What is the term for a dissociation that violates the partnership agreement?
A. Wrongful dissociation
B. Breach dissociation
C. Fraud dissociation
D. Agent dissociation
David entered into a contract to sell Ruth a parcel of land fully aware that Ruth’s
intention of purchase was to construct a high-rise commercial building. David was also
aware that the subsurface soil condition of the property would prevent such
construction. The soil condition was not readily discoverable in the course of normal
inspections or soil evaluations. David did not disclose the existence of the condition to
Ruth, nor did Ruth make any inquiry of David as to the suitability of the land for the
intended development. David’s silence as to the soil condition:
A. renders the contract voidable at Ruth’s discretion.
B. entitles Ruth only to monetary damages.
C. makes the contract a case of a mutual mistake.
D. does not affect the validity of the contract.
Stella, Bob, and Chris are partners in Sole Services, a general partnership that runs a
small shoe store. Stella and Bob want to buy the building that they are currently renting,
but Chris does not agree. How will this disagreement be resolved?
A. Sole Services will buy the building because this management decision can be made
by a majority vote of the partners.
B. Sole Services will buy the building because one partner can never stand in the way
of the will of the majority of partners.
C. Sole Services will not buy the building because this decision requires a unanimous
vote of the partners.
D. Sole Services will not buy the building because all partnership management
decisions require a unanimous vote of the partners.
Someone confronted with an emergency requiring rapid decisions and action need not
employ the same level of caution and deliberation as someone in circumstances
allowing for calm reflection and deliberate action. This exception reflects the
consideration of _____ in a negligence case.
A. personal characteristics
B. context
C. special duties
D. deliberateness
“Tool For You” (TFY) is a company that sells power tools to consumers. The sales
contract of TFY states that TFY will not be liable for any consequential damages that
the consumer suffers as a result of using power tools purchased from them. Harry
purchased a table saw from TFY for use in his hobby of woodworking. Harry was
injured when the saw blade flew off. He wants to sue TFY but is not sure whether the
contract provision limiting consequential damages will be enforced and seeks your
opinion. Will he succeed?
A. No, because this was a sale of a potentially dangerous product.
B. No, because Harry is a consumer.
C. Yes, because Harry agreed to this provision in the contract of sale.
D. Yes, because the UCC allows parties to agree to limitations on damages.
What is emancipation?
A. Termination of a case of fraud and misrepresentation.
B. Termination of a bargain that is considered void.
C. Termination of parental rights to control a child.
D. Termination of necessaries in a quasi-contractual case.
When a promisee who has an existing claim agrees with the promisor that he will
accept some performance different from that which was originally agreed on, both
parties can use the remedy of:
A. specific performance.
B. accord and satisfaction.
C. waiver.
D. rescissions.
Under the _____ Clause, the power to regulate interstate trade is given to the federal
government.
A. Due Process
B. Corporate
C. Commerce
D. Doing Business
Rice contracted with Locke to build an oil refinery for Locke. The contract provided
that Rice was to use United Pipe Fittings. Rice did not do so. United learned of the
contract and, anticipating the order, manufactured additional fittings. United sued Locke
and Rice. United is:
A. entitled to recover from Rice only, because Rice breached the contract.
B. entitled to recover from either Locke or Rice because it detrimentally relied on the
contract.
C. not entitled to recover because it is a donee beneficiary.
D. not entitled to recover because it is an incidental beneficiary.
Pete contracts to sell Jill 100 widgets. The 100 widgets are located at Pete’s business.
The contract does not state a place of delivery. The place of delivery is:
A. Jill’s place of business.
B. Jill’s home.
C. Pete’s place of business.
D. Pete’s home, if this is different from his place of business.
Which of the following statements is true regarding noncompetition clauses in the
employment contracts?
A. These clauses are illegal.
B. Employments contracts with these clauses are voidable.
C. These clauses put postemployment restrictions on the employees.
D. These clause need to be ratified by the employer.
Which of the following is a tenancy for an indefinite period of time?
A. Tenancy for a Term
B. Tenancy at Sufferance
C. Periodic Tenancy
D. Tenancy at Will
Checks and drafts are:
A. documents required as evidence for shipment of goods.
B. documents which detail the transaction between a seller and a buyer.
C. orders to another person to pay money to a third person.
D. promises to pay someone money.
Ordinarily a principal is not made liable for any of the torts committed by:
A. a reckless employee.
B. an employee.
C. an agent.
D. an independent contractor.
Jackie Collins is issued a check payable to the order of Jacky Collens. She takes the
check to the bank. In order to cash the check she has to:
A. sign either Jackie Collins or Jacky Collens.
B. sign only Jackie Collins.
C. sign only Jacky Collens.
D. sign both Jackie Collins and Jacky Collens.
Contracts sometimes contain a provision reciting that disputes between the parties
regarding matters connected with the contract must be litigated in the courts of a
particular state. What is such a provision called?
A. Choice of law clause
B. Forum selection clause
C. Substantive clause
D. Minimum contacts clause
A firm claiming a trade secret must show that it:
A. took measures to ensure secrecy.
B. gave adequate compensation for the work.
C. has a license to produce the product.
D. has enough research to back the product.
Under the Restatement (Second) of Torts, which of the following nonclients may sue an
accountant for professional negligence?
A. A securities investor whose use of the financial statements prepared by the
accountant to purchase common shares was foreseeable by the accountant.
B. A bank that was not known to the accountant and whose use of the financial
statements was not foreseen, but whose use of the financial statements was foreseeable.
C. A bank that was known to the accountant but used the financial statements prepared
by the accountant for a purpose that was not foreseen.
D. A creditor who was not known to the accountant but who used the financial
statements for the same purpose as the bank whose use of the statements was known to
the accountant.
The limited partnership agreement of Davos Limited Partnership has no clause on
partners who transfer their transferable interests. Davos is the only general partner of
the limited partnership. There are five limited partners. Two of them transfer their
transferable rights to their sons (one each). By consent of all the partners, the two
transferees are also made partners. How many limited partners does Davos Limited
Partnership now have?
A. 6
B. 7
C. 5
D. 3
If a buyer has a basis for rejecting a delivery of goods, the buyer:
A. should not ask the seller to reship conforming goods.
B. will still be liable to the seller for breach of the sales contract.
C. need not give the seller notice of the rejection.
D. must act within a reasonable time after delivery.
When Reese Group of Hotels (RGH) was on the verge of facing a hostile takeover bid
by rivals Blossoms Group (which held a 14.98 percent stake in RGH), Rely’s came
forward and bought a 14.12 percent stake in RGH, thereby relieving RGH from the
hostile takeover risk. This kind of tender offer defense is called:
A. Greenmail.
B. The lock-up option.
C. White Knight.
D. Pac-Man.
Carmen Company wants to make an offering of securities exempt from registration
under Rule 505 of the Securities Act of 1933. In order to do this, Carmen:
A. may sell to 50 unaccredited purchasers.
B. may sell to any number of accredited purchasers.
C. may only sell to purchasers sophisticated in investment matters.
D. cannot restrict resale of securities for one year.
_____ is the failure to use reasonable care, with harm to another party occurring as a
result.
A. Assault
B. Recklessness
C. Negligence
D. Liability
Pat is a rich boy whose parents supply him with every conceivable necessity of life.
While still a minor, Pat buys a coat on credit from a men’s store for $5,000. After
wearing the coat for a while, Pat decides that it bores him and that he would like to
disaffirm. Which of the following is most likely to be true? Assume that Pat is still a
minor.
A. Pat can disaffirm the contract, and he must return the coat.
B. Pat cannot disaffirm the contract, but he is liable only for the reasonable value of the
coat.
C. Pat cannot disaffirm the contract, and he is liable for the full price of the coat
($5,000).
D. Pat can disaffirm the contract, but the store will sue him for deceit.
Which of the following is most likely to be perfected by the secured party’s possession
of the collateral?
A. A security interest in inventory
B. A security interest in consumer goods
C. A security interest in general intangibles
D. A security interest in equipment
If a check is drawn “Pay to the order of Maria” and Maria indorses it “pay to the order
of Jay, Maria.” This falls under:
A. blank indorsement.
B. restrictive indorsement.
C. special indorsement.
D. simple indorsement.
The ultra vires doctrine states that:
A. the corporation may engage in any lawful business.
B. a corporation is liable for an employee’s tort that is connected to the authorized
conduct of the employee.
C. any action of a corporation beyond its stated powers is void.
D. the board of directors must manage the corporation.
Which of the following is generally subject to a rational basis review?
A. Regulation of political speech that is challenged under the First Amendment.
B. Regulation of commercial speech that is challenged under the First Amendment.
C. Laws that discriminate on the basis of illegitimacy.
D. Laws that regulate social and economic matters.
Mr. Blue is in a contract with Mr. Brown for the repair of Mr. Blue’s roof for $9,000.
Mr. Blue tells Mr. Brown that Ms. White will pay him the $9,000 for the work
performed. Ms. White’s role in the contract is called what?
A. Delegation
B. Assignment
C. Incorporation
D. Organizing
In which of the following situations can a buyer revoke acceptance of nonconforming
goods?
A. The buyer accepted them with the knowledge of the nonconformity, because they
were the only option available in the market.
B. The buyer accepted the nonconforming goods because the seller couldn’t cure the
defect.
C. The price of the goods fell in the general market.
D. The nonconformity substantially impaired the value of the goods.