Pam certified a statement prepared by John, her employee, without checking John’s
work. He was never known to be anything but diligent and his integrity had never been
questioned. The audit contained gross misstatements. Pam defends a suit against her
claiming “due diligence.” She will:
a. succeed, since she had no reason to believe her employee would lie.
b. succeed, because a reasonable person would not have inquired further.
c. fail, because due diligence requires reasonable investigation.
d. fail, because she is automatically liable for her employee’s act.
The tort of appropriation is also known as the right of publicity.
a. True
b. False
Answer the following:
a. What is negotiation? How does one become a “holder” of an instrument?
b. What is the difference between “transfer” and “negotiation”? Explain.
A trust divides legal and equitable title to property.
a. True
b. False
General Widget partnership assets amount to $34,000 after liquidation. Frank, Gene,
and Hank, equal partners, each contributed $3,000 into the capital pool at the inception
of the business. Gene later loaned the business $5,000. They owe $23,000 to creditors
for inventory. What will Gene get in distribution, assuming there is no agreement on the
distribution of profits?
a. $7,000
b. $5,000
c. $8,000
d. $11,000
Nuncupative wills are generally enforceable.
a. True
b. False
“Goods” for purposes of the Code are essentially tangible, movable personal property.
a. True
b. False
Which of the following transactions is governed by Article 2 of the UCC?
a. The sale of an apartment complex
b. The sale of oranges to be picked from a 10-acre grove
c. The sale of common stock of a soft drink company
d. A contract to receive medical services in a hospital
Statutory law is:
a. not well suited for making drastic or comprehensive changes, thus its importance as a
source of law has diminished since the end of the nineteenth century.
b. the primary source of law for such business law topics as contracts, agency, property,
and trusts.
c. a primary source of new law and ordered social change in the United States.
d. created by legislatures, which are less likely to repeal prior enactments than courts
are likely to overrule prior decisions.
Parties that are usually secondarily liable for an instrument are:
a. indorsers and drawers.
b. makers and indorsers.
c. makers and acceptors.
d. acceptors and drawers.
Kline, Finkel, and Martinez have been partners for years, but a court is now dividing
the assets and liabilities of the partnership separate from the assets and liabilities of the
individual partners. This process is called:
a. marshaling assets.
b. liquidation.
c. dissolution of the partnership.
d. winding up.
The person holding legal title to the property is the settlor of the trust.
a. True
b. False
Harry said to Marge, “I have a ring once owned by Marilyn Monroe. Would you like to
buy it for $500?” Marge pays for the ring, but the next day a friend tells her that Harry
had recently purchased the ring at a local department store. Marge enjoys wearing the
ring and wears it constantly for twelve months. Finally, she goes to Harry and says,
“Here is the ring you lied about. Give me my $500.” Most likely Marge will:
a. get her money back since Harry’s representation was fraudulent.
b. not get her money back since she should have investigated the facts about the ring
more carefully. c. get her money back since she is a good faith purchaser of
merchandise.
d. not get her money back since she has affirmed the contract by taking an unduly long
time to disaffirm.
A ninety-year-old patient walked away from a nursing home and wandered onto some
nearby railroad tracks. Once on the tracks, the patient stumbled and sprained his ankle.
A few minutes later a train approached. The engineer saw the man on the track and
could have stopped, but the train’s brakes were defective. As a result, the train hit and
killed the man. His family is suing the railroad for negligence. In this case:
a. the patient has assumed the risk of wandering onto the railroad tracks.
b. because the patient was contributorily negligent, most states would hold that the
railroad has no liability.
c. in states that follow the contributory negligence rule, the train had the last clear
chance to avoid the accident,
so the patient’s negligence does not bar his estate’s recovery.
d. the train’s striking of the man was an intervening cause, so the railroad company was
strictly liable.
The Revised Act permits the board of directors to adopt certain amendments without
shareholder action. These amendments would include:
a. extending the duration of the corporation if it was incorporated when limited duration
was required by law.
b. changing each issued and unissued authorized share of an outstanding class into a
greater number of whole
sharesifthecorporationhasonlyoneclassofshares.
c. making minor name changes.
d. All of these.
Mark wants to give Susan his car. He can effectively “deliver” it by:
a. giving Susan the keys.
b. giving her a written statement that he plans to give the car to her.
c. letting her drive it for a period of time.
d. telling his wife that he wants to give the car to Susan.
A state constitutionalprovisionconflicts with a valid federal statute. Under the
Supremacy Clause:
a. the federal statute is supreme.
b. the state constitutional provision is supreme.
c. the federal statute is supreme ifCongress has expressly so provided.
d. the state constitutional provision is supreme ifit expressly so states.
a. Discuss primary liability on a note; on a check.
b. What is secondary liability? What must be done before a person with secondary
liability can be sued? Who has secondary liability on a note? Who has secondary
liability on a check?
c. How does contractual liability on the instrument differ from warranty liability?
Under the Restatement, the publicity required for the tort of public disclosure of private
facts is the same as
“publication” under the law of defamation.
a. True
b. False
Sales of personal property are governed by Article of the Uniform Commercial Code
(UCC).
a. 1
b. 2
c. 3
d. None of these.
In most states, children under a certain age cannot make valid wills.
a. True
b. False
Which of the following is both a prejudgment and a postjudgment remedy for a
creditor?
a. Writ of execution
b. Garnishment
c. Attachment
d. Supplementary proceeding
Workers’ compensation is a form of strict liability.
a. True
b. False
A will is generally revoked by all but which of the following?
a. The testator’s murder by a devisee
b. Tearing it in half with the intent to revoke it
c. Executing another will that is inconsistent with the first
d. Inadvertent burning which destroys the document
For soldiers on active duty and sailors at sea:
a. most statutes have specialized, more formal requirements for wills.
b. in most jurisdictions, personal and real property can be passed by soldiers’ and
sailors’ wills.
c. most statutes relax the formal requirements for a will and permit a testamentary
disposition to be valid regardless of the informality of the document.
d. specialized wills allow for general gifts only.
The right of redemption would require:
a. a court order.
b. assent of all parties.
c. payment of the entire debt with interest.
d. payment of past due installments.
The accountant-client privilege is recognized:
a. only in federal court proceedings.
b. by virtue of the common law in most states.
c. only in those states that have enacted statutes creating such a privilege.
d. in most states by reason of court decisions.
A deposition is a pretrial discovery device, which consists of sworn testimony of a
witness, taken out of court.
a. True
b. False
Rules for the distribution of property in a situation involving intestate succession:
a. do not apply to property held in joint tenancy.
b. apply where the testator has failed to name an administrator.
c. prevent property from escheating to the state.
d. have no application to real estate owned by the decedent.
The term “past consideration” is not really consideration at all because the law will not
find a contract where there is no bargained-for-exchange.
a. True
b. False
Barry buys a car from a dealer, which is sold to him “as is.” If the next day, the engine
blows up, Barry can sue the dealer for breach of the implied warranty for fitness.
a. True
b. False