The payment of Frida’s debt to Gianini is guaranteed by Frida’s personal property.
Gianini is
a. a debtor.
b. a secured party.
c. a secured transaction.
d. a security interest.
National Capital Corporation and International Investments, Inc., form a joint stock
company. The ownership of a joint stock company is represented by
a. partnership certificates.
b. shares of stock.
c. title documents.
d. trust certificates.
Bryce’s accountant is Caleb and his attorney is Delilah. All states protect, as privileged
information, Bryce’s communications with
a. Caleb and Delilah.
b. Caleb only.
c. Delilah only.
d. neither Caleb nor Delilah.
The payment of Eden’s debt to Flem is guaranteed by Eden’s personal property. This
property is
a. a secured party.
b. a secured transaction.
c. a security interest.
d. collateral.
Fancy’s Feedlot orders one hundred sacks of cattle feed from Bovine Feeders, Inc. Each
bag has the words “Twenty percent protein” printed on the front. This is
a. an express warranty.
b. an implied warranty.
c. a warranty of title.
d. puffery.
Alpha Company issues a trade acceptance with itself and Beta Company as parties. A
trade acceptance is
a. a draft.
b. an order to accept delivery of money.
c. a promise to accept delivery of goods.
d. a promise to deliver goods.
Robert is selling his used lawnmower. He wants to disclaim any implied warranties.
Robert
a. cannot disclaim implied warranties.
b. should include a written disclaimer that the lawnmower is being sold”as is.”
c. should orally disclose all known faults of the lawnmower.
d. should include a written warranty of title.
Clive works for Digby Excavation Corporation. While operating a backhoe, Clive
suffers an injury. Clive will be compensated under state worker’ compensation laws
only if
a. he does not have health insurance.
b. he is completely disabled.
c. his injury was accidental.
d. his injury was intentional.
Fact Pattern 27-1
Brad, Carlos, and Dora are general partners in Eastside Physicians, a medical clinic.
Refer to Fact Pattern 27-1. Brad, Carlos, and Dora decide to admit Faisal as a new
partner in Eastside Physicians. Faisal’s liability for partnership debts incurred before his
admission is
a. limited to his capital contribution to the firm.
b. limited to his personal assets.
c. nothing.
d. unlimited.
Vernon claims that his contract with Ulani is voidable. If their contract is avoided
a. both parties are released from it.
b. both parties must fully perform their obligations under it.
c. both parties agree to a wholly different contract.
d. a wholly different contract is imposed “as if” the parties had agreed.
Ellen pays State Bank $500 plus a service fee to draw a check on itself payable to Paul’s
Plumbing. Which of the following parties is responsible for paying the check?
a. Only Ellen
b. Both Ellen and State Bank
c. Only State Bank
d. None of the parties
Burt, a mentally impaired person, is asked by Carl to sign a piece of paper that Carl
says is an autograph book. In fact, the document is a note. If later sued on the note by
an HDC
a. Burt must pay the note.
b. Burt’s best defense would be fraud in the execution.
c. Burt’s best defense would be fraud in the inducement.
d. Burt’s best defense would be mistake.
Ted and Svetlana orally agree to several different oral contracts. The Statute of Frauds
will bar enforcement of an oral contract for
a. a deal that will be performed within a year.
b. a primary obligation.
c. a sale of goods for $100.
d. a sale of land.
The payment of Hu’s debt to Ian is guaranteed by Hu’s personal property. To give notice
of his interest in Hu’s property to other creditors, Ian is most likely to
a. attach a bright label to Hu’s property.
b. e-mail other potential creditors.
c. file a financing statement with the appropriate authority.
d. publish a collection notice in local newspapers.
Rhett works at Scarlett’s Sandwich Café. After work, in the parking lot, Rhett finds a
diamond ring lost by Thalia. Title to the ring is possessed by
a. Rhett.
b. Scarlett’s.
c. Thalia.
d. the state.
Martin, a U.S. citizen, feels that a recently enacted federal law is unfair. He assembles a
group of friends and they write a petition to the government. Martin and friends then
stand quietly in front of the White House with signs declaring their belief that the law is
unfair. Under the First Amendment, Martin has a right to
a. petition the government, but not to assemble a group peaceably.
b. assemble peaceably, but not to petition the government.
c. both petition the government and assemble peaceably.
d. neither petition the government nor assemble peaceably.
Juan and Isidro enter into a contract to buy, restore, and reopen the Coastal Park
Carousel. Before either party begins to perform, they agree to cancel their deal. This is
a. substantial performance.
b. mutual rescission.
c. accord and satisfaction.
d. novation.
Rolling Transport & Storage Corporation wants to insure its warehouse to obtain the
maximum possible recovery for the lowest possible premium. To obtain the maximum
recovery under a coinsurance clause, the percentage of the value of the property that
should be insured is
a. 80 percent.
b. 90 percent.
c. 100 percent.
d. 120 percent.
Dita takes out a student loan from Everloan Bank. When she fails to make the
scheduled payments for six months, Everloan advises her of further action that it will
take. This violates
a. no federal law.
b. the Fair and Accurate Credit Transactions Act.
c. the Fair Debt Collection Practices Act.
d. the Truth-in-Lending Act.
The brakes on a River Valley Railroad train malfunction and it rolls towards mainte-
nance workers on the tracks. Everyone gets out of the way except Dick, who wants to
show off. The train hits Dick, who sues Stops-it, Inc., the brake’ manufacturer. Stops-it
can raise the defense of
a. a component-part manufacturer.
b. assumption of risk.
c. consumer participation.
d. product misuse.
Oak Grove Residences, Inc., owns apartment buildings. Pedro leases one of Oak
Grove’s apartments. Pedro’s transfer of his interest in the lease to Quito for a period
shorter than the lease term is
a. an assignment.
b. an eviction.
c. a right of entry.
d. a sublease.
Fact Pattern 25-1
Lita replaces Manny in his job at Neighborly Business Corporation (NBC).
Refer to Fact Pattern 25-1. Manny believes that he has been discriminated against on
the basis of his age. For the Age Discrimination in Employment Act of 1967 to apply
a. all parties must be forty years of age or younger.
b. Lita must be forty years of age or older.
c. Manny must be forty years of age or older.
d. NBC must have been in existence for at least forty years.
Lyla is a common shareholder in Norman’s Nutty Nuts Corporation. As a common
shareholder, Lyla is
a. guaranteed regular payments of dividends.
b. not guaranteed any payments of dividends.
c. not given any voting rights.
d. liable for all of Norman’s Nutty Nuts’s debts.
Sweetwater Café defaults on debts to Town & Country Bank and Uno Loan Company.
Town & Country perfected its security interest before Uno. Town & Country takes
possession of the collateral in which it has a security interest. On a sale of the collateral,
the proceeds will be applied first to
a. Sweetwater’s previous payments on the debts.
b. Sweetwater’s unpaid payments on the debts.
c. the balance of Sweetwater’s debt to Town & Country.
d. the balance of Sweetwater’s debt to Uno.
Trudy forges Uma’s signature on a check “payable to the order of Trudy” drawn on
Uma’s account in Verity Bank. Most likely, if the bank pays the check
a. the Federal Reserve will reimburse all parties for their costs.
b. the loss will be apportioned among all of Verity’s customers.
c. Uma will be liable for the amount.
d. Verity will have to recredit Uma’s account.
Oakley posts a defamatory remark about Pierre in “Roominate,” an online social
network maintained by SocNet, Inc., an Internet service provider. Most likely to be held
liable for the remark will be
a. Oakley.
b. Pierre.
c. Roominate.
d. SocNet.
Ed is a debtor. Financial Loans, Inc., and the government are Ed’s creditors. For these
parties, a bankruptcy proceeding under Chapter 13 could be initiated by the filing of a
petition by
a. Ed alone or by his creditors jointly.
b. Ed only.
c. Financial Loans only.
d. the government only.
Ellen offers to sell her math textbook to Julia for $50. Julia does not respond. Ellen and
Julia do not have a contract because they lack the requirement of
a. agreement.
b. capacity.
c. consideration.
d. legality.
Kelly tells Jimmy she will pay him $1,000 if he builds a shed in her backyard. Kelly is
a(n)
a. offeree.
b. offeror.
c. promisee.
d. contractor.
In-Home Maid Service Company uses a Web site to provide downloadable information
to prospective franchises. This online information is the equivalent of an offer that must
comply with
a. the Automobile Dealer’ Franchise Act of 1965.
b. no law.
c. the Federal Trade Commission’s Franchise Rule.
d. the state Franchise Disclosure Document, or FDD.
Beau sells a car to Cody without disclosing that the odometer, which reads 40,000
miles, was disconnected 80,000 miles ago. Beau is liable for
a. duress.
b. fraud.
c. mistake.
d. undue influence.
To borrow money to finance the start-up of his business, Bob executes an instrument in
favor of City Bank. For the instrument to be negotiable, the signature must be
a. anywhere on the instrument.
b. anywhere on the lower half of the instrument only.
c. in the lower left-hand corner of the instrument only.
d. in the lower right-hand corner of the instrument only.
A motion for a new trial will be granted only if a constitutional issue is involved.
When dissolution takes place by voluntary action, the shareholders are responsible for
winding up the affairs of the corporation.
Federal mortgage disclosure requirements apply to the written materials that a lender
provides and to any oral representations.
A market division by class of customer between rival firms violates antitrust law.
When a breach of contract occurs, the innocent injured party has a duty to mitigate the
damages.
Stating on an instrument the underlying terms of an agreement renders the instrument
nonnegotiable.
Some student loans are dischargeable in a Chapter 7 bankruptcy.
The Foreign Sovereign Immunities Act spells out what a “foreign state” includes.
Insurance companies are exempt from antitrust laws whenever state regulation exists.
On a partner’s dissociation, his or her duty of loyalty to the partnership ends.
Gender can be a bona fide occupational qualification.
A deceived person must have a justifiable reason for relying on a misrepresentation.
Because insurance law follows contract law, bad faith tort actions against insurers are
not allowed.
An oral contract for a sale of goods for more than $5,000 is not enforceable even if the
parties to it admit to its existence in court.
Authority declared in clear, direct, definite terms is express authority.
A preexisting duty may arise from a previous contract.
A material breach occurs when performance is substantial, but not complete.