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The word "merchantability" must be mentioned in a disclaimer of an implied warranty
of merchantability.
a. True
b. False
In most, if not all, cases where there is a legal detriment to the promisee, there is also a
legal benefit to the promisor.
a. True
b. False
With regard to uncertainty in a contract that falls within the scope of Article 2, which of
the following is true?
a. Uncertainty will usually make the contract unenforceable.
b. Missing terms cannot be supplied at a later date.
c. Uncertainty as to incidental matters will seldom be fatal as long as the parties intend
to form a contract.
d. Missing terms will cause the contract to be voidable, but the parties will have a
chance to fill them in later.
Preemptive rights are shareholders' rights to purchase a proportionate part of a new
issue of stock.
a. True
b. False
Which of the following does not terminate a trust?
a. Death of the beneficiary
b. The trustee acquires both equitable and legal title to the trust corpus
c. Occurrence of a date established in the trust instrument
d. Fulfillment of the trust purpose
The Freedom of Information Act and the Government in the Sunshine Act are different
names for the same legislation.
a. True
b. False
When does acceptance of an offer to enter into a unilateral contract generally occur?
a. Upon notice of intent to accept by the offeree.
b. Upon full performance by the offeror with the intention of accepting.
c. Upon commencement of performance by the offeree.
d. Upon full performance by the offeree with the intention of accepting.
If the principal debtor defaults, the surety has rights against the principal debtor, third
parties, and cosureties. These rights would include:
a. exoneration.
b. reimbursement.
c. subrogation.
d. All of these.
The constitutional privilege protects the press in a defamation action:
a. in the absence of mistake.
b. when the plaintiff is a public figure or official.
c. from all liability to anyone.
d. in all of these situations.
Once a Chapter 13 plan of reorganization is confirmed, the provisions are binding on
the debtor and all of his creditors.
a. True
b. False
Which of the following is correct regarding the decisions of state trial courts?
a. They are generally not reported.
b. They are reported in regional reports.
c. They are reported in state court reports.
d. They are binding upon higher courts based upon the principle of staredecisis.
Dr. Olson is a board-certified ophthalmologist who constructs some specially designed
examining tables to use in looking at his patient's eyes. The tables are firmly attached to
the floor of the space he rents for his office. If Dr. Olson decides to move his office,
which of the following is correct?
a. The tables are fixtures that cannot be removed.
b. The tables are not fixtures because Dr. Olson installed them.
c. Dr. Olson may remove the tables if they can be removed without materially
damaging the realty.
d. All of these.
The CISG governs contracts for the international sale of goods between parties located
in different nations that have ratified the CISG.
a. True
b. False
The First Amendment guarantee of free speech applies not only to individuals but also
to corporations.
a. True
b. False
Kent loaned Barbara $8,000 and took back a note secured by Barbara's car. If Barbara
files for bankruptcy when the value of the car is $4,500, what is Kent's status? He has:
a. a secured claim for $4,500.
b. an unsecured claim for $8,000.
c. an unsecured claim for $4,500.
d. a secured claim for $8,000.
Presentment for payment is one step necessary to charge an indorser with the obligation
to pay.
a. True
b. False
In 1992, the SEC issued new rules tightening the registration and reporting system for
small business issuers, which increase the cost for such issuers wishing to trade their
securities publicly.
a. True
b. False
Which of the following would be a voidable transfer if made within 90 days of
bankruptcy?
a. An exchange for new value.
b. An enabling security interest perfected within 30 days after the debtor receives
possession of the property.
c. A payment made in the ordinary course of business.
d. A payment made to or for the benefit of a creditor.
Which of the following is characteristic of a common law legal system?
a. It relies heavily on the inquisitorial method for settling disputes.
b. It depends heavily on comprehensive legislative enactments called Codes.
c. It applies the principle of staredecisis.
d. It is based on Roman law.
Ronald Beeb, who lives in Cleveland, receives a mailing from Florida from the
SwampLand Reclamation Project. It states that the Beebs can purchase one-acre sites as
part of a newly planned development of 200 lots located in Leon County, Florida. The
Beebs contact the company and are given a purchase agreement but no additional
information. They sign the purchase agreement and send it back. Then, a week later
they decide they would prefer to winter in either New Zealand or Australia. Can the
Beebs get out of the contract?
Which of the following is a contract with a condition subsequent?
a. Rhonda enters into a contract to buy a new car conditional upon her getting a loan
from her bank.
b. Roger bought a DVD player, but he may return it within ten days and get all of his
money back.
c. Both of these are examples of a condition subsequent.
d. Neither of these is an example of a condition subsequent.
Dividends paid in stock of the corporation have virtually the same legal significance as
cash or property dividends.
a. True
b. False
If a plaintiff in a civil lawsuit wins the case but the defendant does not pay the
judgment, the plaintiff may request the clerk to issue a writ of execution. If the writ is
returned unsatisfied, certain property of the defendant may be seized by the sheriff and
sold to pay the judgment.
a. True
b. False
The Revised Act, as amended in 2002, provides for domestication procedures which
permit a foreign business corporation to become a domestic partnership or LLC.
a. True
b. False
Because of the harshness of the all-or-nothing contributory negligence rule, nearly all
states have now substituted the last clear chance doctrine for contributory negligence.
a. True
b. False
Under the parol evidence rule, which of the following types of evidence may be used to
vary or contradict the written agreement?
a. Prior oral or written agreements
b. Contemporaneous oral or written agreements
c. Subsequent oral or written agreements modifying the original agreement
d. None of these.
If a partner's act is not apparently for carrying on in the ordinary course the partnership
business:
a. the partnership is bound only where the partner has actual authority.
b. the third person dealing with the partner becomes liable along with the partner.
c. the partner is necessarily acting without authority.
d. the partnership is bound anyway because a partner always has authority to bind the
partnership.
Which of the following is nota breach of an agent's duty of obedience?
a. Entering into an unauthorized contract for which his or her principal is liable.
b. Refusing to follow the principal/employer's instruction to misrepresent the quality of
a competitor's goods to apotential customer.
c. Improperly delegating her authority.
d. Committing a tort for which the principal is liable.
Leslie, the owner of a shoe store, purchased 500 Model XT-50 running shoes from her
supplier, but price was not stated in the contract. The contract is voidable at Leslie's
option until the parties agree on a price.
a. True
b. False
Lynne agrees to buy Harriette's farm for $100,000 and puts $20,000 down. Then Lynne
learns she is allergic to hay and repudiates the contract. If Harriette can sell the farm
one month later for $90,000, she may:
a. keep Lynne's $20,000.
b. keep $10,000 of Lynne's down payment.
c. not keep any of the down payment money.
d. sue for specific performance.
The majority of states allow the injured party who has been induced to enter into a
contract by fraud to recover only "out-of-pocket" damages equal to the difference
between the value of what she has received and the value of what she has given for it.
a. True
b. False
A partner:
a. cannot be held criminally liable for the crimes of his partners.
b. may be criminally liable for the crimes of his partners if he authorized the acts.
c. who commits a tort is liable to the third party only through the partnership entity.
d. has joint and several liability with his partners for contracts entered and for torts and
crimes committed by other partners.
Even though an agent exceeds his express authority, the principal may still be bound. a.
True
b. False
The court's holding in UltramaresCorporationv.Touche:
a. emancipates accountants from the consequences of fraud.
b. relieves accountants from liability for reckless misstatement.
c. establishes that an accountant's liability for negligence is limited to cases in which
there is privity of contract.
d. shows no concern for exposure of accountants to liability in an indeterminate amount
for an indeterminate time to an indeterminate class.
