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Which of the following is empowered to issue industry-wide safety standards for
consumer products?
a. UCCC.
b. RESPA.
c. FCCPA.
d. CPSC.
The person who files or commences a civil lawsuit is the:
a. plaintiff.
b. defendant.
c. prosecuting attorney.
d. attorney general.
Gerhardt is the president of the Pacer Bicycle Company. He also serves as a director of
the Flexible Tire Company. It occurs to Gerhardt that both companies could benefit
from a contract in which Flexible agrees to supply Pacer with tires for its bicycles. If
Gerhardt wishes to negotiate a contract between Pacer and Flexible, which of the
following is correct?
a. The contract will be void as a conflict of interest.
b. Under the RMBCA, the contract is permitted if it is fair and reasonable to both
corporations, Gerhardt fully discloses all information relating to the transaction, and the
contract is approved by either the board of disinterested directors or the shareholders.
c. The contract is a clear conflict of interest and will be avoidable by either company
even with disclosure.
d. Both (a) and (c).
A fiduciary:
a. is a person in a confidential relationship who owes a duty of trust and loyalty to
another.
b. must deal at arm's length with the other party to the relationship.
c. has the same duty of disclosure to the other party to the relationship as one who is not
a fiduciary.
d. Both (a) and (b).
An agent for a disclosed principal may agree to become liable on a contract between a
principal and a third party in all but which of the following ways?
a. Making the contract in the agent's own name.
b. Co-making the contract with the principal.
c. Disclosing the principal's name and the agency relationship.
d. Guaranteeing that the principal will perform the contract between the third party and
the principal.
The perfect tender rule requires that the seller's tender of performance must conform
exactly to the contract subject to:
a. installment contracts.
b. cure by the seller.
c. All of the above.
d. None of the above.
In determining the duty of care owed by a defendant using the reasonable person
standard, the court will consider which of the following factors?
a. The existence of emergency conditions.
b. A physician's training and years of experience.
c. A person's severe mental retardation.
d. Both (a) and (b).
Promissory estoppel is a contractual doctrine that includes which of the following
considerations?
a. The courts use the doctrine of promissory estoppel to enforce noncontractual
promises.
b. Under this doctrine, the promisor reasonably expects that the promisee, in reliance on
the promise, will be induced by the promise to take action or refrain from taking action
and the promisee does so.
c. The courts will not, under any circumstance, enforce promises that do not include all
four of the elements of contract.
d. Both (a) and (b).
If Terry makes a tender offer to the owners of Pizza Village's registered stock, he must
file a statement with the SEC if:
a. he owns 1 percent of Pizza Village stock.
b. he will, after the acquisition, own 5 percent of all Pizza Village stock.
c. he will, after the acquisition, own 5 percent of one class of Pizza Village stock.
d. he will own more than half the stock in all classes.
Which of the following is NOT included within the Code definition of merchantability?
a. Reasonably fit for the ordinary purposes for which the goods are used.
b. Pass without objection in the trade under the contract description.
c. In the case of fungible goods that they be of a quality that exceeds the description and
be above average.
d. Be of fair, average quality.
Identify each of the following corporations by type.
a. Dr. Smith and Dr. Jones are both medical doctors who practice together. They
incorporate their medical practice so that they can offer themselves and their employees
better employment benefits.
b. A group of concerned citizens obtains a corporate charter from the state to form a
local Water Planning and Management Corporation that is authorized to do water
planning on a local level and to grant permits for such purposes as the installation of
ditches, and the encouragement of good water usage practices in their jurisdictional
area.
c. Agatha and Betty, who are sisters, form a corporation in which they are the sole
shareholders. They plan to operate a large retail store that sells collectibles. Agatha is
the president and Betty is the chairperson of the board of directors.
d. Bill and Carl form a corporation to prevent spouse and child abuse. The corporation
operates a shelter for battered women and homeless children.
e. Zeron Corporation is incorporated in the State of West Virginia. It decides to expand
its business to Kentucky. What type of corporation is it in West Virginia? What type of
corporation is it in Kentucky?
An objective of the Check 21 Act is to:
a. require banks to accept checks in electronic form, thereby reducing paperwork.
b. make the check collection process faster by transferring files digitally.
c. enhance fraud detection.
d. Both (b) and (c).
Which of the following is NOT considered to be dissolution by operation of law under
the UPA?
a. Bankruptcy of a partner.
b. Expulsion of a partner according to the partnership agreement.
c. Subsequent illegality of the partnership.
d. Death of a partner.
Mary agrees to sew Georgia's prom dress for $50 plus costs. Georgia decides that she
wants ruffles around the neck and calls Mary who says it will now cost $60. When
Mary finishes the dress (with ruffles), Georgia must pay:
a. $50, since that is the original agreement.
b. $50, since a modification must be in writing.
c. $60, since the modified agreement is supported by additional consideration.
d. $60, since any subsequent agreement is enforceable.
Defenses that may be asserted against a holder in due course are called:
a. personal defenses.
b. real defenses.
c. special defenses.
d. holder in due course defenses.
Which of the following is correct with respect to a bank customer's duty to discover and
report unauthorized signatures?
a. The customer is required to exercise reasonable care and promptness to examine the
bank statement.
b. A customer's duty of examination includes checking the signatures of payees and
indorsers.
c. The bank is liable on all items with unauthorized signatures even if these canceled
checks were returned to the customer four years prior to the discovery of the alterations.
d. The bank is not required to exercise ordinary care in paying the items.
Laura is in possession of a check which contains the following indorsement, "Sam
Smith, without recourse, for collection only." The indorsement would be classified as:
a. blank, qualified, and restrictive.
b. blank, unqualified, and nonrestrictive.
c. special, unqualified, and restrictive.
d. special, qualified, and nonrestrictive.
Jack was fired by Pedro but decided to try to win back his job as agent by getting a big
new contract. He approached Sharon, a new client, and made a pitch to sell Pedro's
product. Sharon agreed to buy 100. Jack tells Pedro. What are the legal consequences?
a. Pedro has to hire Jack again and then make the deal.
b. Pedro would have to ratify the deal to get the benefit of the contract.
c. Pedro would have to negotiate the deal with Sharon himself.
d. Jack would forfeit his commission if Pedro took the contract.
Lyle offers to sell his house to Dennis for $75,000. Dennis responds, "I will pay you
$75,000 for the house if you first paint the second floor." This response could best be
described as:
a. an acceptance.
b. a counteroffer.
c. a rejection.
d. an invitation.
Andre invested $100,000 in a partnership with Erik and Louis. Andre's contract with the
partnership states he will receive a portion of partnership profits, but he will be liable
for partnership's debts only to the extent of the $100,000 he invested. Andre is:
a. a subpartner.
b. a dormant partner.
c. a limited partner.
d. an aggregate partner.
Shannon orally agrees to buy 500 telephone answering machines from Thomas for
$25,000. Thomas delivers 300 answering machines to Shannon, who receives and
accepts them. Which of the following is correct with regard to this transaction?
a. Shannon can enforce the contract for the additional 200 machines.
b. The contract is enforceable to the extent of the 300 machines that have been received
and accepted.
c. The entire contract is in violation of the statute of frauds and cannot be enforced.
d. This is a bad deal, and is therefore commercially unconscionable from the beginning
and unenforceable.
Which of the following promises in consideration of marriage would be outside the
statute of frauds?
a. In consideration of Joan's promising to marry him, a man promises to pay her an
allowance and to give her all of his property upon his death.
b. John and Mary mutually agree that their marriage shall not affect the existing
property rights of the other.
c. Camilo and Laura mutually promise to marry each other in a formal ceremony on
June 23.
d. Della promises to release a money judgment against Steven in consideration of his
marrying her.
Darrell owns a parcel of land that is encumbered by a mortgage held by the First
National Bank. Darrell agrees to sell the land to Paul for $50,000. Darrell and Paul
together go to the First National Bank to discuss the sale and purchase with the banker.
Darrell, Paul, and the banker sign an agreement stating that Paul will assume the
mortgage and that Darrell will be discharged from all further liability on the mortgage.
In this case:
a. the bank is a third party donee beneficiary.
b. the bank can collect from Darrell if Paul defaults.
c. Darrell is a third party beneficiary of the agreement between Paul and the bank.
d. the agreement among the three is a novation.
In a civil lawsuit, after a plaintiff files a complaint with the clerk of the trial court, the
clerk issues a summons to be served on the defendant to notify him that a suit has been
brought against him.
Consideration is essential to an enforceable trust.
Replevin is an equitable remedy compelling the recovery of specific goods in the
possession of the defendant which are being unlawfully withheld from the plaintiff.
Civil law is a part of public law, whereas criminal law is a part of private law.
Not all of the states have enacted statutes enabling the formation of limited liability
partnerships (LLPs).
By agreement, parties to a contract may discharge each other from performance under a
contract.
The common law system of law uses the inquisitorial system of determining disputes.
A principal's intention to permit the agent to delegate granted authority may only be
gathered from the express authorization of the principal.
