A surety could avoid liability for a principal’s default by using the principal’s
bankruptcy as a defense.
Answer:
Ralph and Ann engaged Sue, a realtor, to sell their variety store. Sue represented to
buyer Mike that “this was a typical general store,” selling gas, oil, hardware, beer, and
groceries. She reported that the store had an annual gross income of over $1 million.
Sue failed to inform Mike that one-third of the store’s profit was attributable to an
accompanying lawn and garden equipment distributorship that Ralph and Ann were not
including in the sale. When Mike visited the business, Sue directed him away from the
garage area where the lawn and garden equipment was stored. Throughout all of these
negotiations, Ralph and Ann were unaware of Sue’s misrepresentations. After
purchasing the store, Mike learned of the importance of the equipment sales from Ralph
and Ann. Are Ralph and Ann liable for Sue’s misrepresentation? If yes, what can they
do to avoid liability?
Answer:
Capacity to contract is presumed and a party claiming incapacity bears the burden of
proof.
Answer:
State licensing boards that regulate the ethical conduct of the accounting profession,
strictly regulate the accountants’ right to advertise their services to the public.
Answer:
The drafters of the U.C.C intended for the code to establish complete uniformity.
Answer:
If the goods required for the performance of a contract are destroyed without fault of
either party prior to the time the risk of loss passed to the buyer, then the contract is
voided.
Answer:
Define and discuss the tort of trespass to land.
Answer:
When regulatory programs interfere with the exercise of individual rights, they are
subject only to a procedural due process challenge.
Answer:
Under Chapter 12 of the Bankruptcy Code, a debtor is usually permitted to remain in
possession to operate the farm or fishing operation.
Answer:
Legal rights that have economic value but are not connected with an object can also be
considered as property.
Answer:
Who is primarily liable on a certified check?
A. The payee
B. The drawer
C. The certifying drawee bank
D. No party is primarily liable
Answer:
Bob makes a check for $100 in a way that makes it possible for someone to easily alter
it to read $1,100, and it is so altered. Under these circumstances:
A. If the drawee bank pays the check to a holder in good faith, it can charge the $1,100
to Bob’s account if Bob’s negligence contributed to the alteration.
B. A drawee bank can charge the $100 to Bob’s account and will be liable for the rest of
the altered amount.
C. The drawee bank is completely liable to Bob for accepting the altered check even if
Bob’s negligence contributed to the alteration.
D. The person who altered the check is liable to the drawee bank and the bank cannot
charge the $1,100 to Bob’s account.
Answer:
In a field warehousing arrangement, perfection of a security interest in inventory is
accomplished by:
A. central filing.
B. local filing.
C. possession.
D. automatic perfection.
Answer:
A record in writing of the entire trial proceedings including the testimony of all the
witnesses and any discussions between the judge and the attorneys is called a:
A. treatise.
B. citation.
C. transcript.
D. brief.
Answer:
The Securities Act of 1933:
A. is concerned primarily with private distributions of securities.
B. regulates the sale of securities while they are passing from the hands of the issuer
into the hands of the private investors.
C. requires that issuers selling securities make necessary disclosures at the time the
issuer sells the securities to the public.
D. requires that any material information about the issuer be disclosed as it is obtained
by the issuer.
Answer:
When it comes to tax liability, LLCs:
A. are required to file annual reports with the secretary of state.
B. are taxed as partnerships.
C. do not require partners to report their share of the LLC’s profits on personal tax
returns.
D. are taxed as corporations.
Answer:
A common law lien essentially includes:
A. only possession by the improver or provider of services.
B. only a debt created by the improvement or provision of services concerning the
goods.
C. possession by the improver as well as debt created by the improvement.
D. an improvement which does not become a part of the property.
Answer:
Eli rents an old farmhouse from Kathy for a term to begin on July 31, 2006 and end on
August 1, 2007. When Eli attempts to move in, he finds that Rose, the previous tenant,
is still living in the house. Here, Kathy has breached:
A. the implied warranty of habitability.
B. the implied warranty of possession.
C. the implied warranty of quiet enjoyment.
D. the clauses of the Fair Housing Act.
Answer:
General agents:
A. have a limited range of implied authority than special agents.
B. are authorized by the principal to do a specific act.
C. are agents who do not possess the authority to contract on behalf of its principal.
D. act for the principal in a number of transactions over a period of time.
Answer:
When goods are defective and the buyer provides the seller with notice, which of the
following remedies is applicable?
A. The buyer is entitled to only consequential damages.
B. The buyer can claim only incidental damages.
C. The buyer can recover the difference between the value of the goods received and
the value the goods would have had if they had been as warranted.
D. The buyer can obtain specific performance when the goods are generic and can be
easily found elsewhere.
Answer:
Which of the following is a change that took place in the legal system that led to the
development of contract law in the process?
A. Courts began to shift their emphasis from protecting consumers and workers to
protecting business and promoting industrialization.
B. Courts today are not willing to consider defenses based on inequality of bargaining
power between the parties.
C. Courts tend to view with great suspicion, attempts by manufacturers to limit their
responsibility for their products by contract.
D. Legislation does not control any contractual relationships. This has been left to
private bargaining.
Answer:
If a partner retires before the completion of the partnership, it is called a:
A. termination.
B. dissolution.
C. dissociation.
D. winding up.
Answer:
Nellie owned a Great Dane that she entered in dog shows on a regular basis. When she
went on vacation, she asked her neighbor, Wilson, to take care of the dog. Wilson
agreed to do so without asking to be paid for his services. Before leaving, Nellie gave
Wilson instructions about how to care for the dog, but Wilson did not follow her
instructions or restrain the dog. While Nellie was on vacation, a car hit the dog when it
ran into the street. Which of the following statements is TRUE?
A. A bailment does not exist because Nellie did not pay Wilson anything to take care of
the dog.
B. A bailment was created, but since it was a bailment for the sole benefit of the bailor,
Wilson had no duty to care for the dog.
C. A bailment for the sole benefit of the bailor was created, which holds Wilson
responsible for gross negligence.
D. A bailment for the sole benefit of the bailee was created, meaning that Wilson will
be held strictly liable to Nellie, for the dog’s injuries.
Answer:
Under the Fair Credit Billing Act:
A. a card issuer may report a cardholder’s delinquency to a credit reporting agency at
any time deemed reasonable by it.
B. a card issuer must inform the cardholder of the reporting agency to which the issuer
sends its reports.
C. the seller cannot offer discounts if the buyer pays cash for a purchase rather than
using a credit card.
D. the consumer has the right to have a credit report withheld from anyone not having a
legitimate business need for the information.
Answer:
Which of the following basic requirements must be met, for an offer to sell goods to be
a firm offer?
A. It must contain assurances that it’ll be revocable.
B. The offeror must be a merchant.
C. It must have been made orally.
D. It is revocable for the period of time stated in the offer.
Answer:
Which of the following is TRUE for a close corporation?
A. The shareholders are large in number.
B. Shareholders usually live in different geographic areas.
C. Only few of the shareholders are active in the business.
D. There is no established market for the stock.
Answer:
Which of the following would terminate a lease?
A. Assignment.
B. A party’s material breach of the lease.
C. Landlord’s unanimous decision.
D. Subleasing.
Answer:
Which of the following statements is TRUE about leases?
A. It is a transfer of the ownership of goods from one merchant to another.
B. It is a transfer of the rights to possess and use the goods belonging to another.
C. Article 2 of the UCC deals exclusively with leases of goods.
D. It is governed by the same principles of common law that predominantly govern
service contracts.
Answer:
Polly promises to pay city council member Smith $500 to show up for the weekly
council meetings. Polly’s promise is:
A. supported by consideration.
B. wholly enforceable.
C. not supported by consideration.
D. supported by conditional consideration.
Answer:
Which of the following statements is TRUE for contracts to influence fiduciaries?
A. This doesn’t apply to agreements by fiduciaries that favor the interests of a third
person at the expense of their principals’ interests.
B. Agreements contrary to public welfare are included under this provision.
C. They operate as duress on the principal or beneficiary who is entitled to the
fiduciary’s loyalty.
D. Such contracts may be enforced upon full disclosure to, and agreement of,
beneficiary.
Answer: