Under the __________approach, consideration is defined as a benefit received by the
promisor or a detriment incurred by the promisee.
a. pro-con
b. I win, you lose
c. gain-loss
d. benefit-detriment
Which of the following acts was passed to ensure that public shareholders faced with a
cash tender offer would not be required to respond without sufficient information?
a. the Mann Act
b. the Robinson-Patman Act
c. the Williams Act
d. the SEC Act
Which of the following statements is true?
a. Felonies are punishable by a minimum of six months in prison.
b. Felonies involve white-collar crimes only.
c. Felonies are more serious than misdemeanors.
d. All of the above.
A letter of credit usually sets a:
a. minimum money amount.
b. maximum money amount.
c. both of the above.
d. none of the above.
An agreement to periodically deliver home-heating oil to a residential customer that
does not indicate the duration of the contract
a. is enforceable for a reasonable period of time.
b. lasts for one delivery only.
c. is not a legally-enforceable contract.
d. constitutes a bulk transfer.
Title passes to the buyer at delivery:
a. in all situations
b. when goods are shipped FOB place of destination
c. when goods are shipped FOB shipment
d. never
A blank indorsement turns a(n) __________instrument into a(n) __________
instrument.
a. negotiable; non-negotiable
b. non-negotiable; negotiable
c. bearer; order
d. order; bearer
If a seller delivers defective goods, the buyer does not lose the right to object to the
breach of contract if the buyer:
a. accepts the goods.
b. accepts the goods with a reservation of right.
c. agrees to a modification of the contract.
d. accepts the performance without protest.
In which of the following cases is a contract between A and B binding?
a. A makes a mistake of material fact, and the mistake is unknown by B.
b. A and B make the same mistake of material fact.
c. A recklessly but honestly misrepresents a material fact.
d. A innocently misrepresents a material fact.
Owners of mask works are entitled to the exclusive right to reproduce and distribute
their products under U.S. law for a period of:
a. 10 years.
b. 20 years.
c. 28 years.
d. the life of the creator plus 70 years.
A promise to pay a debt must be in writing if:
a. the debt is for more than $500.
b. the debt is now due and payable.
c. the promise is to pay the debt of another.
d. the debt owed is the promisor’s.
The obligations of the parties to a sales contract include:
a. the seller’s duty to deliver the goods to the buyer’s place of business.
b. the buyer’s duty to always accept the goods.
c. the seller’s duty to arrange for appropriate transport.
d. the buyer’s duty to pay for the goods.
A said to B, “I’ll give you $100 for that bracelet.” B replied, “$135.” A said, “No
thanks.” B then said that B accepted the $100, but A was no longer interested and said
there was no contract. B insists there is a contract. Result?
a. A’s offer of $100 was open and accepted by B, thereby forming a contract.
b. B’s counteroffer of $135 terminated A’s offer of $100.
c. B’s statement, “$135” was a negotiating statement that did not terminate A’s original
offer of $100.
d. A’s offer of $100 was irrevocable.
Which is not a true statement about a warehouser?
a. A warehouser is a bailee.
b. A warehouser may issue a negotiable or nonnegotiable receipt.
c. A warehouser is an insurer of the goods.
d. A warehouser is liable for damaged goods if damage is caused by the warehouser’s
negligence.
In a consignment, the dealer-consignee is often referred to as a(n):
a. remainder.
b. factor.
c. quotient.
d. exponent.
Regarding the sale of food or drink, there is an implied warranty that:
a. the food item is of average quality.
b. the food item is fit for human consumption.
c. that no foreign substances such as a nail or screw will be found.
d. all of the above.
If an issuer requests its correspondent bank where the beneficiary is located to notify
the beneficiary of the issuance of a letter of credit, the correspondent bank is called
a(n):
a. advising bank.
b. foreign bank.
c. consulting bank.
d. coissuer.
After a corporate charter has been forfeited, the owners and officers of the dissolved
corporation are __________ shielded from personal liability by using the corporate
name when making contracts.
a. still
b. conditionally
c. not
d. retroactively
Under the Sarbanes-Oxley (SOX) obstruction of justice provision, auditors must retain
working papers related to a client’s audit for at least:
a. 3 years.
b. 5 years.
c. 10 years.
d. 20 years.
Only the Secretary of Labor can bring court actions to enforce the provisions of ERISA.
When two corporations merge:
a. their separate existences cease, and a new corporation is formed.
b. one of the corporations absorbs the other.
c. each corporation’s stockholders keep their original shares of stock
d. a new charter is needed.
Which of the following is not a universal defense available against all holders?
a. fraud as to the nature or essential terms of the instrument
b. forgery or lack of authority
c. fraud in the inducement
d. duress depriving control
Blackmail is defined as:
a. giving money to a person to influence that person’s judgment.
b. an illegal demand made by a public official.
c. an illegal demand made by a nonpublic official.
d. providing improper political influence.
A person lacks contractual capacity if:
a. the person is a chronic alcoholic.
b. the person is a drug addict.
c. because of mental impairment, the person does not comprehend that a contract is
being made or understand its consequences.
d. all of the above.
The Electronic Fund Transfers Act (EFTA) does not cover transactions originated by
commercial paper.
A written stop payment order or confirmation is effective for:
a. fourteen (14) days.
b. thirty (30) days.
c. six (6) months.
d. one (1) year.
Tom established a bank account for his daughter Mary under the Uniform Gifts to
Minors Act. Tom named himself the custodian. Later, Tom had a serious disagreement
with Mary and ordered the bank to transfer the money in that account to a similar
account maintained in the same bank for Tom’s son Ed. The bank must:
a. comply with Tom’s order, because the custodian controls the account.
b. refuse Tom’s order, because this would clearly not be for the benefit of Mary.
c. comply with Tom’s order, because Uniform Gifts to Minors accounts are not final.
d. comply with Tom’s order if Mary is under 18 years of age and refuse the order if she
is over 18 years of age.
A wrong that arises from a violation of a private duty is called a:
a. criminal action.
b. tort.
c. crime.
d. de mala.
An enterprise that conducts business following a merger or consolidation succeeds to:
a. all of the rights of the predecessor.
b. all of the property of the predecessor.
c. all of the debts and liabilities of the predecessor.
d. all of the above.
An oral contract to sell a house is binding if:
a. the agreement is witnessed by a member of the clergy.
b. there is a tape recording of the agreement.
c. the buyer paid the price and received the deed of conveyance.
d. the seller is a merchant.
The elements of a contract include all of the following except:
a. an agreement.
b. two or more competent parties.
c. consideration.
d. an illegal purpose.
If a tenant fails to pay rent on time the landlord:
a. has an automatic lien on the tenant’s personal property for the money due.
b. has the right to lock the tenant out of the property.
c. may take legal steps to evict the tenant.
d. all of the above.
State laws designed to protect the public from the sale of worthless stocks and bonds
are known as “clear sky” laws.
If a principal terminates an agency without giving notice of the termination to third
persons, the agent may retain the power to make contracts that will bind the principal
and third persons.
Ratification consists of any words or conduct of a former minor manifesting an intent to
be bound by the terms of a contract made while a minor.
Under the Equal Credit Opportunity Act, it is unlawful to discriminate against an
applicant because all or part of the applicant’s income is obtained from a public
assistance program.
Shares of stock may be acquired through subscription or through a transfer of existing
shares from a shareholder or from the corporation.
A restrictive indorsement specifies the purpose of the indorsement or the use to be made
of the paper.
A common carrier is liable for all delays in the delivery of goods.
A quasi contract may arise in a situation in which no contract exists.
A buyer can be barred from claiming a breach if the sales contract expressly states that
the buyer will not assert any defenses against the seller.
A universal defense will defeat a holder in due course and a holder through a holder in
due course.
For the parties to enter into an accord and satisfaction that discharges the original
obligation, there must be a bona fide dispute.
To be set aside as a preference, a transfer must be fraudulent.
The storage of goods in a warehouse and the shipment of goods by a common carrier
are examples of special bailments.
An agreement between Jim and his 18-year-old daughter, Betty, provides that he will
give her $25,000 if she does not marry until after her 22nd birthday. One month after
reaching the age of 22, Betty, still unmarried, claims the $25,000.
Jim refuses to pay, claiming that the agreement was illegal. Is Jim correct?
The UCC statute of limitations applies to actions brought for remedies on the breach of
a sales contract.