A remedy limitation is more likely to be declared unconscionable in consumer cases
involving personal injury.
Josh acquires beneficiary rights under a contract between Sunny and James. Any
modification to that contract which discharges Josh of his rights under the contract will
not be enforceable by the court.
The offeror’s death automatically terminates an offer, but the offeree’s death does not.
In qualified indorsement, the indorser accepts the liability to make the instrument good,
if the maker or drawer defaults on it.
A bankrupt person who conceals property in order to hinder, delay, or defraud creditors
loses any discharge that he may have had regarding that property, but his other debts
still are dischargeable.
If one individual opens the mail of another without permission to do so, then the injured
party can sue under the tort law theory of invasion of privacy.
Some courts have recognized that tying agreements sometimes may be necessary to
protect the reputation of the seller’s product line.
In community property states, land acquired during marriage will be deemed
community property.
When partners disagree concerning an action to be taken in the ordinary course of
business, the disagreement will be resolved only if all the partners agree.
It is unimportant for the court, whether the interpretation of a statute is consistent with
the legislative purpose; it is the actual language (plain or ambiguous) of the statute that
needs to be studied.
The agency relationship may be formed even if the parties do not subjectively intend to
create it.
Section 11 of the 1933 Act provides civil liabilities for damages when a 1933 Act
registration statement on its effective date misstates or omits a material fact.
The Noerr-Pennington doctrine provides an exception to the Clayton Act.
Most states have passed statutes prohibiting or regulating a wage earner’s assignment of
future wages.
For a battery to exist, the victim must be aware of a harmful or offensive contact at the
time that contact occurs.
Ordinarily, members of a limited liability company have limited right to manage the
business of the LLC.
Edna Boyle contracts with The Melonville Times to advertise her garage sale to be held
this Saturday. The ad is to run in the Friday and Saturday morning edition. If the ad
does not run on time, The Melonville Times agrees to pay Edna $50.00. This liquidated
damages clause is most likely enforceable.
The purpose of security regulation is to make issuers and sellers of security have a duty
to disclose important information.
The UCC often creates contractual liability in situations where no contract would have
resulted at common law.
The owner of a tract of real property owns the air above and the mineral below.
A party can withdraw repudiation before the other party has cancelled the contract or
has materially changed position by clearly indicating that the person intends to perform
his obligations.
In general, the ULPA does not grant partners much power to expel other partners from
the partnership.
A promise not to sue another party is not consideration, because the promise does not
convey any legal value to the other party.
Even if a buyer breaches a contract, the seller is accountable to the buyer for any profit
that the seller makes on a resale.
Owners of an LLC are called members.
Mr. Green agrees to an offer to drive Ms. White to the airport for $20, but “only if I feel
like it”. Mr. Green has failed to give sufficient consideration to create a contract with
Ms. White.
The threat to institute a criminal prosecution against another party in order to force that
party into a contract is almost always duress.
The TILA specifies that if a home equity plan involves a variable interest rate, the
“index rate” to which changes in the APR are pegged must be based on some publicly
available rate and must not be under the creditor’s control.
If the debtor defaults on his agreement with the creditor, one of the creditor’s options is
to repossess the collateral and then sell it.
On June 1, Mike writes a check payable to Pete. Without ever being paid, the check is
eventually negotiated to Hal, who receives it on September 15, with notice of the date
on its face. Hal is not a holder in due course of the check.
The legal relations between agent and subagent closely parallel the legal relations
between principal and agent.
Supreme Court decisions in recent years indicate that some group boycotts receive per
se treatment, whereas other group boycotts receive rule of reason treatment.
Constitutional procedural safeguards such as the exclusionary rule protect respondents
of the administrative adjudication process.
An acceptance is assent to a proposal by the offeree to the offeror.
Watley took his old bicycle to the municipal dump. Vandelay retrieved it from the dump
and repaired it. Newman stole the bicycle from Vandelay’s garage, made substantial
improvements to it (the bicycle), and then sold it to Banya. Banya did not know that the
bicycle had been stolen. Who owns the bicycle? Explain your reasoning.
Section 5 of the 1933 Act permits the securities to be offered but not sold during the
_____ period.
A. pre-filing
B. quiet
C. waiting
D. post-effective
Which of the following is true about partnership rules for mining partnerships?
A. Mining partnerships are easiest to dissolve.
B. The transferability of mining partnership interest is restricted.
C. A mining partner may sell his interest to another person.
D. The death of a mining partner affects a dissolution.
The FTC commissioners serve for:
A. five-year terms.
B. staggered five-year terms.
C. fixed seven-year terms.
D. staggered seven-year terms.
Which of the following would keep the Truth in Lending Act from applying to a
transaction?
A. The intent of the debtor to make commercial use of funds borrowed in the
transaction.
B. The transaction being an open-end credit plan.
C. The debtor being a natural person rather than a business entity.
D. The creditor being a credit card issuer rather than a maker of a conventional loan.
A perfected purchase money security interest in a manufacturer’s stock has priority over
a conflicting security interest in the same stock if the notification states that the person
expects to acquire a purchase money security interest in stock of the debtor and
describes the stock. Which of the following priority rules does this statement
correspond to?
A. PMSI in noninventory collateral
B. PMSI in inventory collateral
C. Buyer in the ordinary course of business
D. Artisan’s and mechanic’s lien
Rex Garner recently made an offer to Harry Barns for the sale of his shop using a
registered letter. The offer says that Harry “may accept by registered letter” and this
detail is an example of a _____.
A. contract
B. notification
C. rejection
D. stipulation
A(n) _____ clause is a provision in a contract that purports to relieve one of the parties
from tort liability.
A. exculpatory
B. implied-in-fact
C. quasi
D. expressed
Tina and Tom are co-workers at Acme Corporation. As night custodians, they work
together cleaning the Acme office building at night when the building is empty. Tom
regularly makes sexual advances toward Tina that distress her. However, Tina has never
complained about Tom’s conduct to her supervisor, Mary, who only works during the
day. Which of the following statements is most accurate?
A. Acme Corporation is strictly liable for Tom’s harassment of Tina.
B. Acme Corporation may defend that it did not know about Tom’s harassment of Tina.
C. Acme Corporation is not liable because Tom is not Tina’s supervisor.
D. Acme Corporation is not liable because Tina voluntarily accepted the job of a night
custodian.
Under the Bankruptcy Code a debtor:
A. must elect to use either the set of exemptions provided by the state or the set
provided by the federal bankruptcy law.
B. must honor the instructions of the adjudicating court with regard to the set of
exemptions that he should take.
C. must accept the decision of the creditors with regard to the exemptions to be taken so
as to not jeopardize their chances of recovery.
D. may pick and choose between them the set of exemptions provided by the state or
the set provided by the federal bankruptcy law.
The filing of a bankruptcy petition operates as a(n):
A. exemption of certain items of property.
B. discharge, relieving the bankrupt person of further responsibility for dischargeable
debts, giving him/her a fresh start.
C. automatic stay, holding in abeyance various forms of creditor action against a debtor
or his/her property.
D. redemption of exempt personal property from secured creditors by paying them the
full value of the collateral at the time the property is redeemed.
In which of the following cases will perfection by attachment not be effective?
A. The goods were sold on conditional sales contract to the consumer.
B. The creditor has lent money to enable a consumer to buy goods.
C. The consumer good is a motor vehicle.
D. The goods were sold on a time-payment plan to the consumer.
Payne borrowed $500 from Long Bank. At the time the loan was made to Payne, Gem
orally agreed with Long that Gem would repay the loan if Payne failed to do so. Gem
received no personal benefit as a result of the loan to Payne. Which of the following is
most likely to be true, under the circumstances?
A. Gem must provide a collateral to Long.
B. Both Gem and Payne are primarily liable to repay the loan.
C. Gem is free from liability concerning the loan.
D. Payne must provide a lien to Gem for the amount of the debt.
A bilateral contract is “taken out of the statute of frauds” when:
A. it is completed within a year from the day of its existence.
B. it is fully performed by at least one party.
C. it is put in writing.
D. it has strict rules of performance.
Sal brings a stale check to his bank on June 1, 2003. The check is dated September 1,
2002. The bank:
A. owes a duty to honor the check.
B. must honor the check if it is otherwise properly payable.
C. can honor the check while acting in good faith.
D. cannot honor the check, since it is more than six months old.
In the United States agency law is primarily governed by what type of law?
A. Federal law
B. State law
C. International law
D. Religious law
Tony is employed as a truck driver for Soprano Corporation (SC). While making a
delivery for SC, Tony negligently ran over a pedestrian. Who is liable for this accident?
A. Tony only.
B. Tony and SC, because of strict liability.
C. Tony and SC, because of vicarious liability.
D. Neither Tony nor SC, because this was an accident, not an intentional injury.
An online agreement that presents contract terms and conditions but does not require
readers to click to indicate agreement is called a:
A. clickwrap agreement.
B. shrinkwrap agreement.
C. browsewrap agreement.
D. minimum contracts agreement.
A clause in a contract that states that a promoter of a contract will cease to be liable
under the contract once a corporation has adopted it, is called:
A. An automatic novation clause
B. An automatic agency clause
C. An incorporation clause
D. A bylaws clause
Investigative reporter Maxine McRaker filed a Freedom of Information Act (FOIA)
request that the Food and Drug Administration (FDA) provide her copies of certain
documents in its possession. A private citizen, Al Kaseltzer, became concerned when he
learned that the FDA was likely to give McRaker the requested copies. Kaseltzer was
disturbed because he believed that the documents contained medical information about
him that, if disclosed, would constitute an invasion of his privacy. Alleging that the
reason just mentioned made the requested documents exempt from disclosure under the
FOIA, Kaseltzer sued the FDA in an effort to obtain a court order barring it from giving
McRaker access to the documents. Assuming that Kaseltzer proves his allegation about
the documents’ references to him, should he win the case? Why or why not?
Which of the following is true of a joint tenancy?
A. It is created by a corporation or a group of persons.
B. It requires that the tenants be married to each other.
C. Selling of property by a joint tenant leads to creation of a tenancy in common.
D. A joint tenant can sell but not gift his part of the property.
Where the impostor has impersonated a person authorized to act for a payee:
A. the responsibility for determining the true identity of the payee is on the bank.
B. the impostor has the power to negotiate a check drawn payable to the payee.
C. the later holder does not have good title to the check as the payee’s signature is not
valid.
D. the loss is shared by the maker and the bank that negotiated the forged instrument.
Which of the following is true of a principal’s duty of indemnity?
A. The principal does not have to indemnify the agent for authorized payments made on
the principal’s behalf as the payments were undertaken in the course of the agent’s
work.
B. The principal must indemnify the agent for tort damages resulting from authorized
conduct that the agent did not believe was tortious.
C. The principal is required to indemnify an agent even for losses resulting from the
agent’s negligence.
D. The principal is required to indemnify an agent for losses resulting from
unauthorized acts so long as the principal did not benefit from such behavior.
Which form of damages can have the effect of reducing the liability of the party guilty
of a breach of contract?
A. Incidental damages
B. Consequential damages
C. Liquidated damages
D. Mitigated damages
Lineal descendants—the children and grandchildren of a person—are known as:
A. devises.
B. issues.
C. residuary.
D. obligees.
_____ is effectively a conditional sentence that suspends the usual imprisonment and/or
fine if the offender “toes the line” and meets other judicially imposed conditions for the
period specified by the court.
A. Probation
B. Retribution
C. Prevention
D. Rehabilitation
A partner uses her own truck to pick up some partnership supplies, which she pays for
with her personal check. This partner has the right to be _____ for payments made from
her personal funds.
A. indemnified
B. investigated
C. adjudicated
D. indentured
A _____ argument states that we should or should not do something merely because one
or more other people or firms do or do not do it.
A. bandwagon fallacy
B. circular reasoning
C. false cause
D. gambler’s fallacy
Union Bank lent $200,000 to Wagner. Union required Wagner to obtain a life insurance
policy naming Union as beneficiary. While the loan was outstanding, Wagner stopped
paying the premiums on the policy. Union paid the premiums, adding the amounts paid
to Wagner’s loan. Wagner died and the insurance company refused to pay the policy
proceeds to Union. Union may:
A. recover the policy proceeds because it is a creditor beneficiary.
B. recover the policy proceeds because it is an incidental beneficiary.
C. not recover the policy proceeds because it is not in privity of contract with the
insurance company.
D. not recover the policy proceeds because one cannot claim insurance for oneself.
Karen parked her car in a parking lot. She paid the $2 fee and left for several hours. She
kept her keys and had access to her car during that time. When Karen returned, she saw
that her car had been damaged. Has a bailment been created here?
A. This is a bailment, because Karen paid a fee to park in the lot.
B. This is a bailment, because the car is a personal property.
C. This is not a bailment, because there was no transfer of exclusive possession to a
bailee.
D. This is not a bailment, because there is no contract here.
In which of the following situations will a state make an award of workers’
compensation to an injured worker, if the state is using an “increased risk” test to define
the relationship between an injury and the nature of employment?
A. A secretary is assaulted by a trespasser in an accounting firm.
B. A security guard employed by a software company is assaulted by a trespasser.
C. Two employees engage in an arm wrestling match and are injured as a result.
D. An employee attempts to impress his co-worker by placing a lit match close to his
hand and is burned as a result.
Under the UCC, a collateral which has been sold in a private sale by a secured party to
a good faith purchaser for value, after the debtor’s default:
A. may be redeemed by the debtor within 10 days after the disposition.
B. may be redeemed by creditors with subordinate claims.
C. remains subject to the security interests of subordinate lien creditors in all cases
where the collateral is disposed of at a private sale.
D. discharges the security interest pursuant to which such sale was made and any
security interest or lien subordinate thereto.
Stitchwell is an apparel manufacturer. Huge Mart, a wholesale dealer, is its largest
customer. Huge Mart also owns Gorgeous, a department store chain that deals in
apparels, shoes, and accessories. Stitchwell routinely offers “wholesaler special”
discounts to Huge Mart and other wholesalers. Are these discounts illegal?
A. Yes, these discounts are per se illegal under Section 2(a) of the Robinson-Patman
Act.
B. No, these discounts are not illegal because Stitchwell can legally set resale prices.
C. Yes, these discounts will be deemed illegal if Huge Mart passes them on to Gorgeous
customers.
D. No, these discounts are not illegal considering they are provided only for
wholesalers.
Chin wants to buy a small parcel of land. The seller requires a certified check as
payment. Chin has a checking account with ABC bank; he prepares a check for the
seller and then has the bank certify it. He then presents the check to the seller. Who may
now be liable for payment of the amount of the check?
A. Chin only.
B. ABC bank only.
C. Both Chin and ABC bank.
D. Neither Chin nor the ABC bank.
Suppose that Reed is buying a crane from Movers Inc. Reed needs a crane that will
handle loads of up to 10,000 pounds. Movers’ salesman tells Reed that the crane “will
handle a 10,000-pound load.” Relying on this statement, Reed buys the crane. Later, he
discovers that the crane will only handle a 5,000-pound load. Reed wants to rescind on
the basis of either fraud or misrepresentation. Movers, however, alleges that the
salesman did not make a statement of past or existing fact. Is Movers correct?
Doug Dillard owns a house that he presently rents out to a family. Dillard would like to
convert the house into commercial space (for a store or offices), because the rent he
could charge for the property as commercial space would exceed what he is realistically
able to charge for the house as a dwelling. The house is located, however, in an area
zoned by the city for residential uses only. This means that Dillard cannot convert the
house to commercial space unless the city grants him a zoning variance, something the
city has refused to do. Dillard has therefore sued the city on the theory that the zoning
ordinance and the refusal to grant a variance amount to a taking of his property and
entitle him to just compensation under the Fifth Amendment. Will Dillard win his case?
Why or why not?
Gil has stolen a “Lancer” from Yu and changed the look and interior of the car. Gil is
now using it for his personal purposes. After some months, Yu comes to know about his
car and demands it back. However, Gil demands for the amount he spent on
modifications. Can he recover it from Gil? Is Yu liable to pay that?
Sal Conelli is the president and sole stockholder of Salco, Inc., a corporation engaged in
the wholesale food supply business. Conelli has custody of Salco’s business records. A
grand jury investigating possible criminal violations of health codes applicable to food
products has served a subpoena demanding that certain Salco business records be made
available. Conelli plans to resist the subpoena by arguing that compelling the
production of the records would violate both his and Salco’s Fifth Amendment
privileges against self-incrimination. Should Conelli succeed with this argument?
Explain your reasoning.
Jan opens a sandwich shop across the street from another sandwich shop run by Amy.
Amy is disturbed by this competition, and she agrees to pay Jan $5000, in exchange for
Jan’s promise to quit the business and not to engage in a similar business within
ten-mile radius of Amy’s business. Is this contract legal and enforceable? Why or why
not? If the agreement is not enforceable, how might Jan and Amy restructure it to
increase its chances of being legal?
On July 1, Acledes Bank attaches and perfects a security interest in all of the Playo
Inc.’s present and after-acquired equipment. On July 15, Richard sells and delivers to a
new toy manufacturing machine to Playo Inc. Richard attaches a security interest in the
machine on July 16 and perfects it by filing on July 17. Which security interest has
priority and why?
Delbert Cars sells Jim a nice new model. Unfortunately for Jim, a defect in the car’s
brakes causes them to fail; in turn causing an accident that totals the car and puts Jim in
the hospital. Jim sues (among others) Delbert, arguing that Delbert was negligent in
failing to inspect the brakes for defects. All Delbert did was to drive the car around the
block to see if it ran as it should. Under what conditions might Delbert be liable here?
Under what conditions will it escape liability?
Kirrah Company makes a registered offering of its common shares under the Securities
Act of 1933. A year after the offering, the federal government cancels a contract with
Kirrah in compliance with the contract. The contract had provided and was expected to
continue to provide 30 percent of Kirrah’s business. The material risks section of the
registration statement failed to state that the federal government provided 30 percent of
Kirrah’s business and that the federal government had the right to terminate the contract
at any time. Among others, Amy Arston, the president and chief executive officer of
Kirrah, is sued by purchasers of the shares under Section 11 of the Securities Act. What
is Amy’s due diligence defense under Section 11? Is Amy likely to be able to prove she
met that defense?
Leviathan Corp. has filed a civil Racketeer Influenced and Corrupt Organizations Act
(RICO) lawsuit against NBS Bros., an accounting firm. NBS has asked the court to
dismiss the case for two reasons: first, Leviathan did not allege, and cannot prove, that
NBS is connected in any way with organized crime, as that term is customarily used;
and second, Leviathan did not allege, and cannot prove, that NBS was criminally
convicted of a predicate offense. Should NBS succeed with these arguments? Explain
your reasoning.
Arthur contracts to sell Ben his house for $100,000. Later the parties modify the
contract by changing the price to $110,000. All other terms remain the same. Why is
there no consideration for the second agreement?
Mark, an untenured Assistant Professor of Business Law at a public university, is fired
from his job for supposedly misbehaving with students in class. Since the firing took
place without any kind of hearing, Mark wants to challenge it on procedural due
process grounds. Will Mark’s claim succeed?
How can a corporation improve its corporate governance and corporate responsibility?
Nigel is the sole proprietor of a construction contracting business. As part of an
investigation into bid-rigging allegations, a grand jury issued a subpoena directing
Nigel to turn over various records relating to his sole proprietorship. Nigel had
voluntarily prepared the subpoenaed records. The government had long known that
these records probably existed, but of course did not know of their contents. Nigel
resisted the subpoena on Fifth Amendment grounds, arguing that being forced to
comply would violate his privilege against self-incrimination. Should Nigel be required
to comply with the subpoena? Why or why not?
A mining partner’s interest is not freely transferable.
Ms. Pink offers to landscape Mr. Green’s yard for $100. Mr. Green is planning to say
yes but before he has a chance to communicate with Ms. Pink he receives a text
message from Ms. Pink indicating she has rescinded her offer due to her being too busy.
Ms. Pink has effectively revoked her offer.