When a person makes a contract as an agent for another but lacks authority to do so, the
contract:
a. binds the principal but not the agent.
b. binds the principal and the agent.
c. does not bind the principal.
d. none of the above.
The willingness of an offeror to enter into a contractual agreement regarding a
particular subject is expressed by a(n):
a. offer.
b. acceptance.
c. contract.
d. agreement.
To avoid litigation over impossibility and impracticability issues, modern contracting
parties often contract around the doctrine of impossibility, specifying the failures that
will excuse performance in their contracts. The clauses in which they do this are called
__________ clauses, and they are generally enforced by courts as written.
a. delta force
b. force majeure
c. magnum force
d. force corporeal
Unemployment compensation benefits probably will be denied:
a. when an employee’s theft of property results in termination.
b. to full-time students.
c. when an employee quits a job without cause.
d. all of the above.
It is probable that a zoning variance would be granted:
a. even though many of the neighboring property owners object.
b. on the grounds of hardship, regardless of who created the hardship.
c. to an outside advertiser to build a billboard.
d. when the desired use of the land is in harmony with the general nature of the
surrounding areas.
The damages that are typically recoverable when a contract has been breached and one
party has suffered loss are called:
a. punitive damages.
b. emotional distress damages.
c. compensatory damages.
d. liquidated damages.
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
A carrier owned and operated by the shipper is:
a. a common carrier.
b. a contract carrier.
c. a private carrier.
d. a consignor.
Which is not a correct statement concerning rescission of a contract?
a. The breach must be material.
b. The injured party who rescinds may recover money paid under the contract.
c. The contract remains in effect after the rescission.
d. Rescission is the undoing of the contract.
When goods are sold at an auction in separate lots, the title to each lot passes:
a. when the winning bidder tenders payment for the lot.
b. when the lot is received by the winning bidder.
c. only when all lots have been sold.
d. when the auctioneer announces that the lot in question has been sold to the bidder.
If an insured person tells her current husband that she is going to name him as
beneficiary of her life insurance in place of her former husband and dies a year later
without having taken any further steps with respect to the change of the policy
beneficiary, the insurance company must pay the proceeds of the policy to:
a. the former husband.
b. the current husband.
c. the children by the first marriage.
d. the children by the second marriage.
Joan brought her car into Ace Service Station for a tune-up. After tuning up the car, Ace
(the owner of the service station) decided to visit his mother. Ace drove Joan’s car. Ace
was following all safety precautions when a negligent driver without insurance struck
Joan’s car. Joan sued Ace for the damages to her car. The probable result is:
a. Ace will win, since he was taking reasonable care of the bailed goods.
b. Ace will win, since the bailee has the right to use the bailed goods.
c. Joan will win, since the harm was sustained during the bailee’s unauthorized use of
the property.
d. Joan will win, since bailees are absolutely liable for bailed goods in their possession
and control.
The Utilitarian Theory:
a. holds that we all act in our own self-interest.
b. is based on doing the most good for the most people.
c. resolves ethical dilemmas according to time and place.
d. believes that solving ethical dilemmas requires training
Money __________ involves the knowing and willful participation in a financial
transaction involving unlawful proceeds when the transaction is designed to conceal or
disguise the source of the funds.
a. ironing
b. vacuuming
c. laundering
d. cooking
An indorsement “for deposit only” is:
a. restrictive.
b. qualified.
c. special.
d. blank.
A motion for a directed verdict is appropriate:
a. immediately after the pleadings are filed.
b. immediately after discovery is concluded.
c. immediately after the presentation of all evidence at trial.
d. on appeal.
Apparent authority has the same effect as:
a. undisclosed authority.
b. actual authority.
c. partially disclosed authority.
d. none of the above.
The Federal __________ Act makes it unlawful to intercept oral and electronic
communications and provides for __________ against the violator.
a. Wiretapping; civil damages
b. Wiretapping; criminal liability and civil damages
c. Homeland Security; civil damages
d. Homeland Security; criminal liability and civil damages
Which of the following is not an example of a state penalty for violating usury law?
a. restricting the lender to the recovery of the loan but no interest whatsoever
b. allowing the lender to recover the loan principal and interest up to the maximum
contract rate
c. restricting the lender to the recovery of the loan plus seventy-fifty percent (75%) of
the interest
d. requiring the lender to pay, as a penalty, double the interest the borrower paid on a
usurious loan
When a debtor makes a payment to a creditor specifying how it should be applied, the
creditor must apply the payment:
a. as directed by the debtor.
b. to the oldest outstanding debt.
c. to the most recent outstanding debt.
d. to the largest outstanding debt.
The situation in which an individual impersonates the holder of a savings account and,
by presenting a forged withdrawal slip to the savings bank, receives from the bank a
check payable to the bank’s customer, is covered by the:
a. impostor rule.
b. negotiation rule.
c. assignment rule.
d. bank rule.
In a partnership of four physicians, a decision to buy an office copier for the partnership
must be approved by:
a. all of the partners.
b. at least three of the partners.
c. at least two of the partners.
d. one partner.
____ 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
Negotiation of order paper requires:
a. delivery only.
b. indorsement only.
c. both indorsement and delivery.
d. neither indorsement nor delivery.
Part of every whole life insurance premium covers the cost of insurance. The remainder
of the premium is devoted to the investment component of the policy, which builds up
over time to its:
a. reimbursement point.
b. cash surrender value.
c. culmination value.
d. return point.
The effect of the making of a partial payment to satisfy an admitted debt is an example
of the rule that:
a. past benefits cannot be consideration for a later promise.
b. a conditional promise may be consideration.
c. doing what one is already under a legal obligation to do is not consideration.
d. consideration must be adequate to be binding.
Barry and Eldridge owned Blueacre as tenants in common. Eldridge died. Blueacre is
owned:
a. solely by Barry because of the survivorship feature.
b. jointly by Barry and the state because of escheat.
c. by Barry and Eldridge’s heirs.
d. solely by Eldridge’s heirs.
When ambiguous language exists:
a. words control figures if a conflict exists.
b. handwriting supersedes typewritten words or terms.
c. typewritten terms supersede preprinted terms.
d. all of the above.
The signature requirement, as an element of negotiability, can be met by:
a. the use of initials.
b. a mark.
c. a trade name.
d. all of the above.
A law to declare war:
a. can be enacted by both state and federal governments.
b. can be enacted only by the national government.
c. can be enacted only by state governments.
ddd. is prohibited by the U.S. Constitution.
Perjury occurs:
a. only in federal court.
b. only in written form.
c. only in state courts.
d. none of the above.
If a contract for the sale of goods does not state the price to be paid, the:
a. contract is void because it is too indefinite to be enforced.
b. buyer is required to pay a reasonable price for the goods.
c. buyer can pay whatever price the buyer in good faith believes is a proper price.
d. seller can rightfully charge whatever price the seller in good faith believes is a proper
price.
A letter of credit:
a. cannot last for more than five years.
b. may be in either oral or written form.
c. can only be issued by a bank.
d. must be in writing and signed by the issuer.
The right to performance under a contract can be assigned:
a. if the burden of performance is not materially increased.
b. if the contract requires the performance of personal services.
c. if the contract provides for the extension of credit.
d. all of the above.
A payee has no rights in an instrument until:
a. the drawer or the maker has delivered the instrument to the payee.
b. an acceptor has been established.
c. an accommodation party has signed the instrument.
d. a guarantor has signed the instrument.
A security agreement must be backed by a written record even if the creditor has
possession of the collateral.
In a security agreement, the creditor and the debtor agree that the creditor has a security
interest.
The object of zoning is to ensure an orderly physical development of the geographic
area that is regulated.
Arthur sustained an injury to his back. Arthur claimed the injury was suffered at work
and filed a claim for workers’ compensation benefits. The employer opposed this claim,
saying the injury, if real, was the result of a congenital condition. In accordance with the
statute, a hearing was held before the Workers’ Compensation Board, which ruled
against Arthur. Arthur became disgusted with the hearing officer and the proceedings
because Arthur felt that the hearing officer did not like him. Arthur has consulted an
attorney seeking to sue for workers’ compensation benefits. An appeal is available
within the agency, but Arthur wants to go directly to court because he feels that the
agency appeal would be useless. Discuss the merits of this strategy.
The scope of warranties remains the same regardless of whether the seller is a merchant
or a casual seller.
An obligor required to render a performance under a contract can transfer the duty to
perform to another person whenever desired.
An agreement between real estate brokers to never charge a commission less than 6% is
not an example of price fixing.
A constitution is a body of principles that establishes the structure of a government and
the relationship of that government to the people who are governed.
A writing that is offered to satisfy the statute of frauds must have been written for that
purpose.
Shareholders ordinarily cannot be sued for corporate liabilities.
Vesting refers to the ability of an employer to reclaim all of the funds it may have paid
into a former employee’s retirement fund upon that employee’s decision to resign.
Restrictions on the transfer of stock are valid if they are not unreasonable.
Many changes have been made to the Constitution by the constitutional method of
amending.
When a person purports to act as an agent for a principal, an implied warranty arises
that such person has authority to do so.
Testamentary intent makes the provisions of the testator effective and binding during
the testator’s life.
If words and numbers contradict each other in a contract, the rule of construction favors
the words.
A sale by a factor can pass title to goods from the consignor to the purchaser.
Rights always stand alone, without any duties.