The owner of a ______ estate possesses the same interest as the owner of a fee simple
absolute, only this interest is subject to a condition that may result in termination of the
interest.
A. conditional estate
B. life estate
C. leasehold estate
D. future interest
E. fee simple absolute
How many states still allow a contract without consideration to be enforced, if it is
under seal?
A. Five.
B. Eight.
C. Ten.
D. Twenty.
E. Thirty.
What are the exception(s) to the preexisting-duty rule?
A. Unforeseen circumstances only.
B. Additional work only.
C. Past consideration only.
D. Unforeseen circumstances and additional work, but not past consideration.
E. Unforeseen circumstances, additional work, and past consideration.
_____ are investor-owners of a corporation.
A. Profit owners
B. Profit and loss owners
C. Approved investors
D. Limited partners
E. Shareholders
Who may endorse an instrument made payable to a legal entity such as a partnership?
A. The President only.
B. The Chief Executive Officer only.
C. The Chief Financial Officer only.
D. The Treasurer only.
E. Any authorized representative.
UCC Section 1-205(1), defines _________ as previous commercial transactions
between the same parties.
A. trade norm
B. course of dealing
C. anticipated trade dealing
D. usage of trade
E. course of performance
Saturday Auction. Barry, an auctioneer, was holding an auction on a Saturday morning.
At the beginning of the auction, Barry announced that the auction was being held
without reserve. Helen, Mary, and Chris were all in attendance. Helen saw an old cash
register with a stuck drawer that she thought would look great in her den. The
auctioneer put the cash register up for sale, noting that the drawer was stuck and that no
one really knew what was inside. Helen bought it for $20. At the same auction, Mary
saw a great deal on a used table. She bid $20 on it. No one else bid anything. Barry
announced that $20 was clearly insufficient for the table, that it was worth much more
than that, and that he was taking it out of the auction. Chris started bidding on a
diamond ring for his girlfriend. He bid $2,000. Just as Barry was getting ready to say
“Sold”, Chris looked over at his girlfriend, decided that he was not sure about marriage,
and leaped up yelling, “I revoke.” Barry, however, immediately yelled “Sold.” When
she got it home and broke into it, Helen discovered that the cash register actually
contained $5,000. Unfortunately, Helen had a teenage son named Tad who started
bragging to his friends about the family’s good fortune. Barry heard about what had
happened and sued Helen for return of the $5,000. Mary sues Barry attempting to
obtain possession of the table. Barry sues Chris attempting to enforce a contract for the
sale of the engagement ring. In the lawsuit in which Barry sues Helen for return of the
$5,000, which of the following is the most likely result?
A. Barry will win because when an auction is held without reserve, the auctioneer is
entitled to repossess any item at will.
B. Barry will lose only because he was not the actual seller. He was only selling at
auction for someone else. The seller, however, would win in an action against Helen.
C. Barry would win because Helen made an insufficient offer.
D. Helen will win only if she can show that Barry had knowledge that cash was in the
drawer before he sold it.
E. Helen will win because the auction was without reserve, and she properly bid on and
bought the cash register with everyone knowing that the cash drawer was stuck.
A _____ is a false representation of a material fact that is consciously false and intended
to mislead the other party.
A. negligent misrepresentation
B. fraudulent misrepresentation
C. scienter misrepresentation
D. negligent misrepresentation, fraudulent misrepresentation, and scienter
misrepresentation
E. negligent or fraudulent misrepresentation, but not a scienter misrepresentation
Which of the following are exemptions from rule making that allow an agency to
decide whether public participation will be allowed?
A. Rule-making proceedings with regard to military or foreign affairs
B. Rule-making proceedings with regard to agency management or personnel
C. Rule-making proceedings with regard to public property of an agency
D. Rule-making proceedings with regard to contracts of an agency
E. All of these
Easement Dispute. Sally buys a house from Bob that borders on a lake. Her deed gives
her the most complete estate a person may have. She is in her bathing suit sunning one
day when her neighbor, Fred cuts through her yard. Sally tells him not to do that
anymore. Fred informs her that he had previously purchased and properly recorded a
right to cut across her yard to get lake access. Sally asks you what she should do to try
to get rid of Fred because she doesn’t like him cutting through her yard when she is
sunning. What is the type of right that Fred is exercising by cutting through the yard
called?
A. A profit
B. A license
C. A condition
D. An easement
E. A breach of warranty
Which of the following was the result on appeal in Manderville v. PCG&S Group Inc.,
the case in the text in which the defendant property broker claimed that the plaintiffs
could not recover on their claim for intentional misrepresentation because the plaintiffs
did not diligently investigate the legal condition of the property and also because the
agreement between the parties contained an exculpatory clause releasing the defendant
from any understandings not incorporated into the contract?
A. That the plaintiffs could not recover because the plaintiff failed to meet the
obligation of inspecting the legal condition of the property.
B. That the plaintiffs could not recover based on the exculpatory clause in the contract.
C. That the plaintiffs could not recover because there was nothing wrong with the
property, such as environmental contamination.
D. That the plaintiffs were entitled to proceed to trial and that an exculpatory clause
attempting to render a defendant not liable for fraud is void as a matter of public policy.
E. That the plaintiffs were entitled to proceed to trial on the property issue only if they
could first establish that they did no read the exculpatory clause.
What does the term “negligence per se” mean literally?
A. Pure negligence.
B. Select negligence.
C. Negligence in or of itself.
D. Absolute wrongdoing.
E. Allowable negligence.
Which of the following is a moratorium for almost all creditor litigation against a
debtor in a Chapter 7 bankruptcy?
A. A stop order
B. An automatic stay
C. A semi-automatic dismissal
D. A semi-discharge
E. A means discharge
Generally, a quorum of shareholders exists when shareholders holding more than _____
percent of the outstanding shares are present.
A. 80
B. 70
C. 60
D. 50
E. 25
Yard Mowing. Paula agreed to mow John’s yard once a week for $50 per week
throughout the summer. Paula, however, was having trouble getting her money from
John. On one occasion, he in handwriting gave her an IOU stating “I, John Jones, owe
Paula Smith $50″ which he signed at the end. A couple of weeks later, John did not
have the money with which to pay Paula for additional mowing, and he handwrote the
following on a piece of paper and gave it to her: “I, John Jones, promise to pay Paula
Smith or to bearer, the sum of $100 on Monday, July 22, 2012.” Paula quit mowing
John’s yard, and disgusted with John, Paula assigned both documents to Vince. When
Vince presented the documents to John, John refused to pay on the basis that after
inspecting the yard, he decided that Paula was doing a poor job. Vince told him the
documents constituted negotiable instruments, but John disagreed. Which of the
following is true regarding the effect on negotiability of John’s determination that Paula
did a poor job mowing the yard?
A. Paula’s performance prevents the instruments from being negotiable only if John
meets the burden of proof of establishing to the judge by a preponderance of the
evidence that Paula did a poor job mowing the yard.
B. Paula’s performance prevents the instruments from being negotiable only if Paula
meets the burden of proof of establishing to the judge by a preponderance of the
evidence that she did an acceptable job mowing the yard.
C. Paula’s performance prevents the instruments from being negotiable only if John
meets the burden of proof of establishing to the judge by a preponderance of the
evidence that Paula did a poor job mowing the yard, and if Paula signed a document
agreeing that the instrument would lack negotiability unless she properly performed.
D. Paula’s performance prevents the instruments from being negotiable only if Paula
meets the burden of proof of establishing to the judge by a preponderance of the
evidence that she did an acceptable job mowing the yard and that she did not sign any
document agreeing that the instrument would lack negotiability upon John’s objection.
E. Manner of performance is not one of the listed elements for a finding of
negotiability.
What kind of property is property acquired by the debtor after a security agreement
covering the property is made?
A. Post-dated property.
B. After-acquired property.
C. Proceeds.
D. Post-acquired property.
E. Subsequently acquired property.
Run Around. Millie issues a note to Bob. Bob endorses the note and transfers it to Anne.
Anne endorses the note and transfers it to Henry. In a timely fashion, Henry endorses
the note and presents it to Millie for payment. When Henry presents the note to Millie,
she asks him for reasonable identification. He did not have any identification with him
and told her that she had no right to dishonor the instrument. Millie, however, refused to
provide him the funds until he returned with proper identification. Nevertheless, when
he returned with proper identification, Millie refused to pay the note, claiming that she
lacked the funds with which to do so. Henry proceeded immediately to request that
Anne pay the note, but she told him that he would have to get his money from Bob,
who cannot be found. Which of the following is true regarding Henry’s entitlement to
payment from Millie?
A. Henry is only entitled payment from Millie because Anne dishonored the payment.
B. Henry is not entitled to payment from Millie unless Bob, in addition to Anne,
dishonors the instrument.
C. Henry is never entitled payment from Millie because he must seek recovery only
from Anne.
D. Henry is entitled to recover on the note from Millie.
E. Henry is entitled to recover on the note from Millie only if both Anne and Bob have
filed bankruptcy or cannot be found.
Which chapter of the Bankruptcy Code is used as a reorganization of the debtor’s
financial affairs under supervision of the bankruptcy court?
A. Chapter 7
B. Chapter 9
C. Chapter 11
D. Chapter 14
E. Chapter 15
Which of the following is false regarding the statute of frauds?
A. It relates to fraudulent contracts.
B. It does not address illegal contracts.
C. It does not exist at the federal level.
D. The statute requires that certain contracts be in writing.
E. Some states have statutes of frauds created by judicial decision rather than
legislation.
Which of the following is an amendment to a financing statement that states that the
debtor has no obligation to the secured party?
A. An ending statement.
B. A termination statement.
C. A bind-up statement.
D. A release statement.
E. A reversion statement.
Wrong Deck. Penny hires Jackson to paint her back deck on her house. She agrees to
pay him $200 for the job, and he accepts, sight unseen. They enter into the agreement
on Tuesday, and he is to paint the deck on Saturday. When Jackson arrives, neither
Penny nor her neighbor is at home. He mistakenly paints the neighbor’s deck. Penny
calls him the next day and asks him why he did not paint her deck. He informs her that
he did paint the deck. It is then discovered that he mistakenly painted the neighbor’s
deck. Penny tells him not to worry because the neighbor will be required to pay him.
Jackson says that if the neighbor does not pay, then he expects all of his funds from
Penny. What was the status of the agreement between Jackson and Penny as of Tuesday
when they agreed upon the price for the job?
A. The contract was executory.
B. The contract was executed.
C. The contract was notated.
D. The contract was formal.
E. The contract was a recognizance contract.
Used Car Sales. Walter sells used cars. He is seeking a way to increase sales and profits
because he would like to take his girlfriend on a nice diving trip to the Grand Cayman
Islands. The first thing that Walter does is say that during the first week of December,
he will give a $500 rebate on used cars under two years old. To spice things up, he also
offers to sell any car on the lot that is under five years old for $1,000 to the first three
customers who can hula hoop ten hours straight on December 7th. (Hula hooping was a
practice popular some years ago in which a person, usually around the waist, would
swing around a large hoop.) Walter was not very concerned about the hula hooping
issue because he thought that no one would be able to hula-hoop for ten hours straight.
Walter put an advertisement pertaining to the rebate and hula-hoop opportunity in the
local newspaper. The promotion went over very well. Although he had several on hand,
Walter ran out of cars under two years old within one day. During the rest of the week
shoppers were told that no cars of that description were available. A customer named
Sam was very unhappy when he discovered the next day that no cars under two years
old were available. On December 7th, while Walter was watching the hula hoopers,
Sally was shopping for a car. She was in college and did not have much money. She
saw one, an older car, that she liked but she really did not know if it run or not. She was
going to talk to her parents. Walter eventually approached her and Sally asked him if he
would take $3,000 for the car. Walter said, “Yes, sold.” Sally tried to explain that she
needed to talk to her parents first, but Walter would not hear of it. While Walter was still
fuming from his encounter with Sally, Zack walked up and started to criticize the nature
of Walter’s inventory. Walter told him that he had great cars. Zack pointed at an old
jalopy that was banged up, had 200,000 miles on it, and a cracked windshield. Zack
said, “Sure, I’ll pay $10,000 for that car.” Walter said, “Sold.” Zack said, “Wait a
minute. I was only kidding.” Walter said, “No way.” Meanwhile all the hula hoopers
dropped out well prior to ten hours of hula hooping except for Barbara. One minute
before the ten hours were up, Walter yelled out “I revoke!” Barbara completed the hula
hooping anyway and asked for her car for $1,000. Walter refused saying that the offer
was revoked. Sam was very angry and sued Walter for not having a car available that
was under two years old so that he could get a good deal and a $500 rebate.
Additionally, Barbara sued Walter, and Walter sued Zack and Sally. What is the most
likely result in the lawsuit brought by Barbara against Walter?
A. Walter will win because he was only engaged in preliminary negotiations.
B. Walter will win because the advertisement was simply inviting customers, such as
Barbara, to make an offer.
C. Walter will win because he properly revoked the offer.
D. Barbara will win because the ad would be treated as an offer that she properly
accepted.
E. Barbara will win because she properly made an offer that was accepted by Walter
when he allowed her to continue hula hooping.
What does the Latin phrase respondeat superior mean?
A. Let the superior speak
B. Let the agent speak
C. Let the employee speak
D. Let all speak
E. Let all be responsible
Which of the following are examples of people who do not have the capacity to enter
into legally binding contracts?
A. Those under the age of majority and suffering from a mental illness.
B. People suffering from mental illness and intoxicated persons.
C. Intoxicated persons and those under the age of majority.
D. Only people suffering from mental illness.
E. People under the age of majority, people suffering from mental illness, and
intoxicated persons.
Which of the following are elements of causation?
A. Actual cause and proximate cause.
B. Actual cause and significant cause.
C. Actual cause and clear cause.
D. Proximate cause and significant cause.
E. Proximate cause and real cause.
In an origin contract, when does title pass to the buyer?
A. When money is transferred to the seller
B. When the items are delivered to the buyer
C. At the time and place of shipment
D. One day after goods are identified to the contract
E. When goods are identified to the contract
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. Which of the following would describe Frank in receiving the
information from Linda and acting upon it?
A. Tipper
B. Provider
C. Providee
D. Tippee
E. Revealor
Mindy liked to spend and had a large amount of consumer debt for items such as
jewelry, clothing, a personal watercraft, and a new car. Mindy was having problems
making her credit card payments as they became due. She, however, wanted to make
every effort to pay her debts. On September 1st she repaid a loan to Friendly Jewelry
Store because she wanted to remain on good terms with the manager. Unfortunately,
Mindy was simply unable to continue making payments; and on November 1st of that
same year, she filed a voluntary petition for bankruptcy relief under Chapter 7. A
number of her creditors complained because Friendly Jewelry Store received more from
the early payment by Mindy than would have been received in bankruptcy proceedings.
Which of the following is the most likely result of a claim of preferential payment
based on the payment to the jewelry store?
A. The payment was not preferential because it was for a consumer good and was not
made within 30 days of the filing of the bankruptcy petition.
B. The payment was preferential on the basis that it was made within 90 days of the
filing of the bankruptcy petition.
C. The payment was preferential on the basis that it was made within 90 days of the
filing of the bankruptcy petition only if the trustee is able to establish Mindy’s
insolvency at the time.
D. Because it was for a consumer good, the payment was not preferential unless the
bankruptcy trustee can prove intent to defraud.
E. The payment was preferential because it was made within two years of the filing of
the bankruptcy petition.
Which of the following is false regarding provisions of the Bankruptcy Abuse
Prevention and Consumer Protection Act of 2005?
A. Under the Act, an individual may not generally be considered a debtor unless within
190 days prior to filing, the debtor receives credit counseling from a nonprofit budget
and credit counseling agency.
B. Under the Act, if an individual was a debtor in a bankruptcy case that was dismissed
within 190 days of the current case, the individual is generally not eligible to be a
debtor under Chapters 7, 11, or 13.
C. Under the Act, if a previous bankruptcy was completed rather than dismissed, the
individual is generally permitted to file for bankruptcy again.
D. Under the Act if a party completes a Chapter 7 bankruptcy, the party is not permitted
to seek a Chapter 7 bankruptcy again for eight years.
E. Under the Act if a party has at least $10,000 in assets, the party may not file for any
type of bankruptcy protection.
Multiplication. Phyllis, who is 30 years old, works for We Add for You Accounting.
Phyllis has worked there for a number of years and is considering quitting in order to
spend more time with her three active triplets, Sunny, Fussy, and Perky. She asks her
boss, Bolivar, about the pension plan at We Add for You. Her boss tells her that she has
no entitlement to information until she is at least 60 years old. Phyllis also asks about
retaining her medical insurance protection if she quits and is told that she would have
no right to do so. Bolivar also throws in that he has been monitoring her conversations
and that he particularly enjoys the conversations between her and her single female
friends involving failed dating experiences. He asks her to keep those up. Phyllis tells
him that her personal phone calls are none of his business. Bolivar says that he can
listen if he wants because the phones are his. Phyllis ends up starting her own company
called We Multiply for You, and makes much, much more money. (In answering the
following questions, assume all federal laws apply and that any pension and medical
plan qualifies for regulation under federal law.) Assuming Phyllis quits, which of the
following rights does she have under federal law to retain benefits so long as the
benefits are provided to employees who are still working?
A. None.
B. The right to retain the medical benefits indefinitely, so long as she pays for them
along with the allowable administrative fee.
C. The right to retain the benefits for at least 12 months, with the cost born by the
employer.
D. The right to retain the benefits for at least 18 months, with the cost born by the
employer.
E. The right to retain the benefits for at least 18 months so long as she pays for the
benefits along with the allowable administrative fee.
Which of the following is false regarding the agency relationship?
A. It is a consensual relationship.
B. It may be formed by formal written contracts.
C. It may usually be formed by informal oral agreements.
D. It exists when the principal takes action to ask another individual to act on behalf of
the principal.
E. People must be trained in the field involved in order to qualify as agents.
What is a purpose of the parol evidence rule?
A. To restrict oral evidence from being admitted that supports an agreement in its
written form.
B. To restrict written evidence from being admitted that supports an agreement in its
written form.
C. To restrict oral and written evidence from being admitted that supports an agreement
in its written form.
D. To restrict hearsay from being admitted that supports or contradicts an agreement in
its written form.
E. To restrict evidence from being admitted that substantially contradicts an agreement
in its written form.
When may government agents search without a search warrant?
A. When law enforcement officials believe it likely that the items sought will be
removed before they can obtain a warrant.
B. Outside of normal working hours for a judge.
C. When they can show that the suspect who lives in the residence at issue has been in
jail previously.
D. When they can show that a felony is involved.
E. All of these.