To satisfy the statute of frauds, the person who wants to bring the lawsuit must sign a
memorandum.
a. True
b. False
Bill has had a problem with vandalism at his business. He rigs up a spring gun at the
entryway to his store, so that any after-hours intruder will be shot upon entry. Bill may
legally use this deadly force to protect his business.
a. True
b. False
Generally, if the creditor releases the principal debtor, then the surety is also discharged.
a. True
b. False
A mere holder or an assignee takes a negotiable instrument subject to all claims and
defenses to it.
a. True
b. False
The maxim “Quifacitperalium,facitperse”accurately describes the relationship between
an independent contractor and the one who hired him or her.
a. True
b. False
A publicly held corporation is one that is both (a) owned by at least 50 shareholders and
(b) required to register under the Federal Securities and Exchange Act of
a. True
b. False
Brett contracts to purchase a particular automobile from Johnson’s car lot. At what point
does Brett obtain a special property interest that enables him to insure the car?
a. When the car is tendered to Brett
b. When the contract is made
c. When Brett pays for the car
d. When Brett accepts the car
If the issued and outstanding shares are broken up into a greater number of shares, each
representing a proportionately smaller interest in the corporation, this is known as a:
a. property dividend.
b. stock split.
c. stock dividend.
d. liquidating dividend.
Specific performance is a remedy at law which seeks to compel the party in breach to
perform the contract according to its terms.
a. True
b. False
An exclusive dealing contract is one type of contract which is illusory because it lacks
consideration.
a. True
b. False
Equitable remedies result in money awards to the plaintiff.
a. True
b. False
A statement signed by the required number of witnesses who observe the execution of a
valid will is called a(n):
a. validity clause.
b. ambulatory clause.
c. attestation clause.
d. fiduciary clause.
The term actusreusrefers to the mental intent element of a crime.
a. True
b. False
Mel owns a neighborhood grocery store that he would like to sell. Katrina is interested
in purchasing the business, but she is concerned because she knows that Mel has built
up a lot of goodwill over the years, and she wonders whether Mel might not just open
another store down the block and take all of the business from the old store with him.
Katrina asks for and receives from Mel a clause in the sales agreement that Mel will not
open another grocery store within a 150-mile radius of the old store for a period of at
least ten years.
a. What is this agreement called?
b. Is the negotiated clause a valid one? Explain why or why not.
c. What guidelines would a court ordinarily use in determining whether to enforce such
a clause?
Under Section 1 of the Sherman Act, which of the following is illegal perse?
a. Vertical market allocations
b. Horizontal market allocations
c. Vertical territorial and customer restrictions
d. All of these.
Barb sets her prices to undercut her competitors by 20%. This is:
a. vertical price fixing.
b. market allocation in restraint of competition.
c. no violation of the Sherman Act.
d. perseillegal.
a. What is the implied warranty of habitability? Explain.
b. the family becomes very ill. Eventually, they trace the source of the illness to
chemicals in the cabinets and walls of the home. What can Alice do? Explain.
Mary and Renaldi Co. have dealt with each other for many, many years. Mary’s
Boutique orders 100 assorted lipsticks at $3.00 each from Renaldi Co. Renaldi sends
back a confirmation letter stating that the shipment will be made by UPS rather than by
U.S. mail as usual. There is:
a. no contract, but a counteroffer.
b. a contract for shipment by UPS unless Mary objects.
c. a contract for shipment by UPS only if Mary agrees.
d. a contract for shipment by U.S. mail.
Unless otherwise provided by statute, an assignment may be oral.
a. True
b. False
Which of the following is incorrect with regard to treasury shares?
a. No dividends may be paid on treasury shares.
b. They are issued but not outstanding.
c. A corporation may sell treasury shares for any amount the board of directors
determines, even if the shares have a par value that is more than the sale price.
d. The concept of treasury stock was created by the MBCA and is carried forward in the
RMBCA.
The RUPA authorizes the optional, central filing of a statement of partnership authority
specifying the names of partners authorized to execute instruments transferring the
partnership’s real property. A filed statement is effective for six-year, renewable terms.
a. True
b. False
A business trust, also called a Massachusetts trust, was devised to avoid burdens of
corporate regulation, but it is no longer in use today.
a. True
b. False
Apparent authority arises out of words or conduct of a disclosed or unidentified
principal manifested to third persons.
a. True
b. False
Which of the following is NOT included within the Code definition of merchantability?
a. Reasonably fit for the ordinary purposes for which the goods are used
b. Pass without objection in the trade under the contract description
c. In the case of secondhand goods that they be of a quality that matches that of new
goods of the same type.
d. Are of fair, average quality.
A “person” for purposes of a limited partnership can be a corporation.
a. True
b. False
One difference between a full and a limited warranty is that in a limited warranty, the
manufacturer may, if reasonable, limit the warranty of merchantability to two years.
a. True
b. False
The Americans with Disabilities Act requires businesses to make special
accommodations for handicapped workers and customers unless the cost is unduly
burdensome.
a. True
b. False
Dan dies without a valid will in a state that uses the Uniform Probate Code. Which of
the following is correct?
a. If there are no children and no surviving parents, Dan’s widow is entitled to the entire
estate.
b. The surviving spouse is entitled to the entire estate regardless of other possible heirs.
c. If Dan has a parent surviving as well as a wife, then Dan’s parent will get one-half of
the estate remaining after payment of $50,000 to the wife.
d. If Dan is survived by his wife and two children from a previous marriage, his wife is
entitled to the first
$200,000 plus half of the remaining estate.
A famous decision involving mistake as to the meaning of contract terms is
Rafflesv.Wichelhaus, a case involving two ships with the same name which were
confused by the two parties to the contract.
a. True
b. False
What is unjust to a social egalitarian will also be unjust to a libertarian.
a. True
b. False
The Check Clearing for the 21st Century Act requires banks to accept checks in
electronic form.
a. True
b. False
The UCC does not cover:
a. transfer of negotiable instruments.
b. investment securities.
c. sales of goods.
d. sales of copyrights.
Incellmed Corporation has developed a new process that it plans to use in genetically
engineering microorganisms for its pharmaceutical business. To protect the process,
Incellmed may:
a. only copyright the process.
b. only patent the process.
c. only protect the process as a trade secret without registration.
d. Either patent the process or protect the process as a trade secret, depending on the
other facts of the situation.
Federal protection of a registered trademark is perpetual.
a. True
b. False
Which of the following would NOT be considered a breach of the warranty of
merchantability in some jurisdictions?
a. A piece of glass in a bottle of cola
b. A stone in a can of vegetable soup
c. A cherry pit in a can of cherry pie filling
d. A leaking plastic bottle containing bleach