A person who owes a duty under a contract is an obligee.
a. True
b. False
Ed signs a ten-year lease with a survival clause. If Ed is evicted after two years, he will
have to pay:
a. rent for the remaining 8 years.
b. damages equal to the difference between the rent specified in the lease and the rent
the landlord is able to obtain from reletting the premises.
c. until eviction.
d. until he assigns the lease.
The debtor who uses real estate to secure an obligation is the mortgagee.
a. True
b. False
An express condition is usually preceded by which of the following terms?
a. While.
b. After.
c. Provided that.
d. All of these.
Cheryl, age 16, ordered a new dress to wear to the school prom. She has contracted to
pay $500 when the dress arrives. Before the dress arrives, Cheryl decides that the dress
is too expensive, and she now wishes to cancel the order. Cheryl:
a. must pay $500 for the dress because the dress was specially ordered for her.
b. must pay $500 for the dress because clothing is classified as a necessary.
c. may disaffirm this executory contract because, while clothing in general is classified
as a necessary, a new prom formal would probably not be classified as a necessary.
d. must accept the dress and pay the reasonable value of the dress.
Under the common law, payment of a lesser sum of money than is owed in
consideration of a promise to discharge a fully matured, undisputed debt is legally
sufficient to support the promise of discharge.
a. True
b. False
If West and Burton designated in their contract an amount to be paid in the event of a
breach and the amount is found to be so high it is considered a penalty, the injured party
will be left without a remedy.
a. True
b. False
If an agent receives a gift from a third person with whom he is dealing on behalf of the
principal, he can keep it without notifying the principal.
a. True
b. False
Pat told her friends that her car got 35 miles to the gallon in the city when in reality it
only got 20 miles per gallon. When Pat decides to sell and one these friends decides to
buy the car, Pat is under no duty to tell the correct figure unless asked.
a. True
b. False
a. Explain how an agency relationship comes to an end.
b. Is an agency relationship ever irrevocable? Explain.
If the debtor is in default and the secured party wants to repossess the collateral in order
to sell it, he must get a court order to do so.
a. True
b. False
The capacity to act through an agent, depends on the capacity of the agent to do the act.
a. True
b. False
There are no federal common law crimes.
a. True
b. False
The negligence of an agent who is an employee in conducting the business of the
principal exposes the principal to tort liability for injury and loss suffered by third
persons.
a. True
b. False
Once a court has decided a case, the principle of stare decisis precludes correction of
erroneous decisions.
a. True
b. False
An arm’s length transaction is one in which the parties owe each other no special duties
and each is acting in his or her self-interest.
a. True
b. False
Abe has an allowed claim of $5,000 against the estate of Deborah and has a security
interest in her art collection in the amount of $3,000 of the $5,000 claim.
a. Abe will recover nothing in the bankruptcy proceeding.
b. Abe will recover $5,000 in the bankruptcy proceeding.
c. Abe has a secured claim in the amount of $3,000 and an unsecured claim in the
amount of $2,000.
d. It would be a voidable preference to pay Abe the full $5,000.
A debt is disputed only if both the existence and amount are contested.
a. True
b. False
Ray is informed that his six-year-old child is shooting in the street with a handgun. Ray
fails to take the gun away from the child. The child unintentionally shoots Bill, a
pedestrian. Ray is liable to Bill.
a. True
b. False
A negotiable electronic document of title running to the order of a named person or to
bearer is negotiated by delivery, which means voluntary transfer of control.
a. True
b. False
Liquidation of a corporation:
a. is carried out by a court-appointed receiver in any liquidation.
b. is carried out by the board of directors, serving as trustees, in a voluntary liquidation.
c. results in paying first stockholders with a liquidation preference, then outside
creditors, then expenses of liquidation.
d. is set up to protect stockholders and the board of directors, but not creditors.
Time paper that states it is due on July 1, which is a Sunday, is overdue on:
a. July
b. July
c. July
d. It depends on when the instrument is presented for payment.
Jones signed a 90-day note promising to pay $1,000 plus interest. The note states that
interest is to be based on a variable, published rate external to the note. The sum the
borrower must repay is uncertain, so the note is not negotiable under Revised Article 3.
a. True
b. False
Corporations are subject to a higher standard of accountability than are public bodies.
a. True
b. False
General partners differ from limited partners only in the amount of input they have in
partnership decisions.
a. True
b. False
The definition of a default judgment is:
a. a legal pleading that contains denials, admissions, affirmative defenses, and
counterclaims.
b. a pleading that is a statement of the initial claim against the defendant.
c. an assertion that even if the plaintiff’s allegations are true, the plaintiff would not be
entitled to a remedy.
d. a judgment against a defendant who fails to respond to a complaint.
Which of the following contracts is covered by Article 2 of the Uniform Commercial
Code?
a. The sale of a house.
b. The sale of a new car.
c. An employment agreement.
d. A sale of automobile insurance.
A decision of an appeals court in Minnesota would be recorded in the:
a. states statutory code.
b. Minnesota administrative code.
c. North Western regional reporter.
d. Federal Supplement.
Design patents grant the holder a 14-year monopoly.
a. True
b. False
A “buyer in the ordinary course of business” is necessarily a “good faith purchaser for
value.”
a. True
b. False
Intentional infliction of emotional distress will protect a person from rudeness if the
conduct was intended to cause emotional distress.
a. True
b. False
Warranty liability applies to persons who:
a. transfer an instrument.
b. obtain payment or acceptance of an instrument.
c. have signed the instrument, but not on those who have not signed.
d. All of these.
e. Both transfer an instrumentand obtain payment or acceptance of an instrumentare
correct.
As a general rule, a person may do through an agent whatever business activity he may
accomplish personally.
a. True
b. False
All of the following except which one is a duty of an agent?
a. Account for money received on behalf of his principal.
b. Inform his principal of any information relevant to his agency.
c. Refrain from competing with his principal.
d. After the agency is terminated, refrain from using any information gained while an
agent.
An officer or director’s responsibility to exercise ordinary care and prudence in
discharging duties is the:
a. duty of good faith.
b. duty of diligence.
c. fiduciary duty.
d. duty of obedience.