Which of the following is true about a constructive trust?
a. It normally contains detailed instructions for the trustee to follow.
b. The court to redress an injustice imposes it.
c. It is revocable by the trustee.
d. It carries out the intentions of the trustee.
If Sharpe Finance Co. has a secured interest in Jeff’s car and Jeff is in default, in most
states Sharpe may take the car from in front of Jeff’s house without getting a court
order.
a. True
b. False
Directors, but not officers, may compete with the corporation in their own private
business dealings.
a. True
b. False
Administrative agencies perform what basic function?
a. Rulemaking
b. Law enforcement
c. Adjudication
d. All of these are functions of administrative agencies.
A restraint of trade may be classified as either horizontal or vertical.
a. True
b. False
A unilateral mistake of fact is ordinarily grounds for avoiding a contract.
a. True
b. False
A collection agency threatened to sue Martha for the unpaid hospital bills from her
heart operation. She signed a promissory note at a high but not illegal rate of interest.
What result?
a. The note is valid because she signed it.
b. The threat to bring a civil suit to collect money owed is permissible.
c. The note is invalid because she signed under duress.
d. The note is invalid because the agency put her under undue pressure.
Congress enacted the Administrative Procedure Act in
a. True
b. False
In order to be valid, a will must generally include all but which one of the following?
a. Signature of the testator
b. A written document
c. Signatures of witnesses
d. Signature of the executor
Bob buys a share of Atlas Pizza, which is unregistered. If it was not exempt from
registration, Bob may return the stock and get his money back.
a. True
b. False
For a misrepresentation to be fraud in the inducement, it need not be material.
a. True
b. False
The administration of the assets of the deceased and the proving of the validity of the
will are determined in:
a. probate proceedings.
b. a domicile of intent.
c. an equity proceeding.
d. a testamentary hearing.
If Valley Bank pays a check over a stop payment order of one of its customers, Valley
Bank is subrogated to the rights of:
a. the drawer against the payee or any other holder.
b. any holder in due course on the item against the drawer.
c. the payee or any other holder against the drawer.
d. All of these are correct.
There are rigorously enforced restrictions regarding both number and qualification of
investors who purchase securities under Regulation A.
a. True
b. False
An example of a bailment for the bailor’s sole benefit is when Sherri, without
compensation, lends her Cappuccino maker to Ed for Ed’s party.
a. True
b. False
State laws regulating the issuance and sale of corporate shares of stock and other
securities, typically with provisions prohibiting fraud in the sale of securities are called:
a. blue-sky laws.
b. Securities and Exchange Commission Acts.
c. model investment securities acts.
d. stock warrant laws.
Jack and Karin are cosureties on a debt owed by Lyle to Mike. If Lyle’s debt becomes
due and he and Karin both refuse to pay it, Jack may bring an action in equity against
Karin to obtain an order requiring her to pay her share of the debt.
a. True
b. False
An instrument indorsed “pay any bank” may nevertheless have an individual as a
holder.
a. True
b. False
If Kenneth signs an employment contract for one year but is fired without cause after
two months and spends $500 in reasonable fees trying to find a comparable job, he may
recover $500 in incidental damages.
a. True
b. False
The federal courts have jurisdiction over all matters that have not been given
exclusively to the state courts by the
Constitution or Congress.
a. True
b. False
Maria posted several signs in the neighborhood offering $50 for the return of her lost
cat. Dave calls to get a description of the cat and tells Maria, “I’ll look for your cat.” A
contract is formed by Dave’s call to Maria.
a. True
b. False
In making conflict of law decisions, judges need not be concerned about choosing what
laws to follow since conflict of law rules are the same from state to state.
a. True
b. False
A general partnership that, by making the statutorily required filing, limits the liability
of its partners for some or all of
the partnership’s obligations is a:
a. limited liability partnership.
b. limited liability company.
c. limited liability limited partnership.
d. limited partnership.
The Troubled Asset Relief Program enacted in 2008 was designed to strengthen the
U.S. financial sector by governmental purchase of assets and equity from financial
institutions.
a. True
b. False
The Magnuson-Moss Warranty Act applies to all sales of goods covered by the Uniform
Commercial Code.
a. True
b. False
About half of all bankruptcy petitions are involuntary petitions.
a. True
b. False
The Foreign Corrupt Practices Act makes it illegal to offer a payment of money to a
foreign official to influence a decision even if the payment is not made.
a. True
b. False
R&R, Inc. entered into a contract with Scott, an agent, under the terms of which Scott
would receive $20,000 if he stole trade secrets from the leading competitor of R&R.
Scott performed his end of the agreement by delivering the trade secrets. If R&R now
refuses to pay Scott for his services, Scott:
a. may recover based upon the express contract of the parties.
b. may recover based upon a quasi-contractual theory in order to prevent the unjust
enrichment of R&R.
c. will be unable to recover, because this is an illegal contract.
d. will be able to recover based upon promissory estoppel, because he has detrimentally
relied upon the promises made by R&R.
As a general rule, most contract rights are assignable.
a. True
b. False
The Constitution has recently been held to prevent all employers from subjecting
employees to drug testing without first obtaining a search warrant.
a. True
b. False
The distinction between horizontal and vertical restraints often determines whether a
restraint is illegal perseor should be judged by the rule of reason test.
a. True
b. False
The Federal Trade Commission was created in 1968 in response to the consumer
movement of the 1960s.
a. True
b. False