An anomalous indorsement is:
a. one that specifically identifies the person to whose order the instrument is payable.
b. an indorsement made by a person that is not the holder of the instrument.
c. one that makes the signer liable on the instrument as an indorser.
d. Both one that specifically identifies the person to whose order the instrument is
payableandan indorsement made by a person that is not the holder of the instrument.
e. Bothan indorsement made by a person that is not the holder of the instrument andone
that makes the signer liable on the instrument as an indorser.
“Dissolution of a partnership and “termination of a partnership are synonymous.
a. True
b. False
Rules for the distribution of property in a situation involving intestate succession:
a. do not apply to property held in joint tenancy.
b. apply where the testator has failed to name an administrator.
c. prevent disposition of property by a valid will.
d. have no application to real estate owned by the decedent.
The duty of care exercised by a collecting bank in handling an item transferred to it for
collection does not include:
a. taking care in presenting the item.
b. that it must act within a reasonable time after receipt of the bank item.
c. taking care in routing.
d. taking care in selecting intermediary banks.
e. All of these are duties of care of collecting banks.
a. What was the common law rule with respect to consumer transactions? How has this
rule been changed by recent statutory enactments?
b. Why do you think there were so many consumer protection statutes passed in the last
fifty years?
An example of the “course of dealing” concept that courts will use in interpreting a
contract under the UCC would be:
a. Steven and Michelle have been involved in contracts together for over 5 years.
Steven maintains the sign for Michelle’s restaurant. Each time Steven sees the sign
needs repair, he fixes it without need of express consent from Michelle. Michelle has
always paid the bill promptly.
b. Temaco, Superior Oil, and AllBig, are the largest national oil companies in the
country. In each refinery, orders are placed at the beginning of each quarter for priority
delivery to distributors.
c. Bob sees an ad in the local paper for heritage flower seeds sold by Mel. He calls Mel
and is so excited by his find that he orders a quantity of the seeds to be shipped as soon
as possible but does not inquire as to price. Mel sends him the seeds and the invoice.
d. None of the above.
Under the civil law system, adversaries initiate and conduct litigation.
a. True
b. False
Under copyright law, the doctrine of works for hire states that:
a. if an employee prepares a work within the scope of her employment, her employer is
considered the author of the work.
b. if an employee prepares a work within the scope of her work, the employee is
considered the author of the work for copyright purposes.
c. if the work is specially ordered or commissioned, it is always considered, for
copyright purposes, the work of the employer.
d. a person’s original creations, if committed to tangible form, are always considered to
be authored by the actual creator in the law of copyright.
The U.S. Court of Appeals for the Federal Circuit reviews decisions of the Merit
Systems Protection Board, the Patent and Trademark Office, and the U.S. Court of
Veterans Appeals.
a. True
b. False
The power of a gratuitous agent to affect the principal’s relationship with third parties is
the same as that of a paid agent.
a. True
b. False
There are certain transactions that are enforceable without consideration. These include:
a. promises to pay a debt barred by the statute of limitations.
b. a promise to pay a debt that has been discharged in bankruptcy if certain
requirements are met.
c. a new promise to perform a voidable obligation that has not previously been avoided.
d. All of these.
Oswald applied for a loan from Pointe Lenders. Pointes reasonable cost of checking
Oswalds credit will be considered as part of the financing charge when determining
whether Pointes rate of interest exceeds that allowable under the usury statute.
a. True
b. False
Glenna has been charged with arson of a storage building. The prosecutor must prove
Glennas guilt:
a. by a preponderance of the evidence.
b. by the greater weight of the evidence.
c. beyond a reasonable doubt.
d. beyond shadow of a doubt.
A payor bank is under no obligation to its customer to pay an uncertified check that is
more than six months old.
a. True
b. False
Joanne had a paycheck for $94 made out to her. She indorsed it with her name and gave
it to Larry who, in return, agreed to paint her living and dining rooms the next Saturday.
In this case:
a. the check is not negotiable.
b. Larry is not a holder.
c. Larry is not a holder in due course.
d. Larry has given value for the check.
A merchant buyer of goods receives nonconforming goods. The merchant buyer
rightfully rejects and appropriately notifies the seller, but the seller has no agent in the
buyer’s city. The goods are perishable and threaten to decline in value speedily. The
merchant buyer has no further duty to the seller other than to await the seller’s
instructions.
a. True
b. False
Which of the following will terminate an agency coupled with an interest?
a. The death of the principal.
b. The bankruptcy of the principal.
c. The incapacity of the principal.
d. None of these will terminate such an agency.
By law, all apartment buildings in the state where Mary lives must have smoke alarms
in the ceilings. Mary suffers smoke inhalation because the smoke alarm in her
apartment building was not yet installed. To win a negligence action against the
building owner, Mary would have to prove:
a. a duty existed toward her.
b. a breach of that duty.
c. injury and causation.
d. All of these.
Much of the law of partnership is the law of agency.
a. True
b. False
A novation is an agreement between two parties to have one substitute for the other in a
contract.
a. True
b. False
One way of keeping a trade secret is to obtain a patent on it.
a. True
b. False
Vicki, a bookkeeper for Emilio Enterprises, steals some of the checks she is supposed to
post to her employers account. She forges her employers indorsement. The indorsement
is:
a. effective as the employers indorsement because Vickis duties included processing the
checks.
b. effective as the employers indorsement because of the shelter rule.
c. not effective as the employers indorsement since Vicki was an impostor.
d. not effective as the employers indorsement because an unauthorized signature
necessary to negotiation is inoperative.
The contractual liability of the principal may depend upon whether the principal is
disclosed, partially disclosed, or undisclosed.
a. True
b. False
Peterson, an American exporter, sells lumber to a Japanese importer, using a
documentary letter of credit. Typically in this situation, the correspondent bank will be
in Japan.
a. True
b. False
The U.S. Court of Appeals for the Federal Circuit reviews decisions of which of the
following?
a. United States Court of International Trade.
b. Tax Court.
c. Bankruptcy Courts.
d. All of these.
Ed buys a car from a friend “as is.” The friend tells him, “In my opinion, this car is in
excellent mechanical condition.” The friend has made an express warranty.
a. True
b. False
Would an instrument containing the following language be negotiable? “Harold T.
Stone, as President, hereby promises to pay $12,348 to the order of Joe Jones Furniture
for office equipment for Redtyn Corporation, payable from its corporate assets.
(Signed) Harold T. Stone as President, Redtyn Corporation.”
a. No, because the promise refers to another contract.
b. No, because its payment is limited to a particular fund.
c. Yes, because Redtyn is a business entity.
d. Yes, because it meets all the requirements of negotiability.
A sale of substantially all of the assets of a corporation that is in the ordinary course of
business of the corporation will not require shareholder approval.
a. True
b. False
The “rule of reason” requires the courts to balance the anticompetitive effects of
behavior in restraint of trade with its positive effects on competition.
a. True
b. False
Gerhardt is the president of the Pacer Bicycle Company. He also serves as a director of
the Flexible Tire Company. It occurs to Gerhardt that both companies could benefit
from a contract in which Flexible agrees to supply Pacer with tires for its bicycles. If
Gerhardt wishes to negotiate a contract between Pacer and Flexible, which of the
following is correct?
a. The contract will be void as a conflict of interest.
b. Under the RMBCA, the contract is permitted if it is fair and reasonable to both
corporations, or Gerhardt fully discloses all information relating to the transaction and
the contract is approved by either the board of disinterested directors or the
shareholders.
c. The contract is a clear conflict of interest and will be avoidable by either company
even with disclosure.
d. Both the contract will be void as a conflict of interestand the contract is a clear
conflict of interest and will be avoidable by either company even with disclosure.
Myrick owns 50 shares of stock in Richley Corp., which has a total of one thousand
shares outstanding. If Richley decides to issue one thousand additional shares of stock
and Myrick has preemptive rights, Myrick will be offered one hundred shares of the
newly issued stock.
a. True
b. False
In which of the following ways do debt and equity securities necessarily differ?
a. Ownership interest.
b. Voting rights.
c. Redeemability.
d. Convertibility.
If a Middle Eastern culture and the American culture differ as to the morality of a
particular action, under ethical relativism:
a. both cultures are correct.
b. the action should be assessed to determine whether the action produces more net
pleasure compared with net pain.
c. a cost-benefit analysis should be conducted to determine the relative economic
efficiency of the action.
d. the action should be viewed through a “veil of ignorance to determine whether it is
ethical.