An applicant for insurance has a duty to disclose only material facts that the insurer
asks for.
Under the Restatement (Third) of Torts, accountants can be held liable for negligence to
any third parties.
A divorce necessarily revokes an entire will.
Under the UCC, a contract for a sale of goods that includes open terms is void.
Any partnership can be dissolved by the partners’ agreement.
A bank is subject to a civil suit if its customer writes a bad check.
Advertisements can include express warranties.
Green Grocers, Inc., enters into a contract with Hiway Transport Company for the
delivery of a shipment of fresh produce. If the language in the contract has more than
one meaning, it will be construed against
A.the party who drafted the contract.
B.the party with the greater bargaining power.
C.the promisor.
D.the promisee.
A promise to perform under a contract is never absolute.
Venture capital is capital provided to new business ventures by professional, outside
investors.
An item cannot be a fixture unless it is physically attached to the land.
Only two persons can hold property as tenants in common.
Tariffs are taxes on imports.
Under the Americans with Disabilities Act of 1990, a person with a mental impairment
that “substantially limits” everyday activities is not disabled.
An express trust is created or declared in explicit terms.
A writ of execution is a court order to execute a debtor after the entry of a final
judgment in a creditor’s lawsuit against the debtor.
If a seller is a merchant, and the seller holds the goods, the risk of loss cannot pass to a
buyer.
An employer with fewer than fifteen employees is automatically shielded from federal
employment discrimination laws.
A breach of contract may entitle the innocent party to rescind the contract.
The state can bring an action to dissolve a corporation that has failed to pay its annual
taxes.
An instrument is nonnegotiable unless the word “negotiable” is printed on it.
A tax preparer that fails to give a taxpayer a copy of his or her tax return may be subject
to a penalty under the Internal Revenue Code.
Liquidated damages are damages that are certain in amount.
A director may not sit on the board of more than one corporation at a time.
When a landlord sells leased premises to a third party, any existing leases terminate
automatically.
Informal contracts are usually based on substance rather than form.
A quasi contract arises from a mutual agreement between two parties.
On the entry of an order for relief in a reorganization case, the creditors generally take
over the operation of the debtor’s business.
A person can reproduce copyrighted material for purposes such as teaching, including
multiple copies for classroom use, without paying royalties.
A manufacturer’s duty of care does not extend to the inspection and testing of products
bought to incorporate in the final product.
A security agreement must be filed in person to be valid and enforceable.
Tender must occur at a reasonable hour and in a reasonable manner.
Before filing a registration statement, an issuer must offer to sell securities.
Readmore Bookstore Corporation files a registration statement with the Securities and
Exchange Commission and provides a prospectus describing the securities to investors.
These items are intended to provide sufficient information so that the financial risks
involved can be evaluated by
A.market professionals to explain to all investors.
B.government regulators to disclose to the general public.
C.sophisticated investors only.
D.unsophisticated investors.
Rally Corporation enters into a contract to sell ski gear to SnoSportz Company, which
sells a pair of the skis to Tyra, a consumer, who later sells them to Uli, another
consumer. Article 2 of the UCC applies to the sales transactions between
A.all of the buyers and sellers.
B.Rally and SnoSportz only.
C.SnoSportz and Tyra only.
D.Tyra and Uli only.
On the back of a check payable to Nero, he writes “Pay to Odell, without recourse” and
signs it. This
A.does not effect the check’s negotiability or any party’s liability.
B.relieves Nero of liability on the check.
C.relieves Odell of liability on the check.
D.renders the check nonnegotiable.
Feder prepares federal corporate income tax returns for Giant Stores, Inc., and other
firms. Under the Internal Revenue Code, with respect to an understatement of a client’s
tax liability, Feder may be liable for
A.negligent or willful misconduct.
B.no misconduct.
C.only negligent misconduct.
D.only willful misconduct.
Penn files a suit against Roadway Sign Company While the suit is pending, Roadway
consolidates with Synchronized Signal Corporation to form Traffic Management, Inc.
Now, liability in the suit, if any, rests with
A.Traffic.
B.Roadway and Synchronized.
C.Penn.
D.no one.
Fact Pattern 25-1
Ruben is a shareholder of Speed Bikes Company (SBC). When the directors fail to
undertake an action to redress a wrong suffered by SBC, Ruben files a suit on the firm’s
behalf.
Refer to Fact Pattern 25-1. Any damages recovered by Ruben’s suit will normally go to
A.Ruben.
B.SBC.
C.SBC’s directors.
D.the state in which SBC is incorporated.
Fact Pattern 2-1
Java Cafes, Inc., and Kaffe Import Corporation dispute a term in their contract.
Refer to Fact Pattern 2-1. If Java and Kaffe have a long-standing business relationship
that they would like to continue, a preferred method of settling their dispute may be
mediation because
A.the case will be heard by a mini-jury.
B.the dispute will eventually go to trial.
C.the process is not adversarial.
D.the resolution of the dispute will be decided an expert.
Ellen publishes a book titled First Place, which includes a chapter from Frank’s
copyrighted book Great Racecar Drivers. Ellen’s use of the chapter is actionable
provided
A.consumers are confused.
B.Ellen’s use is intentional.
C.Ellen’s use reproduces Frank’s chapter exactly.
D.Ellen does not have Frank’s permission.
Fact Pattern 16-2
Jake is the maker of a $2,000 promissory note payable to Kim. Kim indorses the note to
Lou who, in turn, indorses it to Mona, who then indorses it to Nat, the present holder.
Refer to Fact Pattern 16-2. Nat properly presents the note to Jake for payment, but Jake
dishonors it. With timely notice to the proper parties, Nat may collect payment on the
note from
A.Kim, Lou, or Mona.
B.Kim or Lou only.
C.Mona only.
D.no one.
Craig decides to sell his Double-D Ranch in an auction “without reserve.” If Craig
changes his mind at the auction, he can withdraw his property
A.only before the auctioneer announces that the ranch is sold.
B.only before the auctioneer delivers the deed to the buyer.
C.under no circumstances.
D.within thirty days after the auction.
Regal Manufacturing Company contracts to sell sweaters to Superb Styles Store. Before
the sweaters are delivered, Superb indicates that it will not be able to pay. Regal can
resell the goods
A.either after finishing the job (and identifying the goods), or after stopping the job.
B.only after finishing the job and identifying the goods.
C.only if Regal immediately stops the job.
D.under no circumstances.
The state legislature of Iowa enacts a transportation statute that impinges on interstate
commerce. This statute will be
A.balanced in terms of Iowa’s interest in regulating a certain matter against the burden
placed on interstate commerce.
B.balanced in terms of the burden on Iowa against the merit and purpose of interstate
commerce.
C.struck down.
D.upheld.
Lucky owns Mud Flats Ranch, which is situated on certain Nevada acreage. The
exterior boundaries of the land extend
A.100 feet into the earth and 100 feet into the atmosphere.
B.one mile into the earth and one mile into the atmosphere.
C.to infinity and beyond.
D.to the center of the earth and up to the farthest reaches of the atmosphere.
Donald applies for a life insurance policy with Equity Insurance Company through
Fletch, an agent who works for Equity. Donald pays the initial premium. Fletch writes a
binder, which
A.acknowledges the application and promises to consider it.
B.attests to the truth of each statement in the application
C.evidences receipt of the payment of the initial premium.
D.indicates that a policy is pending and states its essential terms.
Dora leases a house from Evan for a two-year term. To ensure the validity of their lease,
it should include
A.a description of the premises.
B.a due date for the payment of the property taxes.
C.a requirement that Dora perform structural repairs to the house.
D.a requirement that Evan carry liability insurance.
Hawaii enacts a state law that violates the U.S. Constitution. This law can be enforced
by
A.no one.
B.the federal government only.
C.the state of Hawaii only.
D.the United States Supreme Court only.
Congressman Walden and other politicians want to prohibit the import of certain
agricultural products that pose a danger to domestic crops. With respect to these
products’ import, Congress can
A.do nothing.
B.impose quotas, but not tariffs.
C.impose tariffs, but not quotas.
D.prohibit the imports.
Don writes a check to Eve drawn on Don’s account at First Bank. Eve presents the
check for payment to First Bank, which accepts it. The bank is
A.not liable for payment.
B.primarily liable for payment.
C.secondarily liable for payment.
D.simultaneously liable, with Don, for payment.
County Bank wants to perfect its security interest in collateral owned by Direct Sales
Company. Most likely, a financing statement should be filed with
A.the local chamber of commerce.
B.the county clerk.
C.the federal loan officer.
D.the secretary of state’s office.
Fact Pattern 10-2
Grover contracts to sell two tracts of land to Hank. Both parties believe that the two
tracts are adjacent, but in fact they are not. Grover is still willing to sell the land, but
under these circumstances the deal would adversely affect Hank.
Refer to Fact Pattern 10-2. Because of the parties’ belief about the adjacency of the
property, their contract is
A.unavoidable.
B.unconscionable.
C.unenforceable.
D.voidable.
On behalf of the rock group Uno, their manager Thalia agrees to a performance in
Seaside Amphitheatre on July 4. Rex, acting for Seaside Productions, sends a written
copy of the agreement to Thalia to be signed. Typically, businesspersons put their
contracts in writing to
A.ensure proof of the contracts’ existence.
B.create substance from form.
C.obtain a check or other negotiable instrument.
D.practice their “letters of credit.”
Elmo, a minor, misrepresents his age to be twenty-one and contracts to buy a car from
Fine New Autos. Ordinarily, Elmo can disaffirm the contract
A.only if he can prove that Fine New Autos did not know his TRUE age.
B.only if he can prove that Fine New Autos knew his TRUE age.
C.under any circumstances.
D.under no circumstances.
Southwestern Foods Corporation operates a packaging plant near the border between
the United States and Mexico. Due to the location, it would be easier for Southwestern
to employ noncitizens. It is legal for a U.S. employer to
A.hire persons not authorized to work in the United States.
B.recruit persons not authorized to work in the United States.
C.refer for a fee persons not authorized to work in the United States.
D.none of the choices.
Corner Convenience Store (CCS) takes out a full-page ad in a local newspaper and runs
a thirty-second commercial on a local television station, offering a reward for
information leading to the apprehension of a certain criminal. CCS could normally
terminate the offer by placing
A.a full-page ad in the local paper and a thirty-second commercial on the local station.
B.a notice in the “Legal Announcements” section of the paper.
C.a notice to the news departments of the local stations.
D.any, or none, of the choices.
Based on Nan’s conduct, Odel reasonably believes that Poppy has the authority to act
on Nan’s behalf even though Poppy does not have the actual authority to do so. In this
circumstance, Poppy has
A.apparent authority.
B.express authority.
C.implied authority.
D.no authority.
Owen, in Pennsylvania, and Quik Jobs, Inc., in Maryland agree to have their dispute
resolved in arbitration according to the law of Virginia. This is a ground for a court to
A.do nothing.
B.review the merits of the dispute.
C.review the sufficiency of the evidence.
D.set aside the award.
Pay-to-Buy.com, Inc., applies to the U.S. Patent and Trademark Office for a patent on
an online payment system. Business process patents are more likely to lead to litigation
than patents or tangible inventions because business process patents often involve
A.fields that provide services.
B.machines.
C.processes that incorporate computer programs.
D.transformations of particular articles into different states or objects.
Cow Country Corporation (CCC) sells half of its land to the Double R Ranch. On the
land is a reservoir. In the deed, CCC retains the right to remove a limited amount of
water per day from the reservoir. This right is
A.a leasehold estate.
B.a license.
C.an easement.
D.a profit.
Lena borrows from Mac and Nicol, using the same collateral for both loans. Only Nicol
has a perfected security interest. Lena defaults on both loans. The party with first rights
to the collateral is
A.Lena.
B.Mac and Nicol, in proportion to Lena’s debt to each.
C.Mac only.
D.Nicol only.
Ollie negotiates an order instrument to Phil by
A.assignment of its rights under a contract.
B.delivery with any necessary indorsement.
C.making an unconditional promise to pay.
D.presenting it in response to a demand by B.
Rona is Stu’s administrative assistant and both work for TriCounty Labor Inc. Stu tells
Rona that for sexual favors, he will give her an excellent performance review and
recommend a raise. This is
A.harassment on the basis of sexual orientation.
B.hostile-environment harassment.
C.not harassment.
D.quid pro quo harassment.
Fun Toyz Corporation makes skateboards, which it sells to consumers, including Holly
and Ira. Due to a defect, Holly is injured while using her new board. Ira’s board has the
same defect, but he is not injured. In a product liability suit based on strict product
liability, Fun Toyz may be liable to
A.Holly and Ira.
B.Holly only.
C.Ira only.
D.no one.
Jock and Kim decide to wager in violation of a state statute on the outcome of a football
game. They each deposit money with Iverson, who agrees to pay the winner of the bet.
Before the game begins, Kim tells Iverson that she changed her mind about the bet.
Kim can recover
A.the amount of her bet and the amount of Jock’s bet.
B.the amount of her bet minus Iverson’s expenses.
C.the amount of her bet only.
D.nothing.