Sara holds 1,000 shares of stock in Starr, Inc., which she purchased based upon
financial statements that Travis had prepared. She now realizes that the statements were
false and wants to sue Travis for common law fraud. What is Travis’s best defense?
a. Sara lacks privity of contract.
b. Travis gave a broad disclaimer as part of the financial statement.
c. The false statements were immaterial.
d. Starr contributed to the misstatement.
A number of countries have joined together in Europe, Asia, Africa, and Latin America
to coordinate their regional economies. Which of the following has NOT been an
objective of such cooperation?
a. Creation of “regional” legislatures with actual powers.
b. Lowering of tariffs or removing other trade barriers.
c. Promoting common trade policies among members.
d. Establishing an economic and monetary union.
Under the Uniform Commercial Code, when the minor has sold goods and the buyer
has resold them to a good faith purchaser for value:
a. the minor can disaffirm and recover the property.
b. both the purchaser from the minor and the good faith purchaser for value acquire
legal title.
c. the good faith purchaser for value acquires valid legal title.
d. the good faith purchaser for value receives a voidable title.
An undisputed debt is:
a. a contested amount of debt.
b. an obligation that is not contested as to existence but is contested as to the exact
amount of the debt.
c. an obligation that is not contested as to its existence or amount.
d. a debt action that the court will not hear because it is not definite and certain.
Donald, a minor, makes a contract with Albert, an adult, to buy a motorcycle. One week
later, Donald has his eighteenth birthday and shortly thereafter tells Albert he will pick
up the motorcycle the next week. In this case:
a. Donald has expressly ratified the contract.
b. the contract must be renegotiated, because Donald was a minor when it was made.
c. Donald can change his mind and avoid the contract, because it was made when he
was a minor.
d. the contract is void ab initio, because Donald was a minor at the time it was made.
The UCC battle of the forms rule:
a. changes the mirror image rule.
b. may yield different results depending on whether the parties are merchants.
c. may result in formation of a contract quite different from the terms of the offer.
d. All of the above.
Concurrent federal jurisdiction could exist for cases involving:
a. admiralty.
b. treaties of the United States.
c. antitrust.
d. All of the above.
Which of the following is correct with respect to election of remedies?
a. The Code rejects any doctrine of election of remedies in contracts for the sale of
goods; its remedies are cumulative.
b. The remedy of specific performance is inconsistent with that of restitution.
c. A person who seeks an injunction may also seek incidental damages for the breach.
d. All of these are correct.
The implied warranty of habitability:
a. is a warranty that the land is well maintained.
b. is a concept created by Congress to protect consumers who rent homes.
c. requires leased premises to be fit for ordinary residential purposes.
d. All of the above.
The CISG:
a. does not follow the perfect tender rule.
b. provides that the seller must, in all cases, deliver the goods within a reasonable time
after the conclusion of the contract.
c. provides that in most instances the buyer must pay the contract price before
examining the goods.
d. provides no right of ‘cure.’
A(n) __________ is a third party who obtains possible benefits but no rights under a
contract.
a. incidental beneficiary
b. intended beneficiary
c. assignor
d. donee beneficiary
Which of the following is not a requirement of a Subchapter S corporation?
a. It must be a domestic corporation.
b. It must have no more than 50 shareholders.
c. A corporation or partnership cannot be a shareholder.
d. It may have only one class of stock.
A writ of execution as used in civil law litigation allows:
a. the plaintiff to demand payment from the defendant of a judgment won in court.
b. the governor of a state to demand execution of a convicted felon who has received a
death sentence.
c. the clerk of court to issue a demand for a new trial.
d. the plaintiff, without further process, to obtain a portion of the defendant’s wages.
Mark, who is 16 years old, appoints Joe, age 21, as his agent to purchase a Blu-Ray
player from VideoWorld. The transaction is:
a. void because Mark is a minor.
b. voidable by VideoWorld because Mark is a minor.
c. voidable by Mark because he is a minor.
d. not voidable because Joe is not a minor.
If Mary allows the seller, Sellmart Co., four weeks to repair the defects in her kitchen
set and they have tried but have not done a good job at it, she may revoke her
acceptance if she:
a. notifies Sellmart of revocation.
b. does not use the table and chairs.
c. could not discover the defects easily.
d. inspected the goods herself.
In which of the following cases will an oral contract for the sale of goods of $750 be
enforceable without a writing?
a. The goods are to be specially manufactured for the buyer and the seller has made a
substantial beginning of their manufacture.
b. A party admits in an answer to a complaint in a lawsuit that the contract was made.
c. Delivery and acceptance of the goods has been made.
d. All of the above.
If an auditor becomes aware of information indicating an illegal act within the company
being audited, the auditor must:
a. determine whether an illegal act occurred and, if it did, the possible effect on the
issuer’s financial statements.
b. notify the SEC immediately so it can conduct an investigation.
c. resign immediately to avoid criminal liability.
d. notify local law enforcement and remove himself from any association with the
company.
The Economic Espionage Act of 1996 defines theft of trade secrets to include:
a. stealing, obtaining by fraud, or concealing such information.
b. without authorization copying or mailing such information.
c. purchasing or possessing a trade secret with knowledge that it has been stolen.
d. All of the above.
Lynne agrees to buy Harriette’s farm for $200,000 and puts $20,000 down. Then Lynne
learns she is allergic to hay and repudiates the contract. If Harriette can sell the farm for
$190,000 a month later, 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.
Anita, who is a seamstress, agrees to sew a suit for Bryan, who promises in return to
pay Anita $500 for the suit if he is satisfied with it. Anita completes the suit, which fits
Bryan perfectly. Nevertheless, he says that he is not satisfied and refuses to accept or
pay for it. Bryan is honest in his dissatisfaction, but he is unreasonable. In this situation:
a. Bryan must pay for the suit even if he is dissatisfied.
b. this is an illusory contract, because only Anita is bound.
c. Bryan’s approval is to be judged by an objective standard.
d. Anita has no recourse against Bryan, because she agreed to the subjective standard.
Federal courts have exclusive jurisdiction over bankruptcy, patent, trademark, and
copyright cases.
Contracts containing unconscionable clauses are void and unenforceable.
A “without recourse” indorsement eliminates all of an indorser’s liability.
A patent lasts for the same period of time as a copyright.
If the original agreement was oral, a subsequent oral modification, which brings the
resulting contract within the statute of frauds, is binding on and enforceable by the
parties.
The tender offer is open to select holders of the class of shares subject to the tender
offer.
Willton Bros. obtains from Marbowe Manufacturing a line of credit of $25,000, of
which Willton initially uses $12,000 for purchase of inventory. Marbowe may only have
a security interest in the inventory that covers the initial $12,000 advance.
A holder of an instrument with a blank indorsement may protect herself by writing over
the signature of the indorser words identifying herself as the person to whom the
instrument is payable.
All laws are related to morals, but some moral precepts are not enforced by legal
sanctions.