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Christen graduates from college, receives a job offer across the country, and moves
there giving up her apartment and cancelling all the other job interviews. After she gets
there, she is told that there is no job. What may she recover in most states?
A. Nothing
B. Reliance damages
C. Liquidated damages
D. Acknowledged damages
E. Approved damages
An instrument that reads, "Pay to the order of Jones or Green," is payable to _________
payees.
A. Joint
B. Concurrent
C. Consecutive
D. Alternative
E. Alternate
Which of the following occurs when all aspects of the parties' duties under the contract
are carried out perfectly?
A. Complete performance
B. Substantial performance
C. Significant performance
D. Absolute performance
E. Approved performance
Which of the following was the result on appeal in In re the Estate of Charles Kuralt,
the case in the text involving whether a letter the deceased sent to a companion was
effective to convey property?
A. The court ruled that although extrinsic evidence was not admissible, the letter in and
of itself was effective as a matter of law to establish a holographic will and that the
companion was entitled to the land at issue.
B. The court ruled that the letter was ineffective as a matter of law to establish a
holographic will, that extrinsic evidence was inadmissible, and that the companion was
not entitled to the land at issue.
C. After considering the extrinsic evidence at issue which was ruled admissible, the
court ruled that the letter was ineffective as a matter of law to establish a holographic
will and that the companion was not entitled to the land at issue.
D. After considering the extrinsic evidence at issue which was ruled admissible, the
court ruled that the letter was effective as a matter of law to establish a holographic will
and that the companion was entitled to the land at issue.
E. The court remanded the case for a trial on the issue of whether, in light of the
extrinsic evidence, the decedent intended that the letter at issue effect a testamentary
disposition of the land at issue.
How are the heads of the Securities and Exchange Act chosen?
A. They are appointed by the president.
B. Each state has one appointee appointed by the governor of each state.
C. They are appointed by a two-thirds vote of the Senate.
D. They are appointed by a majority vote of the Senate.
E. They are appointed by a majority vote of the House of Representatives.
If a customer's ATM card is lost or stolen, the customer must notify the bank within
_____ and if that is done, the customer is then liable for only the first _____ stolen.
A. 5 Days; $50
B. 3 Days; $100
C. 2 Days; $50
D. 7 Days; $100
E. 10 Days; $500
"Hot Dress." Doreen writes a check for a dress to Hot Dresses Inc., a small specialty
shop whose shares are owned primarily by Betty. Betty decided to go on an extended
European vacation and temporarily closed down the shop the day after Doreen wrote
the check. When Betty returned, she had a number of other things to do and did not take
Doreen's check and some other checks to the bank for three months. Betty was
independently wealthy and only ran the shop as a hobby, so she had not been in need of
funds. When Betty finally took Doreen's check to the bank, Betty requested that her
bank, ABC Bank, deposit the check into her account. When ABC Bank, however,
requested payment from Doreen's bank, XYZ Bank, the check was dishonored because
of insufficient funds in Doreen's account. Although Betty did not particularly need the
funds, she did not like to feel as if she had been cheated; therefore, she demanded that
Doreen make the check good.
Which of the following is the most likely result of Betty's request that Doreen pay the
amount due on the check?
A. It is likely that Doreen will have to pay the check as a secondarily liable party.
B. It is unlikely that Doreen will have to pay on the check because the UCC states that a
check must be presented within 60 days in order to hold a drawer secondarily liable.
C. It is unlikely that Doreen will have to pay on the check because the UCC states that a
check must be presented within 30 days in order to hold a drawer secondarily liable.
D. It is unlikely that Doreen will have to pay on the check because the UCC states that a
check must be presented within 20 days in order to hold a drawer secondarily liable.
E. It is unlikely that Doreen will have to pay on the check because the UCC states that a
check must be presented within 10 days in order to hold a drawer secondarily liable.
How long does a debtor have in which to object to a secured party's retention of
collateral to satisfy a debt?
A. 5 Days.
B. 10 Days.
C. 20 Days.
D. 30 Days.
E. 60 Days.
Which of the following are contracts that contain multiple parts which can each be
performed separately and for which separate consideration is offered?
A. Independent contracts
B. Substantive contracts
C. Adhesion contracts
D. Justifiable contracts
E. Severable contracts
Which of the following limits shareholders' ability to bring class action suits against
nationally traded companies?
A. The Class Prohibition Act of 1997
B. The Sarbanes-Oxley Act of 2002
C. The National Securities Markets Improvement Act of 1996
D. The Market Reform Act of 1990
E. The Securities Litigation Uniform Standards Act of 1998
Which of the following chapters is used for a sale of a debtor's assets by a trustee and
the distribution of money to creditors?
A. Chapter 7
B. Chapter 9
C. Chapter 11
D. Chapter 13
E. Chapter 15
"Boat Tow." Donnie went to a new car dealership and told the salesperson, Sally, who
was not the manager, that he needed a new car that would get good gas mileage and
would also pull his big boat. Sally encouraged him to buy a smaller car that she
promised would pull the boat. Sally was new to the job and did not realize that the
small car did not have sufficient power to pull the boat for any distance. Donnie bought
the car and used it to pull the boat. Unfortunately, the heavy pull on the car did
significant damage to the car's engine. Donnie complained to the Sally who denied any
liability. Donnie, who had half a semester of business law, informed Sally that along
with the sale of the car he also received an express warranty, an implied warranty of
merchantability, and an implied warranty of fitness for a particular purpose; and that he
could recover under any of those theories. Sally truthfully said that no explicit promises
regarding warranties were ever made orally or in writing.
Is Donnie correct that the car was sold with an implied warranty of merchantability?
A. No, because there was no writing guaranteeing the warranty signed by the
salesperson.
B. No, because Sally was only engaged in puffing.
C. No, because only the manager can make such a warranty.
D. Yes, but only because Sally verbally made certain promises.
E. Yes, because there was a reasonable expectation of how the vehicle would perform.
In the instance of a breach of contract where the accountant, however, completed
substantial performance, an accountant is entitled to which of the following?
A. The full amount of the contractually agreed-on fee minus the amount of damages
caused by the accountant.
B. The contractually agreed-on fee without any deduction.
C. A reasonable hourly rate.
D. No more than one thousand dollars.
E. Nothing.
Which of the following aids plaintiffs in establishing negligence claims?
A. Only res ipsa loquitur
B. Only negligence per se
C. Only assumption of risk
D. Res ipsa loquitur and negligence per se
E. Res ipsa loquitur, negligence per se, and assumption of risk
"Courtroom Surprises." Wilma agrees to sell Wally her house for $200,000. Wilma,
Wally, and the house are all located in Tennessee. She also orally agrees to sell her used
car to Wally for $1,000. Wilma and Wally discuss the fact that the house needs some
repairs. Wilma gives Wally a key and tells him to do whatever he wants with the house.
In reliance on her promise to sell the house, Wally sells his home, gets a loan, and has a
new roof put on Wilma's house because of leaks that needed to be repaired to prevent
further damage. When presented with the written agreements of sale for the home and
the car, however, Wilma refuses to sign either. Wally sues, and the case proceeds to
trial. Wilma tells the judge in court under oath that she orally agreed to sell the house
but that she changed her mind before signing and that she believes she has protection
under the statute of frauds. She tells the judge that no agreement was ever made
regarding the car and that she also has protection under the statute of frauds regarding
that matter.
Which of the following is true regarding Wally getting a loan and putting a new roof on
the house?
A. Wally should have known better, and his actions would be of no use to him in
attempting to enforce the contract.
B. The judge would consider his actions under the UCC as exceptions to the parol
evidence rule.
C. His actions would likely amount to promissory estoppel, which establishes an
exception to the statute of frauds.
D. His actions would be considered as admissions.
E. His actions would be considered only because Wilma told the judge that she had
orally agreed to the contract.
Which of the following is true under the Uniform Partnership Act, regarding profit and
partnerships?
A. There is no requirement that a partnership be formed with a profit-making motive,
and all states recognize the status of non-profit partnerships.
B. A partnership must have a profit-making motive only if the partnership has five or
more members.
C. There is a requirement that a partnership have a profit-making motive only if the
partnership has been in existence for over one year.
D. The partners must operate the business for a profit, and the partnership must be
dissolved if no profit is made for three consecutive years.
E. The partners must operate the business for a profit which is construed to mean that
the partners must intend to make some kind of profit from the business.
"Wrecked Furniture." Ralph buys new furniture for his living room from Good Times
Furniture. It is agreed that the goods will be placed with a common carrier for delivery.
The contract between Ralph and Good Times is ambiguous regarding whether the seller
had the duty to deliver the goods only to the common carrier's hands or whether the
seller had the duty to deliver the goods to Ralph's home. Unfortunately, on the way to
Ralph's home, through no fault of the delivery driver, the delivery truck was involved in
a collision, and the furniture was significantly damaged.
Which of the following is a type of contract that Ralph and Good Times Furniture
entered into?
A. A common-carrier delivery contract
B. A trucking contract
C. A goods-in-bailment contract
D. A conditional sales contract
E. A conditional delivery contract
Which of the following is false regarding franchises?
A. The franchisor can set sales quotas and record-keeping requirements.
B. The franchisor has the legal authority to ensure that the franchisee maintains the
quality of goods and services associated with the franchise.
C. The UCC does not apply in the realm of disputes between franchisors and
franchisees.
D. A franchise is a contractual relationship between the franchisor and the franchisee.
E. If a franchisor exercises too much authority in the day-to-day affairs of the
franchisee's business, the franchisor could be held liable for the torts of the franchisee's
employees.
A[n] ______ beneficiary is one who unintentionally gains a benefit from a contract
between other parties.
A. Incidental
B. Creditor
C. Donee
D. Vested
E. Accidental
When duress is at issue, the _____ needed for legal consent has been removed by the
specifics of the threat.
A. Free will
B. Knowledge
C. Specifics
D. Consideration
E. Realization
Which of the following is an interest in personal property or fixtures which secures
payment or performance of an obligation?
A. An approved interest.
B. A secured interest.
C. A secured transaction.
D. A debt transaction.
E. A security agreement.
Which of the following is true regarding actions a buyer may take if a seller does not
provide goods that were described in the contract?
A. If a seller does not provide goods as described in a contract, the buyer may accept
the nonconforming goods as is, reject the goods subject to the seller's curing the
deficiency in the goods, or reject the goods if no cure is possible.
B. If a seller does not provide goods as described in a contract, the buyer may reject the
goods subject to the seller's curing the deficiency in the goods, but the buyer may not
accept the nonconforming goods as is or reject the goods if no cure is possible.
C. If a seller does not provide goods as described in a contract, the buyer may accept
the nonconforming goods as is and sue for damages, but the buyer may not reject the
goods subject to the seller's curing the deficiency in the goods or reject the goods if no
cure is possible.
D. If a seller does not provide goods as described in a contract, the buyer may accept
the nonconforming goods as is and sue for damages or the buyer may reject the goods,
but the buyer may not reject the goods subject to the seller's curing the deficiency.
E. If a seller does not provide goods as described in a contract, the buyer may accept the
nonconforming goods as is, or the buyer may reject the goods subject to the seller's
curing the deficiency in the goods; but the buyer may not simply reject the goods.
Under the UCC which of the following is true if goods are identified at the time the
parties entered into a contract and these goods are destroyed through no fault of the
parties before risk passes to the buyer or lessee?
A. The parties are excused from performance.
B. The seller has 7 days in which to cure.
C. The seller has 10 days in which to cure.
D. The seller has 30 days in which to cure.
E. The seller has 45 days in which to cure.
Which of the following is true regarding privacy rights?
A. The U.S. Supreme Court has said that the U.S. Constitution does not provide any
right to privacy.
B. The U.S. Supreme Court has found that U.S. citizens have a right to privacy based
upon the U.S. Constitution.
C. The U.S. Constitution specifically provides for a right to privacy within the Second
Amendment.
D. The U.S. Constitution specifically provides for a right to privacy within the Sixth
Amendment.
E. The U.S. Supreme Court has found that U.S. citizens have a right to privacy based
upon the U.S. Constitution, and the U.S. Constitution specifically provides for a right to
privacy within the Sixth Amendment.
An oral stop payment order is valid for _________ unless the order is later confirmed in
writing.
A. 10 Days
B. 14 Days
C. 30 Days
D. 45 Days
E. 90 Days
In order to come within the scope of the Truth-in-Lending Act, a loan must be in the
amount of ______ unless it is secured by a mortgage on real estate.
A. $50,000 or more
B. $50,000 or less
C. $30,000 or more
D. $40,000 or less
E. $25,000 or less
Violet has authority to act on behalf of and bind Robert. Which of the following legal
term describes Robert's position?
A. Agent
B. Principal
C. Warrantor
D. Transferor
E. Real endorser
Which of the following is the forceful and unlawful taking of personal property?
A. Robbery
B. Burglary
C. Larceny
D. Arson
E. Criminal fraud
The ______ for ethical behavior seeks consideration of what the world would be like if
a decision is copied by everyone else.
A. Golden rule
B. Universalization test
C. Public disclosure
D. Relevant disclosure
E. World rule
"Chocolate Chips." Molly makes great chocolate chip cookies and sells them in her café
called "Molly's Famous Chocolate Chips." Some of her friends express interest in
selling her cookies. They want to use her name and identify the cookies as "Molly's
Famous Chocolate Chips." Seeing a business opportunity, Molly agrees to bake the
cookies and provide them in a frozen state to her friends who will open other cafés
under her café's name. Molly strictly controls all packaging and sales. She also
frequently inspects kitchens used by the sellers pursuant to her agreements with them.
Suzette, one of Molly's friends who entered into an agreement with Molly to open a
café and sell the cookies, was not being sufficiently careful and negligently put a
harmful ingredient into the cookie dough resulting in a customer, Fred, becoming ill.
Fred threatens to sue both Suzette and Molly. Molly is so exasperated that she cancels
all the franchise contracts on the basis of aggravation. Although the franchise
agreements provide that so long as requirements are met, the franchise agreements are
good for a period of two years, Molly takes the position that the cookies involve a
personal service using a trade secret and that she cannot be held liable for
discontinuation.
What type of arrangement did Molly make with her friends?
A. A franchise that was a chain-style business operation.
B. A franchise that was a distributorship.
C. A franchise that was a manufacturing agreement.
D. A joint partnership.
E. A joint venture.
Which of the following is true regarding contributory negligence?
A. The defense was once available in a few states but is not available in any state today.
B. It is available in all states today.
C. It was outlawed by a federal statute.
D. It was once available in all states but has been replaced in some states by the defense
of comparative negligence.
E. It was once available in all states and has been replaced in some states by the defense
of assumption of risk.
If a limited partnership is dissolved, which of the following is the order in which the
limited partnership's assets are distributed?
A. Payment to partners who have loaned the partnership money, payment to third-party
creditors, payment to the partners according to their investments in the partnership, and
payment to the partners on the basis of their shares of the profits.
B. Payment to partners who have loaned the partnership money, payment to the partners
according to their investments in the partnership, payment to third-party creditors, and
payment to the partners on the basis of their shares of the profits.
C. Payment to third-party creditors, payment to the partners according to their
investments in the partnership, payment to partners who have loaned the partnership
money, and payment to the partners on the basis of their shares of the profits.
D. Payment to third-party creditors, payment to partners who have loaned the
partnership money, payment to the partners according to their investments in the
partnership, and payment to the partners on the basis of their shares of the profits.
E. Payment to the partners on the basis of their shares of the profits, payment to
third-party creditors, payment to partners who have loaned the partnership money, and
payment to the partners according to their investments in the partnership.
