An agency relationship results from any indication of consent by the principal that the
agent may act on the principal’s behalf and under her control.
Answer:
If a consumer brings suit against the manufacturer, the retailer is relieved of its
responsibility for the fitness and merchantability of the goods.
Answer:
Rob contracted to play football for the United Lions in May 2007. However, he had an
accident and he died. His death will terminate his contract.
Answer:
A court may pierce the corporate veil if a corporation defrauds its creditors by not
having sufficient assets available to meet expected claims.
Answer:
In life insurance policies, the person who purchases the policy must have an insurable
interest in the life being insured at the time the loss occurs, not at the time the policy
was issued.
Answer:
Security deposits protect the landlord’s right to receive rent as well as her right to
reversion of the property in good condition.
Answer:
Unlike contractual liability under the traditional bargain theory, liability under the
doctrine of promissory estoppel is based on reliance.
Answer:
A holder in due course takes the instrument free of the all personal and real defences.
Answer:
The owner (mortgagor) of property subject to a mortgage cannot sell the interest in the
property without the consent of the mortgagee.
Answer:
A contract entered into involuntarily is enforceable if present in writing.
Answer:
The use of a qualified indorsement eliminates the contractual liability of the indorser.
Answer:
If a person stops payment on a check and the bank honors the stop-payment order, the
person is not liable to the holder of the check.
Answer:
By involving a lawyer in the business-planning process, a desired business objective
can be reached with less legal risk.
Answer:
Using a person’s name or likeness for commercial purposes without that person’s
consent is a form of invasion of privacy.
Answer:
A lease is a contract by which the owner of property gives the exclusive right to
possess the leased property to another person for a specific amount of time.
Answer:
An accountant’s duty of care is limited to their actions during the audit itself.
Answer:
Contracts can be created by mutual agreement, but cannot be discharged by mutual
agreement.
Answer:
An order paper can be negotiated by the bearer by transfer alone.
Answer:
Abel had grown tired of working on the family farm and was considering moving
away. However, his parents told him “If you’ll stay and help us, we’ll leave you the farm
when we die.” As a result, Abel decided to stay on the farm and worked there for the
next twenty years. However, when his parents finally died Abel learned that they had
left the farm to his brother, Mark. Abel filed suit against his parents’ estate to enforce
their promise of leaving him the farm. Which of the following is a TRUE statement?
A. Abel gave no consideration for his parents’ promise to leave him the farm, so their
promise is not enforceable against the estate.
B. The work that Abel did on the farm before his parents made their promise is
sufficient consideration to make their promise enforceable.
C. Abel’s parents’ promise is not enforceable because it was illusory.
D. Abel’s parents’ promise is enforceable under a promissory estoppel theory.
Answer:
A warranty deed:
A. conveys title and guarantees to make good any defects in the title.
B. can only be a deed of specific warranty.
C. is used to cure technical defect in the chain of title to property.
D. conveys to the grantee whatever title the grantor has at the time the deed is executed.
Answer:
“Fungible goods” are:
A. goods which are packaged and labeled separately (such as units which come in
cartons or cases).
B. mixed goods which are identical and cannot be separated (such as grain or coal).
C. perishable goods which have been improperly packaged or which have damaged
packaging and are open to contamination.
D. goods which conform to any promises or statements of fact made on the container or
label.
Answer:
Terry has a check indorsed “Pay to the order of Terry.” Terry gives the check to Jane
without indorsing it. Is Jane a holder?
A. No, because Jane failed to indorse the check.
B. No, because Terry failed to indorse the check.
C. Yes, because only delivery was necessary to negotiate the check.
D. Yes, because Jane may supply the missing indorsement herself.
Answer:
(p. 415, 416) A duty imposed on the agent by the common law generally includes the:
A. duty to compensate.
B. duty of loyalty.
C. duty to reimburse.
D. duty of indemnification.
Answer:
Under the power of judicial review:
A. a judge may render a legal rule unenforceable by declaring it in conflict with a
constitution.
B. lower courts may decide that higher court decisions are not valid.
C. courts make law by drafting new statutes.
D. the court may override the acts of the Constitution.
Answer:
Under Chapter 13 of the Bankruptcy Act, debtors:
A. can be free of all debts that are not dischargeable under Chapter 7.
B. cannot retain more property than is exempt from bankruptcy under state law.
C. are free from garnishment of their property by creditors.
D. can pay a lesser percentage of debts owed to the creditors than in straight bankruptcy
proceedings.
Answer:
Elroy is fifteen years old and makes an agreement with Dave to buy Dave’s mp3 player.
The agreement:
A. is executed.
B. cannot be cancelled.
C. is unilateral.
D. is voidable.
Answer:
Partnerships:
A. are not required to pay corporate franchise taxes.
B. need to pay privilege taxes to do intrastate business in another state.
C. are taxed on their operations at the same level as corporations.
D. cannot save income tax even if losses are anticipated in the early years of business.
Answer:
(p. 213; 215) Which of the following under the UCC is TRUE about the way to
communicate acceptance?
A. any means deemed reasonable by the court in light of the circumstances is an
authorized way of acceptance.
B. dispatches that comply with only the stipulated requirements for acceptance is an
authorized way of acceptance.
C. any form of acceptance that is not implied by trade usage is an authorized way of
acceptance.
D. a means slower and safer than the way the offer was communicated is an authorized
way of acceptance.
Answer:
When a principal breaches a duty owed to the agent, the agent:
A. may only bring a lawsuit against the principal for physical injuries suffered.
B. does not have a lien on anything that belongs to the principal which is in the agent’s
lawful possession.
C. may not terminate the agency until the contract has expired.
D. may claim the principal’s property that is in his lawful possession for compensation
due him for his performance of the agency responsibilities.
Answer:
When a tenant attaches personal property to leased premises for the purpose of
carrying on his/her business, it is called a(n):
A. domestic fixture.
B. agricultural fixture.
C. trade fixture.
D. ornamental fixture.
Answer:
Mrs. Medea killed her illegitimate child and buried it in her backyard, soon after giving
birth to it in 1952. Thirty-seven years later, in September 1989, Medea called Captain
Erebus Ereshkigal of the New York Police Department and blurted out the story over
the telephone before Ereshkigal could utter a single word. She then told him that voices
from her backyard told her to confess to the crime. Medea told the police where to dig,
and they unearthed a metal box containing the skeletal remains of a baby in her yard.
Which of the following is a TRUE statement?
A. The remains cannot be used in evidence against Medea because this would violate
her Fifth Amendment privilege against self-incrimination.
B. The remains can be used in evidence against Medea because this would not violate
her Fifth Amendment privilege against self-incrimination.
C. The remains cannot be used in evidence against Medea because Erebus did not
inform her of her right to remain silent before she told him her story.
D. The remains can be used in evidence against Medea because they are not
incriminating to her.
Answer:
The _____ includes civil, criminal, and accounting reforms that drastically expand the
accountability demanded of corporate officers and directors.
A. Electronic Communications Privacy Act
B. Foreign Corrupt Practices Act
C. Computer Fraud and Abuse Act
D. Sarbanes-Oxley Act
Answer:
With instruments payable at a definite time, Revised Article 3 requires that if:
A. the principal is not payable in installments and the due date has not been accelerated,
the instrument is overdue on the day after the due date.
B. the principal is due in installments and a due date has not been accelerated, the
instrument is overdue on the day after the due date.
C. a due date for the principal has been accelerated, the instrument is overdue upon
default.
D. there is a default in payment of the interest but no default in the payment of
principal, the instrument becomes overdue.
Answer: