An instrument stating on its face, “Pay to Robert Stevens or bearer” is
a. nonnegotiable.
b. negotiable.
c. an order instrument.
d. a draft.
One who takes possession of an instrument after proper negotiation is a(n)
a. indorser.
b. holder.
c. accommodator.
d. negotiator.
Damage to one’s boat would be covered by a(n)
a. renter’s policy.
b. marine policy.
c. ocean policy.
d. personal policy.
To hold a bank liable for a forged signature, after the canceled check has been returned,
the drawer has to report the forgery within
a. thirty days.
b. sixty days.
c. ninety days.
d. six months.
Which of the following statements best describes the effect of a person indorsing a
check “without recourse?”
a. The person coverts the check to bearer paper
b. Directs payment to a specific person
c. The person makes no promise or guarantee of payment on dishonor of the instrument
d. The person has no liability to prior indorsers
Which of the following is not an exception to the parol evidence rule?
a. When the written contract contains all the terms and provisions intended by the
parties
b. When parol evidence is introduced in court to explain vague or confusing terms
c. When parol evidence is introduced in court to prove that the written contract lacked
certain terms that were originally agreed upon but were accidentally left out of the
written contract
d. When parol evidence is introduced in court to show that the contract is illegal
A tort resulting from carelessness is
a. defamation.
b. malpractice.
c. wrongful death.
d. fraud.
All of the following may legally be appointed as agents except
a. aliens.
b. insane persons.
c. minors.
d. incompetents.
Johnson and Wales are both merchants. Johnson offers to sell Wales several items, and
Wales accepts but adds additional terms to the acceptance. Wales’ terms automatically
become part of the contract unless
a. the offer expressly limits acceptance to the terms of the offer.
b. the new terms materially alter the contract.
c. the offeror rejects the new terms and notifies the offeree within a reasonable time.
d. all of these.
Unemployment insurance benefits are not payable to employees who
a. are fired without good cause.
b. quit their jobs.
c. have been working for less than one year.
d. have been working for less than two years.
The terms of a franchise relationship are found primarily in
a. FTC regulations.
b. federal law.
c. state statutes.
d. the franchise agreement.
Riggins indorsed her paycheck with her signature and the words “without recourse.”
This is
a. a special indorsement.
b. a blank indorsement.
c. a restrictive indorsement.
d. none of these.
When deciding whether to grant credit, a creditor may not consider the applicant’s
a. sex.
b. income.
c. credit history.
d. requested amount of credit.
Jerold told her friends that her doctor had once been successfully sued for malpractice.
Although the statement was true, the doctor was able to sue Jerold in tort for
a. libel.
b. slander.
c. invasion of privacy.
d. slander and invasion of privacy.
If nothing definite is stated about the time limit of an offer, it continues
a. for a reasonable time, depending upon the circumstances.
b. up to 25 days.
c. until the offeree accepts or rejects the offer.
d. until the offeror accepts or rejects the offer.
Employees have the right to
a. be paid for their work.
b. inform OSHA of unsafe working conditions.
c. join a union.
d. all of these.
Acts of a corporation that exceed its express or implied authority are
a. ultra vires.
b. derivative.
c. pre-emptive.
d. criminal.
A negotiation is defined as
a. an assignment of rights.
b. any assignment of an instrument to the indorsee.
c. a signature other than that of the indorsee.
d. any transfer of an instrument to a holder.
A false statement on an insurance policy application
a. voids the policy.
b. has no effect on the validity of the policy.
c. raises the premium.
d. may permit the insurer to void the policy.
Mangin agreed to sell and Restov agreed to buy a small strip of land adjoining Restov’s
property. This agreement would be binding if made
a. through an exchange of telephone conversations.
b. through an exchange of letters.
c. orally with a small down payment.
d. orally before two witnesses.
Under Article 2 of the UCC, a firm offer will be created only if the
a. offer states the time period during which it will remain open.
b. offer is made by a merchant in a signed writing.
c. offeree gives some form of consideration.
d. offeree is a merchant.
Jennings found and returned Martin’s lost wallet. Martin promised to give Jennings a
reward the next day after he cashed a check. Martin is not legally bound to pay a reward
as he promised, because the consideration for the promise was
a. past.
b. present.
c. future.
d. not legal.
A(n) ____________________ allows a seller to retain possession of goods until they
are paid for in full.
The Equal Credit Opportunity Act ensures that anyone applying for credit receives it.
In virtually all states a person reaches the age of majority at eighteen for the purpose of
making a contract.
A bank is required to honor all checks written by a depositor, even when there are
insufficient funds in the depositor’s account.
A buyer may sue for breach of warranty only after notifying the seller that the goods are
nonconforming.
Lane rented a house from Kent. Lane installed a new refrigerator in the kitchen. At the
end of the lease term, Lane wishes to remove the refrigerator. May she do so?
A felony is an act punishable by imprisonment for ____________________ one year.