Jeff purchased in good faith a warehouse receipt for 1,000 pairs of running shoes
without notice of any defense to it, for value, and in the regular course of his business.
Unknown to Jeff, the goods had been stolen from Jane and delivered to the warehouse
that issued the receipt purchased by Jeff. Which of the following statements is true?
a. Jeff holds a duly negotiated document of title and is not subject to Jane’s title.
b. Jane is entitled to the goods and will prevail over Jeff.
c. Jeff is not a holder of a duly negotiated document.
d. Jane cannot recover the goods but can sue the warehouse for conversion.
Arthur was involuntarily petitioned into bankruptcy by three of his creditors. When the
trustee reviewed Arthur’s books and records, the trustee discovered the following
transactions: (a) Three weeks before the filing of the petition, Arthur paid cash for
$17,000 worth of inventory for his store; and (b) Twelve days before the filing of the
petition, Arthur paid $300 in full satisfaction of his store’s most recent electric bill.
The trustee is considering attempting to set aside both of these transfers as preferential
transfers. Discuss the advisability of the trustee’s attempt to set aside these transfers.
One reason the U.S. controls the export of goods and technology is:
a. for national security reason.
b. foreign policy.
c. short supply of domestic goods.
d. All of the above are reasons the U.S. controls the export of goods and techonolgy.
The key time for determining whether a party lacked contractual capacity is:
a. the time the contract was made.
b. the time the value of the bargain becomes clear.
c. the time set for performance of the contract.
d. the time the plaintiff expresses dissatisfaction with the contract terms.
When a person is authorized by the principal to transact all affairs in connection with a
particular type of business or trade or to transact all business at a certain place, that
person is a __________ agent.
a. general
b. perfected
c. special
d. universal
When supervisors seek sexual favors in return for job benefits, the practice is called:
a. tangible employment action sexual harassment.
b. hostile work environment sexual harassment.
c. res ipsa loquitur sexual harassment.
d. none of the above.
An arrangement in which the owner of a trademark licenses others, under specified
conditions or limitations, to use the trademark in purveying goods or services is a(n):
a. corporation.
b. limited partnership.
c. unincorporated association.
d. none of the above.
An extended time payment plan:
a. does not provide for a discharge of the debtor.
b. provides for a discharge of the debtor.
c. does not require creditors holding the same type or class of claim to be treated the
same way.
d. will not allow the debtor to pay the debts in installments if the debtor’s creditors had
not originally agreed to such installments.
When no limited partnership certificate is filed, what is the result?
a. Only limited partners are fully liable.
b. Only general partners are fully liable.
c. Limited partners retain their limited liability.
d. Both general and limited partners are fully liable.
In order to protect themselves from disclosure of proprietary or confidential
information, businesses may:
a. implement security measures to prevent access by outsiders.
b. enforce contractual nondisclosure agreements against departing employees.
c. limit disclosure of such information to those with a need to know.
d. all of the above.
The types of civil cases that can be brought in federal district courts include:
a. cases in which any state in the United States is one of the parties .
b. cases between citizens of different states that involve damages of $75,000 or more.
c. cases brought by the citizen of one state against the state government of the same
state.
d. all of the above.
A customer requested a price from a carpenter on a teak cabinet to be built according to
the buyer’s specifications. Because teak wood is difficult to obtain, the customer agreed
to pay the cost of the wood plus $175 and the carpenter agreed to build it. Which of the
following is correct?
a. Although the price is somewhat unclear, the parties have entered into a contract.
b. This is an agreement to agree, and is not binding.
c. This agreement fails for indefiniteness.
d. The carpenter is bound by the agreement, but not the customer.
A __________ agent is authorized by the principal to handle a definite business
transaction or to do a specific act.
a. special
b. general
c. secret
d. universal
____ is a body of principles that establishes the structure of a government and the
relationship of that government to the people.
a. A constitution
b. Statutory law
c. Stare decisis
d. The common law
The warranty of merchantability guarantees that the:
a. party in question is a merchant.
b. product is fit for the ordinary purposes for which it is sold.
c. product will remain fit for its normal use for the applicable statute of limitations
period.
d. product can be resold by the buyer if the buyer does not want to keep it.
Janice Beadles owns a large cargo vessel that is used primarily for international trade
transactions. Janice is quite concerned about her possible liability and financial losses,
as she has become aware of more and more collisions between ships at sea. What can
you tell her about the different types of insurance that she could obtain that could assist
her in the event of an accident?
Which of the following is a correct statement concerning the incorporation process?
a. Each application for incorporation is reviewed by the appropriate state legislature.
b. The incorporation process is essentially a matter of filing the correct papers and fees
with the designated government official.
c. Most applications for incorporation are rejected.
d. Incorporator(s) are never required to give public notice of the intent to form a
corporation.
Under the CISG, a buyer may reject goods
a. consistent with the right of rejection set forth in the UCC.
b. if the goods are nonconforming to the contract in any way.
c. only if the tender is a fundamental breach of the contract.
d. only if the tender is illegal in subject matter and/or purpose.
An agreement is not binding when:
a. one party makes a mistake regarding a material fact.
b. both parties make a mistake regarding a material fact.
c. one party makes a mistake of law.
d. all of the above.
Which of the following represents a duty owed by a landowner to a trespasser?
a. the duty to refrain from causing intentional harm once the presence of the trespasser
is known
b. the duty to warn the trespasser of dangers existing on the premises
c. the duty to make the premises safe to protect the trespasser from harm
d. none of the above, since a landowner has no legal duty to a trespasser
Which of the following implied warranties is created when the buyer relies on the seller
to pick out the goods that the buyer requires to meet a stated need?
a. conformity to description
b. Merchantability
c. fitness for a particular purpose
d. conformity to a sample or model
If a wire manufacturing company owned a mill to produce the metal used in making the
wire, this relationship between the companies would be best be described as:
a. a conglomerate.
b. a holding company.
c. an integrated industry.
d. a merger.
An unconditional written promise made by one person to another, signed by the maker,
that promises to pay on demand a specific sum of money to the bearer is a:
a. nonnegotiable draft.
b. bill of exchange.
c. promissory note.
d. certificate of deposit.
A customer went into a store and saw a beautiful leather jacket bearing a price tag of
$29. The customer handed the cashier a $50 bill and said, “I accept. We have a deal.”
The cashier then noticed the price tag and told the customer an error had been made and
that the price was $229. In this case:
a. the customer validly accepted the store’s offer.
b. the price tag was a firm offer.
c. no contract was formed because the customer’s offer was refused.
d. the customer is the offeree.
Which of the following is a preferential transfer?
a. a transaction for present consideration
b. a payment in the ordinary course of business
c. both a. and b. are preferential transfers
d. neither a. nor b. are preferential transfers
A life insurance contract is a third-party:
a. beneficiary contract.
b. assignment contract.
c. payment contract.
d. performance contract.
Only the parties to a sales contract could sue each other under the traditional concept of:
a. exclusivity of contract.
b. privity of contract.
c. privacy of contract.
d. priority of contract.
A transfer of property by the debtor to a creditor may be set aside as a __________
transfer and the property recovered by the debtor’s trustee in bankruptcy if (1) the
transfer was made to pay a debt incurred at some earlier time; (2) the transfer was made
when the debtor was insolvent and within ninety (90) days before the filing of the
bankruptcy ; and (3) the transfer resulted in the creditor receiving more than the creditor
would have received in a liquidation of the debtor’s estate.
a. predetermined
b. preternatural
c. preordained
d. preferential
The Internet Tax Freedom Act (ITFA) prohibits companies from charging sales tax on
Internet transactions.
Public policy:
a. can be precisely defined
b. is frequently used by the courts as a reason to invalidate contracts
c. is protections from that which violates any established interest of society
d. all of the above
White-collar crimes:
a. always involve the threat or use of force or violence.
b. generally involve the threat or use of force or violence.
c. sometimes involve the threat or use of force or violence.
d. do not involve the threat or use of force or violence.
The Racketeer Influenced and Corrupt Organizations (RICO) Act is a product of:
a. Congress.
b. international trade agreements.
c. state law.
d. none of the above.
An individual who has been authorized to vote the share of another stockholder is said
to be voting by:
a. trust.
b. proxy.
c. estoppel.
d. agency.
Which of the following is not a condition necessary for ratification?
a. The agent must have purported to act on behalf of or as an agent for the identified
principal.
b. The third party benefiting from the ratification must give consideration for the
ratification.
c. The principal must have been capable of authorizing the act both at the time of the act
and at the time it was ratified.
d. The principal must have full knowledge of all material facts.
When a credit application is refused, it is sufficient that the lender give the applicant a
written statement saying: “application refused.”
A joint venture typically relates to the carrying out of a single enterprise or transaction.
For an agency to be terminated by operation of law because of the principal’s death, the
agent must be notified of the death.
COD is a shipping term that requires the buyer to pay in order to gain physical
possession of the goods.
A sale of goods is defined under UCC Article 2 as transfer of title to intangible property
for a price.
Instruments are negotiable when they contain the terms required by contract law.
A person who is harmed by a conspiracy that violates the Sherman Antitrust Act may
sue the wrongdoers for four times the actual damages.
A consumer claiming that there has been a violation of a consumer protection statute
has the burden of proving that the statutory definition of “consumer” has been satisfied.
Modern administrators cannot make laws, but they can argue persuasively before
Congress for the passage of needed legislation.
Limited partners may contribute cash or property as their capital contributions.
The CARD Act substantially restricts the solicitation of credit card accounts for those
under the age of 18.
A party injured by the other party’s anticipatory repudiation of a contract has the right to
bring suit at the time of the repudiation without waiting to see if there will be proper
performance when due .
When the price of the goods is $500 or more, a writing signed by the defendant is
required in all cases.
The liability of a buyer for the purchase price of goods is terminated by the fact that the
buyer gave the buyer’s agent the purchase price to remit to the seller.
Trademarks may be used to protect the exclusive right to identify either products or
services.
Contract clauses that limit a common carrier’s liability are void as contrary to public
policy.
A cause of action may not be assigned.
Goods physically existing and owned by a seller at the time of a transaction are called
existing goods.
Assault is the intentional, wrongful touching of another person without that person’s
consent.
In order for delivery to occur, a gift must actually be handed over to the recipient.