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The "perfect tender rule" would allow a buyer to keep merchandise that deviates from
the contract without having to perform himself.
a. True
b. False
Mr. and Mrs. Weaver have a duty to:
a. control the behavior of their minor son with regard to foreseeable risks.
b. merely warn their dependent son regarding his activities related to third persons
involving foreseeable risks.
c. Either (a) or (b), depending upon the circumstances.
d. use reasonable care under the circumstances to third persons with regard to
foreseeable risks that arise withinthe family relationship no matter what their son's age.
A periodic leasehold tenancy may be terminated:
a. upon expiration of the period.
b. upon 6 months' notice.
c. at the will of the parties.
d. upon notice of one period in advance.
An easement describes a limited possessory interest in the land.
a. True
b. False
Which of the following would NOT require a writing under the statute of frauds?
a. Where the buyer of a five-acre lot pays the $40,000 purchase price, thus fully
performing his obligation b. Where a renter agrees to rent a building for a 5-year period
c. Where a contractor enters into an agreement for an easement across adjoining land to
run cables d. Where a landscaper agrees to landscape the lot surrounding an office
building
Fred is a concert violinist who is scheduled to perform at Carnegie Hall for the first
time. He buys what he is told is a Stradivarius violin from a well-known, reputable
dealer in quality violins, and he pays the going rate for a Stradivarius. He later learns
the violin is an imitation, although it is such a good imitation that even the dealer
thought it was authentic. In this case:
a. Fred has made a unilateral mistake and cannot avoid the contract.
b. the dealer has committed fraud in the inducement.
c. the sale is voidable by the purchaser for mutual mistake.
d. the sale is voidable, because the dealer has made a fraudulent misrepresentation.
Which of the following are exemptions for non-issuers?
a. Securities up to $1.5 million in any 12-month period if compliance with Regulation A
is achieved.
b. Sales of restricted or nonrestricted securities by affiliates.
c. Resales of restricted securities acquired under Regulation D.
d. The 1933 Act offers no exemptions from registration for sales by non-issuers.
Powers given exclusively to the federal government under the U.S. Constitution include
the power to establish laws governing bankruptcy and to coin money.
a. True
b. False
The federal courts do not have exclusive jurisdiction over:
a. federal criminal prosecutions.
b. trademark and copyright cases.
c. issues involving state constitutions.
d. bankruptcy cases.
Odessa owes Kevin $2,000. On July 1, Kevin assigns the right to the $2,000 to Troy.
Thereafter, on July 15, Kevin assigns the same right to Donna, who in good faith gives
value for it and knows nothing about the first assignee. In this case:
a. Troy has the right to the payment of $2,000.
b. Donna has the right to the $2,000.
c. neither Troy nor Donna can claim the $2,000.
d. the rule differs in different states. Depending on which rule a state follows, the
answer will vary.
Foreseen plaintiffs under the Restatement view of tort liability for an accountant include
potential investors and the general public.
a. True
b. False
Under the shelter rule, a person who is not a holder in due course can obtain the rights
of a holder in due course.
a. True
b. False
A liquidated damage is a provision by which the parties agree in advance to the
damages to be paid in the event of breach.
a. True
b. False
A seller has breached his contract by providing unfit seed, which breach was
undetectable until the bean crop was to be harvested. Remedies would include:
a. damages for the lost profits from a contract to sell the bean crop.
b. liquidated damages set by the court to cover such a situation.
c. specific performance of the contract.
d. All of these.
Sally, while walking in a park, got hit on the head with a baseball. The ball was thrown
at her by Aaron who intended to hit her to show off in front of his friends. She may
recover damages for:
a. bodily harm.
b. emotional distress.
c. reasonable medical expenses.
d. All of these.
Social Security benefits are funded by:
a. legally required assessments on employers.
b. taxes paid by both employers and employees, or by self-employed persons.
c. the federal tax on corporations.
d. a combination of federal and state taxes.
Atlas Pizza plans to sell $500,000 worth of stock in the next year. This stock will be
exempt from registration under
Regulation A as long as:
a. no more than $5 million worth of stock will be sold in any 12-month period.
b. fewer than 100 shareholders presently own stock in the business.
c. the stock is sold only to current shareholders.
d. All of these.
Under Revised Article 3, a check which meets all the requirements of being a
negotiable instrument except that it is not payable to bearer or order is nevertheless a
negotiable instrument.
a. True
b. False
The main purpose of the Bill of Rights was to:
a. enumerate all of the rights of U.S. citizens.
b. list the powers of the federal government.
c. provide for restrictions on the power of the federal government.
d. provide limitations on the powers of individuals.
Which of the following is a common purpose of the civil and criminal law?
a. Compensation
b. Rehabilitation
c. Deterrence
d. Punishment
The basic principles of contract law apply to insurance policies.
a. True
b. False
Administrative statutes, often called regulations, issued by an agency are:
a. legislative rules.
b. enabling statutes.
c. appropriations.
d. orders.
Many courts will allow recovery for the infliction of emotional distress even in the
absence of physical injury.
a. True
b. False
Caryn deposits a check in her bank at 2:30 on Monday. The bank may, under the Code,
treat the check as having been deposited on Tuesday for purposes of meeting the
midnight deadline rule.
a. True
b. False
Which of the following is not an express warranty?
a. Restating facts or market figures about a product
b. The opinion of an expert in a certain field regarding a product in that field
c. A statement of the product specifications
d. The seller's opinion of the value of goods
Under the Code, "good faith" for merchants is defined as "honesty in fact in the conduct
or transaction concerned."
a. True
b. False
Albert breaches a contract with Bill in a state where the statute of limitations is six
years. Seven years later Bill wants to sue. The contract is unenforceable, rather than
void or voidable.
a. True
b. False
Which of the following is correct with regard to common stock?
a. The Revised Act has eliminated the terms "preferred" and "common."
b. Common stock does not have any special contract rights or preferences.
c. Common stock generally bears the greatest risk of loss in the event of the failure of
the enterprise.
d. All of these are correct with regard to common stock.
Donee beneficiaries and incidental beneficiaries are called intended beneficiaries.
a. True
b. False
Public nuisance actions are very commonly used against polluters.
a. True
b. False
A contract which does not satisfy the writing requirement of the Article 2 statute of
frauds, but which is otherwise valid, is enforceable in which of the following situations?
a. Where the goods have been delivered and accepted
b. Where payment has been accepted
c. Where the goods have been specially manufactured and are not suitable for resale in
the ordinary course of business
d. All of these are situations where the contract would be enforceable.
A transfer of order paper:
a. gives the transferee the specifically enforceable right to have the unqualified
indorsement of the transferor, whether the transfer was for value or not.
b. to a bank, such as the deposit of a check, without an indorsement requires the bank to
provide the customer's
indorsement.
c. not for value creates a presumption by the courts that the parties intended to negotiate
rather than assign the paper.
d. for value creates a presumption by the courts that a negotiation was intended by the
parties unless the parties have agreed that the transfer is to be an assignment, which
requires no indorsement.
Redemption of shares generally results in an increase of treasury stock.
a. True
b. False
The Convention on Contracts for the International Sales of Goods (CISG) includes
which of the following provisions?
a. Interpretation and trade usage
b. Intellectual property rights
c. Obligations and remedies of sellers, but not buyers
d. Profitability
