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1) debra allowed frank to stay in the guesthouse located at the rear of her property.
debra and frank never discussed rental terms. it is very likely a tenancy at will has been
created.
2) the buyer cannot recover any incidental damages.
3) the finder of lost property has better rights to the property than anyone, including the
original owner.
4) jim stanley writes a check on his checking account with a bank. the bank is the
drawee here.
5) generally, the age of majority for contracting purposes is 21 years.
6) alan and ben have a contract. alan has performed 100 percent and ben has performed
50 percent of it. this contract is now executory.
7) corporation law authorizes a shareholder to bring a class action on behalf of the
corporation and for its benefit.
8) a contract in which one party to the agreement agrees to buy all of the produced
goods of the other party is called a requirements contract.
9) the double jeopardy clause:
a.establishes that a person cannot be prosecuted by the state for a state crime after being
acquitted of a federal crime, if the two alleged crimes involved essentially the same
facts.
b.protects criminal defendants from having to undergo more than one prosecution by
the same sovereign for the same criminal offense.
c.establishes that a single criminal act with multiple victims cannot result in more than
one criminal prosecution.
d.bars a private plaintiff from pursuing a civil case against the defendant who was
criminally prosecuted for the same alleged conduct.
10) a _____ indorsement can be used with either a blank indorsement or a special
indorsement.
a.rebuttal
b.conditional
c.qualified
d.restrictive
11) geometry co. manufactures microchips for electrical products. jojoba monopolizes
the supply of gallium arsenide, which is used heavily in the manufacturing of
microchips. because of this monopoly and the demand for microchips, geometry enters
into a long-standing agreement with jojoba for 20 years. for the first couple of years,
due to the huge demand for the microchips, geometry insisted on timely delivery of the
raw material. however, once the demand slumped, geometry asserted economic duress
to avoid the contract. will geometry be successful?
a.yes, because geometry was forced to enter the contract due to jojobas monopoly over
the supply of the raw material. the consent was not free.
b.no, because the facts prove that jojoba had not caused any undue duress.
c.yes, because there was economic duress and thus the contract is voidable at geometry
& co.s discretion.
d.no, because geometry has already taken benefits under the contract for two years.
12) sharon and martha are general partners in the sm general partnership. sharon, acting
with authority, negotiated and signed for a $500,000 loan to sm from a bank. sm has not
repaid this loan. the bank can recover its loan from:
a.sharon only.
b.sm and sharon; they are jointly liable only.
c.sm, sharon, and martha; they are jointly liable only.
d.sm, sharon, and martha; they are jointly and severally liable.
13) directors meetings:
a.require a minimum number of directors to attend, called a quorum.
b.are always called after reasonable notice to the directors.
c.are always required in order for the board to take action.
d.permit directors to cast up to three votes each.
14) what are depositions?
a.written questions directed to a party, answered in writing, and signed under oath.
b.documentary evidence introduced at a trial.
c.oral examinations of a party by the opposing partys attorney.
d.written statements made during arbitration.
15) which of the following is an exception to the general rule that rejections terminate
offers?
a.unilateral contracts
b.bilateral contracts
c.firm offers
d.option contracts
16) sigmund enters into a contract with carl. the terms are that sigmund will purchase
all the gasoline that he wants to purchase in 2011, at a price of $2.50 per gallon, and
carl agrees to sell on those terms. this is an example of a(n):
a.valid promise.
b.illusory promise.
c.voidable promise.
d.implied promise.
17) austen construction, a general contractor, advertised for bids from subcontractors on
the electrical work for the renovation of one of state universitys parking structures. the
advertisement announced that the contract will be awarded to the lowest responsible
bidder. bronte, a responsible electrical subcontractor, submitted the lowest bid to austen
for the electrical portion of the work. austen informed bronte that she should begin
work immediately. bronte then stated that she is withdrawing her bid from austen.
which of the following statements is most accurate?
a.austen should not rely on brontes offer to do the electrical work.
b.austen has accepted brontes offer, thereby forming a contract.
c.austen is not bound by brontes bid until he informs her of his intent to accept.
d.bronte has accepted austens offer by submitting the lowest bid.
18) pamela is a corporate promoter for nulla corporation, a corporation yet to be
formed. pamela determines that nulla will need to lease a building in which to conduct
its business. pamela owns an office building that is suitable for nulla. what should
pamela do if she wants to make a contract for nulla to lease the building from her?
19) _____ imposes liability on underwriters and experts for misstatements or omissions
of material fact in securities act registration statements.
a.section 18 of the securities exchange act of 1934
b.section 12(a)(2) of the securities exchange act of 1934
c.section 17(b) of the securities act of 1933
d.section 11 of the securities act of 1933
20) which of the following must exist in order for a person to possess apparent
authority?
a.the principals payment of consideration to the agent
b.the agents consent to the agency relationship
c.a third partys belief that agency exists
d.the principals written authorization to the agent
21) the most perplexing issue with regard to the authority of officers is whether an
officer has _____ authority merely by virtue of the title of his office.
a.express
b.implied
c.apparent
d.inherent
22) a computer manufacturer offered to sell sophisticated computer equipment to
another country. two days later, before the offer was accepted, congress placed an
embargo on all sales to this country; and therefore, the offer was terminated by the
embargo. this is an example of:
a.promissory estoppel.
b.destruction of subject matter.
c.intervening illegality.
d.revocation.
23) which of the following transfers would be considered fraudulent under the 2005
revisions of the bankruptcy code?
a.transfers that are intended by the debtor and creditor to be a contemporaneous
exchange for new value.
b.transfers that led to the creation of a security interest in new property where new
value was given by the secured party to enable the debtor to obtain the property.
c.transfers made in payment of a debt incurred in the ordinary course of the business of
the debtor and the transferee.
d.transfers to or for the benefit of an insider under an employment contract and not in
the ordinary course of business.
24) if the holders name on an instrument is misspelled or wrong, then the indorsement:
a.can be made only in his name.
b.can be made only in the name that is on the instrument.
c.can be made either in his name or in the name that is on the instrument.
d.can be made by putting his name as well as the name that is on the instrument.
25) sarah entered into an auto insurance contract with abc insurance (abc). on the
application, sarah stated that she had never been in an accident. in truth, sarah had been
in seven accidents in the last ten years. as a result, this contract is:
a.illegal.
b.voidable at abcs option.
c.voidable at either sarahs or abcs option.
d.void.
26) mila owes brad (whom she has not met) $4,000. james claiming to be brad gets mila
to issue him a check for $4,000. james forges brads indorsement and transfers the check
to hall. which of the following statements holds true for this situation?
a.the responsibility for determining the true identity of the payee is on hall.
b.james has the power to negotiate a check drawn payable to brad.
c.hall does not have good title to the check as brads signature is not valid.
d.the loss is shared by mila and hall, who is the holder of the forged instrument.
27) brown & co., a cpa, issued an unqualified opinion on the financial statement of its
client, king corp. based on the strength of kings financial statements, safe bank loaned
king $500,000. brown was unaware that safe would receive a copy of the financial
statements or that they would be used in obtaining a loan by king. king defaulted on the
loan. if safe commences an action for common law fraud against brown, then to be
successful, safe must prove that in addition to other elements it:
a.was in privity of contract with brown.
b.was not contributorily negligent.
c.was in privity of contract with king.
d.justifiably relied on the financial statements.
28) alana, who runs a flower shop, sells jose a shotgun. jose is unemployed, and alana
has never before sold a firearm in her life. which of the following is true?
a.article 2 of the ucc applies because alana is a merchant.
b.article 2 of the ucc applies because a shotgun is a movable thing.
c.article 2 of the ucc does not apply because alana is not a merchant with respect to
shotguns.
d.article 2 of the ucc does not apply because jose is not a merchant.
29) as a condition of giving doyle a thirty-year loan for $100,000, the caldwell bank
requires that doyle procure a surety. doyle pays sal $5000 to serve in this role. later,
doyle and the bank make a binding contract to extend the term of the debt from thirty
years to thirty years and three months. will this change discharge sal from his
obligation? make no assumptions except those stated here.
30) ace insurance company issues a legal malpractice insurance policy to bob, an
attorney. bob decides to skip a court appearance to go relax at his beach house. his
client, gina, brings a legal malpractice claim against bob based on his failure to appear.
ace is unsure whether its policy covers intentional acts such as bobs decision. is ace
obligated to provide bob with an attorney to represent him in ginas malpractice claim
against him? explain.
31) gil has stolen a lancer from yu and changed the look and interior of the car. gil is
now using it for his personal purposes. after some months, yu comes to know about his
car and demands it back. however, gil demands for the amount he spent on
modifications. can he recover it from gil? is yu liable to pay that?
32) tuff ruff llp, a cpa firm, is engaged to audit the financial statements of stuvver
company. during the audit, tuff ruff discovers that stuvver has been illegally dumping
toxic chemicals on a 40-acre plot of land behind its main manufacturing plant. what is
tuff ruffs public duty regarding stuvvers illegal dumping?
33) in kasky v. nike, inc., the california supreme court drew a distinction between a
noncommercial speakers statements criticizing a product and a commercial speakers
statements in praise or support of the same product. what was this distinction, and why
did the california supreme court make it?
34) adams takes insurance from prince insurance company for his office building. there
is an increase of hazard clause in the contract. however, after some days adams was
forced to keep highly explosive material in the office building for official purpose.
however, the building got damaged from inside due to an explosion caused by the
hazardous substance. adams now wishes to claim insurance coverage. prince is refusing
to give insurance. will adams succeed in getting his insurance claim?
35) kallie and lisa wish to start xyz limited liability company. what steps do they need
to take in order to establish it?
