a common situation in which courts will grant a remedy to a party who is not equally in
the wrong is one in which the less guilty party has been induced to enter the agreement
by misrepresentation, fraud, duress, or undue influence.
28) a means by which insurance law separates insurance contracts from wagering
contracts is the typical requirement that the party who purchases a policy of property or
life insurance must possess a(n) _____ in the property or life being insured.
a.warranty
b.codicil
c.reformation
d.insurable interest
29) ads that limit the power of acceptance to one offeree or a small number of offerees,
are highly specific about the nature and number of items offered for sale and what is
requested in return is considered to be _____.
a.offers
b.invitations to negotiate
c.invitations to offer
d.obligations
30) a contract must be between parties who have _____ to contract.
a.knowledge
b.capacity
c.resources
d.intention
31) if the shipping terms are cash on delivery (cod), then the buyer:
a.need not pay for the goods if inspection is not allowed.
b.must pay for the goods if it is obvious without inspection that the goods do not
conform to the contract.
c.must pay the expenses of inspection if the goods do not conform to the contract.
d.must pay for the goods before inspecting them unless they are marked inspection
allowed.
32) which of the following is true of patents?
a.patents fall under the jurisdiction of state laws.
b.naturally occurring things are patentable.
c.abstract ideas are patentable.
d.u.s. patent laws have changed since the mid-1990s.
33) shoddy, the owner of shoe repair, was contemplating retirement. he therefore
contracted to sell his business to pauline parker. shoe repair was located in hoosierburg,
indiana, which has a population of 5,233. apart from containing a provision entitling
parker to use the shoe repair name for the business, the parties contract included a
clause that prohibited shoddy from opening any competing shoe repair shop in
hoosierburg for a period of one year from the date of the parties contract. two months
after the date of the contract (and one and one-half months after the sale of the business
to parker had been completed), shoddy grew tired of retirement. as shoe repair had been
his lifes work, he opened up a shoe repair shop in hoosierburg. parker has sued him in
an effort to obtain an injunction against his operation of the competing business,
alleging a violation of the parties contract. how is the court likely to rule? explain your
reasoning.
34) brady is the sole general partner in abc limited, a limited partnership. there are five
limited partners. one day, brady went to the grocery store to purchase groceries for
himself. he forgot his personal checkbook. however, he had the partnerships checkbook.
unable to otherwise pay for the groceries, he wrote a check from the partnership
account, thinking that he owned part of the money in the account anyway. discuss.
35) who are party to a deed of trust?
36) samantha is the general partner and jack and jared are the limited partners of
profiler limited partnership. samantha has contributed capital of $30,000 to the
partnership, jack has contributed $150,000, and jared has contributed $120,000. they
have not agreed on how to share profits or losses. profiler incurs a loss of $90,000 in its
first year. what is jacks share of the loss? if jack has a total income of $225,000 from
other sources and an income of $15,000 from other passive investments, how much of
the loss may he deduct on his federal income tax return?
37) adams wrote a check to jimmy for $5,000. after three days, he met with an accident
and died. now jimmy wants to collect money from the bank and so he deposited the
check. however, the bank is refusing to pay. is he entitled to get his money?
38) laura gets a statement and a pile of paid checks from her bank on june 1. within the
pile of checks, is one check with a forged drawers signature. laura does not notify the
bank about the forged check until the next month, july 1. does this delay remove the
banks obligation to recredit lauras account?
39) a state passes a minimum wage law. fred whitby, president of unisys corporation, is
certain that it is unconstitutional. for example, fred argues that the constitutions contract
clause plainly renders the law unconstitutional. is fred right? why or why not?