The U.S. Supreme Court has held that the Takings Clause requires just compensation
not only if a governmental taking actually occurs, but also if a governmental regulation
reduces the value of the property.
a. True
b. False
Constructive eviction would result in a discharge of any obligation to pay rent if:
a. proper notice is given to the landlord.
b. the tenant abandons possession within a reasonable time.
c. the tenant fixes the problem.
d. the tenant serves the landlord with a court order.
The Code defines __________ as “honesty in fact in the conduct or transaction
concerned.”
a. good faith
b. unconscionability
c. merchantability
d. entrusting
A check is drawn on Jones Bank by Tamara and made payable to the order of Chris.
Chris indorses it “for deposit only, Acct. 2275, Chris” and gives it to Plainer Bank for
deposit. Plainer stamps “pay any bank” on the check along with its indorsement and
negotiates it to Stone Bank. Stone Bank simply stamps “Stone Bank” and negotiates it
to SmallTown Bank. If SmallTown wants to negotiate it to the electric company to pay
its bill, can it?
a. Yes, because the restrictive indorsement only applied to earlier indorsees.
b. Yes, because the bank was not responsible for checking more than one indorsement.
c. No, because an item restrictively indorsed with words such as “pay any bank” is
locked into the bank collection system.
d. No, because the bank must issue its own check for its own bills.
The Arbor Apartments can legally restrict tenants to those who are married couples.
a. True
b. False
Section 2 of the Sherman Act prohibits contracts, combinations, and conspiracies that
restrain trade.
a. True
b. False
A security interest is ineffective against the debtor until it “attaches.”
a. True
b. False
The board of directors generally manages the day-to-day affairs of the company.
a. True
b. False
Tender can be made any time of the day or night, when it is most convenient for the
seller to deliver the goods.
a. True
b. False
The U.S. Constitution created a federal government of enumerated powers, and
legislation enacted by Congress must be based on a specific power the Constitution
grants to the federal government or be reasonably necessary for carrying out an
enumerated power.
a. True
b. False
The Equal Credit Opportunity Act would not prohibit which of the following? First
Bank refuses to extend credit to:
a. females.
b. men over 70 years of age.
c. people with incomes below $10,000.
d. people from Italy.
Frank, acting as a promoter for Garleen Co., a corporation not yet in existence, makes a
contract with Towne Supplies. When Garleen Co. is formed, it may:
a. adopt the contract, but Frank would not be released from potential liability on the
contract.
b. in all states, ratify the contract, thereby releasing Frank from potential liability.
c. adopt the contract, thereby making it retroactive.
d. ratify all or part of Franks contract.
An employer must notify a job applicant or current employee that a credit report may be
used and must obtain the applicant’s consent prior to requesting an individual’s credit
report from a credit bureau.
a. True
b. False
Which of the following is correct regarding the characteristics of a corporation?
a. A corporation is considered a person within the meaning of the Fourteenth
Amendment’s equal protection clause.
b. The Fifth Amendment provisions against self-incrimination protect a corporation.
c. A corporation is protected by the Fourth Amendment’s provision against unreasonable
searches and seizures.
d. A corporation is considered a person within the meaning of the Fourteenth
Amendment’s equal protection clause andis also protected by the Fourth Amendment’s
provision against unreasonable searches and seizures.
Most states require the registration of securities and regulate brokers and dealers.
a. True
b. False
The terms “law” and “justice” are interchangeable.
a. True
b. False
Protected individuals under the Restatement view of tort liability for an accountant
include potential investors and the general public.
a. True
b. False
The secretary of state may bring an action for involuntary dissolution of a company if
the corporation has not paid its annual franchise tax.
a. True
b. False
John’s brother, Phil, loaned him $10,000 to start his business. John didn’t do too well
and planned to file for bankruptcy. In May, he gave Phil his car worth $8,000 to satisfy
the debt. John filed his petition in November. After liquidation, if the car were included
in his assets, every unsecured debtor would have received 85% of the debt owing to
him. Will this be a voidable preference?
a. Yes, since Phil is an insider.
b. No, because the transfer was made more than 90 days prior to filing.
c. Yes, because the transfer was made within the prior year.
d. No, because Phil did not receive preferential treatment over other creditors.
A statutory lien arises solely by force of statute and includes a security interest and a
judicial lien.
a. True
b. False
If a monthly lease does not specifically provide for a date the rent is due, the tenant
must pay at:
a. the end of the month.
b. the 15th of the month.
c. the beginning of the month.
d. five days after the beginning of the month.
If Gene mistakenly hits Audrey with his truck and kills her, when he intended to hit and
kill Cerise, his intent to kill Cerise is transferred to Audrey, regardless of whether he
even knew Audrey, for the purpose of fulfilling the mental element of the crime.
a. True
b. False
Dan, a widower, dies intestate. He leaves two surviving children, Joe and Carrie, and
two grandchildren who are children of his deceased daughter, Debra. If Joe and Carrie
each take one-third of his estate and the grandchildren each take one-sixth of the estate,
this is described legally by the statement that:
a. lineal descendants of predeceased children take property per stirpes.
b. lineal descendants take the property per capita.
c. collateral heirs take the property per stirpes.
d. lineal descendants and collateral heirs take the property per capita.
What principle did the court apply in the case of Madison Square Garden Corp., Ill. v.
Carnera?
a. When damages are not adequate, an injunction may be used to enforce a negative
covenant regarding exclusive services that are unique and extraordinary.
b. When services contracted for are unusual or extraordinary, the injured party cannot
obtain injunctive relief.
c. An injured partys damages may not be reduced by mitigation for his failure to accept
or seek other employment of a different or inferior kind.
d. Damages are recoverable only if they were foreseeable at the time of entering into
the contract.
Ricardo posts a sign in the neighborhood offering $50 for the return of his Saint
Bernard. Alicia, who knows nothing of the reward, finds the dog and returns it to
Ricardo. Alicia is entitled to the reward.
a. True
b. False
Of the following elements, which one is NOT required to create an enforceable trust?
a. Consideration.
b. Legal capacity.
c. Specific property.
d. A beneficiary.
The rule that prohibits schemes and devices to defraud investors is Rule:
a. 504
b. 144
c. 10b-5
d. 16(b)
Electronic surveillance for the purpose of acquiring trade secrets is permissible under
the law of unfair competition.
a. True
b. False
If the buyer is insolvent and has not paid for goods it has received, the seller may
reclaim the goods.
a. True
b. False
Jill contracts to purchase Kevin’s automobile under the belief that she can sell it at a
profit to Linda, but after Jill has bought the car, she finds out that Linda isn’t interested
in buying it. Jill:
a. cannot void the contract.
b. can rescind the agreement.
c. could rescind the agreement if she was mistaken in her estimate of the value of the
auto.
d. can sue Linda for detrimental reliance.
The combination of two or more corporations into a new corporation is known as:
a. merger.
b. consolidation.
c. compulsory share exchange.
d. short-form merger.
Under the 2004 amendments, corporate offenders who violate Sections 1 or 2 of the
Sherman Act face fines of up to $100 million per violation.
a. True
b. False
A car buyer in the ordinary course of business will take free and clear of a security
interest created by any person who owned the automobile prior to the dealer.
a. True
b. False