Which of the following is true regarding the liability of an accommodation party?
A. As a maker, an accommodation party has primary liability; but, as an endorser, the
party has secondary liability.
B. An accommodation party has primary liability both as a maker and as an endorser.
C. An accommodation party has secondary liability both as a maker and as an endorser.
D. An accommodation party has primary liability as either a maker or endorser only if
all other parties to the instrument have filed bankruptcy.
E. An accommodation party has primary liability as a maker only if all other parties
have filed bankruptcy, and secondary liability in any other case regardless of whether
the accommodation party is the maker or endorser.
Which title of the United States Code contains the Bankruptcy Code?
A. Title 9
B. Title 11
C. Title 7
D. Title 15
E. Title 34
Which of the following must occur for a drawer to become liable on an instrument?
A. The holder of the instrument must present the instrument in a proper and timely
fashion.
B. The instrument must be dishonored.
C. Notice of the dishonor must be given to the drawer.
D. The holder of the instrument must present the instrument in a proper and timely
fashion, the instrument must be dishonored, and notice of the dishonor must be given to
the drawer.
E. The holder of the instrument must present the instrument in a proper and timely
fashion and the instrument must be dishonored, but there is no requirement of notice of
dishonor since the injured party may proceed directly to court.
With a simple delivery contract in which the seller is a merchant, which party sustains a
loss if, through no fault of either party, the goods are destroyed through fire prior to
delivery?
A. The seller
B. The buyer
C. Both the buyer and seller with the loss being proportioned 50% to the buyer and 50%
to the seller
D. Both the buyer and seller with the loss being proportioned 75% to the buyer and
25% to the seller
E. Both the buyer and seller with the loss being proportioned 25% to the buyer and 75%
to the seller
A(n) ______ trust is an equitable trust imposed on one who wrongfully obtains or holds
legal right to property he or she should not possess.
A. resolute
B. actual
C. constructive
D. defined
E. absolute
How can a buyer waive implied and express warranties?
A. By failing to examine goods for which an express warranty was created by a sample
or model.
B. By failing to comply with the seller’s request to inspect the goods.
C. By failing to examine goods for which an express warranty was created by a sample
or model, and also by failing to comply with the seller’s request to inspect the goods.
D. By failing to require that warranties be given in writing and also by failing to comply
with the seller’s request to inspect the goods.
E. None of these. A buyer may not waive both implied and express warranties.
Presidential Profits. Linda was president of a publicly traded tractor company, Tough
Tractors. Linda became aware that stock in her company would likely increase
significantly in value because her company had a contract to purchase the assets of
Rough Tractors. The boards of both companies wanted the information kept
confidential until the purchase was complete and a news release was made. Before the
news was made public, Linda immediately purchased a significant number of shares in
Tough Tractors. Linda also told her friend Frank about the contract to purchase assets.
Frank, who knew that the information was not public, told his brother, George. Frank
and George purchased a number of shares of stock in Tough Tractors prior to any public
announcement of the sale. After the public announce was made and the purchase of
assets went through, Linda, George and Frank, all sold their shares in Tough Tractors
and made a nice profit. For which of the following is Linda liable?
A. Her own profits only.
B. Her profits and those of Frank only.
C. Her profits, the profits of Frank, and also the profits of George.
D. Her profits only plus a 10% penalty.
E. Nothing because she did nothing illegal.
If a negotiable instrument is payable to whoever possesses the instrument, then it is a(n)
______ instrument.
A. demand
B. order
C. transactional
D. bearer
E. payor
Which of the following are debts incurred in an initial contract?
A. Secondary obligations
B. Primary obligations
C. Secondary promises
D. Collateral promises
E. Suretyship promises
Which of the following is false regarding written contracts?
A. Disputes are easier to settle when contractual terms are solidified in writing.
B. The moment of writing allows both parties to reconsider terms and ensure what they
desire.
C. In general, written contracts aid in the conduct of smooth business contracts.
D. The idea of requiring a writing comes from an English Act.
E. All contracts must be in writing in order to be enforced.
A party who claims that he or she could not understand contractual terms because of
tiny, hard-to-read print on the back of an agreement and the excessive use of legalese is
referring to which of the following?
A. Substantive unconscionability
B. Adhesion conscionability
C. Procedural unconscionability
D. Exculpatory clauses
E. An in pari delicto agreement
Lottery Winnings. Frank, a hypochondriac who was also very compulsive, was having
minor surgery to repair a bone spur on his foot. He had just purchased a lottery ticket
for a chance at the grand prize of $30,000,000. Frank’s girlfriend, Bubbles, went with
him to the hospital. While in the waiting room, Frank said to her, “Bubbles, I may not
make it out of this bone spur surgery. Take my lottery ticket. If I don’t make it, I hope
you win and live it up, but please don’t get another boyfriend.” Bubbles replied, “I could
never be happy without you.” A nurse saw and heard the whole exchange. Frank came
out of the surgery just fine but with a sore foot. While he was recuperating, that
evening, Bubbles watched the lottery drawing and discovered that Frank’s ticket was
indeed the winning ticket. She immediately moved out and collected the winnings.
Frank saw her on television with her new boyfriend, George. She appeared to be very
happy. He checked the numbers and discovered that she won off of his ticket. Frank
says that the lottery money is his. Which of the following describes the type of gift at
issue?
A. A gift causa mortis
B. A gift inter vivos
C. A gift inter mortis
D. A gift causa vivos
E. A donative gift
Which of the following is true regarding trade-secret protection?
A. A trade secret is protected from unlawful appropriation by competitors as long as it
is kept secret and consists of elements not generally known in the trade.
B. A trade secret is protected from unlawful appropriation by competitors for ten years
so long as no competitor gains access to the secret through lawful means.
C. A trade secret is protected from unlawful appropriation by competitors for twenty
years so long as no competitor gains access to the secret through lawful or unlawful
means.
D. A trade secret is protected from unlawful appropriation by competitors for thirty
years.
E. A trade secret is protected from unlawful appropriation by competitors for seventy
years.
Which of the following refers to the basic fairness of laws that may deprive an
individual of her life, liberty, or property?
A. Procedural due process
B. Substantive due process
C. Independent due process
D. The prohibition against taking
E. Both procedural and substantive due process
Community Fair. Craig and Melinda are searching for a one-time business opportunity
that will enable them to make a sufficient amount of cash to take a really great vacation
to Galapagos. They live in a rather small rural community that has not, to date, had a
community fair. Craig and Melinda decide to sponsor a fair on a weekend in October
and to arrange for exhibits and awards, beauty contests, pie eating contests, food
vendors, and amusement rides. The profit to Craig and Melinda will come from ticket
sales and from charges to food vendors for the privilege of setting up shop. Apart from
some minor skirmishes between Craig and Melinda regarding management rights,
preparations go fairly well. When the weekend of the fair arrives, things initially go
fairly smoothly. Unfortunately, however, one of the beauty contestants slips on the
runway. An argument broke out during the pie eating contests resulting in angry
contestants throwing pies and injuring spectators. Finally, an elderly lady, who was
angry because she did not win the prize for the best honey, jabbed the volunteer judge
with her cane. All injured parties threaten to sue Craig and Melinda. Craig tells Melinda
that she should bear the larger percentage of any damages because the idea for the fair
was initially hers, and she obtained all necessary permits. Melinda, on the other hand,
tells Craig that he should be wholly responsible for any damages because he was put in
charge of all competitions. They can reach no agreement regarding winding up the
project and splitting the meager profits, and angrily go their separate ways with no
resolution. As she is leaving, Melinda shouts to Craig that as her agent he should have
done a better job with security. Which of the following is true regarding management
rights in regard to the project?
A. Unless an agreement gives one party greater management responsibilities, Craig and
Melinda would share equal management for the task for which they have come
together.
B. For this type of project, generally state law requires that responsibilities of
management be specifically assigned in writing to one of the parties.
C. For this type of project, generally state law requires that responsibilities of
management be specifically assigned to one of the parties; but the assignment may be
oral.
D. In the absence of an agreement between the parties, the party who filed for the
business license for the project is charged with management responsibilities.
E. Regardless of any agreement existing between the parties, the party who filed for the
business license for the project is charged with management responsibilities.
Assume a plaintiff files a case in state court that could also have been filed in federal
court. Does the defendant have any choice in the matter?
A. The defendant has no choice, and the case will stay in state court.
B. The defendant can have the case moved to federal court only if federal question
jurisdiction is involved.
C. The defendant can have the case moved to federal court only if the state trial court
judge grants permission.
D. The defendant can have the case moved to federal court only if the defendant pays
the plaintiff’s filing expenses in state court.
E. The defendant has a right to remove the case to federal court.
An ownership interest in which the holder has the right to possess the property until his
or her death is considered a ___________.
A. conditional estate
B. life estate
C. leasehold estate
D. future interest
E. fee simple absolute
If a licensing statute is intended to protect the public’s health, safety, and welfare, an
agreement with an unlicensed professional is typically deemed _____.
A. executed
B. enforceable without a fine
C. illegal and unenforceable
D. enforceable but with a fine
E. usurious
What does the protection against “double jeopardy” mean?
A. That the government cannot try a person more than once for the same crime.
B. That the government cannot try a person more than twice for the same crime.
C. That the government must have double proof to prosecute a person twice for the
same crime.
D. That the government must show that at least two people were injured by the
defendant in order to justify trying the defendant twice for the same crime.
E. That the government may impose a double sentence on a repeat offender in order to
protect the public.
Constance asks Kathy if Kathy will sell her used business book for $50. What is the
status of the negotiations?
A. No offer has been made.
B. An offer has been made, but it may be revoked.
C. An offer has been made that may not be revoked.
D. A contract has been entered into.
E. A contract has been entered into, but it may be set-aside at the option of either party.
Under which test may a court presume that an individual is abusing the bankruptcy
provisions of Chapter 7 when an individual’s debt is primarily consumer debt and the
individual’s income is above the median income in his or her state?
A. The means test
B. The assets test
C. The median test
D. The liquidation test
E. The bankruptcy test
State incorporation statutes typically grant _______________________ to corporations.
A. the power of perpetual existence
B. the power to sue and be sued in the corporation’s name
C. the power to make charitable donations
D. the power of perpetual existence, the power to sue and be sued in the corporation’s
name, and the power to make charitable donations
E. the power of perpetual existence and the power to sue and be sued in the
corporation’s name, but not the power to make charitable donations
Which of the following refers to special relationships in which one person has taken
advantage of his or her dominant position in a relationship to unduly persuade the other
person?
A. Fraudulent misrepresentation
B. Undue influence
C. Pressing dominance
D. Pressing persuasion
E. Relationship dominance
Which of the following is true under the UCC regarding checks marked “paid-in-full”?
A. If a business inadvertently cashes such a check, the business has 30 days from the
date it cashed that check to offer repayment in the same amount to the debtor and avoid
an accord and satisfaction.
B. If a business inadvertently cashes such a check, the business has 60 days from the
date it cashed that check to offer repayment in the same amount to the debtor and avoid
an accord and satisfaction.
C. If a business inadvertently cashes such a check, the business has 90 days from the
date it cashed that check to offer repayment in the same amount to the debtor and avoid
an accord and satisfaction.
D. If a business inadvertently cashes such a check, the business has 120 days from the
date it cashed that check to offer repayment in the same amount to the debtor and avoid
an accord and satisfaction.
E. The business has no recourse, and the debt is deemed discharged and satisfied.
What type of agreement do the parties have when the sale itself is contingent on
approval?
A. A transferable contract
B. An unapproved contract
C. An average delivery contract
D. A conditional sales contract
E. A goods-in-transfer contract
To stop a competitor form using a trade secret, the plaintiff must prove that a trade
secret actually existed, that the defendant acquired the trade secret unlawfully and
___________.
A. it is the plaintiff’s sole trade secret
B. the inventor successfully patented the trade secret
C. the defendant published the trade secret
D. the defendant used the trade secret without the plaintiff’s permission
E. the plaintiff had the trade secret for less than 20 years
Which of the following have all their terms clearly set forth in either written or spoken
words?
A. Implied contracts
B. Express contracts
C. Liquidated contracts
D. Bilateral contracts
E. Unilateral contracts
While crossing the street, Bobby does not go to a crosswalk but proceeds to illegally
cross the street without even checking to see if any vehicles are coming. Slick sees
Bobby in the street, notices that he is not in the crosswalk, and proceeds to hit Bobby
with his vehicle because he believes that Bobby should be taught a lesson about how to
cross the street. Slick does slow down somewhat and only causes Bobby some
significant bruising, but Bobby is angry and sues. Which of the following is most likely
to happen in a contributory negligence jurisdiction?
A. Slick will not be held liable because Bobby was contributorily negligent.
B. Bobby will be able to recover despite proof of contributory negligence on his part
because Slick had a final clear opportunity to avoid the action that injured Bobby.
C. Bobby will win because of comparative negligence.
D. Slick will win because of the assumption of risk doctrine.
E. Bobby will lose because Slick, at least, reduced his speed.
The party ordered to pay on a draft is the ____________________.
A. drawer
B. drawee
C. payee
D. draftor
E. draftee
What do the initials ALJ represent in the administrative law arena?
A. Administrative Legal Journal
B. Agency Legal Jargon
C. Administrative Law Judge
D. Agency Legal Judge
E. Agency Law Jurisprudence
Which of the following is true regarding the liability in tort of employers for the actions
of employees and independent contractors?
A. Employers are generally liable in tort for the actions of their employees, while they
are generally not liable for the actions of independent contractors.
B. Employers are generally liable in tort for the actions of independent contractors,
while they are generally not liable for the actions of employees.
C. Employers are not generally liable in tort for the actions of independent contractors
or for the actions of employees.
D. Employers are generally liable in tort for the actions of independent contractors and
also for the actions of employees.
E. Employers are generally liable in tort for the actions of independent contractors and
the actions of employees, but only if the employer has agreed to be liable in a written
contract with the employee or independent contractor.
_____ is a franchise in which the franchisor manufactures a product and licenses a
dealer to sell the product in an exclusive territory.
A. Distributorship
B. Manufacturing arrangement
C. Chain-style business operation
D. Approved business franchise
E. Acknowledged standards operation
Susie Smith signed a note agreeing to pay, “Annie Greene, Mary Hodge,” $1,000. The
payment was for painting her house. An issue with the note was that it spelled Annie’s
last name, “Greene,” whereas Annie spells it simply, “Green.” Annie and Mary had a
disagreement regarding how to split up the funds for painting the house. Annie
proceeded to sign the note on the back, “Annie Green,” and presented it to Bill Brown
to satisfy a debt that she owed him. Bill Brown endorsed the note on the back and took
it to the bank for payment. Mary is unhappy because she did not obtain any of the funds
and stated that Annie could not legally endorse the instrument because it misspelled her
name and also because Mary did sign it. Which of the following is true regarding
Mary’s claim that the endorsement by Annie was illegal because the note misspelled
Annie’s name?
A. Mary is correct.
B. Mary is correct, but only because Annie signed the note, “Green,” instead of
“Greene,” as such was on the note.
C. Mary is correct, but only because two payees are listed.
D. Mary is incorrect.
E. Mary is incorrect unless she can prove that Susie intentionally and purposefully
spelled the name wrong to prevent negotiation.
Assuming a buyer that is insolvent has breached a contract by not paying for goods that
are in transit, which of the following may occur?
A. The carrier may stop delivery on the entire shipment.
B. The carrier may stop delivery only if the quantity shipped is a large shipment.
C. The carrier may stop delivery only if a signed writing exists by which the buyer
agreed to the remedy of stopping shipment.
D. The carrier may stop delivery only if ordered to do so by the bankruptcy judge.
E. The carrier may not stop delivery under any circumstances.
Which of the following are laws holding that people in peril who receive voluntary aid
from others cannot hold those offering aid liable for negligence?
A. Good Samaritan statutes.
B. Aid to others statutes.
C. Rescue statutes.
D. Freedom statutes.
E. All clear statutes.