A person who inherits property under a will takes the property free of all outstanding
claims against the property.
Answer:
States generally permit LLCs to have an indefinite duration.
Answer:
A landlord is not liable for criminal acts committed by third persons against the
landlord’s tenants.
Answer:
Under the UCC, a modification of an existing contract for the sale of goods requires
new consideration.
Answer:
No person is contractually liable on a negotiable instrument unless she or her
authorized agent has signed it and the signature is binding on the represented person.
Answer:
If time is not of the essence of a contract, the promisee must accept late performance
rendered within a reasonable time of when performance was due.
Answer:
The terms of the contract of the parties to a negotiable instrument must be set out in the
text of the instrument.
Answer:
A surety’s right of subrogation means that if the surety has to pay the principal’s
obligation, the surety acquires all the rights that the creditor had against the principal.
Answer:
If culture does shape ethical attitudes, managers in individualist societies may be more
inclined to engage in insider trading than members of more collectivist societies.
Answer:
The Fifth Amendment Due Process Clause prohibits the federal government from
depriving any person “of life, liberty, or property, without due process of law.”
Answer:
Persons who contract to furnish labor or materials to improve real estate are not
entitled to claim a lien on the property.
Answer:
Acts classified as per se illegal are presumed to be illegal.
Answer:
If no maturity date is stated in the financing statement, it is valid for six months.
Answer:
Strict liability:
A. does not apply to someone who exercises reasonable care.
B. is described as liability without fault.
C. is a part of contributory negligence.
D. does not relate to intentional torts or negligence.
Answer:
Stare decisis:
A. renders law rigid and unchanging.
B. lends predictability to decisional law by relying on prior decisions.
C. makes the law unadaptable because the rule from a precedent case is applied
selectively.
D. creates harsh results by refusing to recognize equitable exceptions.
Answer:
The problem with looking to “values that find wide acceptance” as a guide to ethical
corporate behavior is that:
A. modern life holds a diversity of conflicting ethical views.
B. most widely-accepted values are uninformed.
C. companies will always look to profit maximization over anything else.
D. in today’s global world, culture has no effect on the ethical attitudes of business
managers.
Answer:
The time requirements for notice of postdated checks are similar to those required for:
A. automatic transfers.
B. stop-payment orders.
C. drawer-depositor accounts.
D. stale checks.
Answer:
George rented a car from RentaCar Co. When he returned the car to RentaCar Co., he
forgot to retrieve his wallet from the glove compartment. What is the status of the
wallet?
A. Lost
B. Mislaid
C. Abandoned
D. Unowned
Answer:
Which of the following contracts can be assigned?
A. Assignment of future wages
B. Employment contracts
C. Contracts promising to deliver goods
D. Contracts involving personal rights
Answer:
Mandatory employment arbitration agreements:
A. keep employees from suing about workplace disputes.
B. do not apply to claims of discrimination.
C. are disfavored by the U.S. Supreme Court.
D. are supported by the EEOC.
Answer:
If an oral contract has been declared unenforceable by the court, yet one of the parties
has rendered some performance under the contract that conferred benefits on the other
party, he/she can recover the reasonable value of the performance in:
A. collateral enforcement.
B. quasi contract.
C. the statute of frauds.
D. parol evidence.
Answer:
An accountant may have conducted a limited audit that she does not feel able to offer
an opinion as to the accuracy of the client’s financial statements. In such situations, the
accountant may issue a(n):
A. qualified opinion.
B. disclaimer.
C. unaudited statement.
D. opinion letter.
Answer:
Pam and Sam are promoters for Kale Corporation. Prior to its incorporation, Pam
negotiated several preincorporation contracts with Ian, an investor. She signed each
contract in the name of Kale Corporation. Kale subsequently was incorporated, but the
Kale Board of Directors refused to adopt the contracts. Ian later sues Kale, Pam, and
Sam on the contracts. Who is liable?
A. Kale and Pam
B. Pam only
C. Kale, Pam, and Sam
D. Pam and Sam
Answer:
Homeowners’ insurance policies:
A. often provide coverage under their comprehensive and collision sections for car
damages resulting from vandalism.
B. insure both the insured’s dwelling and the personal property located on the real
property.
C. do not cover personal property that was temporarily removed from the dwelling at
the time it was damaged.
D. do not allow property owners to purchase specialized policies to make up for gaps in
a standard insurance contract.
Answer:
Documents of title include:
A. stock and bonds.
B. dock warrants and dock receipts.
C. certificates of deposit.
D. conditional sales contracts.
Answer:
_____ is the legal term for settling a disputed claim.
A. Accord and satisfaction
B. Forbearance
C. Compositions
D. Promissory estoppel
Answer:
Paulsen and Warren enter into a written contract. Warren later sues Paulsen for
breaking a certain oral promise that Warren alleges is part of their deal. Paulsen’s oral
promise is not included in the terms of the written contract. At trial, Warren attempts to
introduce evidence about the oral promise, and Paulsen’s attorney objects to the
admission of the evidence on the ground that it violates the parol evidence rule. A court
would refuse to admit evidence about Paulsen’s oral promise if:
A. the oral promise was made after the written contract was signed.
B. the oral promise was made before the written contract was signed and contradicts a
term of the written contract.
C. the written contract is partially integrated and the oral promise is consistent with the
terms of the written contract.
D. the evidence about the oral promise is being offered to prove that Warren entered
into the contract as a result of Paulsen’s fraud.
Answer:
The Sarbanes-Oxley Act:
A. substantially increases the penalties for corporate wrongdoing.
B. gives corporations greater freedom from government control.
C. adopts the theory of allocational efficiency.
D. motivates executives to inflate reports of corporate profits.
Answer:
The primary components of the Takings Clause are:
A. a compelling government purpose; conditional compensation.
B. a taking; for a public purpose; the private property owner is entitled to just
compensation.
C. a taking; justified by the supremacy clause; compensation rarely required.
D. a taking for eliminating urban blight, with minimal compensation.
Answer:
Which of the following statements is TRUE for duress?
A. The reason behind the idea of duress is that mistake may prevent the “meeting of the
minds” required by contract law.
B. The basic idea behind duress is to protect the old, the timid, and the physically or
mentally weak from those who gain their confidence and attempt to take advantage of
them.
C. The term duress is used in contract law to describe the situation in which one or both
of the parties to an agreement acted under an unTRUE belief about the existence or
nonexistence of a material fact.
D. Generally, the threat of a well-founded civil suit is not duress.
Answer:
Which of the following statements is TRUE about the modification of an existing
contract under the UCC?
A. It regards all contractual duties as preexisting duties.
B. If new consideration is provided to support a modification, it is unenforceable.
C. A promise to alter an existing contract for sale of goods is enforceable.
D. Unforeseeable difficulties that made performance impossible or highly impractical
can make promise unenforceable.
Answer:
Distributions of shares in the corporation itself are called ____.
A. stock dividends
B. cash dividends
C. property dividends
D. equity securities
Answer:
Under the UCC, which of the following statements is TRUE for the identification of
goods to the contract?
A. It is applicable if delivery is to be made without moving the goods.
B. It occurs when the seller makes it verbally clear that the goods are those to which the
contract refers.
C. It does not include actions of the seller, such as setting aside or marking the goods.
D. It occurs when the seller gives samples of the goods to the buyer.
Answer:
Uncle Fred is about to undergo a major operation. Fred gives his watch to his nephew,
Harry, and tells Harry he wants him to have it if he does not survive the operation.
Uncle Fred’s gift to Harry is a:
A. gift inter vivos.
B. general gift.
C. residuary gift.
D. gift causa mortis.
Answer:
Harry owns a Cadillac and a Porsche. Bob has always wanted a Porsche and knows
Harry owns one. Harry decides to sell his Cadillac and buy a BMW. A mutual friend of
Bob and Harry tells Bob, “Harry’s selling his car.” Thinking Harry is selling the Porsche
(he does not know he also has a Cadillac), Bob calls Harry and says, “I’ll give you
$9,500 for your car.” Harry, thinking Bob is talking about the Cadillac, says, “You’ve
got a deal.” On what grounds is the above agreement open for rescission?
A. Mutual mistake
B. Fraud
C. Misrepresentation
D. Unilateral mistake
Answer:
A purchaser of securities sold on a stock exchange lost all or part of his investment as a
result of an accountant’s errors in preparing a corporation’s financial statements. Explain
why he/she would not prefer to sue the accountant under Rule 10b-5.
Answer:
Explain the difference between the implied warranty of merchantability and the
warranty of fitness for a particular purpose.
Answer:
Paul and Betty were partners doing business as Granite Stone Co. The firm became
indebted to Monster Equipment Co. The partnership later was dissolved, with Betty
leaving the partnership and Paul continuing to operate the business. Monster Equipment
sued the former partnership, Paul and Betty, to recover the price of equipment supplied
to the firm before Betty withdrew. Betty claims that she is not liable on the debt because
at the time she withdrew, the partnership had sufficient assets to pay all firm debts in
full. Is Betty liable? State the reasons for your answer.
Answer:
Briefly describe the doctrine of respondeat superior.
Answer:
Why do the courts require minors to pay the reasonable value of necessaries they
receive under a contract they are permitted to disaffirm?
Answer: