a. State and local governments require licenses for certain businesses and professional
activities. Explain the difference between a regulatory licensing statute and a licensing
statute enacted to raise revenue.
b. Explain the significance in contract law between a regulatory license and a revenue
raising license.
c. Give an example of each type of licensing statute.
The definition of “usage of trade” includes:
a. a sequence of previous conduct between the parties that may fairly be regarded as
establishing a common basis of understanding for interpreting their expressions and
agreement.
b. a practice regularly observed and followed in a place, vocation, or trade.
c. separate rules that apply to transactions between merchants.
d. All of the above.
James offers to sell four acres of land to Jennifer for $8,000 and further offers to keep
the offer open for one month if Jennifer will pay him $100 for the privilege. Jennifer
pays James $100. Which statement describes the payment of $100?
a. An implied in fact contract has been formed.
b. A unilateral contract has been formed.
c. This created a formal contract.
d. This created an option contract.
The General Agreement on Tariffs and Trade (GATT):
a. attempts to establish agreements on the practice of “dumping.”
b. is a general international antitrust agreement.
c. provides no technical assistance or training for developing countries.
d. has successfully rid international trade of tariffs.
Fay, age 17, ordered a pair of skis on the installment plan. She paid $20 every month
until she turned 18, the age of majority. The next day, she sold them to Sharon and
disaffirmed the contract. What result?
a. Fay is still liable since she had to disaffirm before her 18th birthday.
b. Fay is still liable because selling the skis amounted to a ratification.
c. Fay is still liable because she used the skis.
d. Fay is not liable because skis are not necessaries.
The Recreation and Parks Agency of the state government has six employees and is
interviewing for a person to teach gymnastics and arts and crafts to 3-5 year olds. Ed,
age 68, applies but is told he is too old. If he sues under the Age Discrimination in
Employment Act of 1967, the agency’s best defense would be that:
a. they are not subject to the Act since they only have six employees.
b. there is a bona fide seniority system.
c. Ed is not able to do gymnastics.
d. this is not a salary dispute.
Michelle’s Boutique places an ad in the Sunday paper for beautiful, top-of-the-line
designer suits for $3.00. Alice sees the ad in the paper and goes to the store to stock up
on business suits for her new job. Michelle apologizes for the misprint. Alice has just
finished a class in contract law and insists that the store sell her five suits for $15.00.
Alice threatens to sue Michelle for breach of contract.
a. This is a valid contract, and Alice will win if she sues.
b. The ad in the newspaper is an offer to sell, Alice accepted the offer, and there is an
enforceable contract.
c. The ad in the newspaper is a solicitation seeking offers, but is not an offer to sell;
therefore, Alice will not be able to successfully sue for breach of contract.
d. None of the above.
Adam Smith, in The Wealth of Nations, said the capitalistic system was composed of six
institutions, which include all but which of the following?
a. Economic motivation.
b. Free enterprise.
c. Labor.
d. Limited government.
The procedural stage of a lawsuit after the pleadings but before trial is the:
a. peremptory challenge stage.
b. discovery stage.
c. special verdict stage.
d. offer of proof stage.
In investigating conduct to determine whether the enabling statute has been violated, an
agency is subject to all but which of the following limitations?
a. The investigation must be authorized by law and undertaken for a legitimate purpose.
b. The information sought must be relevant.
c. The information sought must be privileged.
d. The demand for information must be sufficiently specific.
Which of the following is NOT ordinarily a part of a reported opinion?
a. The essential facts.
b. The names of the attorneys representing the parties.
c. What pleadings are material to the issues.
d. The application of legal principles involved in the case.
A trust created by will to become effective at the death of a testator is called a(n):
a. charitable trust.
b. cy pres trust.
c. inter vivos trust.
d. testamentary trust.
The RMBCA states that “all corporate powers shall be exercised by or under the
authority of, and the business and affairs of a corporation managed under the direction
of, its”:
a. board of directors.
b. chief executive officer.
c. officers.
d. shareholders.
What is the effect of a payor bank’s dishonor of a check?
a. It returns the check.
b. The provisional credits must be reversed.
c. The customer who deposited the item for collection must cover the item and seek
recovery from the drawer or indorsers.
d. All of these are correct.
Andrews Manufacturing Company has repudiated its contract to sell 500 computers to a
computer store. What recourse does the retailer have under the circumstances?
a. It must await the seller’s performance.
b. It can recover punitive damages.
c. It can seek a security interest in the computers.
d. It can “cover” by procuring goods elsewhere and then sue for any difference between
the cost of cover and the contract price, plus incidental and consequential damages less
expenses saved by the breach.
In May of 1998, Jones went to C & C Bank to apply for a loan on a home he wanted to
purchase. C & C Bank loaned the money to Jones because he had excellent credit. C &
C never inspected the property Jones was purchasing. Two weeks later, five rusty and
leaking 55-gallon drums of a toxic substance were found buried in a creekbed in Jones’
backyard. Jones and the Bank’s position with regard to liability for cleanup on the
property would be:
a. that CERCLA could not impose strict liability for owners of or lenders of purchase
money for contaminated property even if they acquired the property with knowledge of
contamination.
b. that they would not be liable as innocent landowners as provided for in SARA and
they would have an automatic defense.
c. that if the Bank and Jones made all appropriate inquiry into the previous ownership
and uses of the property before purchase, they may not be liable.
d. that if it could be proven that neither Jones nor the bank unlawfully disposed of the
toxic waste, they could not be found liable under CERCLA.
Which of the following transactions is governed by Article 2 of the UCC?
a. The sale of an apartment complex.
b. The sale of oranges to be picked from a 10-acre grove.
c. The sale of common stock of a soft drink company.
d. A contract to receive medical services in a hospital.
While officers, as agents of a corporation, owe an agent’s duty of obedience, diligence,
and loyalty to the corporation, this is not true of directors.
Briefly discuss the Contract Clause of the Constitution.
In some states, minors are liable for contracts involving bank accounts and student
loans and cannot avoid these contracts even though they can avoid other types of
contracts.
General partnerships are used frequently in finance, insurance, accounting, real estate,
law, and other services.
A provision in a promissory note payable one year from its date that the maker may
extend the maturity date six months impairs the note’s negotiability.
The duty of obedience owed by an agent to a principal is not breached and will not
result in liability to the principal by an agent’s refusal to do an illegal or tortious act for
the principal.
By the operation of law, the occurrence of certain events will automatically terminate an
agency relationship.
The Securities Act of 1933 identifies a number of securities exemptions that are, in
effect, transaction exemptions.