The Fourteenth Amendment is part of the Bill of Rights.
According to the UCC, a check is a special kind of draft.
If Alice makes a proper tender of the full payment of $1,000 due on Richard’s note on
the note’s due date, but Richard improperly refuses to accept the money, Alice will still
be liable for the $1,000, but will not have to pay any interest on the amount.
Investment contracts are securities.
Stakeholders of a business consist of many different groups of people who are affected
by the business’s decisions.
Independent agencies are governed by a senate committee appointed by the president.
Suretyship is an agreement to complete a contract within one year.
An artist can delegate her duties to paint a portrait she was hired to.
Directors and officers have a fiduciary duty of care.
Employee are entitled to full pay if they take time off from work under the Family and
Medical Leave Act.
A promise to pay a debt that has already been discharged in bankruptcy must be in
writing in order to be enforceable in many states.
Good faith is generally relevant in determining whether someone has a valid title.
For a court to enforce a promise, only the offeror must give consideration.
States still require that formal contracts be under seal.
The equal dignity rule requires that all agency agreements be in writing.
An offer has two elements, intent and definite and certain terms.
If an owner entrusts the possession of goods to a merchant who deals in goods of that
kind, the merchant has no authority to transfer any rights in the goods to a buyer in the
ordinary course of business.
Specific performance is a term of a contract that requires a sum certain for damages.
Under partial performance, if the buyer in an alleged contract for the sale of land has
paid any portion of the sales price and either has begun to permanently improve the
land or has taken possession of the land, the courts will consider the contract partially
performed, and this partial performance will amount to proof of the contract.
A partnership in which the partners divide profits and management responsibilities is a
limited partnership.
Intermediate courts of appeal exist in all states.
Rewriting a contract to reflect what the parties had agreed on is referred to as
rescission.
PMSI is purchase-money security interest, which is formed when a debtor uses
borrowed money from an unsecured party to buy the collateral.
Under SEC Rule 506, issuers who make private offerings of securities must still go
through the registration process but they can advertise their private offerings to the
general public.
Corporations have only those powers that states grant them.
A negotiable instrument is a substitution for cash.
A consumer good is an item used or bought primarily for personal, family, or household
purposes.
The U.S. Supreme Court has interpreted the Securities Act of 1933 to mean that only
stocks and bonds should be treated as a security.
The Administrative Procedures Act provides specific guidelines on rule making by
agencies.
When an enforceable contract does not exist, the court may grant a recovery based on
quasi-contract in order to prevent an injustice from occurring.
Subject-matter jurisdiction is a court’s power to hear certain kinds of cases.
Chinese law fails to provide securities regulation.
A franchisor is the owner of a trade name or trademark who is a party to an arrangement
whereby another party sells goods or services under the trade name or trademark.
_____ is a type of warranty regarding instrument.
A. Transfer
B. Presentment
C. Acknowledgement
D. Transfer, presentment, and acknowledgement
E. Transfer and presentment, but not acknowledgement
Once a voluntary liquidation proceeding under Chapter 7 is filed, the debtor’s
prepetition assets form the ______.
A. corpus
B. remainder
C. residual estate
D. bankruptcy estate
E. relinquished asset pool
Which of the following is the most typical way in which to provide constructive notice
of agency termination?
A. By telephone
B. By letter
C. By posting a notice at the courthouse
D. By newspaper publication
E. By e-mail
Which of the following is true?
A. As soon as a transferee discovers a breach of warranty has occurred, he or she can
bring suit against the transferor.
B. A transferee must wait at least 48 hours after he or she discovers that a breach of
warranty has occurred before bringing suit against the transferor.
C. A transferee must wait at least 5 days after he or she discovers that a breach of
warranty has occurred before bringing suit against the transferor.
D. A transferee must wait at least 10 days after he or she discovers that a breach of
warranty has occurred before bringing suit against the transferor.
E. A transferee must wait at least 30 days after he or she discovers that a breach of
warranty has occurred before bringing suit against the transferor.
Coffee shops. Bernice wants to open a chain of coffee shops and begins by asking her
friends in various states around the country to invest through the purchase of securities
in the coffee shops. Her friend Robbie says that he would like to invest but that she
should be sure that she satisfies requirements of the SEC. He tells her that she has to
provide information to the SEC involving a description of the securities, an explanation
of how proceeds will be used, information regarding the management of the company,
and other matters. He tells her that she also has to provide a document to the SEC that
will be provided as an advertising tool to potential investors who can rely on it to
decide whether they should buy securities. Bernice says that she does not want to do
that. She explains to Robbie that insofar as the coffee shop venture is concerned, she
does not want to advertise; and she wants to offer securities only to a limited number of
wealthy friends. Particularly, she has in mind Scott who has a net worth of at least $3
million and Mary, a psychiatrist. Mary recently filed bankruptcy because of some bad
decisions involving an elaborate decoration of her office. Although her income for the
past couple of years has been in the range of $80,000, business is improving based on
her recent involvement with a number of patients suffering anxiety based upon a fear of
alien invasion. Which of the following is the term for the document referenced by
Robbie involving information to be provided to the SEC involving a description of the
securities, an explanation of how proceeds will be used, information regarding the
management of the company and other matters?
A. Robbie was wrong, and there is no such document.
B. A confirmation statement.
C. A registration statement.
D. An acknowledgement statement.
E. A reference statement.
Patty, who lives in East Tennessee, developed a new type of printer that required very
little ink. As a merchant, she entered into contracts to sell the printer to a number of
merchants of office supplies in the East Tennessee area for a charge of $600 each. She
further entered into a number of contracts with merchants in other states and also in
foreign countries. For printers sold in states other than Tennessee and for printers sold
outside the U.S., she charged $1,001 each. Patty was a trusting soul who did not require
that her arrangements be in writing because she believed that a person’s word was his or
her bond. She did, however, send a confirming memo to each client to which she
received no objections. Patty manufactured a number of printers; but unfortunately, due
to a downturn in the economy, a number of her buyers refused to proceed on their
contracts, with several claiming that the contracts were unenforceable because they
were not in writing. Which of the following is true regarding whether the contracts with
clients in the East Tennessee area were required to be in writing?
A. Because the contracts were for amounts priced at $500 or more, they were required
to be in writing and signed by the buyer.
B. Because the printers were sold in Patty’s home state, no writing was required.
C. Because the contracts were for amounts priced at $1,000 or more, they were required
to be in writing and signed by the buyer.
D. Because the contracts were for amounts priced at $500 or more, they were required
to be in writing; but Patty’s memo was sufficient to satisfy the requirement.
E. Because the contracts were for amounts priced at $1,000 or more, they were required
to be in writing and signed by the buyer; but Patty’s memo was sufficient to satisfy the
requirement.
Lakeside Property. Ronnie agreed to act as the agent of Sue in finding a piece of
lakeside property for her at a good price and also in obtaining a loan for her with which
to purchase the property. She agreed to pay him $500 for doing so. To assist Ronnie in
his duties, Sue disclosed to Ronnie confidential information about her finances and
debts. Ronnie decided that he needed help and paid Rick $300 to look for property for
Sue. Bruce told Ronnie about a great deal on a piece of lakeside property that Bruce had
for sale. In fact, the deal was so good that Ronnie purchased the property for himself.
When Sue found out about the property Ronnie bought for himself, she complained to
Ronnie. He defended himself on the basis that he was not actually working for Sue
when he found out about the deal. At the time, he was playing golf with Bruce. He also
told Sue that he had hired Rick for $300 to assist him and that he could not be held
liable because he had turned the job over to Rick. He asked Sue for reimbursement of
that amount. Sue fired Ronnie threatening to sue him. Ronnie told Sue that he would
counterclaim for the $300 owed to Rick. Only after he was fired, Ronnie disclosed to a
number of parties information regarding Sue’s spending habits that he thought were
excessive. Which of the following is the most likely result if Sue sues Ronnie for
purchasing the property from Bruce?
A. Sue will lose because Ronnie had the right to act in his own best interest.
B. Sue will lose but only because Ronnie was not involved in work duties when he
heard about the property.
C. Sue will lose because Ronnie had validly assigned all duties to Rick.
D. Sue will win.
E. Sue will win only if she can establish that she expressly told Ronnie that he could not
assign the contractual duties under the contract.
Under the Uniform Commercial Code, contracts for the sale of goods totaling more
than ______ must be in writing.
A. $200
B. $300
C. $500
D. $600
E. $1,000
Presidential Profits. Linda was president of a publicly traded tractor company, Tough
Tractors. Linda became aware that stock in her company would likely increase
significantly in value because her company had a contract to purchase the assets of
Rough Tractors. The boards of both companies wanted the information kept
confidential until the purchase was complete and a news release was made. Before the
news was made public, Linda immediately purchased a significant number of shares in
Tough Tractors. Linda also told her friend Frank about the contract to purchase assets.
Frank, who knew that the information was not public, told his brother, George. Frank
and George purchased a number of shares of stock in Tough Tractors prior to any public
announcement of the sale. After the public announce was made and the purchase of
assets went through, Linda, George and Frank, all sold their shares in Tough Tractors
and made a nice profit. Which of the following would describe Frank in providing
information about the asset sale to George?
A. Tipper
B. Provider
C. Providee
D. Tippee
E. There is no designation for his behavior because he did nothing illegal.
Junk Food. Mary Dogood, a member of the school board in ABC County, is appalled at
the amount of junk food in the schools. She convinces the state legislature to pass an
ordinance that no stores may sell any unhealthy, junk food within 500 feet of any school
or day care center. A teacher of political science raises the issue of whether the
regulation is valid and is told that it is a valid exercise of the jurisdiction’s police power
to protect its citizens. Convenience stores balk at the regulation and challenge it in
court. What concept is addressed in regard to the reference to “police power”?
A. The residual powers retained by each state to safeguard the health and welfare of its
citizenry.
B. The residual powers retained by the federal government to enforce valid laws and
regulations.
C. The powers granted to local government to enter residences without a search
warrant.
D. The powers granted to state governments to tax for the purposes of having law
enforcement.
E. The powers granted to state government to imprison citizens of other states who
commit crimes within a state.
Which of the following is true regarding liability on negotiable instruments?
A. Makers and acceptors are primarily liable for a negotiable instrument, while drawers
and endorsers are secondarily liable
B. Drawers and endorsers are primarily liable, while makers and acceptors are
secondarily liable
C. Makers and drawers are primarily liable, while acceptors and endorsers are
secondarily liable
D. Acceptors and endorsers are primarily liable, while makers and drawers are
secondarily liable
E. Makers, acceptors, drawers, and endorsers are all secondarily liable
In a _____ all the partners’ liability for professional malpractice is limited to the
partnership.
A. general partnership
B. limited partnership
C. professional partnership
D. limited liability partnership
E. loss limiting partnership
What type of gift is made by a person during his or her lifetime?
A. Adverse possession
B. Profit
C. An easement
D. Causa mortis
E. Inter vivos
A voidable contract may be canceled or _____.
A. chargeable
B. rescinded
C. deassented
D. reassented
E. uncharged
If the plaintiff wants a court order requiring the defendant to stop doing something, the
plaintiff is seeking a(n) _______________.
A. specification
B. directive
C. instructional edict
D. demand
E. injunction
Which of the following is true regarding illusory promises?
A. Illusory promises are not consideration.
B. Illusory promises are consideration.
C. Illusory promises qualify as consideration when past consideration is at issue.
D. Illusory promises qualify as consideration when promissory estoppel is at issue.
E. Illusory promises are consideration only when a sale of goods is involved.
Which amendment provides that the government cannot infringe on citizens’ right to
bear arms?
A. First
B. Second
C. Fifth
D. Sixth
E. None
The obligations of sellers/lessors and buyers/lessees are determined by which of the
following?
A. Terms the parties outline in agreements only
B. Custom only
C. Rules outlined by the Uniform Commercial Code only
D. Terms the parties outline in agreements, custom, and rules outlined by the Uniform
Commercial Code
E. Terms the parties outline in agreements and custom, but not rules outlined by the
Uniform Commercial Code
Which of the following are examples of negotiable instruments?
A. Checks and oral agreements
B. Drafts and stocks
C. Notes and oral agreements
D. Checks, drafts, and notes
E. Checks and drafts, but not notes
Which is the most common type of negotiable instrument in the United States that is
regulated by the UCC?
A. Money orders
B. Certificates of Deposit
C. Notes
D. Demand instruments
E. Checks
A(n) ______ is an irrevocable right to use some part of another’s land for a specific
purpose without taking anything from it.
A. appurtenance
B. profit
C. easement
D. fixation
E. joint use
Which of the following is true regarding the obligation of a minor on disaffirmance?
A. In all states, a minor must return any consideration in his control but is entitled to a
full refund of any purchase price regardless of the condition of the consideration when
returned.
B. In all states, a minor is entitled to a full refund without returning consideration.
C. In all states, a minor must return any consideration in his control, must make
restitution, and must pay for any loss in value of the collateral.
D. In all states, a minor only receives a return of half the minor’s investment.
E. The obligations of a minor on disaffirmance vary from state to state.
Presidential Profits. Linda was president of a publicly traded tractor company, Tough
Tractors. Linda became aware that stock in her company would likely increase
significantly in value because her company had a contract to purchase the assets of
Rough Tractors. The boards of both companies wanted the information kept
confidential until the purchase was complete and a news release was made. Before the
news was made public, Linda immediately purchased a significant number of shares in
Tough Tractors. Linda also told her friend Frank about the contract to purchase assets.
Frank, who knew that the information was not public, told his brother, George. Frank
and George purchased a number of shares of stock in Tough Tractors prior to any public
announcement of the sale. After the public announce was made and the purchase of
assets went through, Linda, George and Frank, all sold their shares in Tough Tractors
and made a nice profit. In which of the following prohibited practices was Linda
engaged by purchasing the shares after she found out about the merger?
A. Insider trading
B. Outlaw trading
C. Presidential trading
D. Officer profiting
E. Prohibited profiting
Which of the following was the result on appeal in Martha A. Nix and Charles E.
Upham v. Skip Wick, Christie Wick, and James Oldfield, the case in the text in which the
plaintiffs sued claiming that in addition to a written agreement regarding the purchase
of land, they were orally promised the sale of additional land which the facts later
revealed was not actually owned by the seller?
A. That the actual owner of the land would be forced to convey the property.
B. That under the statute of frauds, the entire contract of sale would be rescinded but
that the plaintiff would not receive damages.
C. That the contract would be enforced, but that the seller would be forced to pay the
plaintiff’s damages because of the portion of the land that could not be conveyed.
D. That under the statute of frauds, the contract would be rescinded and that the plaintiff
was entitled to damages.
E. That the statute of frauds rendered void allegations regarding the sale of the land
owned by the other party.
Which of the following is true regarding a signature on a document falling within the
statute of frauds?
A. There is no requirement of any signature of either party to satisfy the statute of
frauds.
B. Any party required to sign must sign at the beginning of the document.
C. Any party required to sign must sign at the end of the document.
D. Any party required to sign must sign both at the end and at the beginning of the
document.
E. So long as it is meant as a signature, a party required to sign may sign at any place
on the document.
Which of the following are tools of discovery?
A. Interrogatories
B. Depositions
C. Summary motions
D. Both interrogatories and depositions, but not summary motions
E. Interrogatories, depositions, and summary motions
From what country did equitable remedies as applied in the U.S. grow out?
A. France
B. Italy
C. England
D. Spain
E. Portugal
Which of the following occurs when the parties to the agreement wish to replace one of
the parties with a third party?
A. Accord and satisfaction
B. Novation
C. Substituted contract
D. Mutual rescission
E. Alteration
Check Cashing Business. Susan owns and operates a check cashing business. A
customer, Bob, claiming to be Sam, comes in and cashes a $2,000 check issued by ABC
Trucking to Sam. The day after Susan cashed the check, she received a notice from
ABC Trucking that some checks had been stolen. It was later discovered that the
customer had forged Sam’s name on the check issued by ABC Trucking. At the time she
took the ABC Trucking check, Susan was very busy with several customers in line. She
simply glanced at the check and cashed it. A reasonable examination would have
revealed that the check had been materially altered and changed from the amount of
$200 to $2,000. Susan decided that she needed to hire some people to help her because
she also had a problem with another check. On the same day that she took the ABC
Trucking check, she took a check from another customer, Maurice. It was later
discovered that the check from Maurice, which was four months old, was the subject of
a dispute between Maurice and the issuer of the check for whom Maurice had done
some work. The issuer claimed that the work was improperly done. Both ABC Trucking
and the issuer of the check to Maurice stopped payment on the checks. Susan claims
that she was entitled to the status of holder in due course and was entitled to payment
on both checks. What is the effect of Susan receiving notice the day after she cashed the
check for Bob that the check had been stolen?
A. The notice has no effect on her status as holder in due course because it was
provided after she cashed the check.
B. The notice prevents her from being a holder in due course.
C. The notice prevents her from being a holder in due course only if Bob had been
convicted of check cashing offenses in the past since she would have discovered his
history had she checked.
D. The notice prevents her from being a holder in due course only if she subjectively
knew that Bob had been charged criminally with check cashing violations in the past.
E. The notice prevents her from being a holder in due course because it was presented
to a business; only individuals can avoid the effect of notice of theft by cashing a check
prior to receiving notice.
The duration of one’s ownership interest and the power one has over using the land
depends on the type of ______ one is said to hold.
A. condition
B. estate
C. tenancy
D. hold
E. acknowledgement
The discharge by parties of their obligations by doing what they respectively agreed to
do under the terms of the contract is called ______.
A. discharge by tender
B. discharge by performance
C. discharge by finishing
D. discharge by absolution
E. discharge by reason
A(n) ______ is a specific draft that orders the bank to pay a fixed amount of money on
demand.
A. note
B. promissory note
C. check
D. acknowledgment draft
E. promissory draft
Cosmetic Profits. Sally is the vice president at Big Name Cosmetics Company. Through
important and material nonpublic information, she learns that the company is soon
going to purchase a smaller chain of stores. It is expected that stock in Big Name
Cosmetics will rise dramatically at that point. Sally immediately buys a number of
shares of her company’s stock. She also tells her friend Alice about the expected
purchase of stores. Alice wanted to purchase stock in the company but lacked the funds
with which to do so. Although she did not have the funds in Bank A, Alice decided to
draw a check on Bank A and deposit the check in Bank B and then proceed to write a
check on Bank B to cover the purchase of the stock. She hoped that she would have
sufficient funds to deposit before the check was presented for payment. Of which
offense is Sally guilty, if any, in purchasing stock of her company?
A. Insider trading
B. Tipping
C. Insider misappropriation
D. Extortion
E. She is guilty of no offense
Which of the following occurs when a debtor turns over all assets to a trustee?
A. Liquidation
B. Reorganization
C. Reformation
D. Acknowledgment
E. Avoidance
Monetary damages are also referred to as ______ damages.
A. equitable
B. fair
C. public
D. legal
E. injunctive
Cindy and Clowie have a dispute regarding ownership of a dog, Rascal. Cindy removed
Rascal’s tags in order to give him a bath. Knowing what was coming, Rascal made a run
for it and ended up at Clowie’s home down the street. When Cindy saw Clowie walking
Rascal, she demanded his return. Clowie refused. A lawyer in the neighborhood
suggested either an early neutral case evaluation or mediation in an attempt to resolve
the feud. Describe mediation and neutral case evaluation. Which would you suggest and
why?
Set forth the five items that a party warrants when the party transfers an instrument for
consideration.
Set forth what a registration statement filed with the SEC generally contains.
What is required by the Telemarketing Sales Rule of 1995?
Constance was buying a used personal watercraft from Ralph. He told her that the
engine on the watercraft was in good shape. Constance agreed to pay Ralph $4,000 for
the watercraft. She was going to be out of town on vacation, so Ralph and Constance
agreed that when she returned in a week, she would bring over the money and pick up
the watercraft. During that week, the manufacturer notified Ralph that the watercraft
was being recalled because it had a faulty engine that needed repair. Ralph said nothing
about the condition of the engine or the recall when Constance came to pick up the
watercraft. They chatted about other matters; she gave him the $4,000, and took the
watercraft. Later, Constance started having problems with the watercraft and found out
the purchasers had been notified of the issue with the engine. She asked for a refund
accusing Ralph of fraud. Ralph refused on the basis that he did not make any
misrepresentation. Who is correct and why? For purposes of this question, assume that
sales talk or puffery is not at issue.
What needs to be shown under the UCC for goods to be found merchantable?
Set forth the three main situations in which the courts find objective impossibility.
Set forth the definition of sexual harassment as stated by the EEOC and accepted by the
U.S. Supreme Court.
Explain the effect of auctions held with reserve and without reserve, and discuss what
happens if nothing is said regarding whether an auction is being held with reserve or
without reserve.
Set forth the steps involved in hybrid rule making.
Discuss whether or not you believe that our law should recognize holder in due course
status with its resulting rights.
Set forth the family-related occurrences under which leave is available under the
Family and Medical Leave Act.
What rights, if any, does a creditor who does not wish to repossess collateral have in the
event of a default, and why might a creditor prefer a remedy other than repossession of
collateral?