Agreements that create a conflict between a public employee’s personal interest and
public duties are illegal and contrary to public policy.
Answer:
Union membership and union power have dramatically increased over the past decade.
Answer:
Foreign corporations doing business in the U.S. are protected against discriminatory
treatment by bilateral investment treaties.
Answer:
The United States Constitution establishes the right to “just compensation” for private
property taken for public use.
Answer:
A seller cannot accept a buyer’s offer by simply promising to ship the goods or by
shipping the goods.
Answer:
The Civil Rights Act of 1964 is an example of substantive law.
Answer:
If an instrument is made payable to cash, it is called bearer paper.
Answer:
The negotiability of an instrument is affected by a statement of the consideration for
which the instrument was given.
Answer:
Once a mentally impaired person regains his mental capacity, he may ratify a contract
he made while he was impaired.
Answer:
When the parties to a contract do not expressly agree on all the terms of their contract,
it prevents the creation of a contract.
Answer:
Critics of capitalism and Corporate America increasingly argue that corporations
should follow socially responsible standards higher than that imposed by law.
Answer:
The Equal Credit Opportunity Act prohibits discrimination in credit transactions based
on wealth.
Answer:
Under the Clean Air Act, a factory may be required to limit its emissions of volatile
organic compounds to a certain amount per unit of production or hour of operation.
Answer:
Affirmative action has not been upheld by courts.
Answer:
A unilateral contract trick is, a dishonest seller who has received a “rush” order sending
the wrong goods, hoping that the buyer’s necessity will force him to accept.
Answer:
Section 1 of the Sherman Act aims to attack joint action in restraint of trade.
Answer:
A substantial change in market values or business conditions that affects the subject of
the agency ends it if a reasonable agent would believe that termination is desired by the
principal.
Answer:
Under the Uniform Simultaneous Death Act, if a husband and wife die under
circumstances that make it difficult or impossible to determine who died first:
A. the husband’s property will go to his relatives and the wife’s property to her relatives.
B. the property will automatically be distributed among the husband’s siblings.
C. the property will revert to the state.
D. the property will automatically be distributed among the husband’s relatives.
Answer:
The buyer is entitled to ____ of the contract if the goods are unique.
A. liquidated damages
B. specific performance
C. incidental damages
D. consequential damages
Answer:
Consideration can have legal value:
A. if there is no proof of bargain between the promisor and promisee.
B. if the promisee does or agrees to do something, he or she had no prior legal duty to
do, in exchange for the promisor’s promise.
C. if the promisee agrees to do something he or she has a legal right to do in exchange
for the promisor’s promise.
D. if the promisee doesn’t give up something in exchange for the promise made by the
promisor.
Answer:
The Foreign Corrupt Practices Act (FCPA):
A. prohibits payments of kickbacks to foreign businesses and their corporate officials.
B. imposes recordkeeping and internal-controls requirements on any corporation whose
shares are privately traded in the United States.
C. does not require a U.S. parent corporation to make a good faith effort if the parent
owns less than a majority interest in the foreign corporation.
D. deals only with payments to foreign governmental officials.
Answer:
Millie executed a deed and put it under her mattress along with a note directing that the
deed is to be delivered to her cousin Don, upon her death. What will be the result of
such an act?
A. The deed effectively passes title to Don upon Millie’s death.
B. The deed is not effective to pass title after Millie’s death as it is not delivered.
C. The deed is not effective to pass title because Millie did not record it.
D. The deed becomes effective and passes title to Don the day he gets it.
Answer:
When, at the time of contracting, the goods are in the hands of a third-party bailee and
are covered by a document of title, the risk passes to the buyer when he/she:
A. takes possession of the goods.
B. receives the document of title.
C. acknowledges the right to possession.
D. indulges in a breach of contract.
Answer:
When a general partner sells his/her partnership interests, the purchaser:
A. is granted automatic partnership by operation of law.
B. does not become a partner until he/she is unanimously accepted by the other
partners.
C. is granted partnership only after he divests all interests in other general partnerships.
D. does not become a partner until he is nominated by the director and unanimously
accepted by other members.
Answer:
The following hierarchy applies when a check contains ambiguous terms.
A. Printed terms prevail over typewritten terms.
B. Handwritten terms prevail over printed and typewritten terms.
C. Where words and number conflict, the numbers control the words.
D. Where words and numbers conflict, only printed words control the numbers.
Answer:
Which of the following statements is TRUE about patent infringement in the U.S?
A. The court holds only the infringer accountable for the unlawful activities.
Accomplices are not considered liable under the U.S infringement law.
B. There is no affect on the importation of foreign goods that infringe U.S. patent
rights.
C. Infringement does not occur when a product patented in the U.S is made and sold in
another country.
D. The court grants an automatic injunction in cases of infringement.
Answer:
Under the RUPA, when a partnership that has suffered losses winds up, which party is
paid first?
A. All the partners
B. All partnership creditors
C. Major share holder in the partnership business
D. Both partners and creditors have equal rights to be paid first
Answer:
The “incontestability clause” found in life insurance policies:
A. bars the insurer from objecting on the basis of the purchase of the policy with the
intent to murder the insured.
B. bars the insurer from contesting its liability on the policy on the basis of the insured’s
misrepresentations if the policy has been in force for a specified period of time.
C. bars an insured from reinstating a lapsed policy that has not been surrendered for its
cash surrender value.
D. bars the insurer from objecting on the basis of absence of insurable interest.
Answer:
Ali enters into a contract with Billy’s Brewpub to be a bartender. Ali does not know
that Billy’s does not have a liquor license. Under these circumstances:
A. Ali can recover only for emotional distress.
B. Ali can recover the wages for bartending before she learned of the violation.
C. Ali can recover the wages for bartending for the entire term of her employment.
D. Ali cannot recover any of her wages as illegality makes the contract void.
Answer:
Which of the following statements is TRUE about exculpatory clauses?
A. Exculpatory clauses are always illegal.
B. When an exculpatory clause is enforced, it can effectively relieve a party of liability
for his own negligence.
C. Exculpatory clauses are effective only when the party benefited by the clause owes a
duty to the public.
D. Exculpatory clauses are always valid and enforceable.
Answer:
Which form of business organization most limits personal liability for its
shareholders?
A. Sole proprietorship
B. General partnership
C. Corporation
D. They all share this attribute equally
Answer:
Which of the following is a purpose of the Magnuson-Moss Warranty Act?
A. It provides maximum warranty protection for consumers.
B. It increases consumer understanding of warranties.
C. It protects all business to business transactions.
D. It insists on the sellers compulsorily giving a written warranty to the consumers.
Answer:
In a deed of trust transaction:
A. the buyer agrees to pay the purchase price over a period of time.
B. the surplus proceeds from a sale of property goes to the trustee.
C. the trustee can sell the property at a judicial sale.
D. the borrower deeds to the trustee the property that is to be put up as security.
Answer:
Henry applied for a loan from First Bank and was denied the loan two weeks later. He
discovered that the reason behind the denial was that the bank considered him a poor
credit risk because a credit report stated that he was an alcoholic. Henry claimed that
this information was not TRUE. Which of the following Acts will allow Henry to
approach First Bank for reconsideration of his loan application?
A. Equal Credit Opportunity Act
B. Fair Debt Collection Practices Act
C. Fair Credit Billing Act
D. Fair Credit Reporting Act
Answer:
Jack Monroe bought 200 GE common shares on the New York Stock Exchange and
could easily sell them without any SEC registration because:
A. it was a small offering.
B. it wasn’t an insurance policy.
C. it was a nonprofit private offering.
D. he was neither an issuer, underwriter nor dealer.
Answer:
Which of the following statements is TRUE about trade secrets?
A. A trade secret usually receives legal protection even if its owner did not take
reasonable precautions to keep it a secret.
B. A trade secret generally does not include processes, techniques, and compilations of
information.
C. A business may attempt to maintain a trade secret when it has a process or product
that is not novel enough to receive patent protection.
D. A business may attempt to maintain the trade secret if the monopoly period for
patents is relatively long.
Answer:
Artisans who retain goods are liable for conversion if they:
A. return the goods before the debt has been paid.
B. keep the goods without the right to a lien.
C. lose the goods to the debtor in a fraudulent manner.
D. sell the goods.
Answer:
An agent possesses implied authority when:
A. the principal has ratified past actions, leading third persons to believe authority
exists.
B. the principal gives greater authority to special agents than general agents.
C. the agent is required to safeguard the property interests of the principal due to an
emergency.
D. the agent’s powers are specifically described by the principal.
Answer:
If one automobile firm merges with another automobile firm it is called a:
A. push down merger.
B. vertical merger.
C. conglomerate merger.
D. horizontal merger.
Answer:
Under strict scrutiny analysis, to demonstrate that a government action is
constitutional, the government must demonstrate that:
A. its action bears a rational relationship to its desired end.
B. it is pursuing a compelling government interest.
C. it is pursuing a governmental end in the most intrusive manner.
D. there is no restriction on commercial speech.
Answer:
Which of the following is correct regarding the CISG?
A. Its fundamental goal is to unify and codify the law on sale of goods among
contracting parties from different states in the United States.
B. It provides rules governing the formation of international contracts and regulates the
transfer of goods under those contracts.
C. It focuses on which terms of the offer and acceptance are the same.
D. It applies to commercial and consumer transactions.
Answer:
Which of the following statements concerning reaffirmation agreements is correct?
A. Reaffirmation agreements are unlawful under the Bankruptcy Act.
B. Reaffirmation agreements must be made before a discharge in bankruptcy is granted.
C. A debtor cannot voluntarily pay any dischargeable obligation without entering into a
reaffirmation agreement.
D. Court approval is required for the reaffirmation of loans secured by real property.
Answer:
Explain the writing requirement under the UCC and U.N.’s Convention on the
International Sale of Goods.
Answer:
How does the Uniform Commercial Code define “merchant”? Why does the UCC
distinguish between merchants and non-merchants?
Answer:
Bev ordered an alabaster-colored mink coat from Poe’s Furs. The coat had been
specially made because she required an unusually large size and had requested a
particular styling. The coat cost $5,500, of which Bev paid $250. Several months later,
she decided that she did not want the coat and canceled the order, even though Poe’s
had completed the coat. Poe’s then filed suit for the balance of the purchase price. What
can Bev argue in defense?
Answer:
Explain the Clean Air Act’s approach for dealing with air pollution, including the role
of the states.
Answer:
List the claims and defenses available to a holder in due course under the Revised
Article 3.
Answer:
Nation-wide Check Corp. sold money orders to drugstores. The money orders
contained the words, “Payable to,” followed by a blank. Can the money order qualify as
a negotiable instrument?
Answer:
Explain the difference between a liquidated and an unliquidated debt.
Answer:
Jerry’s Juice Joint sends Mango Mart an order for 20 cases of mangoes at $100 per
case. Mango Mart sends Jerry’s an acknowledgement form accepting the order. Using
concepts discussed in this chapter, describe the type of contract between Jerry’s and
Mango Mart.
Answer:
Explain an illusory promise and provide an example.
Answer: