Under condominium ownership, a purchaser takes title to his/her individual unit and
becomes a tenant in common with other unit owners in shared facilities.
Answer:
Trading on inside information is in violation of fiduciary duties.
Answer:
One can commit an intentional tort with the conscious desire to cause harm or with the
knowledge that harm is substantially certain to result.
Answer:
When a security is sold in exempt transaction, all its subsequent sales are also covered
by the exemption.
Answer:
Under the MBCA, shareholder approval is required for employee and director stock
option plans.
Answer:
Defendants in criminal cases have the right to remain silent and cannot be compelled to
testify against themselves.
Answer:
An injured buyer is able to recover consequential damages even if he could have
prevented the damage by obtaining substitute goods.
Answer:
Negotiability is the same thing as validity with regard to commercial paper.
Answer:
Only specified individuals, and not members of the general public, can be incidental
beneficiaries of contracts.
Answer:
Minors who successfully disaffirm a contract are not entitled to the return of any
consideration they have given the adult party to the contract.
Answer:
Distanet Corporation is a competitor of Telenex Corporation in the personal computer
market. After examining past and future price and sales data and after consulting an
economist and an accountant, the directors of Distanet voted to reduce the price of that
company’s computers, believing that by reducing the price of their product, the
corporation could compete more successfully with Telenex. The plan was put into
operation, but it did not prove to be effective. In fact, Distanet lost money as a result of
the plan. Aileen, a stockholder of Distanet, brings an action against the directors,
seeking to hold them liable for the failure of the plan to improve Distanet’s position in
the computer market, and for the losses experienced by the corporation as a result of the
implementation of the plan. Will she succeed in her suit?
A. No, because the directors are the managers of the corporation.
B. No, because the directors’ decision was one subject to the business judgment rule.
C. No, because a stockholder does not possess the rights to sue the directors under any
circumstance.
D. Yes, because shareholders are permitted to sue to allow a court to determine whether
the directors have acted in the best interests of the corporation.
Answer:
Nellie borrowed money from Solvent National Bank and gave the bank a security
interest in her business equipment, both present and after-acquired. She later borrowed
money from Resilient Savings and Loan to purchase additional business equipment.
Three weeks after Nellie purchased the new equipment and took possession of it, an
employee of Resilient discovered the bank’s filed financing statement concerning the
bank’s loan to Nellie. Resilient immediately recorded a financing statement, so as to
perfect its purchase money security interest in the equipment. Nellie then defaulted on
the obligation owed to the bank and on the obligation owed to Resilient. Who has the
first priority security interest in the equipment purchased by Nellie with the funds
borrowed from Resilient?
A. Solvent National Bank
B. Resilient Savings and Loan
C. Both Resilient and Solvent have equal priority
D. Both Nellie and Resilient have equal priority
Answer:
In the states that recognize holographic wills, such wills will be valid:
A. if they do not evidence testamentary intent.
B. if they are in the handwriting of the testator.
C. if only the material portions in the will are typed.
D. if they are typed and evidence testamentary intent.
Answer:
A holder in due course takes the instrument free of all:
A. defenses and claims to the instrument.
B. defenses and claims to the instrument except those which concern its validity.
C. defenses and claims to the instrument except those which concern its negotiability.
D. defenses and claims to the instrument except those it has notice of.
Answer:
What is the “right of rescission”?
A. Correction of outdated or wrong information and its notification to credit
information recipients.
B. A cancellation right for three business days after the purchase on credit or after the
creditor makes the required disclosure.
C. Rights to the creditor to accept or reject consumer applications within 30 days.
D. A cardholder’s right to limited liability for unauthorized use of a credit card.
Answer:
A famous publisher makes an oral deal with Professor Cullison to write a new Legal
Ethics book. The parties agree that Professor Cullison’s work will be due in five years.
Under this scenario, the contract is:
A. enforceable.
B. unenforceable.
C. void.
D. illegal.
Answer:
Max is employed by a large law firm in a city of one million. His employment contract
with the firm includes a promise on his part not to practice law within the city for ten
years once he leaves the firm. His promise:
A. is illegal as a contract injurious to public service.
B. is only illegal if it violates state or federal antitrust laws.
C. is illegal as a contract in restraint of trade.
D. is illegal and will invalidate the entire employment contract.
Answer:
Monica contracted with Joe’s Furnishing’s to complete the work on her house by 1st
November. She gave Joe’s a negotiable promissory note in the amount of $20,000,
payable to the order of Joe’s on November 1. Joe’s then negotiated the note to the bank.
He however, could not complete the work by 1st of November. If the bank is able to
qualify as a holder in due course, which of the following statements is TRUE?
A. Monica is not liable to the bank because Joe’s breached the contract, not her.
B. The bank can collect the amount from Joe’s because he negotiated the note to the
bank.
C. Monica can assert personal defense against the bank and avoid payment as Joe’s did
not complete the work on time.
D. Monica cannot assert personal defense against the bank and avoid payment as it was
a negotiation, and not a simple contract.
Answer:
Which of the following would qualify as a “check” under the terms of the Code?
A. A money order
B. A treasury bill
C. A promissory note
D. A certificate of deposit
Answer:
A person may have the right to use the land of another person but not to actually
occupy it on a long-term basis. This is known as a(n):
A. fee simple.
B. license.
C. lease.
D. easement.
Answer:
Jen is a buyer for Autumn’s Iowa health food store. While Jen is in California buying
tofu, she finds a solar car for sale for just $3,000. Jen contracts to buy the car for
Autumn, who has been looking for a solar car for the past three years. Autumn instructs
the seller of the car to ship it. Under these circumstances:
A. Autumn has ratified the contract.
B. Autumn is not liable on the contract.
C. Jen is liable on the contract.
D. Jen has ratified the contract.
Answer:
Advertisements for rewards, such as for the return of lost property, information, or the
capture of criminals, are generally:
A. held to be invitations but not offers.
B. held to be offers for unilateral contracts.
C. held to be offers for bilateral contracts.
D. held to be firm offers.
Answer:
As a part of their new business expansion strategies, an Italian company,
manufacturing car accessories, licensed a local firm in Kenya for production of car sun
shades. After running a successful business for one year, the Kenyan firm manufactured
its own car shades with local resources and started selling them at lower rates. This was
a violation of the _____ clause in licensing agreements which prohibits the licensee
from providing goods or services that are competitive with those supplied by the
licensor.
A. granting
B. requirements
C. exclusive dealing
D. technical service
Answer:
Under which of the following circumstances can minors disaffirm a contract?
A. The minor has not ratified the contract upon reaching majority.
B. The contract is for real estate.
C. The minor has given a false statement about his/her age.
D. The minor is required to place the adult in status quo.
Answer:
When a seller breaches a contract, the buyer may:
A. buy other goods and recover damages from the seller based on any additional
expense incurred in obtaining the goods.
B. obtain specific performance when the goods are generic and can be obtained
elsewhere.
C. never recover consequential damages.
D. be legally sued into performing as well as made to compensate for loss of time.
Answer:
Adhesion contracts fall under:
A. contracts from unequal bargains.
B. contracts injurious to public service.
C. contracts to influence fiduciaries.
D. contracts in restraint of trade.
Answer: