All states have authorized the formation of limited liability companies.
a. True
b. False
Bob took a check written by Jack to Jack’s bank to be certified. The bank stamped
“Certified” on it and gave it back to Bob. What consequence?
a. Bob can only demand the money from Jack.
b. The bank is now primarily liable on the check.
c. The bank would have to pay if Jack doesn’t.
d. Bob would have to pay if the bank doesn’t.
A condominium differs from a cooperative in that a tenant in the latter:
a. rents his apartment from the cooperative.
b. owns his apartment in cooperation with others.
c. owns all the space except the common areas.
d. owns only the internal space.
The apple which identifies Apple Computers is an example of a:
a. trademark.
b. service mark.
c. certification mark.
d. collective mark.
Sarah offers to pay Allison $150 if Allison will paint her apartment while she is out of
town on vacation for two weeks. Allison makes no promise but tells Sarah that she will
think about it. While Sarah is out of town, Allison paints the apartment. This is best
described as a(n):
a. unilateral contract.
b. quasi contract.
c. implied in fact contract.
d. bilateral contract.
A newspaper article hints that a certain corporation is a front for illegal activity. The
corporation:
a. will lose a defamation suit because only natural persons can successfully bring
defamation suits.
b. will likely win a defamation suit if the statement is untrue and was made with malice.
c. will likely lose a defamation suit because the press has an absolute privilege in this
type of case.
d. can win an invasion of privacy suit even if the statement is true.
The Oak Grove Partnership decided it would buy personal computers for use by each
partner. Unknown to the other partners, Cromwell, a partner, had an ownership interest
in a computer store and thought he could get the computers for the partnership at the
best price because of his inside position. He did, in fact, obtain eight computers at only
$150 above the manufacturer’s price, which was $250 less than the next lowest bid for
each computer. What consequence?
a. Because Cromwell did not tell his partners of his inside position with the computer
store, there will be no sale.
b. Since Cromwell obtained the lowest price available, the deal will go through.
c. Cromwell will have to give his part of the sales profits to the partnership.
d. Cromwell will have to rescind the contract and go with the next highest bidder.
Ray threw a bomb into the office of his insurance agent, intending to kill the agent
because the company had disallowed his claim. The agent wasn’t in the building, but the
bomb seriously injured his secretary, who was working in the office. Ray:
a. cannot be liable to the secretary for any torts because he did not intend to hurt her.
b. can be sued by the secretary with an intentional tort cause of action because Ray’s
intent to harm the agent is
transferred to the secretary.
c. has committed a crime, but he is not liable for any torts.
d. has committed the tort of intrusion.
An indorsement must be written within 1 1/2 inches of the trailing edge of the back of
the check and must be written in ink or the check’s negotiability is destroyed.
a. True
b. False
“Capital surplus” would be credited with the excess received over par value for par
value shares issued by the corporation.
a. True
b. False
A seller’s promise to service a sewing machine free for the next 90 days when she has
no intention of doing so is
actionable as a false representation of a fact if the other elements of fraud are present.
a. True
b. False
Enforcement proceedings under the Sherman Act may not be brought by the:
a. U.S. Commerce Department.
b. U.S. Justice Department.
c. Federal Trade Commission.
d. state Attorneys General.
A definite time required for negotiability would NOT be satisfied in which instance?
a. Payable on or before January 1, 2015
b. Payable one week after demand is made
c. Payable one year from the completion of the building
d. A dated instrument payable “90 days after date”
A time draft is one payable upon demand (at the time it is presented to the drawee).
a. True
b. False
Don has an employment contract with Dunkirk Ice Cream. He sells ice cream and
novelty ice cream products. He has nine children and doesn’t make enough money, so
he decides to see if another dairy will hire him, too. “After all,” he reasons, “most stores
carry four or five different brands.” His employment contract prohibits him from
competing. If Don sells for another dairy in addition to Dunkirk, will he be in trouble
under his contract?
a. No, it is unenforceable as against public policy.
b. Yes, it is likely to be enforceable during employment.
c. No, the prohibition against competing is enforceable only after he quits Dunkirk.
d. A court would have to rule on the enforceability of the covenant not to compete since
courts are reluctant to enforce such covenants during a period of employment.
Under the statutes in most states, if Marilyn and George form a corporation with
Marilyn as president and George as treasurer, Marilyn cannot also be corporate
secretary.
a. True
b. False
Joanne had a paycheck from Pizza Plaza for $54 made out to her. She indorsed it with
her name and gave it to
Larry, who in return agreed to paint her living room next Saturday. In this case:
a. the check is not negotiable.
b. Larry is not a “holder.”
c. Larry is not a “holder in due course.”
d. Larry has given value for the check by his agreement.
The final arbiter as to the constitutionality of laws passed by Congress or by the
legislature of a state is the Supreme
Court of the United States.
a. True
b. False
Dan signs a note “Dan Mason, Agent” without disclosing his principal’s name. Dan is
liable to a holder in due course without notice that Dan was not intended to be liable.
a. True
b. False
Under the Foreign Sovereign Immunities Act, a foreign state is:
a. immune from all suits in the United States.
b. immune from suits in the United States involving public acts, but not commercial
acts.
c. not immune from any type of suit in the United States.
d. None of these.
For purposes of intentional torts, a person can have the intent to cause harm if the harm
is substantially certain to occur even if he or she doesn’t desire that such harm occur.
a. True
b. False
Zoron Company purchased a truck from Ace Motors. The sales personnel at Ace know
that Anton Green is an executive at Zoron. To pay for the truck, Anton delivered a
$35,000 note to Ace and signed it “Anton Green, Agent.” In this case:
a. the signature of the maker is incomplete. Neither Zoron nor Anton is liable on the
note.
b. “Zoron Company” does not appear on the note. Only Anton is liable to Ace for
payment of the note.
c. as long as Ace Motors remains holder of the note, Zoron Company is liable for
payment.
d. if ABC Bank is holder of the note and Zoron Company does not pay, the bank has no
recourse against Anton.
The EPA administrator established air quality standards for seven major classes of
pollutants (carbon monoxide, particulates, sulfur dioxide, nitrogen dioxide,
hydrocarbons, ozone, and lead) but the hydrocarbon standard was subsequently
withdrawn as no longer being necessary.
a. True
b. False
For negligence cases, the Restatement has adopted the requirement of privity as set
forth in the landmark opinion of
Judge Cardozo in UltramaresCorp.v.Touche.
a. True
b. False
The doctrine of resipsaloquiturwould permit the court to infer negligence in which of
the following situations?
a. A can of peas fell off the shelf onto your foot.
b. A sign over a storefront fell on your head.
c. Neither of these situations.
d. Both of these situations.
Jesse makes an offer to Ike, and Ike accepts; then the state legislature passes a law that
makes performance of the contract illegal. What is the effect of the new statute on the
contract?
a. The contract is severed; any portions that are legal must still be performed and any
portions that have been made illegal must not be performed.
b. The statute has no effect on the contract.
c. The statute acts as a condition on the contract.
d. The statute discharges the obligations of both parties under the contract.
Breach of a contractual promise and failure of a condition have fundamentally the same
effect.
a. True
b. False
The Code provides that where neither party is at fault and the agreed manner of
delivering the goods becomes commercially impracticable, a substituted manner of
performance, if commercially reasonable, must be tendered and accepted.
a. True
b. False
Under the RUPA, in which of the following situations may a court order dissolution
upon application by a partner?
a. An event makes it unlawful to continue substantially all of the partnership’s business.
b. A definite term for the partnership has expired.
c. A partner files a petition for personal bankruptcy.
d. The court finds the economic purpose of the partnership is likely to be unreasonably
frustrated.
A postincorporation subscription is:
a. like a preincorporation subscription in that the subscriber may withdraw the offer to
enter into the subscription any time before the corporation accepts it.
b. treated as a contract between the subscriber and the corporation.
c. not recognized under the RMBCA.
d. defined under the RMBCA as a contract between all subscribers.
Mike, the owner of a yogurt shop, orders 500 quarts of yogurt from his supplier.
Nothing, however, is said by either party about the price or method of payment. The
supplier ships the yogurt as ordered. Since this is a contract implied in fact, Mike must
pay his supplier for the yogurt.
a. True
b. False
The statute which contains the rules applicable to investment securities transfers is:
a. the Securities and Exchange Commission Act.
b. Article 2 of the UCC.
c. Article 8 of the UCC.
d. the Model Business Corporation Act.
Almost all jurisdictions require that:
a. express trusts of real property be in writing.
b. trusts have at least four witnesses.
c. an intervivostrust has at least two trustees.
d. a charitable trust has at least two trustees.
The legislature may exercise control of administrative agencies in all of the following
ways, EXCEPT:
a. through its budgetary power.
b. through the power to appoint and remove chief administrators.
c. by amending an enabling statute to increase, modify, or decrease an agency’s
authority.
d. All of these are ways the legislature controls agencies.
Which of the following does not exemplify a relationship that typically leads to scrutiny
of a contract for undue influence?
a. Wife and husband
b. Clergy and parishioner
c. Brother and sister
d. Parent and child