Billings and Durick, who are competing distributors, made an agreement whereby
Billings promised that he would not sell his goods in a specified area, and Durick
promised that she would not sell her goods in another specified area. The agreement
was made to keep prices high by eliminating competition. This arrangement was
a. legal because it was made in reasonable restraint of trade in order to control prices
and territory.
b. legal because a binding contract was made willingly by both parties.
c. illegal because it called for unreasonable restraint of trade by controlling prices and
territories.
d. illegal because agreements that allow manufacturers to set prices are voidable.
Unclaimed or abandoned property ultimately escheats to
a. its rightful owner.
b. the federal government.
c. one’s heirs.
d. the state.
The amount of a debtor’s wages that may be taken by garnishment is
a. limited by federal law.
b. unlimited.
c. limited by state law.
d. limited by the Wage and Hour Law.
Price fixing
a. violates federal law.
b. violates state law.
c. violates both state and federal laws.
d. is permissible if it results in lower costs to the consumer.
A partnership may be terminated by
a. the death of a partner.
b. agreement among the partners.
c. bankruptcy of the partnership.
d. all of these.
Charging an interest rate higher than the rate permitted by law is known as
a. ex post facto.
b. usufruct.
c. ab initio.
d. usury.
A detailed accounting that buyers and sellers receive at closing is pursuant to
a. state law.
b. federal law.
c. the contract of sale.
d. local custom.
By orally repeating a rumor that he knew to be false, Ralston caused injury to Hicks’
reputation. Ralston was guilty of
a. trespass.
b. libel.
c. fraud.
d. slander.
Day-to-day management is the responsibility of the
a. officers.
b. directors.
c. stockholders.
d. incorporators.
A negotiable promissory note must contain
a. a date.
b. the letters IOU.
c. the words value received.
d. words indicating a promise to pay.
Blacklaw in a signed letter to Ekis made the following request (offer): “Ship promptly
100 dozen of the new light saver type light bulbs.” This offer
a. may be accepted only by a prompt shipment.
b. may be accepted only by a prompt promise to ship.
c. may be accepted by either a prompt promise to ship or a prompt shipment.
d. is invalid because no price was mentioned.
According to the Magnuson-Moss Warranty Act, which of the following statements is
true?
a. The law requires manufacturers and sellers to give written warranties.
b. The law replaced UCC warranty law.
c. If a written warranty is given by a manufacturer, the implied warranties of
merchantability and fitness for a purpose cannot be eliminated.
d. Does not differentiate between a full warranty and a limited warranty.
A corporation comes into existence when the
a. application for a charter is filed.
b. state issues the charter.
c. bylaws are adopted.
d. first meeting of stockholders is held.
A constructive eviction would occur if the landlord
a. turned off the water for an hour to make repairs.
b. entered the leased premises to check on fire damage.
c. failed to provide heat for ten days.
d. all of these.
Abel entered into a written agreement with Burrows to buy a horse. In the meantime,
the horse died. Under the common law, this contract was discharged by
a. performance.
b. mutual agreement.
c. substantial performance.
d. impossibility.
Joels, a bank vice president, regularly took money for his own use from customer
accounts and made false entries in the bank records. Joels committed the crime of
a. blackmail.
b. robbery.
c. burglary.
d. embezzlement.
Arnold who worked for the Clean Corporation sold vacuum cleaners house to house.
He called on Anna, a single mother on welfare with five children. Convinced by
Arnold’s sales presentation Anna signed a sales contract to purchase a vacuum cleaner.
While the contract stated the price of $600 payable in weekly installments, there were
hidden charges (fine print) covering insurance and a service contract for one year
bringing the total to $900. After paying in $300, a neighbor pointed out the hidden
charges to Anna who then stopped payments at the suggestion of Legal Aid under the
theory of
a. fraud.
b. duress.
c. misrepresentation.
d. unconscionability.
Roscoe, of Cleveland, Ohio, ordered twenty computers from the Rand Computer
Corporation in St. Louis, Missouri, terms FOB St. Louis. The computers were damaged
in transit from St. Louis to Cleveland. The loss is borne
a. by Roscoe.
b. by Roscoe and Rand Computer Corporation.
c. 50 percent by Roscoe and 50 percent by Rand Computer Corporation.
d. by Rand Computer Corporation.
Grill Lovers, a Manufacturing Co. that makes gas grills for outdoor cooking, sold
several of its grills to Premier Home Company located in a large city. Ferris, who
purchased a gas grill from Premier, was seriously injured while grilling steaks outside
for a family outing. The injury resulted from a manufacturing defect in the gas line
which caused an explosion as he was cooking over the grill. In order to be successful in
his lawsuit, which is based on strict liability, Ferris must present proof that
a. he was in privity of contract with Premier Home Company.
b. Grill Lovers had a duty to sell a safe product and that the product purchased was not
safe.
c. a warranty existed on the product and that there was a breach of warranty by Grill
Lovers.
d. the product was unreasonably dangerous when it left the manufacturer’s or other
seller’s control and that he suffered an injury.
A composition of creditors
a. allows creditors to sue the debtor.
b. is binding on all creditors.
c. allows creditors to collect the full amount owed.
d. is illegal.
The purpose of government regulation is
a. to maintain competition.
b. to protect the rights of consumers, employees, and owners.
c. to protect the environment.
d. all of these.
Maile agrees to sell his retail men’s shop in Cleveland, Ohio, to Lunger. Lunger wishes
to have a restrictive clause against competition by Maile included in the sales contract.
Which restrictive clause against the seller would be enforceable?
a. Never to engage in a similar business in Cleveland
b. Not to engage in a similar business for the next two years anywhere in the state of
Ohio
c. Not to engage in any type of business anywhere in Cleveland for the next year
d. Not to engage in a men’s shop business within a radius of one mile for the next year
When goods are in existence and identifiable, title passes from the seller to the buyer
a. at the time the parties make the contract.
b. when the buyer pays for the goods.
c. when the seller tenders the goods.
d. when the buyer takes possession.
An item attached to real property is considered goods if it can be removed easily.
If an agent enters into a contract without authority to do so, the
____________________ is not liable on the contract.
False ‘suggested list prices” are an example of price fixing.
One who subleases real property from another is called a(n) ____________________.
Freedom of contract is a basic principle of the UCC. Consequently, its provisions are
not mandatory.
A principal may ask an agent to assume equal liability on a contract.
Iosa promised to pay a police officer $150 to keep an eye on Iosa’s store while she was
away. Is Iosa’s promise binding? Why or why not?