Cal sprayed pesticide on his crops in a very careful manner on a windless day.
Nevertheless, some of the pesticide spray fell on his neighbor’s side of the fence and
contaminated the cornmeal for the chickens. The chickens died and the neighbor sues.
What is the likely result?
a. Cal is not liable because he was not negligent in his spraying operation.
b. Cal is not liable because the neighbor assumed the risk of damage to the feed by
placing it so close to the fence.
c. Cal is liable because spraying pesticides is an abnormally dangerous activity.
d. Cal is not liable for the damage because of contributory negligence.
Which of the following would ordinarily NOT be considered a security under the
federal securities laws?
a. Bonds.
b. Stocks.
c. Investment contracts.
d. An investment in a nonprofit venture based on one’s own entrepreneurial efforts.
Bill owns and operates a farm and a farm machinery dealership. Under the Code, a new
tractor that Bill uses on his farm is classified as:
a. farm products.
b. inventory.
c. consumer goods.
d. equipment.
The Code’s classifications of collateral according to nature are: (a) goods; (b)
intangibles; and (c) dispensable paper.
A contractor and Southampton, Inc. have a contract, which calls for the contractor to
build a building with the completion by June 15. If the building is not completed by that
date, the contract calls for the contractor to pay $100 per day in damages. The $100 per
day is:
a. punitive damages.
b. nominal damages.
c. liquidated damages.
d. an illegal penalty.
Agatha, Betty, and Clara are sisters who own 300 acres of land as joint tenants.
a. What interest does each of them have in the parcel of land?
b. If Betty dies, what happens to her share of the 300 acres?
c. If Clara sells one-half of her interest to Diane, what interest does Diane acquire in the
300-acre parcel?
Federal Reserve Board guidelines for checks:
a. require indorsements to be in blue or black ink.
b. must be followed or the check will not go through the banking system.
c. require bank indorsements to be made within 2 inches of the left edge of the back of
the check.
d. Both (a) and (c).
The __________ and __________ Amendments respectively prohibit the federal and
state governments from depriving any person of life, liberty, or property without due
process of law.
a. First; Tenth
b. Fifth; Fourteenth
c. Fourth; Fourteenth
d. Fourteenth; Fifth
The principle illustrated in the Christy v. Pilkinton case is:
a. a breach of contract is material if it is an intentional breach.
b. subjective impossibility does not discharge the contractual duty of the party.
c. objective impossibility generally discharges the contractual duty of the party.
d. commercial impracticability occurs when performance can only be accomplished
under unforeseen and unjust hardship.
In which of the following situations will a court grant specific performance?
a. In a case involving breach of contract for the sale of real property.
b. In contracts for personal services.
c. Where goods are unique or rare.
d. Both (a) and (c).
What is the reasonable person standard? How is it applied to each of the following
types of people?
a. Children
b. Persons with physical disabilities
c. Persons who are mentally retarded
d. Professional people with advanced degrees and training, such as doctors, lawyers,
and accountants
e. Persons acting in emergency situations
f. Persons who violate statutory duties
Gaines delivers a chair for Jasper Furniture and, before he goes back to the store, he
goes 15 miles out of the way to visit a friend. On the way, he negligently runs a stop
sign and hits Rick. Who can be held liable for the accident, and why?
a. Jasper Furniture under the doctrine of respondeat superior.
b. Gaines since his negligence caused the accident.
c. Gaines, but not Jasper Furniture, since Gaines had deviated from the purpose of his
employment.
d. Both (b) and (c).
Jack moved from New Hampshire to Florida and decided to have an air conditioner
installed in his car. After it was installed, Jack received a bill for $1,200. Jack called the
dealer and told him he’d never heard of this service costing more than $500. They
argued, but the dealer finally agreed to take $900. Is the agreement enforceable?
a. Yes, there is no way for the dealer to get the extra money anyway.
b. Yes, there is consideration for the modified amount.
c. No, there is no consideration and the dealer can sue for the extra $300.
d. No, there is an implied contract to pay the dealer whatever he billed Jack.
Parties that seek to challenge agency action must:
a. have standing.
b. have exhausted their administrative remedies.
c. be a party injured by the agency action.
d. All of the above.
A draft is payable “to the order of Joe Jones or to bearer.” Sally finds it and demands
payment. Should the drawer pay Sally?
a. No, unless Joe Jones’s name is crossed off.
b. No, unless “bearer” is handwritten.
c. Yes, since the word “or” is contained in the instrument, either will do.
d. No, the terminology is ambiguous and therefore must be paid only to the order of Joe
Jones.
A certificate of deposit differs from a promissory note in that:
a. the maker is always a bank.
b. there are three parties to the transaction.
c. the payee of a CD must be paid on demand.
d. Both (a) and (b).
The Uniform Commercial Code does NOT apply to:
a. employment contracts.
b. service contracts.
c. insurance contracts.
d. All of the above.
Which type of contractual provision affects remedies?
a. Cover.
b. Liquidation or limitation of damages.
c. Modification or limitation of remedy.
d. Both (b) and (c).
Which of the following is NOT true about a delegation of duties?
a. When the delegatee assumes the delegated duty, both the delegator and the delegatee
are liable for performance of the contractual duty to the obligee.
b. Contractual duties are generally delegable.
c. The courts will examine an assignment more closely than a delegation.
d. A delegation will not be permitted if the nature of the duties are personal in that the
obligee has a substantial interest in having the delegator perform the contract.
A buyer of real estate subject to a mortgage who does not undertake any personal
liability for payment of the mortgage debt:
a. takes the property ‘subject to” the mortgage.
b. “assumes” the mortgage.
c. can only obtain a quitclaim deed.
d. can only obtain a leasehold.
A photographer taking photos of a movie star with a telephoto lens would NOT be
guilty of intrusion if the:
a. movie star was in a restaurant at the time.
b. pictures were not published.
c. movie star was in bed at the time.
d. photographer never entered onto the movie star’s property.
Margaret tells the members of the Raleigh Association of Restaurant Owners that they
will be able to get a better price on linen supplies (tablecloths, napkins) if they will deal
with one supplier rather than split their business between two. They all know Margaret
deals with Niagara Linen rather than Cayuga. Under the Sherman Act, if they all sign
contracts with Niagara:
a. there is no violation since there is no express agreement to boycott Cayuga.
b. illegality may be implied from this conduct.
c. there is no concerted action.
d. this is horizontal market allocation.
Shopville Industries, Inc., a nonconstruction employer of 35 people, must have a
written affirmative action plan subject to the Executive Order prohibiting discrimination
based on race, sex, religion, or national origin by federal contractors:
a. only if it has contracts for more than $100,000.
b. only if it has contracts for more than $50,000.
c. regardless of the dollar value of its contracts.
d. under no circumstances since the Executive Order only applies to construction
contractors.
In the United States, treaties are not subject to judicial review.
Equitable remedies result in money awards to the plaintiff.
A person may misappropriate a trade secret by unintentionally discovering it.
“Consideration” requires an actual benefit to both sides of an agreement.
Denver has rightfully rejected nonconforming goods that were delivered to him.
Explain his interest in those goods in his possession and his rights and duties regarding
the goods.
Sam orally agreed to sell his house to Humphrey. Humphrey wanted it ready for his
family quickly, so after he paid Sam a 5 percent deposit, he had a new roof put on, new
carpeting installed, and he renovated the kitchen. Sam now thinks the place looks great
and has decided not to sell. A business law student told him he could back out of the
oral agreement. Can he? Explain.
The Norris-La Guardia Act gave federal courts the power to issue injunctions in
nonviolent labor disputes.
As the shareholders’ elected representatives, the board of directors are delegated the
power to direct the business of the corporation.
Corporations have no right of free speech under the First Amendment.