A restraint that is merely ancillary to a contract may be legal if it is:
A. designed to protect interests created by the contract.
B. broader than reasonably necessary to protect the interests created by the contract.
C. solely designed to restrain trade.
D. meant to recover punitive damages for furthering public interest.
Answer:
On January 1, 2006 Bev owed $5,000 on her car loan. The loan was due in May 2006.
On January 1, 2006, Bev sent the lender a check for $4,000 marked “in full payment” of
the loan. The lender cashes the check. Under these circumstances:
A. the lender can sue Bev for $1,000.
B. the lender has not promised to accept the payment as “payment in full.”
C. Bev can avoid paying the $1,000.
D. Bev has not given consideration.
Answer:
A buyer owned a retail store in Baltimore, and the seller was a manufacturer in Los
Angeles. If the buyer orders goods from the seller to be shipped “FOB Baltimore,”
which of the following statements is TRUE?
A. The seller bears the expense and risk of delivering the goods to Baltimore.
B. Both equally share the risk of loss.
C. The seller bears the expense and risk of delivering the goods only to the carrier in
Los Angeles.
D. The buyer bears the risk of loss as he has the power to take possession of the goods.
Answer:
The Holder in Due Course rule:
A. alters statutes of limitations or other state-created limitations on the consumer’s
enforcement of claims and defenses.
B. states that all defenses available to the purchaser against the seller can also be
available against the holder in due course.
C. eliminates rights that the consumer may have as a matter of federal, state, or local
law.
D. creates a warranty claim or defense where the product is sold “as is.”
Answer:
A subcontractor’s bid:
A. is considered an offer.
B. can be revocable.
C. can be withdrawn even if the general contractor has relied on it.
D. is considered to be a part of a shrinkwrap agreement.
Answer:
Which of the following statements is TRUE of the recovery by a creditor on the theory
that the creditor was a third-party beneficiary of the contract employing the
accountant?
A. To recover the creditor must show that only he stood to benefit from the contract.
B. To recover the creditor must show that the accountant was aware of the fact that the
audit was ordered to satisfy the demand of the creditor.
C. To recover the creditor must prove that the accountant performed the work in a
negligent fashion, to the injury of the creditor.
D. The creditor is prohibited by law, in most states, from bringing such a suit.
Answer:
Which of the following statements is TRUE for a restrictive indorsement?
A. A person who purchases a check indorsed “for collection”, automatically converts it
even if the indorser received the amount paid for it.
B. If an indorser merely signs his name and does not specify to whom the instrument is
payable, he has indorsed the instrument in restriction.
C. The person who takes an instrument with a restrictive indorsement need not pay for
the instrument consistently with the indorsement.
D. Indorsements for collection or deposit are restrictive indorsements.
Answer:
An indorsement that contains the signature of the indorser along with the words
indicating to whom, or to whose order, the instrument is payable is a __.
A. special indorsement
B. restrictive indorsement
C. blank indorsement
D. qualified indorsement
Answer:
Sociological jurisprudence maintains that:
A. statutes should be interpreted based on their plain meaning.
B. courts must look beyond the plain meaning of a statute to consider the law’s
legislative purpose.
C. courts should not consider the legislative purpose as well as their perceptions of the
prevailing public policies in interpreting statutes.
D. the law is the command of legitimate political institutions and must be enforced to
the letter.
Answer:
Which of the following is TRUE for debentures?
A. It is a type of short term equity security.
B. It is a type of long-term secured debt security.
C. It can have a term of 10 years or less.
D. It is a type of long-term unsecured debt security.
Long-term unsecured debt instruments are called debentures. They may have a term of
30 years or more.
Answer:
One of the factors considered in determining the state statute to be constitutional and
allow the states to regulate aspects of interstate commerce that have not been preempted
by the federal government is that the state statute must:
A. not further a legitimate local interest.
B. not discriminate in favor of local interests and against out-of-state interests.
C. allow only direct, not incidental, regulation of interstate commerce.
D. impose costs on interstate commerce that are more excessive than necessary to bring
about the state interests.
Answer:
Which of the following is TRUE about statutes of repose?
A. This is a significant change in the law for people who are injured by products that
cause immediate injury.
B. It bars the bringing of a tort-based product liability suit usually after five years from
the date the product is first sold to a user.
C. People covered by statutes of repose now can bring suit even if their injury is not
discovered within the statutory period.
D. The tort statute of limitations gives people one or two years from the time they
discover their injury in which to bring their suit.
Answer:
Which of the following is TRUE for the dissolution of an LLC?
A. The remaining members cannot avoid liquidation even by unanimously agreeing to
continue the business operations.
B. Dissolution can only be caused by bankruptcy.
C. The LLC must be set up so that it can be easily dissolved.
D. The act of dissolution terminates the LLC’s business.
Answer:
What right does a partner have to continue a partnership beyond the originally
agreed-on term?
A. The partner has an unconditional right.
B. The partner has no right to continue.
C. The partner has a right to continue until the firm is liquidated or a new partner joins
the firm.
D. The partner has no right to continue until it is agreed upon by the majority of
partners.
Answer:
Which of the following statements is TRUE about the Federal Sentencing Guidelines?
A. They are designed to establish consistent sentences for homicides only.
B. They require judges to arrive at a sentence by using a formula based on the
seriousness and circumstances of the crime.
C. They specifically mandate lenient penalties for corporations dealing with
white-collar crimes.
D. They mandate a minimum one-month prison term for tax frauds.
Answer:
Adam contracts to sell Ben 100 widgets for $100 for use in Ben’s factory. Adam does
not know that Ben’s factory is closed as it is waiting for supply of widgets from Adam.
Will Adam be liable for the damages caused due to late delivery?
A. Will be liable for compensatory damages.
B. Will be liable for consequential damages.
C. Will not be liable for any damages.
D. Will be liable for nominal damages.
Answer:
If a part of a divisible contract is illegal:
A. the whole contract is void.
B. the illegal parts will be removed and the legal parts remain in force.
C. the whole contract will be unenforceable.
D. the whole contract is still enforceable.
Answer: