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S agrees to sell B 10,000 widgets at a price of $1.00 per widget. After B breaches the
contract, S resells the widgets for $1.10 per widget in a public sale. S also saved $200
in shipping costs. What amount does S owe B?
A. $1,200
B. $1,300
C. $1,000
D. Nothing
Amtul and Hassan were involved in an automobile accident. Amtul's car, worth $10,000
was destroyed. Hassan suffered no personal injuries or property damage. The case went
to the court and a jury determined that Amtul was 30% at fault and Hassan was 70% at
fault. Under what legal theory would Amtul be able to recover $7,000 from Hassan?
A. Contributory negligence
B. Comparative negligence
C. Negligence per se
D. Res ipsa loquitur
An accident on a state highway rendered Jill in comatose state for nearly a month.
There was an old nurse who used to take care of her then. After her recovery, Jill felt so
indebted to the nurse that she contracted to transfer all her assets to her to fulfill her
(Jill's) moral obligation. Although this contract lacks ______, it can be enforced.
A. value
B. consideration
C. acceptance
D. capacity
A party may win a judgment even after the jury has reached a verdict against it through
the procedure of:
A. mens rea.
B. non obstante veredicto.
C. demurrer.
D. habeas corpus.
Courts have held that a beneficiary's rights cannot be lost by modification or discharge.
This is known as:
A. assignment.
B. dissociation.
C. malfeasance.
D. vesting.
Sam, a plumber, entered into a contract for $75,000 with Orr, Inc., to perform certain
plumbing services in a building owned by Orr. After Sam had satisfactorily performed
the work, Orr discovered that Sam had violated the state licensing statute by failing to
obtain a plumbing license. As a result, Orr denied paying any money to Sam. The
licensing statute was enacted merely to raise revenue for the state. An independent
appraisal of Sam's work indicated that the building's fair market value increased by
$70,000 as a result of Sam's work. The cost of the materials which Sam supplied was
$35,000. If Sam sues Orr, Sam will be entitled to recover:
A. nothing.
B. $35,000.
C. $70,000.
D. $75,000.
An agency's interpretive rules:
A. have the full force and effect of law.
B. specify how the agency will conduct its hearings.
C. are not binding on businesses and the courts.
D. are seldom heeded by business because of their advisory nature.
If a negotiable instrument is payable on demand, it is overdue:
A. the day before the demand for payment has been made.
B. 30 days after the demand for payment has been made.
C. the day after demand for the payment has been made in a proper manner.
D. the week after payment has been demanded.
_____ enumerates the principle of federal supremacy.
A. Article III
B. Article IV
C. Article V
D. Article VI
What is the term for when law renders an obligation to pay an instrument void.
A. Forgery
B. Comity
C. Illegality
D. Duress
After all the assets of an LLC have been sold, the proceeds will be distributed first to
LLC:
A. creditors.
B. founders.
C. transferees.
D. dissociated members.
On Thursday, Trista Dylan receives a letter from Charlie Holmes offering to sell her a
diamond ring and stating that: "if you choose to accept, you must do so prior to 2:00
p.m. tomorrow." Trista had a telegram of acceptance dispatched well before 2:00 p.m.
on Friday but it is delivered to Charlie's home only at 2:15 p.m. Do Trista and Charlie
have a binding contract?
A. No, because Trista's purported acceptance was delayed.
B. Yes, because Trista dispatched the telegram prior to 2:00 p.m.
C. No, because Trista's use of a telegram was not stipulated in the offer.
D. Yes, unless Charlie is not home to receive the telegram.
Some courts have held that certain shareholders are fiduciaries of each other. These are
shareholders of:
A. close corporations.
B. open corporations.
C. publicly traded corporations.
D. nonprofit corporations.
Section 2(a) of the Robinson-Patman Act does not directly address the legality of:
A. functional discounts.
B. partial payment discounts.
C. quantity discounts.
D. accumulation discounts.
Frank, a business law professor who has never sold a car before; sells his 1995 Honda
Civic to Wanda. This sale is governed by:
A. The common law of contracts.
B. Article 2 of the UCC.
C. Article 2A of the UCC.
D. Section 208 of Restatement (Second) of Contracts.
Which of the following is most likely to be classed as a nuisance (rather than as a
trespass to land)?
A. Firing a machine gun through an adjoining landowner's airspace.
B. Allowing thick smoke from your manufacturing operations to continually drift over
an adjoining landowner's land.
C. Leaving smelly, unsanitary garbage on your ex-landlord's land after the expiration of
your lease.
D. Chasing another person onto an adjoining landowner's land.
Since the level of doing business that constitutes intrastate business for qualification
purposes has been difficult to define, the Model Business Corporation Act lists several
activities that do not require qualification. One such activity is:
A. owning or using real estate for general corporate purposes.
B. soliciting orders by mail that require acceptance outside the state.
C. entering into contracts relating to local business or sales.
D. maintaining a stock of goods within a state from which to fill orders.
Which of the following would be a nonnegotiable instrument?
A. "Payment is subject to the terms of a mortgage dated August 12, 2011."
B. A statement in the instrument that it was given in payment of last month's rent.
C. A statement in the instrument that it was given in payment of the purchase price of
goods.
D. "This note is secured by a mortgage dated January 13, 2011."
Nearly all corporations whose veils are pierced are:
A. close corporations.
B. government-owned corporations.
C. publicly held corporations.
D. nonprofit corporations.
_____ arises when the principal's manifestations cause a third party to form a
reasonable belief that the agent is authorized to act in a certain way.
A. Contractual authority
B. Incidental authority
C. Apparent authority
D. Actual authority
Joe writes a check payable to Advanced Autos. The check is drawn on his checking
account with the Progressive Bank. The drawee on this check is:
A. Joe.
B. Progressive Bank.
C. Advanced Autos.
D. the Federal Reserve.
A secured creditor repossesses the collateral from the debtor and sells it to satisfy the
debt. Which of the following has the first claim on the proceeds of the sale?
A. Debtor
B. Consequential damages suffered by the creditor due to the debtor's default
C. Court costs
D. Expenses of repossessing, storing, and selling the collateral
An important difference between duress and undue influence is that:
A. duress occurs in a relationship of trust, while undue influence employs improper
threat.
B. duress involves physical compulsion, while undue influence involves economic
compulsion.
C. the scope of duress has contracted since the 19th century, while the scope of undue
influence has expanded since the 19th century.
D. duress is wrongful coercion, while undue influence is unfair persuasion.
Which of the following debts in an estate is liable for if owed by the decedent at the
time of death?
A. All of the decedent's debts
B. Only debts secured by the decedent's property
C. Only debts covered by the statute of frauds
D. Only consumer debts
Which of the following statements about the problem of acid rain is accurate?
A. The 1990 amendments to the Clean Air Act addressed the problem of acid rain by
requiring the installation of scrubbers.
B. The 1970 Clean Air Act addressed the problem of acid rain by providing for an
emission trading scheme.
C. The 1990 amendments to the Clean Air Act addressed the problem of acid rain by
instructing electric generating facilities to build tall smokestacks.
D. The 1970 Clean Air Act addressed the problem of acid rain by requiring the
installation of clean-coal technologies.
Marlene, a self-employed 16-year-old whose parents are dead, buys a dress on credit for
$50. After receiving the dress and discovering that its reasonable value is only $25,
Marlene tries to disaffirm the deal before paying the $50. In this case:
A. Marlene can disaffirm, and she is bound to pay the full $50.
B. Marlene can disaffirm, but she is only bound to pay $25.
C. Marlene can disaffirm, and she can return the dress without paying for it.
D. Marlene can disaffirm, and she can keep the dress without paying for it.
Dawson entered into a contract with Jensen for the sale of Dawson's boat. Which set of
legal rules governs this transaction?
A. Contract rules of the common law
B. Contract rules of the Uniform Commercial Code
C. Equity rules that ensure fairness in transactions
D. Marine law
In case a particular agency enabling legislation provides for stricter procedures than the
Administrative Procedure Act (APA), those procedures will be considered void.
Edna is a leading brain surgeon in the United States. She enters into a contract to
perform a complicated brain surgery on Ben. However, since Edna is very busy, she
wants to assign this contract to a less experienced surgeon, Charles. This would be
Charles's first operation of this type. Ben can object to this assignment and prevent it
because the contract between Ben and Edna is a(n):
A. contract for services to be performed in the future.
B. contract involving personal skill.
C. services contract.
D. employment contract.
In a reorganization petition under Chapter 11 of the Bankruptcy Code, if any particular
class of creditors rejects the reorganization plan, the Court will:
A. disallow the claims of the rejecting creditors.
B. force the trustee to renegotiate with the rejecting creditors so that a compromise
maybe reached at.
C. order the debtor to file bankruptcy under Chapter 13.
D. force the rejecting creditors to accept the reorganization plan, if the plan is fair and
equitable towards the rejecting creditors.
In a(n) _____ transaction, the borrower keeps the title of his real property with a third
party and in the event of default, the third party can sell the property so that the creditor
can recover his loan.
A. strict foreclosure
B. land contract
C. deed of trust
D. equity of redemption
Supermart Inc., a manufacturer of lawn furniture, is ordered by the FTC to place a
warning on their TV advertisements that the price shown does not include everything
that is shown, some items are additional costs. This remedy by the FTC is called what?
A. Affirmative disclosure
B. Fair Credit Monitoring
C. Imprisonment
D. Hybrid order
Svetlana Mills gives a check "payable to the order of Svetlana Mills," to a shopkeeper
for some groceries. Here, the check would be considered as negotiated only upon the
fulfillment of which of the following conditions?
A. The check should be indorsed by the shopkeeper.
B. The check should bear the name of the shopkeeper.
C. Svetlana should indorse the check in the name of the shopkeeper.
D. Svetlana should indorse the check in her own name.
