When an injured party is required to elect remedies, which of the following would be
mutually exclusive?
a. Restitution and liquidated damages
b. Specific performance and compensation for incidental damages
c. Specific performance and restitution
d. Incidental and consequential damages
Aunt Ellie promises her 21-year-old nephew, Robbie, that she will pay him $100 if he
quits smoking for a month. IfRobbie does, is there a binding contract?
a. No, because Robbie gave no benefit to Aunt Ellie
b. No, because Robbie did not suffer any detriment
c. Yes, because stopping smoking will benefit Robbie’s health
d. Yes, because Robbie gave up a legal right
Al owns a farm that he believes is worth $150,000. Betty knows that there is oil under
the farm and offers Al
$160,000 for it. Al accepts and sells the farm to Betty. Al later realizes that the land was
worth more than $160,000. Al can have the contract avoided based upon fraud.
a. True
b. False
Resulting from a Supreme Court decision, vertical territorial and customer restrictions
are now illegal perserather than being judged by the rule of reason.
a. True
b. False
The Overseas Private Investment Corporation (OPIC):
a. is a private company that analyzes and monitors the political climate of countries in
which American companies do business.
b. offers insurance to American companies to diminish the risks of expropriation of
their property in the countries in which they do business.
c. was successful in lobbying Congress to repeal the Foreign Sovereign Immunities Act
which had, in the past, prevented American companies from seeking relief from
countries which had expropriated their property.
d. None of these.
Roberts, Smith, and Tomas have been partners for ten years. The partners, however, are
now collecting debts, converting assets to cash, paying creditors, and distributing
remaining assets to each partner. Roberts, Smith, and Tomas are engaged in:
a. dissolution.
b. marshaling assets.
c. reformation.
d. winding up.
Which of the following is a prerequisite for requesting appraisal rights?
a. Make a verbal demand
b. Meet the statutory time limit
c. Get an independent appraisal of the stock’s value
d. None of these.
The “impostor rule” is an exception to the general rule that negotiation of an order
instrument requires a valid
indorsement by the person to whose order the instrument is payable. a. True
b. False
An offer is an indefinite proposal made by one person to another.
a. True
b. False
Mary goes to a stockbroker, purchases 50 shares of a certain stock, and instructs the
broker to register the stock in
her husband Warren’s name. If this stock is intended as a Valentine’s Day gift, Warren
becomes a(n):
a. donee beneficiary.
b. transferee.
c. delegatee.
d. assignee.
As a result of the Sarbanes-Oxley Act, the lead audit partner having primary
responsibility for the audit and the audit partner responsible for reviewing the audit
must rotate at least every three years.
a. True
b. False
Which of the following is nota remedy available to an unpaid seller against the buyer?
a. Recovery of the price
b. Cover and suit for damages
c. Recovery of incidental damages
d. Cancellation of the contract
Cora and Bruce have an executory contract for the sale of some goods. Cora files for
bankruptcy and is then discharged by the bankruptcy court. Cora has no obligation to
perform under the contract.
a. True
b. False
Harry Jones at Jones Brothers Furniture Co. does not like the Bryte Lamp Co.
representative, so he decided that
Jones Brothers would boycott Bryte. Under the Sherman Act, this is:
a. perseillegal.
b. no violation.
c. a tying arrangement.
d. vertical market allocation.
The members of the board of directors are essentially trustees of the corporation.
a. True
b. False
Arnold and Doug make a contract for Arnold to manufacture five leather chairs of a
specified design. Prior to their manufacture, the factory is destroyed in an accidental
fire that is no one’s fault. The chairs are available from other sources. Arnold:
a. must supply the chairs, even if he must buy them elsewhere.
b. is discharged from his duty to deliver the chairs by the destruction of the factory.
c. has materially breached the contract if he fails to deliver the chairs.
d. must return any money paid by Doug.
A valid will must be witnessed. Which of the following statements about witnesses is
correct?
a. Most states require only one witness to a will.
b. The witnesses must see the testator write the will.
c. The witnesses must sign the will.
d. Under the Uniform Probate Code, witnesses lose any bequests to them in a will they
witness.
In some corporations, only the shareholders are taxed; in others, both the corporation as
an entity is taxed and the shareholders are taxed as well.
a. True
b. False
Charitable subscriptions are one of the most frequently occurring applications of the
doctrine of promissory estoppel.
a. True
b. False
In order to form a contract, the parties must:
a. manifest their agreement subjectively.
b. manifest their agreement objectively.
c. indicate solely through written word their intent.
d. create a formal document called a contract.
Patrick agrees to sell two different goods to his friend Ron, a retailer. One item is legal,
and one item is illegal. The contract price is $2,000. In this case:
a. Patrick may not recover payment for either of the items, or in some cases, he may
recover for the legal item, but not for the illegal item.
b. Patrick may only recover for the legal item, and he may not recover for the illegal
item.
c. the contract is unconscionable under the UCC.
d. Patrick may not recover payment for either of the items.
When a limited partnership dissolves and winding up commences:
a. a certificate of cancellation must be filed.
b. the state automatically cancels the certificate of limited partnership.
c. all general and limited partners can be involved in the winding up process.
d. a court must decree that the partnership is terminated.
The U.S. Supreme Court reviews most decisions of lower courts by:
a. the mandatory writ of certiorari.
b. the discretionary writ of certiorari.
c. appeal by right.
d. appeal inrem.
Legal detriment means the obtaining by the promisor of that which he had no prior legal
right to obtain.
a. True
b. False
In an assignment for the benefit of creditors, if each creditor is paid an equal share of
his original obligation, the debtor is then discharged from any further obligation to the
creditor.
a. True
b. False
Belinda has a household insurance policy, which requires that she notify the insurance
company within thirty days of any loss before she is eligible to receive payment for her
loss. The notification requirement is a condition precedent to the insurance company’s
obligation to perform, even though the notification must occur subsequent to the loss.
a. True
b. False
If untrue, which of the following would probably be considered a misrepresentation of a
material fact?
a. “This is the one that I think is the best buy.”
b. “This is the best computer on the market.”
c. “This car has new brakes.”
d. “These tires will wear like iron.”
An automobile may be considered a necessary item for a minor.
a. True
b. False
A written and signed promise by Miller to Baker to deliver 1,000 pounds of flour in 30
days is an example of a negotiable instrument.
a. True
b. False
The HometownNewssnapped a picture of Tom, a local teenager, as he was sleeping
under a tree in the park on a warm spring day. If they print the picture on the front page
of the paper:
a. the HometownNewsis guilty of intrusion.
b. the HometownNewsis guilty of false light.
c. the HometownNewsis guilty of appropriation.
d. it is unlikely that the HometownNewsis guilty of any tort.
Dickens Corporation, incorporated in Delaware, opens a warehouse in a western state
from which it ships goods. If
Dickens does not have a certificate of authority to do business within the western state:
a. it will face no sanctions or penalties.
b. the corporation will be shut down.
c. the corporation’s officers and directors may be held personally liable on contracts
made within the state.
d. Any of these may happen.
David, a partner in the Tri-State Express Mail delivery partnership, negligently drove
his delivery truck onto the curb during a rush-hour package delivery. Marlene was
injured. Against whom can Marlene collect?
a. Only David
b. Only the other partners
c. Tri-State Express Mail Partnership or any partner
d. Only Tri-State Express Mail Partnership