When contract terms prohibiting the assignment of rights exist, most courts will:
a. strictly construe them.
b. interpret a general term prohibiting assignments as rendering any assignment
ineffective.
c. award the obligor no right to damages for breach of a general term prohibiting
assignments.
d. All of the above.
Robbery can be “aggravated robbery” under which of the following circumstances?
a. The robber intends to kill if faced with resistance.
b. Serious bodily injury to the victim occurs.
c. The crime is committed by two persons rather than one person.
d. All of the above.
e. None of the above.
Custom Sales and Rentals uses a four-page contract with important contract terms
buried in the fine print. This is an example of:
a. procedural unconscionability.
b. a reasonable, legal business practice.
c. a “Blue law.”
d. substantive unconscionability.
The Fair Credit Reporting Act has to do with:
a. bills that are incorrectly added.
b. credit checks done by potential lenders.
c. reports made by credit agencies.
d. All of the above.
e. Two of the above, (b) and (c).
A creditor may petition the court to judicially dissolve a corporation if he has an
unsatisfied judgment against the corporation and:
a. the corporation is insolvent.
b. the creditor will become insolvent if not paid.
c. the debt is over $5,000.
d. All of the above.
Which of the following is true about the European Union (EU)?
a. The EU is the predecessor to the European Community.
b. An objective of the EU is to promote economic and social progress and to establish
an economic and monetary union among member nations.
c. The EU has officially admitted Japan to full membership.
d. The EU has ten full member nations and almost forty million citizens.
Which of the following will destroy negotiability?
a. Antedating a check
b. Making the right to payment subject to the terms of another agreement
c. Marking a check payable only out of the proceeds of a particular sale
d. Writing a check on notebook paper
e. All of the above.
Which of the following is both a prejudgment and a postjudgment remedy for a
creditor?
a. Writ of execution
b. Garnishment
c. Attachment
d. Supplementary proceeding
In order for there to be a violation of Section 2 of the Sherman Act, in addition to
monopoly power, the courts must find:
a. unfair conduct.
b. concerted action.
c. competitive behavior.
d. economic advantage.
What reported warranty problems caused Congress to enact the Magnuson-Moss
Warranty Act?
a. Most warranties were not understandable.
b. Most warrantors disclaimed implied warranties.
c. Most warranties were unfair.
d. The warrantors did not live up to their warranties.
e. All of the above.
The holder of legal title to the property in a trust is the:
a. grantor.
b. settlor.
c. beneficiary.
d. trustee.
The Star General Partnership had assets worth $34,000 after liquidation. Frank, Gene,
and Hank, equal partners, each contributed $3,000 into the capital pool at the inception
of the business. Gene later loaned the business $5,000. They owe $23,000 to creditors.
What will Gene get in distribution, assuming there is no agreement on the distribution
of profits?
a. $5,000
b. $7,000
c. $8,000
d. $11,000
The return to the aggrieved party of the consideration, or its value, which he gave to the
other party is:
a. injunction.
b. restitution.
c. specific performance.
d. reformation.
An action for negligence consists of five elements, each of which the plaintiff must
prove. These elements include:
a. harm.
b. res ipsa loquitur.
c. a reasonable person.
d. All of the above.
The UCC does not cover:
a. transfer of negotiable instruments.
b. investment securities.
c. sales of goods.
d. sales of copyrights.
Which of the following is a special indorsement?
a. “John Doe”
b. “Without recourse, John Doe”
c. “Pay to Richard Roe, John Doe”
d. “John Doe, for collection only”
Types of securities that are exempt from registration under the federal securities laws
include:
a. securities of domestic banks.
b. securities of a charitable organization.
c. bonds issued by a city.
d. All of the above are exempt.
Which of the following is true with regard to the federal Electronic Fund Transfer Act?
a. It is primarily a disclosure statute.
b. It gives the same protections to customers that are found in Article 4.
c. It limits a customer’s liability for unauthorized transfers to $50 if notification
requirements are met.
d. Both (a) and (c).
Contracts that are implied in law:
a. are obligations imposed by law on grounds of justice and equity.
b. are intended to prevent unjust enrichment.
c. do not rest upon the assent of the contracting parties.
d. All of the above.
Blevins, Inc. calls the Widget Corporation of America to order 400 widgets at $2 a
widget. Widget accepts the oral order and then sends out an order confirmation form,
with the pre-printed name Widget Corporation of America on the top of the form. The
form states that an order has been received for “300” widgets and that it will be filled
promptly. In this case:
a. the order acceptance form fails to meet the writing requirement in the UCC, because
it isn’t signed.
b. Blevins can enforce the contract for 300 widgets, but not for 400 widgets.
c. if Blevins signs and returns the form, it will be able to sue for the extra 100 widgets
later.
d. the contract is enforceable for 400 widgets, because it has been partially performed.
Kline, Finkel, and Martinez have been partners for years, but a court is now dividing
the assets and liabilities of the partnership separate from the assets and liabilities of the
individual partners. This process is called:
a. marshaling assets.
b. liquidation.
c. dissolution of the partnership.
d. winding up.
Bankruptcy under Chapter 13 differs from Chapter 11 in that:
a. an individual cannot use Chapter 11.
b. a corporation cannot use Chapter 13.
c. Chapter 11 cannot be instituted by involuntary petition.
d. Chapter 13 requires unsecured debts to be less than $100,000.
e. Two of the above, (c) and (d).
An express trust is a trust:
a. established by law through the courts when the parties’ conduct seems to warrant the
creation of a trust.
b. established by voluntary action.
c. that a written document, oral statements, or the conduct of the settlor may manifest.
d. All of the above.
e. (b) and (c).
If a statute establishing a reasonable person standard of conduct is found to be
applicable to a fact situation, then the courts will hold that an unexcused violation of
that statute which causes an injury to another is:
a. strict liability.
b. res ipsa loquitur.
c. negligence per se.
d. assumption of the risk.
Property law protects existing ownership of goods. A principal belief underlying this
policy is:
a. a person should not be required to retain possession at all times of all the goods he
owns in order to maintain his ownership of them.
b. good faith purchasers for value must be protected in certain circumstances to
encourage and make safe the good faith acquisitions of goods.
c. there must not be conflicts among underlying beliefs.
d. All of the above.
e. Both (a) and (b).
If a holder presents a note for payment to the maker, which one of the following
warranties is given?
a. All indorsements are genuine.
b. All signatures are genuine.
c. Holder has no knowledge that any indorsements are forged.
d. Holder is entitled to enforce the note or is authorized to obtain payment on behalf of
the person entitled to enforce the note.
An unqualified indorser:
a. promises he will pay the instrument according to its terms at the time of his
indorsement to the holder or to any subsequent indorser who paid it.
b. guarantees payment of the instrument in all cases.
c. promises to pay the instrument according to its terms at the time of its presentment.
d. All of the above.
Classes of unsecured claims that have a priority must be paid before:
a. the debtor’s attorney.
b. secured creditors.
c. any distribution is made to claims of lesser rank.
d. All of the above.
The ____ is empowered to issue industry-wide safety standards for consumer products.
a. UCCC
b. RESPA
c. FCCPA
d. CPSC
If Sam writes a check drawn on his account at First Bank to Towers University to pay
his tuition:
a. Sam is the drawer.
b. the university is the drawee.
c. the bank is the payee.
d. Sam is the maker.
Under the RMBCA, if the charter states that “the corporation elects to have preemptive
rights,” shareholders have preemptive rights with respect to:
a. shares issued as compensation to directors, officers, and employees.
b. shares issued within six months of incorporation.
c. shares issued for consideration other than money.
d. unissued shares.
e. All of the above.
A valid will must be witnessed. Which of the following statements about witnesses is
correct?
a. Most states require only one witness to a will.
b. The witnesses must see the testator write the will.
c. The witnesses must sign the will.
d. Under the Uniform Probate Code, witnesses lose any bequests to them in a will they
witness.
Which of the following involves a creditor beneficiary relationship?
a. A contract where the insured names a bank with which he has a loan as the
beneficiary of a life insurance policy
b. A contract between an employer and a union representing the employees, which
contract is made for the benefit of the employees
c. A contract between the owner of a building and the contractor stating that the
contractor will pay his employees at a stated rate
d. A contract between a governmental unit and business for services to be rendered to
area citizens
Lemon laws are generally understood to be laws that:
a. apply to the safety of food additives for fruits and vegetables.
b. are federal legislation designed specifically to protect state consumers from
fraudulent car manufacturers.
c. are state laws that attempt to provide new car purchasers with rights that are similar
to full warranties under the Magnuson-Moss Act.
d. are interstate compacts to uniformly deal with lemon cars.
Commencing a voluntary case by filing a petition constitutes an automatic order for
relief.
The certificate of limited partnership need not be amended if a new general partner is
admitted.
The law of partnership differs greatly from the law of agency.
Creation of a limited partnership does not require more formalities than formation of a
general partnership.
Upon rightful rejection or justifiable revocation of acceptance, the buyer loses all
property interest in the goods.
Bill has had a problem with vandalism at his business. He rigs up a spring gun at the
entryway to his store, so that any after-hours intruder will be shot upon entry. Bill may
legally use this deadly force to protect his business.
The UCC permits a buyer under a contract of sale to agree as part of the contract that he
will not assert against an assignee any claim or defense that the buyer may have against
the seller under certain circumstances. Identify these circumstances, and discuss the
reason the UCC permits such a provision and how the FTC deals with such waiver of
defense provisions.
The Action Corporation and the Braker Corporation combine to form the Cable
Corporation. This is a merger.
The Model Business Corporation Act has been adopted by all of the states in the United
States to make state incorporation statutes uniform throughout the United States.
Bearer paper is negotiable.
A bailee is required to return the identical goods bailed, in the same condition as when
the bailee received them.
If a seller buries important terms of its sales agreement in fine print, this could
constitute procedural unconscionability, which could result in a court’s refusal to
enforce the entire sales contract or at least the part the court finds unconscionable.
A buyer in the ordinary course of business takes collateral free of a perfected security
interest created by the buyer’s seller.
A profit is not usually exclusive to the owner of that right.
As a general rule, a person may do through an agent whatever business activity he may
accomplish personally.
Both the Code and the Restatement provide that, unless the offer or circumstances
indicate otherwise, an authorized means of accepting an offer is any reasonable means
of communication.
An instrument which is ambiguous as to whether it is a draft or note, such as, “To A: On
demand I promise to pay $200 to the order of B. Signed, C” must be treated as a note
and be presented to C for payment.
If the creditor refuses to accept tender of payment by the principal debtor, the surety
remains liable until the creditor wants payment.