The United Nations is governed by the General Assembly, the Security Council, and the
Secretariat.
The mailbox rule provides that an acceptance sent through the mail is effective only
when it reaches the offeror’s mailbox.
Under the corporate citizenship theory of the social responsibility of business, a
business has multiple obligations, but these obligations are only to those who have
some direct interest or connection with the business.
If a contract is void, neither party is obligated to perform the contract, and neither party
can enforce the contract.
A state that enacts its own bankruptcy exemptions may not give debtors the option of
choosing between federal and state exemptions.
Law serves the functions both to facilitate orderly change and to maintain the status
quo.
If there is no room on an instrument for an indorsement, the indorsement may be
written on a separate piece of paper called an allonge.
As long as other requirements are met, a writing may satisfy the Statute of Frauds even
if it is on a paper towel.
Warranties may be either expressly stated or implied by law.
Under the ULLCA, the articles of organization of a limited liability company must set
forth the name and address of the initial agent for service of process.
An agent of a corporation who signs a negotiable instrument on behalf of a corporation
is always personally liable.
A seller has breached the contract if they deliver nonconforming goods.
“Par value” is usually an accurate measure of a stock’s market value when the stock is
originally issued.
Genuineness of assent means that the parties apparently agree to the contract.
The United Nations is headquartered in Geneva, Switzerland.
Many states have enacted recording statutes that require a mortgage or deed of trust to
be recorded in the county recorder’s office in the county in which the real property is
located.
Equitable remedies are designed to supplement all legal remedies available to a
plaintiff.
Click-wrap agreements provide a fast but expensive way for licensors to mass market
their software to users without requiring paper contracts or physical signatures.
Virtually all private employers are within the scope of the Occupational Safety and
Health Act.
The use of a living trust reduces estate taxes more than a will.
Max has operated as a partnership for several years with Mabel, his wife. His daughter
has just taken a business law class, where she learned about limited liability companies,
and she suggests to Max that he convert to a limited liability company. If Mabel agrees,
the partnership may convert to a limited liability company by delivering articles of
organization to the Secretary of State.
Because the Consumer Product Safety Commission (CPSC) regulates potentially
dangerous products, it issues product safety standards for consumer products that pose
unreasonable risk of injury.
A breach of a contract cannot occur until the time for performance of the duty in
question.
There is no dollar-amount restriction on “federal question” cases that can be brought in
federal court.
With regard to a life insurance policy, the “insured” receives the insurance proceeds
when the person whose life is the subject of the policy dies.
Res ipsa loquitur means “the thing speaks for itself.”
The Superfund requires the Environmental Protection Agency to rank hazardous waste
sites according to the severity of the risk.
No inference of the existence of a general partnership is drawn if profits are received in
payment of a debt owed to a creditor in installments or otherwise.
Plant life that is severed from the land is considered real property.
In a limited partnership, the partners can agree that all partners have limited liability.
If an audit turns up a suspicious transaction or entry, the accountant is under a duty to
investigate it and to inform the client of the results of the investigation.
Parties to a contract must have contractual capacity.
An enforceable liquidated damages clause is a non-exclusive remedy.
Under what circumstances can a dissenting group of shareholders recover from the
corporation the costs it incurs in a proxy contest?
A) under all circumstances
B) in all proxy contests the dissenting group wins
C) in a proxy contest involving an issue of policy, even if the dissenting group does not
win the proxy contest
D) in all proxy contests involving issues of policy, and in the case of contests
concerning personal matters, if the dissenting group wins
E) in a proxy contest involving an issue of policy that the dissenting group wins, but
never for a contest involving a personal issue
John borrowed $20,000 from a bank, secured by his car. John allowed his insurance to
lapse when the car was destroyed in a hurricane. John’s only other assets are a boat that
has no security interests associated with it, located in the garage at the house he rents,
and a checking account at another bank with $600 in it. The bank sues John for
payment of the $18,000 remaining balance on the car loan, and obtains a judgment
against John for that amount. If John does not pay this judgment, what can the bank do
at this point?
A) nothing, because the collateral has been destroyed
B) obtain a writ of garnishment on the boat and the bank account
C) have the sheriff attach the property
D) obtain a writ of execution on the boat, and a writ of garnishment on the bank
account
E) obtain a writ of garnishment on the boat and the bank account
A private party cannot sue for an injunction to prevent violations of the Consumer
Product Safety Act (CPSA) or of Consumer Product Safety Commission (CPSC) rules
and regulations.
A ________ is a long-term debt security that is secured by some form of collateral.
A) debenture
B) bond
C) note
D) promissory note
E) primogeniture
What is the distinguishing feature of joint tenancy?
A) the right of survivorship
B) the right to pass the interest by will
C) the right to have co-owners in the property
D) that only married couples can own property this way
E) that the interests of both parties terminate upon the death of one of the parties
The reasonable person standard is used to decide whether an express contract exists
under:
A) quasi-contract.
B) the objective theory of contracts.
C) standard offer requirements.
D) the federal guidelines for contract formation.
E) nondisclosure rules.
In connection with an issuance of securities, which of the following would amount to
“conditioning” the market?
A) issuing press releases about normally newsworthy events
B) analyzing the overall stock market in order to determine the price at which to issue
securities
C) distributing a preliminary prospectus
D) issuing press releases that praise the backgrounds, accomplishments and future
promise of key individuals in the company
E) placing “tombstone ads” in financial publications
The Worker Adjustment and Retraining Notification Act exempts an employer from
giving notice of an otherwise-covered layoff or plant closing if:
A) the giving of notice would work an undue hardship on the employer.
B) the employer was seeking capital investment in the business, and notice of the layoff
or closing would have precluded the employer from acquiring the capital.
C) the employees are represented by a union.
D) the employees are not represented by a union.
E) rumors of the closing already existed at the time the notice would have been
required.
An accommodation party may sign an instrument guaranteeing collection rather than
payment of an instrument. In this situation, the accommodation party is ________ liable
on the instrument.
A) primarily
B) secondarily
C) unconditionally
D) never
E) exclusively
Which of the following is true about an offer made that does not contain an expiration
time?
A) It will remain open indefinitely.
B) It can be terminated only by an order of the court.
C) The offeror loses the ability to revoke it.
D) It will expire after the passage of a reasonable period of time.
E) The offeree is unable to make a counteroffer.
When a customer makes a deposit into a bank, a ________ relationship is formed.
A) principal-agent
B) trustee-beneficiary
C) donor-donee
D) creditor-debtor
E) creditor-donor
An equal protection challenge to a statute that treats adults of different ages differently
would be decided under:
A) intermediate scrutiny.
B) majority scrutiny.
C) strict scrutiny.
D) rational basis.
E) limited scrutiny.
Unfair and deceptive trade practices are generally regulated by the:
A) Federal Trade Commission.
B) Food and Drug Administration.
C) Securities and Exchange Commission.
D) Consumer Product Safety Commission.
E) Interstate Commerce Commission.
Jordan is a student at State College. She has been paying her tuition and fees under a
payment plan and made her final payment on May 8th. She has taken and passed her last
final exam required for graduation on May 14th. On May 21st she walked across the
platform during graduation ceremonies. Her diploma was mailed to her on May 23rd
and she received it on May 25th. When is Jordan’s contract with State College
considered executed?
A) May 8th
B) May 14th
C) May 21st
D) May 23rd
E) May 25th
Which of the following is true regarding the liability of the partners in a limited
partnership?
A) Both the limited and general partners have unlimited liability for partnership debts.
B) Neither the limited nor the general partners have unlimited liability for partnership
debts.
C) The limited partners have limited liability and the general partners have unlimited
liability for partnership debts.
D) The limited partners have unlimited liability, and the general partners have limited
liability, for partnership debts.
E) If a corporation is a partner, its shareholders have unlimited liability for partnership
debts.
In a product liability action, the plaintiff typically relies on ________ or ________.
A) contributory negligence; comparative negligence
B) comparative negligence; assumption of the risk
C) contributory negligence; assumption of the risk
D) the traditional tort theory of negligence; the modern tort doctrine of strict liability
E) the traditional tort theory of strict liability; the modern tort doctrine of negligence
If a patent application is filed but a patent has not yet been issued, the applicant usually
places the words ________ on the article.
A) “top secret”
B) “for your eyes only”
C) “conditional patent”
D) “patent pending”
E) “trade secret”
Assume that there is a provision in the Colorado state constitution that is in conflict
with a valid federal statute that was passed by the U.S. Congress and enacted into law.
Which is true?
A) The Colorado constitutional provision will control; the federal statute is invalid.
B) The federal statute will control and make the state constitutional provision invalid.
C) In Colorado, the Colorado constitutional provision will control over the statute
passed by Congress, but the federal statute will apply in the other 49 states.
D) Within Colorado, whichever was passed earlier will control over the other.
E) Within Colorado, whichever was passed later will control over the other.
Which of the following is true regarding the history of corporations?
A) Corporations were first formed in the United States shortly after the United States
gained independence from Great Britain.
B) Corporations were first formed in medieval Europe.
C) Corporations were first formed in Germany in the 1800s.
D) Corporations were first formed in Spain in the1800s.
E) Corporations were first formed in England between 1900 and 1910.
John Locke and Jean-Jacques Rousseau proposed a(n) ________ theory of morality.
A) individual mandate
B) individual conscience
C) moral compass
D) social contract
E) social safety net
Which of the following is not true about the Comprehensive Environmental Response,
Compensation and Liability Act?
A) The Act provides for the creation of a government fund to finance the cleanup of
hazardous waste sites.
B) The sites are ranked according to the severity of the risk, and the highest-ranking
sites are placed on the National Priority List.
C) The Environmental Protection Agency performs all site cleanups, and then recovers
the associated costs from responsible parties.
D) The Environmental Protection Agency can recover the costs of cleanup from the
generator who deposited the wastes.
E) The “Superfund” permits states and private parties who clean up hazardous waste
sites to seek reimbursement from the fund.
Zach’s small bicycle manufacturing company, Peddle Away, is in dire straits. Zach
wishes to merge with the very successful and large bicycle manufacturing company,
Bikes Unlimited. There is concern that the merger will violate Section 7 of the Clayton
Act. What defense would result in the merger being approved, even if it would
otherwise violate Section 7?
A) the “failing company” doctrine
B) the “troubled company” doctrine
C) the ‘small company” doctrine
D) the “fair advantage” doctrine
E) the “economic advantage” doctrine
Which of the following is usually not a point to which the child support obligation
continues, unless specifically agreed to or imposed by the court?
A) until the child reaches the age of majority
B) until the child graduates high school
C) until the child graduates with an undergraduate degree
D) until the child is emancipated
E) child support usually continues until all of the above events have occurred
Which of the following is most likely to be considered a “fixture?”
A) curtains
B) a window-unit air conditioner
C) a television satellite dish mounted on the side of a house by three bolts
D) a centrally-installed air conditioning unit
E) a lamp plugged into the wall
Which of the following statements is true?
A) The number of shares the corporation is authorized to issue is indicated in the
articles of incorporation.
B) A corporation may not repurchase its own shares after they have been issued.
C) A corporation may vote its treasury stock.
D) A corporation must sell all of its authorized stock.
E) Any treasury stock shares acquired by a corporation cannot be reissued.
Under the Securities Exchange Act of 1934 and applicable rules, a shareholder may
submit a resolution to be considered by other shareholders if:
A) the shareholder has owned at least $2,000 worth of shares of the company’s stock or
1 percent of all shares of the company for at least one year.
B) the shareholder has owned at least $3,000 worth of shares of the company’s stock or
2 percent of all shares of the company for at least one year.
C) the shareholder has owned at least $5,000 worth of shares of the company’s stock or
2 percent of all shares of the company for at least six months.
D) the shareholder has owned at least $10,000 worth of shares of the company’s stock
or 2 percent of all shares of the company for at least six months.
E) the shareholder has owned at least $100,000 worth of shares of the company’s stock
or 2 percent of all shares of the company for at least one year.
Regarding a “manager-managed” limited liability company:
A) the manager must be a member.
B) there can only be one manager.
C) a manager must be appointed by a vote of the majority of members.
D) members who are not managers may participate in the management of the business,
but managers have final decision-making authority.
E) a manager has more liability for company debts than does a member.
In order to perfect a security interest by filing, which is true about what must be filed?
A) In all cases, the financing statement must be filed.
B) In all cases, the security agreement must be filed.
C) In all cases, both the financing statement and the security agreement must be filed.
D) In all cases, the financing statement and underlying loan agreement must be filed.
E) In all cases, either the financing statement must be filed, or the security agreement
can be substituted for the financing statement if desired.
The concept of a deficiency judgment applies to:
A) secured debt only.
B) unsecured debt only.
C) both secured and unsecured debt.
D) neither secured nor unsecured debt.
E) loans in default.
Jared needs a fancy sports car. Jared only wants to use the car for three months. Jared
goes to the bank and requests a loan for the sports car. Instead of giving Jared a loan for
the car, the bank tells Jared, “we (the Bank) will purchase the car and you can use it for
three months, so long as you pay us $4,000 a month.” The Bank purchases the sports
car from the manufacturer and then lets Jared use the car, so long as he makes $4,000
each month. Under the UCC, what type of sale or lease is this?
A) an ordinary sale
B) a finance sale
C) a finance lease
D) an ordinary lease
E) a manufacturer sale and lease
What is an accommodation shipment? Would an accommodation shipment be
considered a breach of contract under the common law? How does an accommodation
shipment further the purposes of the UCC.
How should the Internet affect the rules for attachment and perfection of security
interests?
Vince and Jennifer are good friends. In August, 2010, Jennifer borrowed $5,000 from
Vince for tuition and has been paying him in installments. Over the next few months
Vince grew fond of Jennifer and asked her on a date. The date went well, even though
Jennifer repeatedly told Vince that she wanted to stay good friends and no more. Vince,
however, has grown to love her. When she shows up to make her December payment,
Vince not only rips up her payment check but rips up the promissory note evidencing
the debt declaring that he doesn’t want her money and she is now free of the debt. She
thanks him, shakes his hand, and gives him a peck on the cheek then leaves. That
afternoon, Vince goes to a coffee shop and sees Jennifer and Brad in a corner booth
kissing passionately. Vince is infuriated. He goes home and pulls the ripped promissory
note out of the garbage and tapes the forty pieces together. He then e-mails Jennifer
telling her that he expects to be paid on the note. Discuss Vince and Jennifer’s rights and
whether the note is still enforceable and negotiable.
John operates a sailboat charter service in the United States Virgin Islands. He currently
has a fleet of ten boats and would like to have a larger fleet, but he would have to obtain
additional investors in order to do so, which he opposes. John is considering having
investors buy sailboats, which he would maintain and operate as part of his charter
fleet. He would enter into a contract that would sell the boat to an investor, obligate the
investor to pay John a monthly fee for the maintenance of the boat, and share profits
between John and the investor. Discuss whether this investment is a security under the
Securities Act of 1933.
Assume that due to another person’s intentional act, you have been injured. You have
been inconvenienced, experienced pain and suffering, have medical bills and lost
money due to an inability to work for a few weeks. Naturally, you want to be
compensated and at a minimum recover your out of pocket costs. Assume that the
person that harmed you was homeless, had no assets and was out of work. What should
you consider before proceeding with the lawsuit? Would your answer be different if
your assailant was a poor college student?
Why does the law generally place the risk of forgery on the payor bank, yet place the
risk of unauthorized completion on the drawer? What factors would justify a difference
in liability of the bank? What factors would justify a difference in liability of the
drawer?
Why would a buyer ever enter into an arrangement where the buyer assumes the risk of
loss during transport? Is it fair that common carrier’s don’t take any responsibility under
the UCC?
Mary runs a clothing store near a college campus. In the winter, Mary was preparing to
order some T-shirts and shorts for the upcoming summer. She prepared an order on her
stationary for “1,000 T-shirts of assorted sizes, S, M, L and XL, 800 in royal blue, the
other 200 in assorted colors.” For the shorts her order read, “1,000 pairs of shorts,
assorted sizes, approximately equal quantities, of white, black, khaki, and olive.” She
sent the order to the clothing maker, and about a week later received an order
confirmation on their sales order form. She glanced at it and the wording for her order
was the exact same as she had sent in. When she received the merchandise a month
later, there were only 150 royal blue shirts, and the others were various assorted colors.
There were only 50 pairs of white shorts, with the other 950 approximately equal
quantities of the other three colors. Mary looked back at the sales order and noticed a
provision in the fine print that the clothing maker could substitute different colors for
what was ordered. Mary claims that the clothing maker has breached the agreement.
The different colors shouldn’t affect the sales of the shorts, but she ordered the royal
blue shirts because that is the local university’s predominant school color. Discuss
Mary’s situation.
A number of the functions of the law can be viewed as being contradictory. For
example, one function is to maintain the status quo, whereas another is to facilitate
orderly change. What other functions could be in conflict with one another? How can
the law simultaneously have seemingly inconsistent functions?
Brittany runs a store called “Miatas Only” that sells parts and accessories for the
popular Mazda Miata sports car. The store purchases parts and accessories from many
manufacturers, but, as its name indicates, sells parts only for Miatas. The store received
a shipment for a large order from Worldwide Sportscar Accessories late on a Saturday
afternoon. The seller had assured “Miatas Only” that the goods were conforming. After
a quick count of the boxes, the store accepted the shipment. The following week when
stocking the items, the following problems were found with the order:
Some sheepskin seat covers were the wrong color. The store had ordered 50 of these in
four different colors, but all 50 were black. The value of the seat covers was the same
regardless of color.
The store had ordered 100 sets of floor mats with the name “Miata” embossed on them,
but instead received 100 sets embossed with “SLK” that were sized for the
Mercedes-Benz sports car of that name. The Miata mats cost the store $60 per pair and
can be sold for $90, whereas the SLK mats cost $70 and are usually sold for $110.
The store had ordered 100 blankets embossed with “Miata” and received the blankets
ordered, but without “Miata” embossed. The plain blankets cost $10 less and sell for
$10 less.
Assume that nonconformity was not difficult to discover. Discuss what is required for a
buyer to revoke acceptance and whether “Miatas Only” can revoke its acceptance of
these items.
Frank is a jeweler who both sells and repairs jewelry. An elderly woman brought in
several pieces of jewelry to be repaired and left them with Frank. Frank called the
woman with a question about one of the pieces of jewelry. In that conversation they
agreed that Frank would go to the woman’s home to examine and possibly purchase
some of her jewelry. While at her home, Frank stole several pieces of her jewelry. The
following week Frank’s employees sold all of the jewelry that she had left at the store
and all that Frank had stolen. Can the woman get her jewelry back from the persons
who purchased it?
Beginning in about 1990, many credit card issuers began marketing more aggressively
to college students on the basis that they have considerable future earning potential
even though their current income is not very high. Prior to 1990, most credit card
issuers required co-signers, who would typically be the student’s parent. This has led to
far more students incurring excessive debt. This has required some students to work
longer hours while in college and to have more debt-related problems after getting out
of college. Furthermore, employers are increasingly using credit information in the
hiring selection process so that some students’ debt problems adversely affect their
ability to find a job. Evaluate the propriety of these marketing efforts.
Assume Bobby wants to buy a house priced at $150,000. He pays $50,000 down, and
borrows $100,000 from First Bank. On January 2, Bobby gives First Bank a mortgage
on the home for $100,000, but First Bank forgets to record the mortgage until August 1.
On March 1 Bobby obtains a home equity loan of $100,000 from Second Bank. Bobby
does not tell Second Bank that there is another loan outstanding on the house. Second
Bank records a mortgage on the home on March 2. Bobby defaults on both loans and
leaves town. Assuming the home can be sold for $150,000, who would be entitled to
those funds, and why?
Why can an apparent agency be created only through the representations of the
principal, but not those of the apparent agent?
Sam places an advertisement in the newspaper for his Dodge Viper that states, “I hate to
sell it, but high insurance costs force me to sell my 2002 Dodge Viper. The first $45,000
cash takes it.” Betty goes to look at the car and says to Sam, “I’ll give you $42,000 for
it.” Sam then says, “That’s not the deal.” Betty says nothing more and leaves. A couple
of weeks later Betty notices that the ad is still in the paper, so she takes $45,000 cash
over to Sam’s house. He hasn’t sold the car, but says to Betty, “You rejected my offer of
$45,000 so I don’t have to sell it to you for that. You can have it for $47,000.” Is Sam
obligated to sell the car to Betty for $45,000? Give all possible arguments for each
party.
In many cases, an incidental third-party beneficiary suffers a loss that can be directly
traced to a party’s breach of contract. Why are incidental third-party beneficiaries not
able to recover their losses in such situations?