Betsy’s elderly father gave her written authority her to sell the family house. Her father
lived in Arizona and she lived in Minnesota. After about two months she found a buyer
for the house and signed an acceptance of the offer on March 21. Later that same day
she learned her father had died the day before (March 20). Other members of the family
did not want the family house sold and claimed that the acceptance Betsy signed was
void. The buyer of the house claims Betsy had the legal authority to sell the house and
that the contract is binding. Who is right?
Section 2-306 of the UCC expressly disallows output contracts in the sale of goods.
a. True
b. False
There are four types of illegal activity under the Civil Rights Act of Which choice lists
these four?
a. disparate treatment, disparate impact, hostile environment, and retaliation
b. disparate employment, unfair promotions, hostile environment, and unfair firing
c. false reports, retaliation, prima facie discrimination, sexual harrassment
d. religious disparaging, racial profiling, sexual harrassment, unfair promotions
Maxine lost her job as an electrical engineer with a large company which had provided
health insurance benefits for Maxine and her family. She now
a. must try to find insurance on her own or try to find another job with health insurance
benefits.
b. is protected under COBRA, which allows her continued health insurance coverage
for 18 months as long as she pays the cost.
c. is protected under COBRA, which requires her employer to continue her health
insurance coverage for six months under whatever copayment arrangements she had
while she was employed.
d. has some protection under the NLRA, which requires her employer to pay for
continued health insurance for three months following her termination if she did not
leave the company voluntarily.
What two conditions must exist for federal courts to have diversity jurisdiction?
a. an individual is bringing suit against a corporation and the amount in dispute exceeds
$75,000
b. the plaintiff and defendant are from the same family and the amount in dispute
exeeds $50,000.
c. the case has been tried in two different states with two different outcomes and the
amount in dispute exceeds $50,000.
d. the plaintiff and defendant are citizens of different states and the amount in dispute
exceeds $75,000.
Marla applies for and receives a three-year loan through Sharkey Lenders for $5,000 at
27% APR.If the loan agreement violates the applicable usury statute, Marla may be able
to keep
a. the interest that exceeds the usury limit.
b. all of the interest on the loan.
c. the interest and the $5,000.
d. Any of the answer choices are possible, depending on where the loan was made.
Phillip was waiting for a bus at a bus stop. Across the street and down the block, a
mechanic negligently overinflated a tire he was intending to put onto Marshas pickup
truck. The exploding tire injured Marsha and frightened a neighborhood dog, which ran
down the street and knocked Phillip down, injuring his knee. Phillip sued the mechanic.
In applying the Palsgraf v. Long Island Railroad Co. decision to this case, Phillip would
a. win because the mechanic was negligent in overinflating the tire, which led to
Phillips injury.
b. win based on negligence per se.
c. lose because the court would apply the doctrine of res ipsa loquitur.
d. lose because, although the mechanics conduct was negligent toward Marsha, it was
not a wrong in relation to Phillip, who was far away. The mechanic could not have
foreseen injury to Phillip and therefore had no duty to him.
Which of the following relationships generally fails to create an insurable interest?
a. Husband and wife
b. Doctor and patient
c. Debtor and creditor
d. Chief executive officer and corporation
The United States and Argentina have signed the Convention on Contracts for the
International Sale of Goods (CISG). Oxtron, Inc., a U.S. company, and Leer, an
Argentinean company, have entered into a contract under which Oxtron is to ship
medical devices to Leer. The contract does not include a choice of law provision. The
contract will be governed by
a. the CISG.
b. the ICC.
c. the domestic contract law of Argentina.
d. the domestic contract law of the United States.
Which of the following is correct concerning termination statements?
a. A termination statement must be filed by a secured party when a debtor has defaulted
on a loan.
b. For consumer debt, the secured party must complete a termination statement in every
place that it filed a financing statement.
c. The secured party must file a termination statement within 30 days of a consumer
debtor’s demand, provided the debtor has paid the full debt.
d. A termination statement indicates that a secured party is transferring its rights to
collateral to another party.
Jerry offers to shovel the snow from Ben’s driveway for $35. Ben replies “OK.” This is
an example of
a. an implied, unilateral contract.
b. an express, unilateral contract.
c. an implied, bilateral contract.
d. an express, bilateral contract.
Congress enacted legislation in 1933 to regulate the securities industry and prohibit
various forms of fraud with securities. The Securities Exchange Act of 1934 was passed
a year later. This law created the Securities and Exchange Commission (SEC) as an
independent regulatory entity whose function is to administer the two laws. The SEC
has generated rules and regulations to administer these acts. These rules and regulations
are
a. statutes.
b. administrative law.
c. executive orders.
d. common law.
The dissolution of a partnership means the same as its termination.
a. True
b. False
If Chuck buys frozen cheese from Cheese, Inc., then fails to inspect the cheese within a
reasonable amount of time and does not reject the shipment, Chuck has accepted the
shipment even if there is non-conformity.
a. True
b. False
To simplify, clarify, and modernize the law governing commercial transactions, the
UCC permits the use of “open terms” in sales contracts. In the use of “open terms,”
which of the following is TRUE?
a. The court will use market value and other comparable sales to determine what a
reasonable price would have been at the time of delivery if the parties have not settled
the price in the contract.
b. If time of payment is not mentioned in the contract, payment within a commercially
reasonable time is presumed.
c. If the contract permits the buyer or seller to determine the price during contract
performance, the UCC requires the party to do so in good faith.
d. All of the above are true.
Raymond agrees to transfer an easement right to Sandra for $1,000. This contract is
within the statute of frauds and therefore needs to be in writing to be enforceable.
a. True
b. False
Ev-R-Green Co., a private corporation, decides to sell substantially all of the companys
assets. Under the Model Act and many state statutes
a. the sole remedy for dissenting shareholders is to sell their stock on the stock
exchange.
b. the board must first get unanimous shareholder approval for this fundamental change.
c. Ev-R-Green must buy back, at fair value, the stock of any shareholders who object to
the decision.
d. the company may buy back, at fair value, the stock of any shareholders who object to
the decision or the shareholders who object may receive the right of first refusal to
purchase corporate assets.
On the day a tender offer begins,
a. greenmail must be sent to the SEC.
b. a bidder must file a disclosure statement with the SEC.
c. assets of the target corporation must be locked up until an inventory is completed.
d. the SEC issues a binding order to the target company to file audited financial
statements to the bidder.
Premier Enterprises sold Watson unregistered stock which was not exempt. The 1933
Act imposes liability on Premier, and Watson can demand rescission if he still owns the
stock.
a. True
b. False
Which of the following statements is correct with respect to state efforts to offer
protection to companies targeted for hostile takeovers?
a. Courts offer the only legal protection to companies targeted for hostile takeovers.
b. Statutory law offers the only legal protection to companies.
c. Both statutory law and the state courts have provided some degree of protection for
companies.
d. State courts and state statutes have offered no protection for companies targeted for
hostile takeovers.
Cecilia made a check out to Gideon for $15. Gideon fraudulently changed the check to
read $150, and cashed it at Corner Bank. Is Cecilia discharged from liability on the
check?
a. Yes, Cecilia owes nothing on the check because alteration of a check is a real defense
and real defenses are good even against holders in due course.
b. No, Cecilia pays $150 because of the impostor rule.
c. No, Cecilia pays $150 because she in not an indorser or accommodation party.
d. Yes, Cecilia owes nothing unless Corner Bank is a holder in due course in which case
she owes the original $15.
An agency relationship can be created
a. by the conduct of the parties.
b. only by the meeting of all the standards of contract law.
c. only by a written agreement.
d. only if the agent is paid.
A defendant engaging in an ultrahazardous activity is almost always liable for any harm
that results.
a. True
b. False
The Clayton Act was passed in part because the courts were not enforcing the Sherman
Act as strictly as it had intended.
a. True
b. False
Kian is the chief financial officer of Yonkka, Inc. He is also a member of Yonkka’s
board of directors. Kian is
a. an inside director.
b. an outside director.
c. holding an illegal position.
d. a public director.
An assignment for consideration is irrevocable.
a. True
b. False
Francenie has a checking account at Corner Bank. She wants tickets to an upcoming
concert. She writes a check to Ticketmaster for the cost of two tickets. In this scenario:
a. Francenie is the drawee, Corner Bank is the drawer, and Ticketmaster is the payee.
b. Francenie is the maker, Corner Bank is the drawee, and Ticketmaster is the payee.
c. Francenie is the drawer, Corner Bank is the drawee, and Ticketmaster is the payee.
d. Francenie is the payee, Corner Bank is the drawer, and Ticketmaster is the maker.
The shipping terms,FOB place of destination, indicate that the seller must deliver the
goods at the place named and bears the expense and risk of shipping.
a. True
b. False
Carlos conveys his property “to Noah for life, then to Maxie.” Noah has a life estate and
Maxie has a remainder.
a. True
b. False
The Federal Trade Commission Act considers the terms “deceptive and “unfair to be
synonymous when determining what practices should be prohibited.
a. True
b. False
Cheryl enters into a contract with Gabe. In this contract, Cheryl asks Gabe to pay the
money he owes her from the contract to her friend Leah because Leah is having
financial troubles. Leah is
a. a third party creditor beneficiary.
b. a third party donee beneficiary.
c. a third party incidental beneficiary.
d. the promisee in the contract.
In a derivative lawsuit, the named plaintiff
a. is the corporation on whose behalf the lawsuit is filed.
b. is the particular class of shareholders primarily injured by the wrong.
c. consists of all the corporation’s shareholders.
d. is the board of directors for the corporation.
The Grand Performance Hall is in the process of remodeling and is scheduled to open
for business after being closed for 50 years. As part of the remodeling, it is installing a
new sound system. The sound system is to be installed by Sound Systems, Inc. on or
before April 10. Opening night of the hall is May 1. The contract states that “time is of
the essence” because of the opening-night deadline. Sound Systems has some financial
difficulties and doesnt deliver the system until April 20. Grand Hall refuses to accept it,
and Sound Systems sues. What will be the result?
a. Grand Hall wins; the contract date was strictly enforceable.
b. Sound Systems wins; the contract was substantially performed.
c. Grand Hall wins; there was commercial frustration.
d. Sound Systems wins; there was a true impossibility.
Assume that three automobile manufacturers all merged into one car company. Such a
merger would be a
a. vertical merger.
b. vertical cooperative arrangement merger.
c. horizontal merger.
d. intracompetitive merger.
Which of the following represents a unilateral offer?
a. “I will pay you $50 if you mow my lawn.”
b. “I will pay you $50 if you promise to trim that tree.”
c. “I will pay you $50 for your CD player.”
d. “I will pay you $50 for your backpack.”