Under the principle of “Respondeat Superior,” an employer is not liable for torts
committed by employees.
Kathy writes a check on her checking account with a bank. Kathy is the payee here.
In the case of foreclosure by action and sale, the creditor has no right to a deficiency
and the debtor has no right to any surplus.
The U.S. Constitution allows ex post facto criminal laws.
“Begging the question” is also known as the slippery slope fallacy.
An indorser to a negotiable instrument is generally primarily liable.
The “modified impact rule” does not require an element of direct physical contact.
Watered shares are shares issued for consideration that has been overvalued
impermissibly by the board of directors.
A retailer’s decision not to close earlier than its regular closing time even though a
storm warning makes it unlikely that there will be any more customers that day is an
example of rule utilitarianism.
Unforeseeable acts are held to be an intervening cause.
Jason has knowledge of the fact that the check given to him bears Julie’s forged
signature. Despite the said fact, he presents the check to ABC Bank. ABC Bank pays
Jason, under a mistaken belief that the signature on the check is authentic. Bank cannot
recover that payment from Jason.
Consequential damages do not include an injury to a person or property caused by a
breach of warranty.
After all the LLC assets have been sold, the proceeds will be distributed first to the
partners.
The power of eminent domain enables a private citizen to sue neighbors for any kind of
nuisance.
Apparent authority protects third parties who reasonably rely on the principal’s
manifestations that the agent has authority.
The relevant geographic market in the case of merger between competitors are the
markets in which they actually compete.
Rights theory concerns itself with the costs and benefits of requiring respect for
another’s rights.
Under many “mixed” comparative negligence systems, a plaintiff recovers nothing
where the plaintiff’s own negligence was 50% or more responsible for the plaintiff’s
injury.
The parol evidence rule blocks evidence of subsequent agreements that modify a
completely integrated written contract.
Tangible property is property that has a physical existence; for example, a car or a
computer is tangible property.
There is a requirement that all contracts be in writing.
A sole proprietorship is a legal entity separate from its owner.
Unless specific language indicates otherwise then an assignment of a right will be
interpreted to include a delegation of duty under a contract.
In a limited partnership, a general partner’s liability is limited to his investments in the
business.
According to the Clayton Act, trade unions and their activities can be construed as
illegal.
A donee beneficiary of a contract can recover under that contract.
A right of first refusal on a share certificate allows the corporation to match the offer
that a selling shareholder receives for his shares.
There is usually no liability of injurious falsehood for false statements that are made
negligently and in good faith.
There are two types of negotiable instruments.
A person who makes a completely executory promise, in return for a negotiable
instrument, has given value for it.
Rule 10b-5 relating to liability to false statements in filed documents applies to only
those transactions in all securities, which are registered under the 1933 Act or the 1934
Act.
An individual who leaves a partnership by nonwrongful dissociation is entitled to
receive their value of the partnership.
Corrective advertising is a requirement from the FTC for a seller to use advertisements
to correct false impressions from past advertising.
A passive investor who believes she has invested in a corporation has no liability for the
obligations of the business if the corporation has not in fact been formed.
A minor has the right to recover property transferred to third parties. This includes even
good faith purchasers.
A policy which obligates the grantor for reimbursing to the grantee for loss, if the title
proves to be defective is called the policy of abstract title.
A bank is not authorized to pay a postdated check before the date on the check and
charge the amount to the customer’s account, unless the customer has given notice to
the bank.
Uniform acts are model statutes drafted by private bodies of lawyers and/or scholars;
they become law only after legislature enacts them.
Marc and Sonia were the only members of the MS Limited Liability Company. Marc
then sold all his rights in the LLC to Gertrude. As a result:
A. Gertrude becomes a member of the LLC.
B. Gertrude gains the right to receive Marc’s share of distributions.
C. Marc ceases to be a member of the LLC.
D. the LLC becomes a sole proprietorship of Sonia.
What is the term for the orderly sale of the assets of the partnership as part of
dissociation?
A. Winding up
B. Incorporation
C. Organizing
D. Foreclosure
Which of the following sometimes serves as an alternative to claims of trademark
infringement?
A. Trademark abandonment
B. Trademark dilution
C. Trademark protection
D. Trademark disparagement
In a partnership, partners may give everyone notice of a partner’s authority or limitation
on a partner’s authority by filing a(n) _____ with the secretary of state.
A. special resolution
B. Article of Organization
C. memorandum of association
D. Statement of Denial
An insurer’s “duty to defend” the insured requires:
A. paying the insured any compensatory damages incurred.
B. ensuring that there is no breach in bad faith.
C. furnishing the insured with an attorney for a liability case.
D. accepting any punitive damages on behalf of the insured.
A purchaser of real property who wishes to receive the broadest protection with respect
to the property being conveyed should obtain a:
A. bargain and sale deed.
B. general warranty deed.
C. quitclaim deed.
D. recorded deed.
Debbie Jones and Bill Schneider exchanged standard order forms to formalize their
contract for a batch of goods and realized that their standard forms do not agree on
material terms. Under UCC section 2-207, when will there be a contract? Assume that
Bill did not make its acceptance conditional on Debbie’s assent to any additional or
different terms.
A. Only when Debbie and Bill are merchants.
B. When Bill’s form is a definite and seasonable expression of acceptance.
C. When the conduct of one party recognizes the existence of a contract.
D. When the offer expressly limits acceptance to its own terms.
Which of the following can a buyer do if the goods delivered by the seller do not
conform to the contract?
A. Accept only part of a commercial unit and reject the rest
B. Accept all of them but not make the payment
C. Accept a commercial unit and withhold payment for the accepted portion
D. Accept any commercial units and reject the rest
To avoid winding up:
A. a unanimous vote of all partners, who have not wrongfully dissociated, is necessary
to continue business.
B. two-thirds majority of partners wanting to continue business is necessary.
C. the court has to pass judgment to continue business.
D. the remaining partners must file a continuing statement with the public office.
In analyzing vertical restraints on distribution, courts today will apply what analysis?
A. The rule of reason
B. Finding that any evidence of vertical restraint is per se illegal
C. Federal courts will not consider issue, deferring it international courts
D. Applying the strict scrutiny test
According to the Code classifications of collateral, which of the following includes
dock warrants and dock receipts?
A. Chattel paper
B. Documents of title
C. Deposit accounts
D. General intangibles
To qualify as a contract, a set of promises must be based on a voluntary agreement,
which is made up of an offer and a(n) _____ of that offer.
A. understanding
B. writing
C. assumption
D. acceptance
Besides imposing duties on consumer reporting agencies, the Fair Credit Reporting Act
(FCRA) imposes duties on users of credit reports generated by such agencies.
Any corporation that has complied with all mandatory provisions is called a:
A. de facto corporation.
B. partnership.
C. de jure corporation.
D. defective incorporation.
Where the goods are to be delivered in installments, an installment delivery may be
rejected only if the nonconformity substantially affects the value of that delivery and:
A. if payment is to be made as per the contract price.
B. if the nonconformity cannot be corrected by the seller.
C. if the buyer accepted the goods with full knowledge of the nonconformity.
D. if payment has already been made.
Which section of the UCC indicates that upon breach of a contract a buyer can purchase
substitute goods also called cover?
A. 2-712
B. 3-301
C. 1-102
D. 2-450
What is the standard applied to examine managers’ duty of care?
A. The degree of care expected from an intelligent person faced with a complex
problem.
B. The care expected from a shopkeeper while selling expensive goods.
C. The care expected from an ordinarily prudent man in similar circumstances.
D. The degree of care expected from a prudent businessman during economic
downturn.
Which of the following is the only form of perfection that occurs without the giving of
public notice?
A. Perfection by public filing
B. Perfection by attachment
C. Perfection by possession
D. Perfection by control
Archibald and Priscilla, an unmarried couple, co-owned a house. Priscilla automatically
became the owner of the house upon Archibald’s death. What kind of a co-ownership
did they have?
A. Tenancy in common
B. Tenancy by the entirety
C. Joint tenancy
D. Cooperative ownership
Which of the following is an essential element of a lien?
A. Presence of a written deed of trust.
B. Presence of guarantor for the payment of an artisan’s service.
C. Creation of a debt by the improvement or the provision of services concerning the
goods.
D. Presence of an accommodation surety who voluntarily accepts the duty of the surety.
Which of the following is an advantage of a limited partnership?
A. It has the ability to attract large amounts of capital.
B. It is a nontax paying entity.
C. It can be created by default.
D. It cannot be transferred to another person.
Which of the following deeds uses phrases such as – “I grant,” “I bargain and sell,” or “I
convey”?
A. Grant deeds
B. Deeds of general warranty
C. Special warranty deeds
D. Quitclaim deeds
The doctrine of standing to sue implies that:
A. the lawsuit must benefit the public in general.
B. the plaintiff have a substantial stake in the litigation.
C. cases must be genuine controversies.
D. courts must not issue any advisory opinions in cases.
Which of the following is true of consideration?
A. A promise cannot be deemed a consideration in a bilateral contract.
B. The legal value of a consideration must be equal to the actual value in a
consideration.
C. Gross inadequacy of consideration can give rise to an inference of fraud for setting
aside a contract.
D. A preexisting moral obligation is deemed a consideration.
What is the term for when a tenant unjustifiable and permanently vacates a leased
premises before the lease term.
A. Foreclosure
B. Sublease
C. Abandonment
D. Eviction
Assume that the Federal Trade Commission (FTC) is conducting a hearing. In order to
obtain certain documents relevant to its investigation, the FTC need not:
A. ensure that the investigation is being conducted for a legitimate purpose.
B. confirm that the information it seeks is relevant to its purpose.
C. possess “probable cause” in support of regular search warrants.
D. ensure that the subpoena it issues adequately describes the information it seeks.
One of the two principal regulatory components of the 1933 Act is:
A. distribution provisions.
B. restricted provisions.
C. registration provisions.
D. disclosure provisions.
Which of the following is true of the remedies for misrepresentation and fraud?
A. All states allow a victim of fraud to rescind and sue for damages.
B. A person can claim punitive damages for fraud under the tort of misrepresentation.
C. The contractual remedy for innocent misrepresentation is rescission.
D. Ratification enables the right to rescind a contract.
Can a local businessman pay a police officer $50 a week to watch the business more
closely?
A. Yes, as long as the contract is registered with the Secretary of State
B. No, Public Officials cannot give consideration on duties already supposed to perform
C. Yes, as long as $50 is reasonable amount to watch the business
D. Yes, as long as a court reviews the contract within 30 days
Sean goes to Pinnacle Corp., convinces the store manager that he is their loyal online
customer Ryan and purchases a DVD credited to Ryan’s account. He then sells the DVD
to Jason for a higher price. When Ryan finds out, he wants the DVD back from Jason.
Which of the following is true of the case?
A. Ryan is the good faith purchaser in this deal.
B. Pinnacle can get the DVD from Jason.
C. Sean has voidable title to the DVD.
D. Jason needs to pay Sean as well as Pinnacle.
Mila owes Brad (whom she has not met) $4,000. James claiming to be Brad gets Mila
to issue him a check of $4,000. James forges Brad’s indorsement and transfers the check
to Hall. Which of the following statements holds true for this situation?
A. The responsibility for determining the true identity of the payee is on Hall.
B. James has the power to negotiate a check drawn payable to Brad.
C. Hall does not have good title to the check as Brad’s signature is not valid.
D. The loss is shared by Mila and Hall, who is the holder of the forged instrument.
Which of the following is true of the Clean Water Act?
A. The act enforces criminal sanctions against offenders.
B. The act mandates civil sanctions against offenders.
C. The act is enforced by the federal and the state governments.
D. Violation of the act results in fines, but not imprisonment.
The _____ has adopted a regulation that alters the rights of a holder in due course in
consumer purchase transactions.
A. Securities and Exchange Commission
B. Consumer Product Safety Commission
C. Bureau of Consumer Financial Protection
D. Federal Trade Commission
Which of the following is an accurate statement of a general rule regarding security
deposits obtained by landlords from tenants under residential property leases?
A. If the landlord intends to retain part, but not all, of the tenant’s security deposit, the
landlord complies with applicable legal requirements if he verbally notifies the tenant
of that intent.
B. The landlord is not entitled to use any part of the security deposit to cover the cost of
remedying ordinary wear and tear that occurred during the tenant’s occupation of the
property.
C. The landlord is entitled to use any part of the security deposit as a way to recover
unpaid rent.
D. As a general rule, security deposits are generally nonrefundable unless the tenant
makes a convincing written showing of why part or all of the security deposit should be
refunded to him or her.
The term commercial paper is defined as?
A. A contract for the payment of money.
B. An agreement between nations for the benefit of commerce.
C. A receipt of goods barter between businesses.
D. A warranty on good shipped in international commerce.
BG Corp., a manufacturer of men’s polyester leisure suits and other men’s clothing
items, held approximately a 70 percent share of the leisure suit market in the United
States. (Although most males have publicly spurned this 1970s-era item, BG knows
quite well that millions of men still swear by them-albeit quietly.) BG began refusing to
sell wholesalers and retailers its leisure suits unless they also purchased BG’s polyester
capes. As a result, intermediate sellers that wished to buy BG leisure suits for resale
effectively had to agree to purchase the capes as well. BG had begun selling the capes
two years earlier, but the product was a commercial flop. Only one other company
manufactured capes for wearing by men, and that company was about to cease doing so
because, as it and BG had discovered, there was virtually no demand among men for
capes. An appropriate plaintiff has now sued BG under Section 1 of the Sherman Act,
on the theory that BG was a party to impermissible tying agreements. What treatment
will the court give the agreements? Will BG be held liable? Why or why not?
Why are “disguised gift” promises involving nominal consideration nonbinding because
of the absence of consideration? Explain with one example.
A sale or return contract is a contract for goods that are primarily for buyer’s use.
Janet, age 15, has to make it on her own. To protect herself from the winter winds, Janet
buys a coat on credit for $200 from the Lifestyle Clothing Store. The coat’s reasonable
value is $80. Before making any payments on the coat, Janet tells the store that she
wants to disaffirm, i.e., she wants her money back in exchange for the coat. Can Janet
disaffirm? If not, what must she pay?
Under what two conditions is a governmental taking of property unconstitutional?
Should both of these conditions be satisfied in order for a taking to offend the
constitution, or is only one condition necessary enough?
Alan, Bob, Charles, David, and Edward are the only shareholders of Harbin
Corporation. It is a close corporation. Each owns 20 percent of the shares. There are
five director positions and each serves as a director. One day the other four find out that
Edward has committed a serious crime. They decide that they wish to expel him from
the corporation. What action may the others take? Discuss.
Richard contracts with Yuan to buy Yuan’s house for $100,000 “unless my horse does
not win the Kentucky Derby.” This is a condition subsequent, or at least an attempted
condition subsequent. Rephrase it as a condition precedent with the same effect. If you
can do this, why does the law bother to distinguish conditions precedent from
conditions subsequent?
Why was the emergence of large corporations so important in shaping the 20th century
contract law?
Donna is a partner of Don-Tel Lawn Care, a partnership in the business of providing
lawn care services. While mowing a lawn using a partnership mower, Donna
negligently runs over a piece of metal, sending pieces of metal flying through the air.
One piece hits the client’s patio door and shatters the glass. Is Donna liable to the client?
Are Donna’s partners liable to the client?
Amy Ames applied for a loan at Local State Bank. Three weeks later, she received
notice from Local State that her application had been denied. Ames later learned, from a
reliable source, that the bank denied her application because a credit report on her stated
that she regularly uses and deals in illegal drugs. Ames contends this statement in the
credit report is untrue. What can she do?
Nordex Corporation is in the business of manufacturing furniture. Because the industry
has matured, Nordex is considering adding a new product line, manufacturing plastic
products such as casings for telephones and videotapes. No director will have a
personal interest in the decision to expand into those lines. To avoid liability for making
a poor decision, what standard of conduct should Nordex’s board of directors comply
with?
Why is it important for an assignee to immediately notify the obligor of the
assignment?
What is an exculpatory clause?
Adam hired Kim as his agent to drive a cab. On his first day on the job, Kim hit a
pedestrian who suffered serious injuries. The pedestrian wants to file a suit against both
Adams and Kim. Can he file a single suit against both of them?
Jones goes to a clothing store and orders $1000 worth of clothing on credit. The
salesperson writes up a receipt describing the terms of the deal, but Jones does not sign
anything. Three days later, the store delivers $750 worth of clothing, which Jones
accepts. One day later, however, Jones decides that he doesn’t want the clothing. When
the store insists that he has to pay the full $1000, Jones pleads the statute of frauds.
Does the statute of frauds give Jones a defense against payment here?
